VidhiSangh

Supreme Court of India · 18/11/2022

THE STATE OF MADHYA PRADESH versus M/S SEW CONSTRUCTION LIMITED & ORS.

[2022] 9 S.C.R. 731 · 2022 INSC 1217

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Summary

A contractor building a masonry dam for Madhya Pradesh found the allotted sand quarry exhausted. An inspection committee confirmed this, and in November 2002 the Superintending Engineer permitted sand to be taken from a more distant quarry under clause 3.11(A). That clause allows a claim where a quarry is changed for reasons beyond the contractor's control on the Superintending Engineer's written order. The Executive Engineer added a condition barring any claim for extra lead. The arbitral tribunal awarded Rs 5.51 crore escalation, and the High Court upheld it. The Supreme Court dismissed the State's appeal. Both contractual conditions were met, so the right to escalation arose from the contract itself. Officers administering a government contract have no discretion to add conditions the contract does not contain. An earlier award on a different, unsupported quarry request was no bar.

Issues

  1. Whether a contractor was entitled to escalation for extra lead under clause 3.11(A) after a quarry change ordered by the Superintending Engineer, despite the Executive Engineer's condition denying extra payment.
  2. Whether an earlier arbitral award rejecting a previous quarry claim barred the claim as res judicata.

Provisions considered

Held

Result

Civil Appeal No. 8571 of 2022 dismissed, upholding the Madhya Pradesh High Court (Gwalior Bench) order dated 03.05.2019 in Arbitration Revision No. 04 of 2009 and the award dated 26.11.2008 of Rs 5,51,03,040 with 9% interest; parties to bear their own costs.

Judgment PDF: Supreme Court of India, [2022] 9 S.C.R. 731.