IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR BEFORE HON'BLE SHRI JUSTICE VIVEK RUSIA &

HON'BLE SHRI JUSTICE PRADEEP MITTAL

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ON THE 12 OF JANUARY, 2026 CIVIL REVISION No. 256 of 2003 THE SEC. TO GOVT. OF M.P. & ANR Versus PHOOL CHAND JAIN Appearance:

Shri Abhijeet Awasthi Deputy Advocate General for petitioners/State.

None appears for respondent.

ORDER Per: Justice Pradeep Mittal The present arbitration revision is preferred under Section 19 of the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983, challenging the award dated 27.06.2002 passed by the Madhya Pradesh Madhyastham Adhikaran Tribunal, Bhopal, in Reference Case No. 5 of 2020. By the said award, the claim of the non-applicant/contractor was partly allowed, and the petitioners/State were directed to pay a sum of Rs. 6,000/-, deducted towards penalty, to the contractor, along with Rs. 254/- towards pendente lite interest at the rate of 12% per annum on Rs. 6,000/- from 24.09.1999 to 20.01.2000, the date on which the reference petition was filed. The State/petitioners were further directed to pay a sum of Rs. 90,000/- towards escalation and Rs. 3,855/- towards pendente lite interest at the rate of 12% per annum on Rs.

90,000/- from 16.09.1999 till the filing of the reference petition, i.e., 20.01.2000. The petitioners/State were also directed to pay interest on Rs. 96,800/- at the rate of 12% per annum from 21.01.2000 till realisation. The remaining claims of the respondent /contractor were rejected. Thus, a total amount of Rs. 1,00,998/- was awarded in favour of the respondent/contractor. The State was also directed to pay proportionate costs to the extent of the contactor’s success and to bear its own costs. Counsel’s fee was fixed at Rs. 3,000/- if certified.

2. The admitted facts of the case are that the petitioners/State had invited tender for the work of 100 boys hostel including water supply and sanitary fitting for B.T.I. at Sagar. The work order was issued on 01.05.1993 and the work was to be completed within 18 months including rainy season.

The contractor filed the petition claiming in all Rs.2,30,157/-.

3. Petitioners/State has taken the following grounds in revision that the Arbitration Tribunal, after considering the material available on record, has partly allowed the claim of the respondent.

4. The Arbitration Tribunal has held that the State has arbitrarily withheld the payment of Rs. 6,000/-.The case of the respondent/contractor was that, as the State did not provide the site along with the approved site and layout plan in a timely manner and also delayed payment of running bills due to non-availability of funds, the contractor could not complete the work within the stipulated period, and the work was ultimately completed on 31.12.1997. The Arbitration Tribunal has specifically found that the contention of the respondent/contractor that the State had not provided the site along with the approved site and layout plan in time and that the State delayed the running payments was not proved. The Tribunal has further specifically found that the site was made available immediately and that there was no delay in running payments.

5. The contention of the State was that, since the respondent/contractor could not complete the work within the stipulated period, the time was extended while reserving the right of the State to impose penalty, and, in fact, the penalty was imposed subsequently. The Tribunal came to the conclusion that the penalty was imposed after hearing the respondent/contractor. Merely because the penalty was imposed subsequently, the Tribunal held that the imposition of penalty was bad and, therefore, granted relief of refund of Rs. 6,000/-.

6. It is submitted by the State that once the Tribunal had come to the conclusion that there was no default on the part of the State and that the penalty was imposed after hearing the respondent/contractor, it ought not to have interfered with the order imposing penalty. The Tribunal has awarded a sum of Rs. 90,