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2025 Supreme(Online)(MP) 9855

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 court's revisional jurisdiction over arbitral awards is restricted to correcting jurisdictional errors or patent illegality; the burden remains on the claimant to prove allegations of loss through cogent evidence, and a voluntary request for contract foreclosure precludes subsequent claims for damages.

Headnote:(A) Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 - Section 19 - Civil Revision - Challenging Arbitration Tribunal award - Scope of revisional jurisdiction limited to jurisdictional error, illegality or material irregularity. (Para 20)

(B) Construction Contract - Breach of contract - Claim for overheads and loss of profit - Burden of proof lies on the contractor to provide cogent evidence regarding lost opportunities, drop in turnover, and actual losses incurred due to delay - Without such evidence, claims cannot be decided mechanically. (Paras 7 and 10)

(C) Contract - Foreclosure - Voluntary request by contractor - Valid discharge of mutual obligations - Clause 4.3.14 of agreement regarding foreclosure and undertaking not to claim is binding when parties mutually agree to terminate. (Paras 13 and 14)

Facts of the case:
A construction firm appealed against an arbitration award rejecting its claims for losses amounting to Rs. 21,08,553/-, including overhead expenses, interest on delayed payments, and loss of profit following the premature termination of a dam construction contract. The respondent maintained that the project delays were attributable to the contractor’s mismanagement and that the contract was foreclosed based on the contractor's own request and subsequent undertaking, with final measurements and payments settled accordingly.

Findings of Court:
The court held that the petitioner failed to substantiate claims for loss of profit and overheads with actual proof of lost business opportunities or accounting evidence. Furthermore, the tribunal’s factual findings regarding the respondent’s timely bill payments and the voluntary nature of the contract foreclosure under the agreement terms were found to be well-reasoned and free from perversity or jurisdictional error.

Issues: Whether the arbitration tribunal’s award was vitiated by perversity or legal misconduct, and whether the tribunal erred in assessing the contractor’s claims for damages and the validity of the contract’s foreclosure.

Ratio Decidendi: A revisional court cannot interfere with an arbitral award unless it suffers from jurisdictional error, patent illegality, or material irregularity. Since the petitioner failed to prove claimed losses through cogent evidence and had voluntarily agreed to contract foreclosure and payment finalization, the award reached by the tribunal was valid.

Result: Revision petition dismissed.

Table of Content
1. overview of the background of the construction contract dispute and arbitration reference. (Para 1 , 2)
2. summary of contentions regarding the tribunal’s alleged failure to consider evidence of departmental delays. (Para 3 , 4 , 5 , 6)
3. requirement to prove overhead losses and the standard for reviewing findings on contractor delay. (Para 7 , 8 , 9 , 10)
4. validity of contract foreclosure and deduction of recoverable amounts from final bills. (Para 11 , 12 , 13)
5. mutual agreement to terminate versus valid contract foreclosure and interpretation of price clauses. (Para 14 , 15 , 16 , 17)
6. final confirmation of tribunal findings and limited scope of revisional jurisdiction. (Para 18 , 19 , 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 2

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