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Delays and Payment Claims in Construction Contracts in Bangladesh: Disputes and the Legal Framework

Delays and Payment Claims in Construction Contracts in Bangladesh: Disputes and the Legal Framework

Why delay and payment disputes dominate

Most construction disputes in Bangladesh come down to two questions: who is responsible for the project finishing late, and who owes whom how much money. The two are tied together. An employer who withholds payment slows the work; a contractor who finishes late faces liquidated damages that are deducted from its bills.

These disputes arise in private building projects, real estate developer–landowner arrangements, and above all in public works for bodies such as RHD, LGED, PWD, RAJUK and city corporations. Contractors often face unpaid running bills, frozen retention money and refused extensions of time. Employers face abandoned sites, defective work and contractors who claim far more than the agreed price.

This article explains the law that governs these disputes, the claims each side can make, and the routes to resolve them. The outcome of a dispute is very often decided long before it reaches an arbitrator or court — by the notices, records and letters exchanged while the work is still going on.

The legal framework

Bangladesh has no dedicated construction statute or security-of-payment law. Rights come from the contract itself, read with general legislation.

SourceWhat it governs in delay and payment disputes
Contract Act, 1872Time for performance (s.55), reciprocal promises and prevention (ss.53, 67), damages (s.73), liquidated damages and penalties (s.74), payment for work accepted under a failed contract (ss.65, 70)
Public Procurement Act, 2006 (as amended by the 2025 Ordinance) and Public Procurement Rules, 2025Contract management, payment, extension, termination and complaints in public works. The PPR 2025 replaced the PPR 2008 from 28 September 2025 (BPPA)
Standard contract formsPW3 and other CPTU/BPPA standard tender documents for public works; FIDIC forms on donor-funded projects (World Bank, ADB, JICA)
Arbitration Act, 2001Conduct of arbitration, interim measures, setting aside and enforcing awards
Specific Relief Act, 1877Injunctions, specific performance and declarations
Code of Civil Procedure, 1908Money suits, interim injunctions, and court-annexed mediation (s.89A)
Limitation Act, 1908Time limits for suits and arbitration claims

The contract is always the starting point. Its clauses on time, extension, payment certificates, notices and dispute resolution usually decide who wins. The statutes fill gaps and set limits — for example, a court will not enforce a delay "penalty" beyond reasonable compensation.

Delay disputes

The central question in any delay dispute is cause. The law treats delay very differently depending on whose risk it was.

Type of delayTypical causesContractor's position
Employer-causedLate site handover, land acquisition problems, late drawings or approvals, utility shifting, variations, late paymentEntitled to extension of time and usually to extra cost
Neutral (excusable)Force majeure, exceptional weather, hartal or political unrest, change in lawUsually extension of time, but no extra cost unless the contract says so
Contractor-causedPoor mobilisation, shortage of labour, materials or funds, defective workNo extension; liable for liquidated damages

Is time of the essence? (Section 55)

Under section 55 of the Contract Act, if time is of the essence and the contractor misses the date, the employer may treat the contract as voidable. If time is not of the essence, the contract survives but the employer can claim compensation for the loss caused by delay.

In construction, time is usually not treated as of the essence where the contract provides for extensions of time and liquidated damages. Those clauses show that the parties expected late completion to be compensated, not to end the contract.

Section 55 also has a trap for employers. If the employer accepts late performance, it cannot later claim compensation for the delay unless it gave notice of its intention to do so at the time of acceptance. A clear reservation of rights in letters and certificates is therefore essential.

Prevention by the employer (Sections 53 and 67)

A party cannot hold the other to a deadline that it has itself prevented them from meeting. Section 53 entitles a contractor who is prevented from performing to compensation for its loss. Section 67 excuses the contractor's non-performance caused by the employer's neglect or refusal to give reasonable facilities.

In practice, if the employer delays the work and the contract has no workable mechanism to extend time, the original completion date can fall away. The employer may then lose its right to liquidated damages altogether, and the contractor must only finish within a reasonable time.

Extension of time

Most standard forms set out the grounds for extension and a procedure. Typically the contractor must give notice within a fixed period, then submit details and supporting records. Under FIDIC forms, the notice period is 28 days, and a late notice can bar the claim entirely.

