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M/s National Building Construction v. State of Maharashtra

Civil Appeal · 2017 INSC 791Decided 23 Aug 2017
Civil Appeal No. 10269 of 2017
Justice Dipak Misra · Justice A.M. Khanwilkar

Background

A construction firm contracted with the Maharashtra government in 1978 to build the Nishanghat Minor Irrigation Tank. After completing the work in 1982, the firm disputed its final bill, claiming it was underpaid for extra stone-pitching work, excavation of harder rock, extra transport ("lead") for water, and extra lead for sand. It sued and the trial court decreed the full claimed amount (~Rs. 4.98 lakh with 15% interest); on the State's appeal, the Bombay High Court (Nagpur Bench) partly reversed this, disallowing the pitching claim and the extra-lead-for-water claim while upholding the other two heads.

Decision Breakdown

The Supreme Court upheld the High Court's reasoning on both disputed claims. On the pitching claim, it found the contractor's extraordinarily high billed rate stemmed from a typographical error in the government's official rate schedule (showing a rate meant for square metres as if it were per cubic metre), which the government had later formally corrected, and since the contractor had already been paid more than the corrected rate, the correction was a restatement of the true rate, not an impermissible retrospective change, so the claim was rightly rejected. On the extra-lead-for-water claim, the Court held the written contract itself (Clause "d" of Item No. 8) expressly included watering and compaction within the base rate with no separate payment due, so this claim also failed on the plain contract terms. Finding no other issue, the Court dismissed the appeal with costs.

Lesson Learnt

A contractor's entitlement under a government works contract is governed strictly by the written contract terms and the officially notified (and, where genuinely erroneous, later-corrected) rate schedules: a typographical slip in an official rate list that is subsequently rectified does not entitle a party to claim payment at the mistaken, inflated rate.

Official source (sci.gov.in)View Judgment (PDF)

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