Court says SHC overlooked contractual dispute procedures and relevant WAPDA and NAB laws
The Federal Constitutional Court (FCC) on Monday set aside all Sindh High Court (SHC) orders on the Nai Gaj Dam project and restrained the courts from interfering with its construction until its completion, ruling that further litigation should not delay a project of vital public importance.
The Nai Gaj Dam project in Sindh’s Dadu district was launched in 2009 at an estimated cost of Rs 17 billion. to support irrigation, conserve water and rehabilitate Lake Manchar.
The project has since faced repeated delays due to design changes, cost revisions, funding constraints and disputes between the federal and provincial governments over revised funding arrangements.
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 in connection with the construction contract must be resolved through the mechanism agreed upon by the contracting parties rather than through judicial intervention.
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“The present case involves a project of immense public importance undertaken with public funds for purposes of irrigation, rehabilitation of Manchar Lake, agricultural development and water conservation,” the court observed.
While contractual rights deserve protection, it added that disputes should be resolved in a manner that does not unduly impede the timely completion of critical public infrastructure.
The court held that the SHC had issued its orders without properly 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 Acts.
It further observed that the jurisdiction of the High Courts under Article 199 of the Constitution could not be extended beyond constitutional limits and warned that such judicial overreach could result in a miscarriage of justice.
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The FCC allowed the appeals and set aside the SHC’s judgment of 27 May 2025 along with its orders of 6 October 2023 and 13 June 2025. The court also disposed of Constitutional Challenge No. 64 of 2018 and all pending applications.
The judgment directed WAPDA to decide within 15 days any request of the contractor expressing its willingness to resume and complete the project.
Such request must be filed within one week of the judgment and include an obligation 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 assess the remaining scope of work and determine a reasonable extension of time in accordance with the contractual provisions.
It added that if the contractor failed to comply with its contractual obligations, WAPDA would be free to re-tender the remaining works in accordance with the law.
