Madhya Pradesh High Court
M/S Bharat Constructions vs State Govt. Of M.P. & Ors. on 19 November, 2025
Author: Vivek Rusia
Bench: Vivek Rusia
..1..
NEUTRAL CITATION NO. 2025:MPHC-JBP:60223
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE VIVEK RUSIA,
&
HON'BLE SHRI JUSTICE PRADEEP MITAL
ON THE 19TH OF NOVEMBER, 2025
CIVIL REVISION No. 1892 OF 2000
M/s BHARAT CONSTRUCTIONS CO.
Versus
STATE OF MADHYA PRADESH AND ANOTHER
Appearance:
Shri Sourabh Singh, Advocate for petitioner.
Shri Ritwik Parashar, Government Advocate for respondents.
ORDER
Per: Pradeep Mittal, The present civil revision preferred under Section 19 of the Madhya Pradesh Madhyastham AdhikaranAdhiniyam, 1983, challenging the award dated 29.04.2000 passed by the Madhya Pradesh Arbitration Tribunal, Bhopal in Reference Case No. 7 of 1996. By the said award, the petitioner's claim has been partly allowed and the respondents have been directed to pay Rs. 9,57,767/- against refund of security deposit and pendentelite interest from 06.02.1996 to 24.04.2000. Postlite interest is awarded Signature Not Verified Signed by: MANVENDRA SINGH PARIHAR Signing time: 26-11-2025 11:06:24 ..2..
on an amount of Rs.4,93,673/- from the date of this award till realisation.
2. For the sake of convenience, the parties shall be referred to by their respective titles as used before the Tribunal.
3. The admitted facts of the case are that the under Agreement No. 2 of 1991-92 dated 08.07.1991, the applicant was awarded the work of doing earth work of Narbada Sagar Main Canal Gr. II from RD 1.244 to 4.36 Kms. By accepting its item rate tender. Work order was issued on 15.07.1991 and the work was to be completed within 24 months excluding the rainy season i.e. by 15.03.1994. Work could not be completed within the stipulated period. Two-extensions were sought and were granted by the defendants.
4. Facts of the case are that the Work could not be completed within the stipulated period. Two-extensions were sought and were granted by the defendants. Respondent has not fulfilled the reciprocal promises regarding, providing of the whole of the worksite at the same time and not fully between RD 3.744 Km. to RD 4.360 Km., availability of explosive material, sufficient availability of water for completion of earth work, payment of bills in due time, sanction of the extra rates for excavation in soft rock. On account of neck breaking large held up amount of about Rs.67.5 lakhs, it became impossible to work because financial resources had dried up and payment was not being made. Applicant had done the work to the extent of Rs.1,73,60,00/- as per last running bill as against the contract amount of Rs.2,37,55,265/-. Applicant claims Signature Not Verified Signed by: MANVENDRA SINGH PARIHAR Signing time: 26-11-2025 11:06:24 ..3..
that the total work executed by him was worth Rs.1,74,10,300/-. Amount of security deposit was Rs.8,99,072/-. An amount of Rs.47,20,250/- had become due towards excavation of excess quantity of soft rock above 10% of the stipulated quantity when the excess went upto more than 375% of the stipulated quantity. Moreover, rates of the excavated quantity of soft rock beyond 10% of the stipulated quantity were claimed by the petitioner as an extra item and even though Executive- Engineer had recommended market rate as per his own calculations in the analysis submitted to Superintending- Engineer/Chief Engineer, the rate was not settled upto the last.
4.1. Above defaults of respondents retarded the progress of the work and ultimately made it impossible for him to continue. This resulted in sinking of large amount of money of the petitioner and a stage was reached when it became impossible to go on incurring the expenditure without any hope of its being reimbursed. Besides, other amounts were withheld and financial bottleneck was created, superimposed by repeated demands for refund of large amount of escalation withheld on account of audit objection. The petitioner, therefore, in frustration avoided the contract and withdrew his men and machines from the work site. This was followed by rescission of contract by the E.E. without any proper notice to show cause. Whatever notice was given was replied in full but in the rescission order none of the difficulties expressed by the petitioner was considered. Notices as well as the rescission order were vague. Security amount was held up. Thereby, the petitioner had been put claim for financial loss which was rejected by tribunal.
