Dwaraka Das Vs. State of M.P

Factual and procedural background

In the early 1960s the Madhya Pradesh government gave a construction contract to Dwaraka Das for building a boys hostel at the Polytechnic in Ujjain. The work had to be finished within a fixed period but the state later cancelled the contract saying the contractor had completed almost nothing. Dwaraka Das went to court claiming he was owed money including compensation for the profit he would have earned if the contract had continued. The trial court partly agreed with him and ordered the state to pay a certain sum along with interest after the judgment. Dwaraka Das then asked the trial court to add interest for the time the case was actually going on in court calling it a small accidental mistake in the order. The trial court made that change. The state appealed and the high court reduced the total amount payable and also removed the extra interest for the court period. Dwaraka Das then approached the Supreme Court.

Dispute in question

The main arguments were whether the trial court was allowed to go back and add interest for the period the case was pending by treating it as a minor correction and whether Dwaraka Das could claim money for the expected profit he lost when the contract was cancelled even though he had not shown exact losses on paper.

Reasoning and decision of court

The Supreme Court held that once a judgment is delivered a court cannot use correction rules to change important parts of its decision unless there was a genuine accidental slip or typing error. In this case the trial court had clearly decided only future interest and not interest during the case so the later change was not a simple correction and the high court was right to set it aside. On the compensation side however the court said that when the government wrongly cancels a works contract the contractor is entitled to a reasonable amount for the profit he would have made and does not have to prove every single rupee of actual loss. The Supreme Court partly allowed the appeal and directed the state to pay Dwaraka Das a total of Rs 24 783 with future interest at six per cent from the date of the decree.

Dwaraka Das Vs. State of M.P., (1999) 3 SCC 500

Disclaimer: Donot treat this as substitute for legal advise as it may contain subjective errors.

Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi

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