Court says SHC ignored contract dispute procedures and relevant laws of WAPDA and NAB
The Federal Constitutional Court (FCC) on Monday quashed all orders of the Sindh High Court (SHC) related to the Nai Gaj Dam project and restrained courts from interfering in its construction till completion, ruling that fresh litigation should not delay a project of major public importance.
The Nai Gaj Dam project in Dadu district of Sindh was launched in 2009 with an estimated cost of Rs 17 billion to support irrigation, conserve water and rehabilitate Lake Manchar.
Since then, the project has faced repeated delays due to design changes, cost reviews, funding limitations and disputes between the federal and provincial governments over revised funding agreements.
The bench, comprising Chief Justice Aminuddin Khan and Justice Ali Baqar Najafi, was hearing petitions filed by the Water and Power Development Authority (WAPDA).
The 17-page judgment held that disputes arising out of the construction contract should be resolved through the mechanism agreed upon by the contracting parties and not through judicial intervention.
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“The present matter involves a project of immense public importance undertaken with public funds for the purposes of irrigation, rehabilitation of Lake Manchar, agricultural development and water conservation,” the court observed.
While contractual rights deserve protection, he added, disputes must be resolved in a way that does not unnecessarily impede the timely completion of critical public infrastructure.
The court held that the SHC had issued its orders without adequately considering the applicable legal framework, including the dispute resolution mechanism under the contract and the relevant provisions of the WAPDA Act and the National Accountability Bureau laws.
It further observed that the jurisdiction of the high courts under Article 199 of the Constitution could not be extended beyond the constitutional limits, and warned that such judicial overreach could lead to miscarriage of justice.
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By allowing appeals, the FCC set aside the SHC’s ruling of May 27, 2025, along with its orders of October 6, 2023 and June 13, 2025. The court also disposed of Constitutional Petition No 64 of 2018 and all pending applications.
The judgment directed WAPDA to decide within 15 days any application submitted by the contractor expressing its willingness to resume and complete the project.
Such request must be submitted within one week of the ruling and include a commitment to complete the remaining work in accordance with the original contract, the arbitration award, the court orders issued on February 19 and July 31, 2021, and the memorandum of understanding signed on September 21, 2021.
The court further ordered WAPDA to evaluate the remaining scope of work and determine a reasonable extension of time in accordance with the contractual provisions.
He added that if the contractor failed to fulfill its contractual obligations, the WAPDA would be free to re-tender the remaining works in accordance with the law.
