Writ petitions seeking interest for delayed payment not maintainable where contract bars interest and provides for civil suit or arbitration: Andhra pradesh high court

Writ petitions for interest on delayed payments deemed non-maintainable when contracts prohibit interest and allow civil suits or arbitration, rules the Andhra Pradesh High Court.

Yellaboina Mallaiah v. State of Andhra Pradesh and Ors. Citation: (2026) ibclaw.in 4194 HC Court: High Court of Andhra Pradesh Case No.: Writ Petition Nos. 5506, 5608, 5712, 5748, 5781, 8818, 8895, 8978, 9279 and 9730 of 2025 Decided on: 22-Jul-26 Coram: Sri Justice Subba Reddy Satti

The Andhra Pradesh High Court has held that a batch of writ petitions seeking only interest on delayed payment of contractual dues is not maintainable where the agreement between the parties contains a clause barring interest and further provides for adjudication of disputes through arbitration or civil suit, and where the claim for interest had already been left open to be decided before the appropriate forum in an earlier round of litigation.

A Single Bench of Justice Subba Reddy Satti was dealing with ten writ petitions filed by contractors who had executed works under the Neeru Chettu Scheme in Chittoor District. In the first round of litigation, their earlier writ petitions seeking payment along with interest had been disposed of directing release of the principal amount, while granting liberty to the petitioners to agitate their claim for interest before an appropriate forum. The petitioners did not pursue that liberty, but instead filed the present writ petitions directly claiming interest, relying on a subsequent Division Bench order in W.A. No. 724 of 2021, which had directed payment of interest at 6% per annum and was passed with the consent of parties who were not before the present Bench.

The agreements executed by the petitioners incorporated the Andhra Pradesh Standard Specifications, which barred the contractor from claiming interest on delayed payments, and separately provided that disputes above Rs. 50,000 would be decided by a civil court by way of regular suit, and not by arbitration.

The Court held that the earlier direction leaving the petitioners at liberty to approach the appropriate forum amounted to a qualified refusal of interest in writ jurisdiction, and since the petitioners neither appealed that order nor availed the alternative remedy, the present writ petitions claiming interest were barred by the principle of constructive res judicata. Relying on Daryao v. State of U.P. and M. Nagabhushana v. State of Karnataka, the Court held that this principle applies with full rigour to successive writ proceedings.

The Court also held that the consent order in W.A. No. 724 of 2021 did not lay down a binding precedent since it involved no independent adjudication on the contest between the parties, relying on Municipal Corporation of Delhi v. Gurnam Kaur, and could not be relied upon by petitioners who were strangers to that litigation.

Referring to Joshi Technologies International v. Union of India and Titagarh Paper Mills Ltd. v. Orissa SEB, the Court reiterated that purely contractual monetary claims, particularly where the contract itself prescribes a dispute resolution mechanism such as arbitration or civil suit, are not ordinarily entertained in writ jurisdiction. It further followed the Division Bench ruling in State of Andhra Pradesh v. Vyshno Constructions, which held that a contractual bar on interest cannot be overridden by invoking Article 226.

Holding that the petitioners had failed to plead the terms of the agreements in their affidavits and that the claim for interest was a disputed question triable before a civil court or arbitrator, the Court dismissed all the writ petitions, with no order as to costs.