CPWD Paid for a Site Under Court Stay. The Award Stands.

Tender Awarded on Allotted Land

Central Public Works Department floated the tender for a Kendriya Vidyalaya at Jabalpur after the Collector had already allotted 1.963 hectares in Khasra No. 118.

The Executive Engineer signed the award letter for Rs 9,64,66,285. Laxman Sharma deposited Rs 20,00,000 and furnished a performance guarantee.

Then the joint site inspection found what the file did not. The Madhya Pradesh High Court had ordered status quo on possession of that land in a pending writ petition.

A Chain of Routine Failures

Four gates, each passable on its own:

- A Collector's allotment letter read as proof of encumbrance-free possession.
- No court-record check before the NIT went out.
- Earnest money and security collected from bidders on a site nobody could lawfully enter.
- A twelve-month completion clock started regardless.

Every step was somebody's routine. Together they produced a contract incapable of performance.

Public Policy Argument Fails in High Court

Union of India argued before the 23rd District Judge, Jabalpur that the resulting arbitral award was contrary to public policy.

That worked at the district level. It failed at the High Court.

Justice Vivek Agarwal held that the department's silence on the stay, and its failure to verify land status before floating the NIT, sits outside Explanation 2 to Section 34(2)(b)(ii).

Gross negligence by instrumentalities of the Central Government is not fraud, not corruption, not a contravention of the fundamental policy of Indian law, not a conflict with basic notions of morality.

Contractor Recovers, CPWD Bears Cost

The contractor recovers. Advocate Falgun Yadav appeared for Laxman Sharma; Dy. Solicitor General Suyash Mohan Guru for the Union.

The cost of the department's own pre-tender failure lands on CPWD, with interest running from the original award.

The Operative Finding

The operative line deserves circulation in every tender cell.

The Bench said the instrumentalities of the Central Government should not have ventured to float the NIT, call offers and allot the work to a successful bidder without ensuring the correct status of the project land in the courts of law.

A finding of procedural failure, recorded in a judgment that offers no remedy against the party that committed it.

Section 34 Cannot Be Post-Award Due Diligence

Section 34 cannot function as post-award due diligence.

A defective tender that survives arbitration becomes a payment obligation, and hindsight about the land file does not convert it into a public policy challenge.

Whether the land was allotted is settled. Whether it is litigable is not.

For every state PWD, CPWD circle and municipal tender cell holding an allotment letter, that verification belongs in the pre-NIT checklist next to the cost estimate.

Skip it, and the bill arrives twice: once at the arbitration, once at the treasury.