The Engineer or Project Manager must assess the claim fairly and decide within the contractual time. A refusal or silence is itself a decision that can be referred to the contract's dispute procedure.

Liquidated damages (Section 74)

Construction contracts usually fix delay damages as a percentage of the contract price per day or week, subject to a cap (commonly 10%). Section 74 of the Contract Act allows the employer to recover reasonable compensation up to the named amount, whether or not actual loss is proved.

The named amount is a ceiling, not a guaranteed sum. A court or tribunal awards only what is reasonable in the circumstances, and it will not enforce a sum that is really a penalty. Employers should be ready to show the delay was the contractor's fault and that the rate is a genuine pre-estimate of loss.

Contractors commonly resist liquidated damages by showing concurrent employer delay, a pending or wrongly refused extension claim, or the employer's acceptance of the works without reserving its rights.

Payment claims

Payment disputes usually fall into a handful of recurring categories.

ClaimWhat it isCommon points of dispute
Running (interim) billsMonthly or stage payments for work done, certified by the EngineerUnder-measurement, delayed certification, payment held back after certification
Retention moneyA percentage of each bill held as security, released on completion and after the defects periodRelease refused or delayed long after the defects period ends
VariationsAdditional or changed work instructed by the employerInstructions given orally or by site staff, no agreed rate, work done before formal approval
Price adjustmentChanges in the cost of steel, cement, bitumen, fuel or labour, where the contract allowsWhether the clause applies, which index and base date to use
Delay and disruption costsIdle plant and labour, extended site overheads, financing costs caused by employer delayProof of actual cost and of causation
Final billSettlement of all sums due on completionDeductions, counter-claims, liquidated damages set-off
InterestCompensation for late paymentWhether the contract provides a rate; the tribunal's discretion

Certification and the right to be paid

Under most standard forms, the contractor's right to payment is linked to the Engineer's certificate. A certified sum is generally a debt due within the contractual period. The employer cannot simply refuse to pay it without a contractual ground, such as a properly notified deduction.

Where the Engineer refuses or fails to certify, the contractor is not left without a remedy. The certification decision can be challenged under the contract's dispute procedure, and a tribunal can open up and review it.

Deductions at source and set-off

Payments on public contracts are made net of income tax and VAT deducted at source. Contractors should check that deduction certificates are issued, as these are needed for their own tax returns.

Employers often set off liquidated damages or counter-claims against running bills. A set-off is only valid if the contract allows it and the sum is properly established. A disputed and unquantified counter-claim is a weak ground for withholding certified amounts.

Payment where the contract does not cover the work

Where a contractor does extra work at the employer's request without a formal variation, section 70 of the Contract Act may still help. A person who lawfully does something for another, not intending to do so gratuitously, is entitled to compensation where the other enjoys the benefit.

This "quantum meruit" claim is also important when a contract is void or is discovered to be unenforceable. Section 65 requires a party who received an advantage under such an agreement to restore it or compensate for it.

Interest on late payment

Many standard forms provide for interest or financing charges on late payment. Where the contract is silent, an arbitral tribunal or court can still award interest in its discretion. Contractors should claim interest expressly and from a stated date.

Public works contracts

Government contracts follow the Public Procurement Act, 2006 and its rules, alongside the contract. The Act was substantially amended by the Public Procurement (Amendment) Ordinance, 2025, and new Public Procurement Rules, 2025 replaced the 2008 Rules with effect from 28 September 2025 (BPPA).

The 2025 reforms made e-GP mandatory for all public procurement and introduced beneficial ownership disclosure and a debarment board (Financial Express). Contracts signed before the new Rules took effect may still be governed by the PPR 2008 and the standard documents then in use. The applicable version must be checked for every contract.

Points that matter most in delay and payment disputes on public works:

Contract documents prevail. The General and Particular Conditions of Contract in the standard tender document set the extension, payment, price adjustment and liquidated damages terms.

Approvals are layered. Extensions and variations above certain limits need approval from authorities higher than the Project Director, which is a frequent source of delay. Work done before approval is a common payment risk.

