In Brief
NHAI contracted with road construction companies using a standard form contract with price adjustment clauses. Disputes arose over whether the price adjustment formula for bitumen (and cement and steel) required using the base rate at tender time or the current market rate. Different arbitral tribunals reached conflicting conclusions. The Supreme Court held that base rate must be used. This interpretation aligns with the contract's mathematical structure, prevents absurd results (such as negative 'other materials' percentages), and reflects the parties' intent that price adjustment is comparative compensation. The Court set aside the arbitral awards favoring current rates and directed that this judgment governs all pending cases on this issue.
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