No Room For Discretion In Contractual Matters

Recently, in the case of the State of Madhya Pradesh v. M/S Sew Construction Limited & Ors.¹, the Supreme Court ("SC") has held that discretion holds no place in matters relating to contracts unless the discretion has been expressly incorporated by the parties as part of the contract.

The State of Madhya Pradesh ("State") published a tender for construction of the Masonry Dam and Sew Infrastructure Limited ("Contractor") was the winning bidder. The parties entered into a contract in 1993 that set a deadline of 60 months for the project's completion.

After a break, the work was resumed again in 2000. The Contractor requested a different quarry during construction in 2002, but the executive engineer declined, which decision was upheld by the superintending engineer. As a result, the Contractor referred the matter to arbitration.