Performance security and advance payment guarantees. Encashment of bank guarantees is a frequent flashpoint when an employer alleges delay or default. Courts will restrain a call on an unconditional guarantee only for established fraud or irretrievable harm (ABB India v PGCB, discussed below).

Termination and debarment. An employer may terminate for default and seek debarment. A contractor facing termination should respond in writing promptly, as the record will be scrutinised later.

Joint ventures. Partners in a JV are usually jointly and severally liable to the employer, so internal JV disputes over delay or money do not reduce liability to the employer.

A contractual dispute with a public body is normally resolved through the contract's dispute clause, usually arbitration. The High Court Division's writ jurisdiction is generally not available for pure contractual claims (CMECC-BEL JV v Bangladesh, 2025), but it may be where a public body acts arbitrarily, in breach of statute or in bad faith in the tender or termination process.

Landowner–developer disputes

In Dhaka, Chattogram and other cities, much residential construction is built under joint venture agreements. The landowner contributes the land, the developer builds, and the finished flats and car parks are shared in an agreed ratio. These arrangements are governed by the Real Estate Development and Management Act, 2010, its 2011 Rules, and the Contract Act, 1872.

Common causes of dispute

DisputeTypical complaint
Delay in completion and handoverBuilding unfinished years after the agreed date; landowner's share not handed over
Interim rent and signing moneyMonthly accommodation rent to the landowner stopped or unpaid; signing money unpaid
Sharing ratio and allocationDisagreement over which floors, flats or car parks belong to whom, or over extra floors built
Deviation from approved planConstruction beyond the RAJUK or CDA approved plan, or contrary to the Building Code, putting the whole building at risk
Quality and specificationMaterials, fittings and finishes below what the agreement promised
Sale of the landowner's shareDeveloper sells or mortgages flats allocated to the landowner
Landowner's defaultDelay in handing over vacant possession, title defects, refusal to sign documents, or revoking the power of attorney mid-project
AbandonmentDeveloper stops work for lack of funds and leaves a half-built structure

The Real Estate Development and Management Act, 2010

The Act (Act No. 48 of 2010) applies to every private and public–private real estate project. It does not apply to wholly government-run projects (section 3). It also binds individuals who build flats on their own land for sale (section 7). For projects already under way when it came into force, the Act applies without overriding the parties' existing agreements (section 37) (Act text).

The provisions that matter most between landowner and developer:

SectionWhat it requiresWho it protects
5Every developer must be registered with the relevant authority (RAJUK, CDA, KDA, RDA, city corporation, pourashava or NHA) or, to operate nationwide, with the Government. Registration lasts five yearsLandowner
6Developer must not advertise or sell before project approval, and must show buyers the approvals and title documentsLandowner and buyers
9(3)–(5)The landowner's power of attorney must let the developer execute sale deeds for the developer's share. If no such power was given, the landowner must sign the buyer's deed within 15 days of the developer's written request. If the landowner fails, the developer may execute the deed itself as if it were the ownerDeveloper
10The parties must sign a written joint venture agreement. It must state the developer's share, the condition for the power of attorney, and the dates for starting and finishing the work. Work must start and finish as the agreement saysBoth
11(2)(c)Developer must repair construction defects at its own cost for at least 2 years after handoverLandowner and buyers
11(3)Developer must maintain the building for at least 1 year after handover, as agreedLandowner and buyers
11(4), 18(5)No deviation from the approved plan that reduces facilities or alters common space; no change to the approved plan without the authority's approvalLandowner and buyers
16(2)Developer may mortgage the building under construction only with the landowner's consent, and must release the mortgage before executing transfer deedsLandowner
18(2)–(3)Design and supervision by qualified architects and engineers, following the Building Construction Rules and the Bangladesh National Building CodeBoth

The development agreement and power of attorney should both be registered. An unregistered agreement can block a suit for specific performance and weaken either party's case.

Section 15 is often cited in landowner disputes, but it governs a developer's failure to hand over a flat to a buyer. It requires a refund of the price paid with the agreed compensation, or 15% if none is agreed, within six months. The landowner's delay compensation comes from the development agreement and the Contract Act, backed by section 30.