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5. Heard the learned counsel for the parties and perused the record in detail.
6. It is submitted by the learned counsel for the petitioner that the learned Tribunal has exercised jurisdiction not vested in it, and has failed to exercise the jurisdiction vested in it by law. The award has been passed in a very casual manner, and all findings of the learned Tribunal are perverse. The learned Tribunal has failed to consider the fact that the Chief Engineer did not fix the rate of extra work as per the contract and failed to perform his part of the contract. By creating avoiding circumstances, he denied performing his remaining part of the contract. The petitioner was not responsible for the non-performance of that part of the contract. He further argued that the Tribunal also failed to notice that the extra hard work was not part of the original contract. Due to the respondent's failure to perform its part of the contract, the petitioner suffered losses. Hence, the award ought to have been passed in favour of the petitioner.
7. Learned counsel for the respondent has opposed the petition and argued that the petitioner himself foreclosed the work and was not ready to execute the work as per the conditions of the contract. The respondent has suffered, including monetary losses, due to the non-execution of the remaining work which was part of the contract. Hence, the Tribunal has rightly dismissed the suit.
8. The claims' of the petitioner was before the Tribunal are as under:
1 Claim for extra item as per Schedule A Rs.47,20,950/- Tribunal rejected the claim.
2 Claim for release of withheld amount as Rs.11,27,005/- Tribunal rejected the Signature Not Verified Signed by: MANVENDRA SINGH PARIHAR Signing time: 26-11-2025 11:06:24 ..5..
per schedule B claim.
3 Claim for payment of final bill Rs.50,000/- Tribunal rejected the
claim.
4 Payment of escalation on withheld Rs.1,50,000/- Tribunal rejected the
amount as per Schedule C claim.
5 Refund of security deposit as per Rs.8,89,072/- Tribunal allowed the claim
Schedule D by awarding of
Rs.7,49,072/-
6 Recovery being made unauthorisedly Rs.7,56,765/- Tribunal rejected the
claim.
9. It is evident from the record that the work order was issued on 15/7/1991 and work was started by petitioner on 1/11/1991, date of completion of work was 15/3/1994 and extension of time was granted up to 15/12/1994 and up to 15/3/1996 and work was not completed even within the extended period. On 12/9/1995, the contract was declared void by petitioner due to failure to fulfill its own contractual commitments. Tribunal in its award categorically discussed the evidence in para no. 3 to 28 and reached the conclusion in para no. 29 to the effect that under the circumstances, we are of the opinion that shifting of the machinery in 4/95 from the site by the petitioner and subsequently declaring the contract void by the petitioner w.e.f. 12.9.1995 is not on account of fundamental breaches or defaults of the respondents but on account of his own sweet will. After voiding of the contract by the petitioner the respondents wrote several letters Ex. D. 22 dt. 28.7.1995, Ex.D.28 dt.27.1.1996 regarding restarting the work by the petitioner and to complete the work. 'Ultimately the Executive Engineer vide Ex. D.32 dt. 30.10.1996 rescinded the contract under Clause 4.3.3.3 of the agreement asking the contractor to be present on the site on 16/11/1996 for measurements. There is nothing on record to show whether the final measurements were taken or not and whether the petitioner was present for taking final Signature Not Verified Signed by: MANVENDRA SINGH PARIHAR Signing time: 26-11-2025 11:06:24 ..6..
measurements. Since no work was done by the petitioner after 4/95 and thereafter and that the voiding of contract is held illegal, the work is deemed to be abandoned by the petitioner w.e.f. 12.9.1995 and the question of rescission of the contract by the respondents is of no consequence. The above finding is based on the proper appreciation of evidence which in not perverse, therefore this court cannot interfere in revisional jurisdiction.
