Prohibition clauses/ Exclusionary clauses in construction contracts

The Courts have consistently taken the view that such clauses would amount to a specific consent by the Contractor to accept only Extension in satisfaction of claim for delay losses, irrespective of whether delay was caused by the Employer or the Contractor and not be entitled for compensation.

However, there are a line of judgments that have taken a view that even though there is a contractual bar which prevents the Contractor from making a claim for compensation and interest, the Courts are not bound by the contractual bar, if it is found that the Contractor has, in fact, suffered losses as a result of such breach committed by the Employer. In such cases, the Contractors have been awarded compensation under sections 54, 55 and 73 of Indian Contract Act 1872 subject to Claimant having proved breach of contract, and consequential loss suffered by the Contractor.

1. Asian Techs Ltd V UOI (2009)

2. Bharat Drilling and Foundation Treatment Pvt Ltd V State of Jharkhand (2009)

3. Simplex Concrete Piles India Pvt Ltd V UOI (1982)