Offences and penalties

SectionOffenceMaximum penalty
19Carrying on real estate business without registration2 years, Tk 10 lakh fine, or both
20Starting a project, advertising or selling without approval2 years, Tk 10 lakh, or both
26Building outside the approved plan3 years, Tk 20 lakh, or both
27Fraud: signing a development agreement, then doing nothing or abandoning the work without reason and without paying the landowner any financial benefit2 years, Tk 20 lakh, or both
28Landowner failing to hand over possession of the land within the agreed time2 years, Tk 10 lakh, or both
29Landowner cancelling the registered power of attorney without at least 30 days' notice2 years, Tk 10 lakh, or both
30Developer failing to complete the work and hand over the landowner's share, or its possession, within the agreed time2 years, Tk 20 lakh, or both

Procedure for these offences:

They are compoundable, bailable and non-cognizable (section 32). A case therefore begins with a complaint petition before the Magistrate, not a police case, and it can be settled.

They are tried summarily by a First Class or Metropolitan Magistrate (section 33).

Where the developer is a company, any owner, director or officer with whose knowledge and participation the offence was committed is personally liable (section 31).

The court may order up to 50% of any fine recovered from a developer to be paid to the affected landowner or buyer (section 35).

Dispute resolution under section 36

Section 36 sets a mandatory sequence for disputes between landowner, developer and buyer. It covers both breaches of their agreement and the offences under sections 21–25 and 27–30.

Amicable settlement. The parties must first try to settle the dispute between themselves (section 36(1)).

Notice of arbitration. If settlement fails because of the other party's non-cooperation, the aggrieved party serves notice of its intention to go to arbitration under the Arbitration Act, 2001 (section 36(2)).

Joint constitution of the tribunal. The recipient must join in forming the arbitral tribunal within 30 days of receiving the notice (section 36(3)).

Binding award. Notwithstanding the Arbitration Act, the award binds the parties and those claiming through them, and section 36(4) states that no party may object to it in any court.

Court as fallback. If the parties fail to form the tribunal within that time, either party may bring the dispute before the competent court (section 36(5)).

These provisions are actively litigated. The High Court Division has issued a rule asking why section 36, together with section 21A of the Specific Relief Act, should not be declared unconstitutional (Jago News). It has also repeatedly considered whether, when a party ignores a section 36 notice, the other party may apply to the District Judge under section 12 of the Arbitration Act to appoint arbitrators, or must sue under section 36(5) (C.R. No. 2444 of 2024; C.R. No. 5705 of 2024). The route must be chosen with care, as a wrong step can cost months on a maintainability objection.

Remedies available to the landowner

Arbitration or suit for damages. Claim the delay compensation and monthly rent fixed in the agreement, and damages under sections 73 and 74 of the Contract Act for losses caused by delay or breach.

Specific performance. Seek an order compelling the developer to complete the building and hand over the landowner's share under the Specific Relief Act, 1877, provided the agreement is registered.

Injunction. Seek an urgent order restraining the developer from selling, mortgaging or allotting the landowner's flats, or from building beyond the approved plan. Interim relief is available from the court under section 7A of the Arbitration Act, or under Order XXXIX of the Code of Civil Procedure in a suit.

Cancellation and declaration. Sue to cancel deeds executed for the landowner's share without authority (section 39, Specific Relief Act), and for a declaration of title (section 42).

Criminal complaint. File a complaint before the Magistrate under section 27 (abandonment), section 30 (failure to hand over the landowner's share) or section 26 (deviation from the approved plan). Directors can be personally liable, and up to half of any fine may be paid to the landowner.

Defect and maintenance claims. Require repair of construction defects for at least 2 years, and maintenance for at least 1 year, after handover (section 11).

Regulatory complaint. Report unapproved construction or plan deviation to RAJUK or the relevant authority, which can act against the developer and its registration.

Termination. End the agreement for fundamental breach, in line with its termination clause, and appoint a new developer. Any cancellation of the registered power of attorney must give at least 30 days' notice (section 29).