10. Learned tribunal has held in the para no. 34 of the award that the appreciable variations in the total excavation in disintegrated rock/soft rock and that in hard rock. Therefore, we hold that the additional quantity of excavation executed by the petitioner is on account of variation in the strata in the same canal section and not on account of any extra work beyond the scope of the agreement or C.S.R. The rate payable for this item is as per Clause 4.3.13.3(a) of the agreement as agreed by both the contracting parties in case of variation in the quantities of the 'G' Schedule beyond 10%. As discussed earlier the rate of Rs. 37.79 per Cu.m. as per this clause has been paid to the petitioner from the 7th running bill onwards and the demand of the additional rate of Rs. 62/- per Cu.m. or considering the rate of Rs. 43.15% during the course of arguments is not inconsonance with the agreement clause 4.3.13.(a) and is rejected.
11. Contract executed between the parties has not been placed on the record for ready reference. Clause 4.3.13.3 (a) of the contract is reproduced below from the award:-
"4.3.13.3 (a) Rates of item of contract involving increase in quantity during execution: "In the case of Signature Not Verified Signed by: MANVENDRA SINGH PARIHAR Signing time: 26-11-2025 11:06:24 ..7..
such item for which the actual quantities shown in Annexure-1 of the tender document, the rate for the particular item as entered in Annexure -1 of the contract, shall be payable for extra quantities up to 10% (Ten Percent) of the quantities in the Annexure-1"
"In the case of such item for which the actual quantities exceed the quantities shown in Annexure -1 of the tender document by more than 10% (Ten Percent) the quantity in excess of 10%(Ten Percent) will be paid on the estimated rate of the item on the date of invitation of tender plus or minus the overall percentage of accepted tender above or below as the case may be to the total cost of work as per Annexure -1 at the estimated rates."
12. The petitioner has challenged the finding of the Tribunal on the ground that the condition of the said agreement is void under Section 17 of the Contract Act because excavation of soft soil is more than 350% of the contract which was uncertain in the contract; therefore, the condition is void. As per contract digging of soft rock is 61,481 Cu.m and hard rock is 74,887 Cu. m. During the execution of work the contractor had dug 2,94,294 Cu.m soft rock and 85,570 Cu.m. hard rock. Total of both the rocks is 3,79,886 Cu. m. Under the agreement excavation of both rock was 3,36,368 Cu.m which is not 350%. Only the work of excavation shifted to hard rock to soft rock, Therefore, the contention of the petitioner is not acceptable.
13. The second contention that the computation of the excess work should be as per clause 4.3.13.3(c) is also not acceptable because copy agreement has not been placed on the record so we could not find out that condition on record, secondly; the work of excavation of soil under agreement no extra work was executed by the contractor out of the contract. Only work of Signature Not Verified Signed by: MANVENDRA SINGH PARIHAR Signing time: 26-11-2025 11:06:24 ..8..
excavation is shifted from the hard rock to the soft rock, therefore, the learned Tribunal has rightly confirmed the calculation of the respondents.
14. The petitioner has argued that Clause 4.3.13.3(a) of the agreement becomes irrelevant for determining the rate for additional quantities exceeding 10% of the tendered quantity. There is no force in this argument because the excessive work was executed within the limits of the contract.
15. Petitioner has placed his reliance on Tara Pore and Company Vs Cochin Shipyard Ltd reported in AIR 1984 SC 1072 and National Fertilizer Ltd Vs. Puranchand Nagia reported in AIR 2001 Page 53 and S.Harcharan Singh V/s Union of India reported in 1990(4) SCC 647 and argued that if agreed condition varied then contract clause becomes irrelevant. That judgment cannot be applicable in the present case because the excess work has been executed under the contractual limit.
