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2025 Supreme(Online)(MP) 9147

HIGH COURT OF MADHYA PRADESH
Vivek Rusia, Pradeep Mittal, JJ
Amsk Group Proprietary Firm – Appellant
Versus
Secretary, Narbada Valley Bhopal – Respondent
CIVIL REVISION No. 618 of 2002



Advocates:
For the Appellants/Petitioners: None
For the Respondents: Piyush Jain

A revisional court's jurisdiction over an arbitral award is strictly limited to correcting jurisdictional errors, illegality, or material irregularity; it cannot interfere with factual findings or evidentiary assessments made by the tribunal unless they are patently perverse.

Headnote:(A) Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 - Section 19 - Civil Revision - Challenge to Arbitral Tribunal award - Scope of interference - Limitation of revisional court to interfere only on grounds of jurisdictional error, illegality or material irregularity. (Paras 20, 21)

(B) Contractual dispute - Claim for overheads, loss of profit and price escalation - Evidence - Burden of proof - Petitioner failed to produce sufficient cogent evidence to establish overhead losses or losses resulting from alleged breach. (Paras 4, 7, 10)

(C) Arbitral award - Foreclosure clause - Mutuality - Parties agreed to foreclosure under the contract - Petitioner’s undertaking to waive claims validly acted upon - No perversity in Tribunal’s findings. (Paras 13, 14)

Facts of the case:
Petitioner was awarded a construction contract in 1991 for earthwork in a dam project. Following delays and multiple extensions, the petitioner sought foreclosure of the contract, which was processed by the respondents. The Arbitral Tribunal rejected the petitioner's claims for various losses and interest, leading to the current revision.

Findings of Court:
The court upheld the Tribunal’s findings, noting that the petitioner failed to prove the losses claimed through cogent evidence and was bound by the mutually agreed foreclosure terms of the contract. The findings of the Tribunal were found not to be perverse or suffering from jurisdictional error.

Issues: Whether the award of the Arbitral Tribunal is vitiated by perversity or legal misconduct and whether the Tribunal failed to exercise or exceeded its jurisdiction.

Ratio Decidendi: Where a contractor fails to provide sufficient evidence to quantify specific losses such as overheads or lost profits, and where the parties have mutually agreed to the foreclosure of a contract under its specific provisions, the Tribunal’s decision to disallow such claims is not perverse or illegal.

Result: Civil Revision dismissed.

Table of Content
1. overview of contract dispute and tribunal proceedings. (Para 1 , 2 , 3)
2. appellant arguments regarding perversity in evidence assessment. (Para 4 , 5 , 6)
3. court findings on lack of evidence and delay responsibility. (Para 7 , 8 , 9)
4. legal principles for calculating overhead losses and damages. (Para 10)
5. validity of mutually agreed contract foreclosure. (Para 11 , 12 , 13 , 14)
6. review of price escalation and contractual payment terms. (Para 15 , 16 , 17 , 18 , 19)
7. scope of revisional jurisdiction and final dismissal. (Para 20 , 21 , 22)

ORDER

Per: Justice Pradeep Mittal

1. This Civil Revision under Section 19 of the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 is directed against the award dated 15.01.2002 passed by the Madhya Pradesh Arbitration Tribunal, Bhopal, in Reference Case No. 21/1998, whereby the claim of the petitioner has been rejected.

2. The facts of the present case pertain to a construction contract for the balance work of the main earthen dam of the Man Project, which included the portion from RD 154 M to RD 487 M, covering trench cutting, excavation, earth filling, dam work, and laying of filter blankets and chimney filters, excluding watering and compaction works. The contract was awarded to the petitioner after receipt of the tender dated 21/9/1990, followed by issuance of the work order on 11/7/1991, with a stipulated completion period of 18 months, revised extensions subsequently granted up to 31/3/1994 and then 30/6/1995, and on the further application for extension, till 29/2/1996. Eventually, the contract was terminated by the petitioner on 26/2/1996, with the total cost of work executed amounting to Rs. 1,23,23,244/- as against the contract value of Rs. 1,51,51,342/-. It is further noted that the execution of certain adjacent works, specifically concrete/masonry blocks and downstream training wall, depended on another contractor, whose failure to complete the assigned items rendered it impossible for the petitioner to finish the earthwork in the wrap round portion and behind the training wall, consequently, earthwork connecting these components also remained incomplete, yet 95% of the stipulated contract work was duly executed by the petitioner, with only the portions linked to the unexecuted responsibilities of other contractors left unfinished. Claim for advances and interest thereon at the tune Rs. 5,01,626/- and interest on delay payment tune of Rs.4,96,674/- and loss of infructuous overhead and loss of profit at the tune Rs.6,31,300/- and earth work at chimney area to the tune Rs.20,639/- and different payment for extra work to the tune Rs.4,58,314/-, total amount Rs.21,08,553/- was wrongly rejected and claim for Rs.2,27,054/- has been wrongly adjusted against the price acceleration amount Rs.3,41,739/- which was awarded to the petitioner .

3. Respondents have stated that the petitioner was given sufficient extensions under Clauses 4.3.5.1 and 4.3.5.2 of the agreement but the progress of the work was slow and held up due to shifting of the machines to other projects viz. Rampur Khurd Project in Sehore District The petitioner had failed to complete the work within the stipulated period of completion and even in extended period due to non-deployment of adequate labour, lack of planning and management, shifting of machineries to the other project site and inadequate machineries. It is further stated that at the instance of petitioner vide Ex.D-3 their letter No. 298/AMSK/96-97 dt. 1.7.1996 the foreclosure of work was considered by the Member, M.V.D.A., Bhopal and decision was communicated vide letter No. 479/7/M.V.D.A./Engg./6/95 dt. 29.7.97, in pursuance of which the final measurements of work was taken on 22.10.1997 and after due scrutiny the payment of final bill was made by the respondents’ E.E. on 22.1.1998, therefore, the petitioner is not entitled for any compensation as he has himself requested for the foreclosure of the work under Clause 4.3.14 of the a

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