Remedies available to the developer

Arbitration or suit for damages. Recover wasted costs and loss of profit under section 73 of the Contract Act where the landowner breaches the agreement.

Extension of time. Where delay is caused by the landowner, for example through late vacant possession, title defects, family disputes or refusal to sign documents, the developer can resist delay claims and seek extra time (sections 53 and 67, Contract Act).

Executing buyers' deeds. If the landowner will not sign deeds for the developer's share, serve a written request. If the landowner does not comply within 15 days, the developer may execute the deeds itself (section 9(4)–(5)).

Specific performance and injunction. Seek an order compelling the landowner to perform the agreement, and restraining the landowner from dispossessing the developer, selling the land or appointing another developer.

Declaration on revocation. Challenge a cancellation of the power of attorney made in breach of the agreement or without the 30-day notice required by section 29.

Criminal complaint. File a complaint under section 28 (failure to hand over possession of the land) or section 29 (cancellation of the power of attorney without notice).

Recovery of money paid. If the agreement fails, recover signing money, rent and construction costs that have benefited the landowner under sections 65 and 70 of the Contract Act.

Before taking action

Criminal complaints under the Act are useful pressure, but they do not by themselves deliver the building or the money. In most cases, the decisive steps are a well-drafted section 36 notice, prompt interim relief to protect the flats or the site, and a damages or specific performance claim through arbitration or court.

Termination carries serious risk for both sides. A landowner who cancels the agreement and power of attorney without following the contract and the Act risks criminal liability and a damages claim. A developer who walks away risks prosecution and loses its investment.

Resolving the dispute

Most construction contracts set out a tiered procedure. Skipping a tier can give the other side a jurisdictional objection, so each step should be followed in order.

Contractual notice and claim. Notify the delay event or payment claim within the contract's time limit, with particulars and supporting records.

Engineer's or Project Manager's decision. The claim is assessed under the contract. Their determination binds unless challenged within the stated period.

Amicable settlement. Negotiation between senior representatives, often for a fixed period such as 28 days.

Adjudication or dispute board. Many standard forms provide for an Adjudicator; FIDIC forms use a Dispute Avoidance/Adjudication Board. Its decision is usually binding until revised in arbitration, and a notice of dissatisfaction must be given in time.

Arbitration. The final forum under nearly all construction contracts in Bangladesh, governed by the Arbitration Act, 2001.

Court proceedings. Limited to supporting and supervising arbitration, or to disputes with no arbitration clause.

Arbitration under the Arbitration Act, 2001

Where there is a valid arbitration agreement, a civil court must refer the parties to arbitration and cannot try the merits. Key court functions include:

appointing an arbitrator where a party refuses to do so (section 12);

granting interim measures, such as an order preserving a bank guarantee or site materials (section 7A); the tribunal may also order interim measures (section 21);

setting aside an award on limited grounds (sections 42 and 43), such as incapacity, invalid agreement, lack of notice, matters beyond the reference, or conflict with the public policy of Bangladesh;

enforcing an award as if it were a decree of the court (section 44).

The High Court Division has repeatedly described the setting-aside jurisdiction as narrow. A party who loses on the merits cannot simply re-argue the facts before the court.

Court proceedings and mediation

Where there is no arbitration clause, the claim is brought as a money suit or a suit for declaration and injunction. Courts must consider mediation under section 89A of the Code of Civil Procedure. Court proceedings are generally slower than arbitration for technical claims.

Time limits

The Limitation Act, 1908 applies to arbitration as it does to suits. Claims for breach of contract or for the price of work done are generally subject to a three-year limitation period. Contractual time bars for notices are usually much shorter and are often the real deadline.

Key judicial decisions and principles

The decisions below, from the Appellate Division and the High Court Division, show how the principles in this article are applied in practice. Decisions marked "cited in" are taken from the discussion in a later judgment.

Delay, extensions and liquidated damages

An employer who causes delay must pay for it, and liquidated damages are decided under the contract's own terms.

Bangladesh Power Development Board v Arab Contractor (BD) Ltd, 6 ADC (2009) 952 (AD), cited in GTCL v Drilltec-Maxwell JV. The employer was late in handing over the site, leaving the contractor's plant and staff idle. The tribunal awarded about Tk 70 crore with 15% interest. The Appellate Division upheld the award, holding that the party responsible for the delay must pay compensation.