16. The argument of learned counsel is that in agreement Clause 4.13.3.3, no limit has been mentioned. It is settled law that where no limit is specified, it should be interpreted as a reasonable limit, which may be between 10% to 25%, and not 378%. In the present case, there was an increase of more than 378%, which was a result of improper investigation and incorrect preparation of item quantities. However, the above contention is not acceptable because the total excavation incurred is not more than 20%, which is reasonable. Secondly, it was also the duty of the contractor that before submitting his tender, he should conduct proper Signature Not Verified Signed by: MANVENDRA SINGH PARIHAR Signing time: 26-11-2025 11:06:24 ..9..
investigation of the work. No one can anticipate, before commencement, how much soil hard or soft will be excavated, as this becomes clear only after execution of the work. For this reason, the clause was incorporated in the agreement. The total work can only be estimated prior to commencement, and such estimates were provided in the tender documents. The Tribunal has rightly held that the calculation was properly made under Clause 4.3.13.3(a).
17. Learned tribunal has held in the para no. 35 of the award that the respondents' counsel argued that site from Ch. 3744 to 4360 meters was not handed over but the rest of the site from Ch. 1244 to Ch. 3744 was available to the petitioner and work was executed and left incomplete by the petitioner. As per technical specification Cl. 1.9.16 (b) of the agreement "for canal excavation, intermediate payments will be made at 80% of the full rate. The remaining 20% will be released only when at least 0.5 Km. continuous reach is excavated as per design profile true to the lines and levels and finally inspected by the Executive Engineer". The petitioner did not complete any 0.5 Km. continuous canal reach as per the Clause and left the work incomplete. Therefore the 20% withheld amount cannot be released to the petitioner.
18. It is also argued that the finding of the tribunal regarding abandonment of the work and voiding of the contract is illegal and perverse, as admittedly there was no extension of time after 15.03.1996, and the contract had ended on 15.03.1996. Therefore, it is contended that after that date the contract could not have been terminated. This argument cannot be accepted because Signature Not Verified Signed by: MANVENDRA SINGH PARIHAR Signing time: 26-11-2025 11:06:24 ..10..
the petitioner himself abandoned the work, leaving no option for the respondents except to terminate the contracts.
19. It is also argued that the Executive Engineer recommended a rate of Rs. 43.15 per cubic meter, but the respondents failed to fix the rate until the petitioner declared the contract void. Hence, the petitioner had no alternative and was compelled to declare the contract void vides Ex. P-27 dated 12.09.1995, after giving notice Ex. P-20. This was due to compelling circumstances for which the respondents were fully responsible. Reference is made to Section 53 of the Indian Contract Act. However, under the facts and circumstances of the present case, we are of the opinion that there is no force in this argument because, by D-29, the rate had already been approved for the access work as per Clause 4.3.13.3(a). The contractor was responsible for foreclosing the work after repeated demands not to leave the work incomplete.
20. Learned tribunal has held in the Para no 37 of the award that the agreement Clause 1.9.6(b) is very specific and has been agreed to by both the parties. It is no where pleaded or brought in evidence by the petitioner that they have completed 0.5 Km. of continuous reach of the canal section true to the lines and levels and to the entire satisfaction of the Engineer- in-charge. Therefore, in our opinion the 20% withheld amount is not refundable and the claim on this account amounting to Rs. 12,25,005 /- is rejected.
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21. After hearing the argument of both the counsel and the evidence before us we find that the petitioner had produced no evidence in support of his claim of final payment of Rs. 50,000/- while the respondents claimed to have paid all the dues of the petitioner for the work done till April, 1995 by 20th running bill paid in June, 1995. Under the circumstances we find no substance in the demand of the petitioner for claiming Rs. 50,000/- towards the final bill which was not prepared and paid by the respondents. In view of the fact that all payments/dues were made by 28th running bill paid in 6/95, the claim is, therefore, rejected. Petitioner during the argument has expressed that he would not like to press that claim no 5.
22. Learned tribunal has held in the para no 41 of the award that it is pleaded by the petitioner that the respondents had paid escalation on the actual value of the work done but on the value of work, after deducting 20% from the value of item executed as the canal work was not finished in more than 0.5 Km. of continuous reach. The petitioner claimed escalation at 13.6% on Rs. 11,27,000/- which works out to Rs. 1,51,272/-. However the petitioner has restricted his claim to Rs. 1,50,000/-. The respondents argued that 20% of the withheld amount cannot be released as the petitioner has not completed any 0.5 Km. continuous length of canal section and therefore the question of payment of escalation on account of amount withheld for work not done, cannot be paid.
