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 28 OF JANUARY, 2026 CIVIL REVISION No. 45 of 2002 M/S K.G.N. CONSTRUCTIONS CO.MANDLA Versus STATE OF M.P. & ORS.

Appearance:

Shri Navneesh Jauhari - Advocate for the petitioner.

Shri Rajvardhan Dutt Padraha - Government Advocate for respondent.

ORDER Per: Justice Pradeep Mittal This Civil Revision under Section 19 of the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 is directed against the award dated 29.09.2001 passed by the Madhya Pradesh Arbitration Tribunal, Bhopal, in Reference Case No. 03/1997, whereby the claim of the petitioner, has partly been allowed.

2. Facts of the case, in brief, are that the contract for construction of a Government Girls Higher Secondary School at Bamhni Banjar, District Mandla, was awarded to the petitioner firm under Agreement No. 97/DL of 1987-88. The probable amount of the contract was Rs.6,00,000/-. The accepted rate was 136.75% above the C.S.R. in force from 20.08.1980, and the tendered cost worked out to Rs. 14,29,500/-. The time stipulated for completion of the work was 15 months, including the rainy season, with the scheduled date of completion being 23.07.1989. However, the work was actually completed on 24.06.1992. The petitioner firm applied for extension of time, citing reasons for delay, all of which were attributable to the employer. The Executive Engineer, agreeing with the reasons assigned, recommended grant of clear extension of time. However, the Superintending Engineer, without affording any opportunity of hearing to the petitioner firm, granted extension of time under the penal clause, allegedly with a view to deny escalation beyond 31.12.1991. During execution of the work, extra items such as 6 mm thick plaster on R.C.C. ceiling, lintels, beams and columns were got executed. The petitioner firm, being bound under the contract, executed the said extra items. However, instead of making payment for the extra items executed, the Department effected recovery of the cost of cement at penal rates by not accounting for the actual consumption of cement. The petitioner firm accepted the final bill under protest and raised quantified claims before the final authority, and thereafter filed a reference case before the Tribunal.

3. Learned counsel for the petitioner, out of 8 claims, pressed only three claims on following ground, i.e. Claim No.1, Claim No.3 and Claim No.5, which are as under:-

Claim No.1 – Cost of 6 mm plaster in cement mortor 1:3 of Rs.32,936/-.

Claim No.3 Reduction of agreemented rates of Rs.1,43,176/- and, Claim No.5 Escalation charges for the full period of Rs. 1,65,132/-

4. It is submitted that having taken shelter under Clause 5 of the Agreement, which stipulates grant of extra time for completion in the event of short supply of materials, the plea of the petitioner that the delay is attributable to the Department stands established. Learned counsel contends that once delay on this account is established, the petitioner is entitled to be compensated, notwithstanding the existence of a clause providing only for extension of time without compensation as such a clause is unreasonable.

5. It is further argued that despite holding that there was delay of 11 months and 4 months in payment of the sixth and ninth running bills, and a delay of 9 months in payment of the final bill, the Tribunal erroneously held that such delay was not attributable to the respondents. It is further contended that at the time of payment of the final bill, quantities and rates of certain items already paid earlier were reduced. Even assuming that the work was not as per specification, there is no clause in the contract permitting reduction of rates. Once the quantities are entered on the basis of actual work done and recorded, except for arithmetical corrections, there is no scope for reduction of quantities. The Tribunal, it is submitted, erred in permitting such