Jamuna Resort Ltd v Bangladesh Bridge Authority, 36 BLD (2016) 561 (HCD). The Authority was obliged to hand over the concession land on signing in 1999, but handed it over in stages between 2001 and 2009. It then cancelled the 30-year concession on about seven days' notice, although the contract required three months' notice to remedy any default. The High Court Division held that the lower court should have protected the concession pending arbitration.

Bangladesh Railway v Pamkaya (M) Sdn Bhd, 2 CLR (AD) (2014) 139, cited in GTCL v Drilltec-Maxwell JV. A dispute over liquidated damages for late delivery was decided by the tribunal under the contract's liquidated damages clause. The Appellate Division refused to interfere.

ABB India Ltd v Power Grid Company of Bangladesh Ltd, 9 LNJ (2020) 123 (HCD), on its facts. The employer granted a provisional extension "reserving rights to impose liquidated damages", then imposed the full 10% cap. This is a common pattern: a reservation of rights preserves the employer's claim, so the contractor must contest the delay in writing at once.

Risk in turnkey and EPC contracts

Under a turnkey contract, the contractor usually carries the risk of investigating the site. Any claim against the employer must be raised during the contract, not first in the arbitration.

Gas Transmission Company Ltd v Drilltec-Maxwell Joint Venture, Arbitration Application No. 2 of 2020 (HCD, 24.06.2021), 9 LNJ (2020) 168. The contractor twice failed to drill a gas pipeline under the Padma because of buried obstructions near the Hardinge Bridge. A majority tribunal held that the employer had misrepresented the site investigation and awarded damages. The High Court Division set aside all the awards. Under the turnkey contract, investigation was the contractor's responsibility, and the contract allowed extra time but not extra cost for unforeseen conditions. The misrepresentation claim had never been raised during the contract or in the notice of arbitration, so the tribunal had decided a dispute outside the submission (section 43(1)(a)(iv)).

Variations and payment claims

A variation needs the agreement of both parties. With a government employer, it must be made in writing by an officer with authority to make it.

Chairman, BT & T Board v Bazlur Rahman, 6 BLD (1986) 336 (HCD). A clearing contractor, troubled by incomplete documents from the employer, billed at an enhanced commission instead of the agreed tonnage rate. Officials had only said the request was "under examination" and would go to higher authority. The High Court Division held that this was not acceptance of a variation, and that an oral agreement cannot bind the Government.

In the same case, the Court held that quantum meruit under section 70 of the Contract Act applies only where the agreed rates have been abandoned. That was the position in Bengal Nagpur Railway v Ruttanji Ramji, AIR 1938 PC 67. Absent an agreed rate, trade usage or statute, interest for the period before the suit is not recoverable as damages. The decree, which carried 15% interest, was set aside and the contractor was left to claim at the contract rates.

Bank guarantees

An unconditional bank guarantee is a separate contract between the bank and the employer. Courts will rarely stop the employer from encashing it.

ABB India Ltd v Power Grid Company of Bangladesh Ltd, 9 LNJ (2020) 123 (HCD). The contractor sought to stop encashment of retention guarantees pending arbitration over liquidated damages. The High Court Division held that section 7A of the Arbitration Act does not reach a guarantee to which the contractor is not a party. It also held that an injunction is available only for established fraud or irretrievable harm, meaning a loss that could not be recovered even if the contractor won. Damage to business reputation was not enough, and the Rule was discharged with Tk 10 lakh costs. The Court relied on Fatullah Agro-Product Industries v BADC, 17 BLD (AD) 49.

Some earlier High Court Division decisions did restrain encashment, including Summit Bibiyana v Bangladesh and Drilltec-Maxwell JV v GTCL, 21 BLC 122. ABB India treated those as decided without considering the guarantee's independence. The wording of the guarantee, conditional or unconditional, is therefore decisive.

Following the contract's dispute procedure

The courts enforce the dispute procedure the parties agreed. They also expect objections to be raised at the first opportunity.

