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contract dispute, bridge construction, frustration of contract, force majeure, bank guarantee, Calcutta High Court, Rahee GPT JV, Union of India, soil report, compensation
10 Mar, 2026
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Rahee - GPT (JV) & Ors. Vs. The Union of India & Ors.
As per case facts, plaintiffs were awarded a contract for bridge construction. They faced challenges like local insurgency, cement scarcity, and discovering hard rock strata not indicated in the initial
...soil report, making the well sinking method unfeasible and significantly more expensive than quoted. Despite requests for alternate methods or revised rates, the defendants issued termination notices and later encashed the performance bank guarantee. The plaintiff filed a suit challenging the termination and seeking compensation, arguing that the contract was frustrated due to unforeseen circumstances and faulty initial reports. The question arose whether the contract was frustrated by supervening impossibility due to unforeseen geological conditions and whether the termination of the contract and invocation of the bank guarantee by the defendants were justified. Finally, the Court ruled in favor of the plaintiffs, determining that the contract was frustrated by supervening impossibility and the defendants' actions were not justified. The suit was decreed in favor of the plaintiffs for various sums, including earnest money, security deposit, the bank guarantee amount, and pending bills, along with interest, and the defendants' counterclaim was dismissed.
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