23. It is further submitted that the layout of canals 3744 meters to 4360 meters was never handed over to the petitioner and Signature Not Verified Signed by: MANVENDRA SINGH PARIHAR Signing time: 26-11-2025 11:06:24 ..12..
for that reason the work could not be completed; hence, the petitioner claims entitlement for the losses. This argument has no force because, except for the said layout, all other layouts had already been provided. At the time of accepting the tender, therefore, it was clear that this particular layout would be given only after completion of the preceding work, which the contractor never completed. Therefore, the non-supply of that layout cannot be considered the reason for failure to perform the contract within the stipulated. However it was rightly held by the tribunal that 20 % amount rightly was withheld due to non performing the work.
24. Learned tribunal has held in the Para no. 41 of the award that in Schedule B, the petitioner has claimed release of withheld amount as Rs. 12,20,005/- while in Schedule C the withheld amount stated to be Rs. 11,27,000/- and escalation has been claimed at 13.6.% of the value. The petitioner has not submitted any calculations in support of the claim for escalation. The petitioner has claimed escalation on an ad-hoc basis at 13.6% which is not acceptable to us. We are inclined to agree with the submission of the respondents that the 20% amount withheld for work not executed of the canal section in 0.5 Km. continuous reach is not payable and therefore the question of paying escalation on this withhold amount does not arise and is inadmissible. We, therefore, reject the claim on account of escalation.
25. Petitioner has argued that he executed 80% of the work as per the contract therefore, 20% withheld amount should be released because of no forfeiture of withheld clause in contract.
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Petitioner had abandoned the work of canal of the cost 1,51,272/- therefore, petitioner has no right to get any claim.
26. Learned tribunal has held in the Para no. 42 of the award that the petitioner in Schedule D has shown security deposit in the shape pf bank guarantee of Rs.1,50,000/-. The respondents have conceded that no notice has been served on the petitioner for recovery of security deposit, and earnest money and also that no order has been passed forfeiting the security deposit and earnest money. Under the circumstances the petitioner is entitled to refund of earnest money and security deposit amounting to Rs. 7,49,072/-:
We award release of security deposit and earnest money amounting to Rs. 7,49,072/-.
27. We have heard the arguments of both the parties on the issue of recovery being made unauthorized. We agree with the contention of the respondents that the operative date for the purpose of escalation would not be the date mentioned in the N.I.T when the envelopes were received, common conditions were drawn and the revised offers were called. The date of opening of tender means the date when the original price bid and revised price bid was opened which in this case is dated 14.12.1991 and escalation is payable from this date onwards. The respondents pointed out, Ex. D-20 dated 29.4.1995 vide which the petitioner agreed for the above recovery, raised during, the audit of Accountant General, to be made from security deposit and 20% withheld amount against the work done. Under the circumstances we hold that the recovery has been correctly made and agreed by the petitioner and therefore, the claim on account of recovery for escalation charges amounting Signature Not Verified Signed by: MANVENDRA SINGH PARIHAR Signing time: 26-11-2025 11:06:24 ..14..
to Rs. 7,56,765/- is rejected. The petitioner has prayed for pendentelite interest. The same is awarded @ 10% p.a. from 6.2.1996 to 29.4.2000 i.e. date of award, amounting to Rs. 2, 08,695/-. Claim Nos. 1, 2, 3, 4 and 6 of the petitioner are rejected and the refund of security deposit and earnest money as per claim No. 5 is awarded amounting to Rs. 7,49,072/- to be paid by the respondents to the petitioner. Out of this amount security deposit amounting to Rs. 2,55,400/- is in the shape of Fixed Deposit Receipts which themselves are interest bearing securities, Therefore, pendentelite interest on security deposit in the shape of cash amounting to Rs. 4,93,673 is awarded, the amount being Rs.2,08,695/-.
