Contract Termination Payment Upheld in Jabalpur Corridor Case
judgment dated 29.5.2026 of the Supreme Court in Madhya Pradesh Road Development Corporation Ltd Vs. M/s Jabalpur Corridor Pvt Ltd in Civil Appeal No.10877 of 2018
The majority arbitral award dated 22.8.2014 allowing claims of the respondent, was confirmed by Section 34 Court and also by Section 37 appeal court.
On 11.4.2003, the Corporation, TDM Constructions and the respondent had executed concession agreement dated 11.4.2003 for the project. Pursuant to the said agreement, the respondent had loan agreement with EXIM Bak Malaysia for Rs.80.85 crores.
In March, 2007, the respondent filed writ petition for vacant possession of the land. On 12.7.2007, the Corporation issued termination letter under clause 32.2 of the CA. This had led to arbitration, claims of the respondent and counter claims of the Corporation.
The Appellant’s approach also fundamentally undermines the core objectives of the 1996 Act, namely certainty, expediency, and finality of adjudication. The award-holder Respondent has already endured over a decade of litigation despite having succeeded before the Arbitral Tribunal and through multiple judicial stages. To permit the Appellant now to reopen a jurisdictional issue which already stood concluded up to review proceedings before the Hon’ble Supreme Court would amount to sanctioning perpetual litigation and defeating the very sanctity of arbitral finality,
The Corporation objected to the Arbitral Tribunal on the ground that the agreement is works contract covered by the arbitration of MP law and 1996 Act does not apply.
Termination Payment & Refund of Value of Works Done
Interest on Bank Loan
The respondent challenged the termination notice and claimed Rs.69,67,60,270/- under clause 32.6 of the Agreement relatable to the “termination payment”.
In this case, the respondent claimed interest of Rs.42,55,57,298/- on loan obtained from EXIM Bank Malayasia for the project.
The termination payment was clubbed to include damages for financial closure, damages for delay, reimbursement of bank guarantee charges, insurance policy and overheads.
The Arbitral Tribunal, on extensive examination of the evidence, found that the respondent was not at fault and the termination of the contract by the Corporation was completely unjustified, unlawful, arbitrary and void.
