Summary The Federal Constitutional Court ruled High Courts cannot rewrite contracts under constitutional jurisdiction, setting aside Sindh High Court rulings in the Nai Gaj Dam case.
ISLAMABAD (Dunya News) – The Federal Constitutional Court (FCC) has ruled that the constitutional jurisdiction of a High Court under Article 199 of the Constitution does not extend to resolving purely contractual disputes or rewriting agreements, arbitral awards or court decrees between parties, holding that courts cannot redefine the legal rights and obligations voluntarily agreed upon by contracting parties in the name of public interest.
A two-member Constitutional Bench headed by Chief Justice Aminuddin Khan and comprising Justice Ali Baqar Najafi issued a detailed judgment on Monday in the Nai Gaj Dam project case, setting aside the Sindh High Court’s judgments dated October 6, 2023, and May 27, 2025.
According to the detailed judgment approved for reporting, the court held that the Sindh High Court had exceeded its constitutional jurisdiction by modifying the arbitral award between the Water and Power Development Authority (WAPDA) and the contractor, the court decree based on that award, and the subsequent Memorandum of Understanding (MoU) executed between the parties.
The judgment stated that while exercising constitutional jurisdiction, courts cannot confer contractual benefits upon a party that it had not voluntarily accepted under the agreement.
The court further observed that the contractor had agreed to complete the project at 2018 prices and, therefore, was not legally entitled to seek additional payments on account of price escalation or inflation on the basis of subsequent recommendations made by the Pakistan Engineering Council.
The Federal Constitutional Court also held that the record established that the contractor had submitted a forged performance bank guarantee, a fact that was confirmed by the Bank of Punjab. Submission of a forged bank guarantee constituted a fundamental breach of the contract, and WAPDA was therefore legally justified in terminating the agreement.
The judgment further held that the Sindh High Court had no jurisdiction to interfere with or restrain investigations being conducted by the National Accountability Bureau (NAB), as proceedings relating to the alleged forged bank guarantee fell within the lawful jurisdiction of the accountability authorities.
The court observed that the Nai Gaj Dam project is of national importance for irrigation, agricultural development, hydropower generation and the rehabilitation of Manchhar Lake.
However, it emphasized that the significance of a public project does not empower courts to disregard the law or alter the terms of valid contractual agreements.