28. Petitioner argued that the according the agreed clause regarding the price adjustment the date should be the date mentioned in NIT not opening tender date. That contention could not be accepted because no contract has been placed on the record secondly; when the tender opened and accepted then that rate must be accepted for the escalation of the price. Learned tribunal has rightly held that the date of opening of tender means the date when the original price bid and revised price bid was opened which in this case is 14.12.1991 and escalation is payable from this date onwards.
29. The plaintiff/contractor had demanded a rate of Rs.62/- per Cu.m. for 1.95,000 Cu.m. soft rock excavated over and above the agreement quantity. It is not disputed that soft rock excavated work was for 1.95,000 Cu.m. As per the condition of the agreement 4.3.13.3(a), the Executive Engineer had fixed the rate of Signature Not Verified Signed by: MANVENDRA SINGH PARIHAR Signing time: 26-11-2025 11:06:24 ..15..
excess work of the contract as per rate of Rs.40.60 per Cu. m. The overall percentage below is 6.92% below U.S.R. of 1984 as entered in the agreement. The petitioner had challenged the rate fixed by the Executive Engineer at the rate of Rs.37.79 per Cu. m. which was incorrect. According to the agreement clause 4.3.13.3(c) the rate should be fixed according to that clause. The learned Tribunal has decided that issue categorically in Para 34 of the award and rejected the claim.
30. The third contention of the learned counsel for the petitioner that the rate fixed by the Executive Engineer should not be acceptable. The estimated rate was given in Ex. D/29 dated 21.09.1990 which was given to the contractor after that the contractor continued the work which has not been disputed at that point of time and for the first time on 29.7.1993 he demanded the rate of Rs.62/- per Cu.m. Once, the estimated rates are fixed by the respondents he should have challenged the same before the mediator but he never challenged to the same. This contention is also not acceptable; therefore, we do not find any perversity in the award passed by the tribunal regarding claim no. 1.
31. It is further argued that Ex. P-34, an agenda prepared by the Superintending Engineer, shows that in other contracts, contractors were being paid between Rs. 46 to Rs. 64 per cu. m., and therefore, a rate of Rs. 43.15 per cu. m. was recommended to be paid to the petitioner. This contention is not acceptable because the Chief Engineer is the competent authority to fix the rate under the terms of the agreement. Accordingly, in 1990, the rate for the Signature Not Verified Signed by: MANVENDRA SINGH PARIHAR Signing time: 26-11-2025 11:06:24 ..16..
work was approved by the Chief Engineer, as is evident from Ex. D/29.
32. After perusing the entire awarded we have not found any perversity on record. Contractor willfully foreclosed the contract and after repeated request he had not completed the work. A fundamental principle of contract law is that a party who has not performed their obligations cannot seek relief against the other party for non-performance. Therefore he could not get any relief as compensation.
33. It is well settled position that a provisional court's jurisdiction under Section 19 of the M.P. Madhyastham Adhikaran Adhiniyam, 1983 is limited to reviewing an Arbitral Tribunal's order for specific errors, such as exercising jurisdiction not vested, failing to exercise jurisdiction, or acting with material irregularity. The court can only interfere if there is a jurisdictional error, illegality, or material irregularity, as detailed in the Act.
34. Having examined the matter in detail, we are of the opinion that there are no jurisdictional errors, acts of misconduct or events of invalidity or impropriety in the conduct of proceedings by the Arbitrator in passing the award, For this reason, this court refrained from exercising its revisional jurisdiction under Section 19(2) by not interfering with the award passed by the Arbitral Tribunal. For the reasons stated above, the civil revision arising out of Reference Case No. 07/1996 filed against the award dated 29.04.2000 passed by Madhya Pradesh Arbitration Tribunal Bhopal, is accordingly dismissed. Parties shall bear their own costs.
Signature Not Verified Signed by: MANVENDRA SINGH PARIHAR Signing time: 26-11-2025 11:06:24..17..
The Record of tribunal be sent back with the copy of the order within two week.
(VIVEK RUSIA) (PRADEEP MITTA)
JUDGE JUDGE
MSP
Signature Not Verified
Signed by: MANVENDRA
SINGH PARIHAR
Signing time: 26-11-2025
11:06:24