In Brief
The State of Madhya Pradesh contracted with a construction company to build a Masonry Dam. After the original sand quarry became depleted, the Superintending Engineer authorized use of an alternative quarry. Years later, the contractor claimed Rs. 5.51 crore in escalation costs for increased transport from the new quarry. The contractor's claim was rejected but an Arbitrator awarded the amount. The Supreme Court upheld the award, holding that once the contract's conditions for escalation were satisfied (change of circumstance and written authorization), the contractor had a contractual right to escalation. Government officers could not impose additional conditions precluding payment. The prior arbitral award denying an earlier claim was distinguishable and did not bar this one.
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