In a significant commercial dispute ruling, the Tripura High Court has partly allowed an appeal filed by Hindustan Steelworks Construction Limited (HSCL), but ultimately directed the PSU to pay ₹1.26 crore in damages to a local contractor for arbitrary termination of a drain construction project in Agartala. The bench of Chief Justice M.S. Ramachandra Rao and Justice S. Datta Purkayastha delivered the judgment on September 26, 2025, following detailed hearings held in August.
Background
The case stemmed from two construction tenders issued by HSCL in 2012 for covering drains under the Urban Development Department of Tripura. The contractor, Mr. Dilip Kumar Kar of Agartala, claimed that despite starting the work after receiving “go-ahead” letters, HSCL unilaterally cancelled the contract midway without signing a formal agreement.
Mr. Kar alleged that he had already completed about one-fourth of the work before going to Chennai for medical treatment. During his absence, HSCL issued letters accusing him of abandoning the project and later rescinded the contract. The company then re-tendered the remaining work to another firm, M/s Pobi Technologies and Construction Pvt. Ltd.
The contractor sought ₹5.7 crore in compensation, while HSCL counter-sued, demanding ₹5 crore plus recovery of materials and alleged excess payments.
Court’s Observations
The Division Bench noted that while the contractor had indeed begun work based on HSCL’s communication, the company never executed a formal agreement. The judges observed that several contractual conditions were drawn from the Standard Bid Document (SBD), which both parties accepted, but “it is surprising how a government undertaking like HSCL could proceed with multi-crore public works without a signed contract.”
The court found that HSCL relied on Clause 109 of its General Conditions of Contract (GCC) to cancel the project-though that clause was not part of the signed or referenced documents. “Rescission of the contract based on Clause 109 was illegal,” the bench observed, calling the termination “arbitrary and unjustified.”
Rejecting HSCL’s argument that the contractor abandoned the site, the court also noted the absence of proof that key notices were ever properly served. The judges accepted that work worth ₹1.10 crore was already completed before cancellation.
Decision
The High Court recalculated the compensation for loss of profit at 15% of the remaining value of work, amounting to ₹1,26,41,700, instead of the ₹1.41 crore earlier awarded by the lower court. It further ordered HSCL to pay interest at 6% per annum from the date of the suit until full realization.
The bench upheld the trial court’s rejection of HSCL’s separate claim for recovery, noting that the company failed to prove material supply records or measurement registers. “We find no reason to disturb the lower court’s findings,” the judges concluded.
With that, the High Court partly allowed HSCL’s appeal against the compensation quantum but dismissed its recovery appeal entirely-ending the decade-long dispute over Agartala’s drain project.
Case: Hindustan Steelworks Construction Ltd. vs. State of Tripura & Anr.
Case Type: Commercial Appeal No. 01 of 2023 & Commercial Appeal No. 02 of 2023
Appellant: Hindustan Steelworks Construction Ltd. (HSCL), a Government of India undertaking
Respondents: The State of Tripura and Mr. Dilip Kumar Kar (Contractor)
Date of Judgment: September 26, 2025
