Incidental Civil Construction Doesn't Make Waste Management Contract A Works Contract: Madhya Pradesh HC

The Madhya Pradesh High Court on 3 September reiterated that a waste management contract does not become a “works contract” merely because it involves incidental civil construction, and that disputes arising from such a contract can be referred to arbitration under the Arbitration and Conciliation Act, 1996.

Justice Deepak Khot allowed Susajja JV Anand LLP's application against Bhopal Municipal Corporation and appointed former Calcutta High Court Chief Justice Sujoy Paul as the sole arbitrator to resolve the contractual dispute between the parties. The Bench held:

“Therefore, following the view taken by the Hon'ble Apex Court in the case of Ecogreen Energy (supra) as well as by this Court in the case of M/s PKH M.P. Convention Center (supra), this Court is also of the considered opinion that the contract in question is not a work contract, as it deals dominantly for the purpose of waste management and the civil work which is incidental to the said management cannot be said to be a works contract. Therefore, the present application is allowed.”

The dispute arose from a 2024 Request for Proposal issued by Bhopal Municipal Corporation for remediation of old waste through bioremediation and biomining, disposal of residual waste, and processing and disposal of fresh waste at Adampur Chawni, Bhopal. Susajja JV Anand LLP was declared the successful bidder through a Letter of Intimation dated 3 October 2024, following which the parties executed the contract.

After the project site was handed over, Susajja claimed that it encountered several infrastructure deficiencies, including a damaged tipping floor, absence of a windrow platform, inadequate sheds, drainage and internal roads, damaged boundary walls and landfill-related issues.

A dispute also arose over the quantity of legacy waste. While the RFP estimated 2,50,000 MT, a MANIT survey allegedly assessed approximately 10,63,000 MT. The Corporation cancelled MANIT's appointment on 17 December 2024.

Susajja issued an intent-to-terminate letter on 7 July 2025, stating that Rs. 4.34 crore remained outstanding towards fresh-waste processing invoices. It terminated the contract on 22 July 2025, and the site was handed over on 24 July. The Corporation subsequently issued its own termination letter dated 11 August 2025, disputing Susajja's termination and alleging contractual breaches.

After the contractual dispute-resolution mechanism failed, Susajja invoked arbitration on 12 February 2026 and approached the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996.

Bhopal Municipal Corporation argued that the contract involved excavation and remediation of waste, dewatering, reclamation, construction of sheds and platforms, landfill and drainage works, and operation and maintenance of facilities.

It therefore contended that the agreement was a works contract and that disputes between the parties were required to be resolved by the Madhya Pradesh Arbitration Tribunal under the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983.

Susajja relied on the Supreme Court's 21 April 2026 decision in Ecogreen Energy Gwalior Pvt. Ltd. v. Municipal Corporation Gwalior, contending that incidental construction does not alter a contract whose dominant purpose is solid-waste management.

The High Court agreed that the nature and scope of the work covered by the agreement must be examined to determine whether it constitutes a works contract. It reiterated:

“From a reading of the aforesaid principle laid down by the Honorable Apex Court, it is demystified that the Court has to consider the nature and scope of the work which is agreed between the parties under the agreement and on consideration of nature of work, which is under the scope of the agreement, if the Court comes to the conclusion that it is not a work contract, the dispute can be referred by appointment of an Arbitrator under the Act of 1996.”

The Bench further held that even if the parties contemplated statutory arbitration under the 1983 Act, a contract that does not fall within the statutory definition of a works contract would not come within the jurisdiction of the Madhya Pradesh Arbitration Tribunal. The dispute could instead be referred to arbitration under the 1996 Act.

Accordingly, the High Court allowed Susajja's application and, with the parties' consent, appointed former Calcutta High Court Chief Justice Sujoy Paul as the sole arbitrator.

The arbitration will take place at Jabalpur, with the parties directed to deposit the applicable fees under the Madhya Pradesh Arbitration Centre Rules, 2019.

Appearances for petitioner (Susajja JV Anand LLP): Advocates Anshuman Singh, Anuj Shrivastava.

Appearances for respondent (Bhopal Municipal Corporation): Advocate S.M. Guru.