M/s Concord Engineers & Construction Ltd v Chief Engineer, RHD, 3 ADC (2006) 23 (AD). RHD cancelled a Dhaka flyover contract a few months after signing. The contract required disputes to go first to the Additional Chief Engineer, then to an arbitrator appointed by the Chief Engineer. Instead, the contractor appointed its own arbitrator, who proceeded ex parte and awarded Tk 15.35 crore. The Appellate Division held that the award was without jurisdiction and a nullity, and could be challenged without regard to limitation or the deposit requirement. The case arose under the Arbitration Act, 1940, but the lesson applies today.

Jamuna Resort Ltd v Bangladesh Bridge Authority, 36 BLD (2016) 561 (HCD). Arbitration is deemed to commence when one party serves notice referring the dispute to arbitration (section 27). The 30-day route to the court under section 12(4) applies only where the contract has no agreed appointment procedure; otherwise section 12(7) applies, with no fixed time limit. Once arbitration has commenced, the court can grant interim measures under section 7A to preserve the subject matter.

Joinal Abedin Jamal v Noor Afza, 63 DLR (2011) 432 (HCD). A purchaser who had been allowed to obtain RAJUK approval and allot spaces in a Nawabpur property paid Tk 37.5 lakh, but did not receive the property. The District Judge appointed a sole arbitrator, and the sellers took part in the arbitration without objecting. The award ordered a refund with 6% interest. The High Court Division held that the sellers had waived any objection to the appointment under section 6 by not raising it under sections 13, 14 or 19.

Challenging an arbitral award

The court is not a court of appeal from the tribunal, but it will intervene where a ground under section 43 is made out.

In GTCL v Drilltec-Maxwell JV, the High Court Division held that it cannot take fresh evidence or rehear the case. It may, however, examine the tribunal's findings to see whether they are perverse, meaning based on misreading or ignoring the evidence. Such an award is "prima facie opposed to the law" under section 43(1)(b)(ii).

The same judgment confirms that a majority award is valid without the dissenting arbitrator's signature, provided the award states the reason for the missing signature (section 38(2)).

In BPDB v Arab Contractor, the Appellate Division confirmed that an award will be disturbed only on limited grounds, such as reliance on inadmissible evidence or an error of legal principle.

Writ petitions are no substitute for arbitration

CMECC-BEL JV v Government of Bangladesh, Writ Petition No. 8220 of 2024 (HCD, 09.03.2025). A sub-contractor on the Jet A-1 pipeline project challenged a ministry directive and BPC's termination of the EPC contract. The High Court Division held the writ not maintainable. The sub-contractor had no privity with BPC, the dispute concerned a commercial contract with disputed facts, and arbitration was already under way. The Court applied the Appellate Division's approach in Superintendent Engineer, RHD v Md. Eunus & Brothers, 16 BLC (AD) 73.

Landowner–developer disputes and title

A development agreement is only as good as the landowner's title and the land's legal status.

Morsalin Khan v Bangladesh, 76 DLR (2024) 94 (HCD). Office-bearers of an orphanage signed a development agreement and power of attorney with a real estate company over government land held on short-term lease, with a bar on transfer. The developer was to take 78% of the building. The Court held that a person without title cannot agree to transfer the land, and declared the agreement and power of attorney void ab initio. A letter relied on to show a perpetual lease was found to be forged, and no final RAJUK approval was proved. The building under construction was confiscated for the orphanage, with no compensation to the developer.

Faridul Alam v Bangladesh, 30 BLD (2010) 500 (HCD). The lessee of a Cox's Bazar hotel-zone plot appointed a developer by agreement and registered power of attorney, and the developer spent about Tk 4.88 crore on foundations. When the Government cancelled the leases, the High Court Division held that they had been granted in breach of the ecologically critical area declaration under the Environment Conservation Act, 1995. The Rules were discharged. The Court directed a refund of the lease money and an engineers' commission to assess the land and the construction costs.

Md. Sarwar Mirza v Sajedul Alam, Civil Revision No. 6797 of 2023 (HCD, 06.08.2025). A buyer developing land for a housing project sued for specific performance after the one-year agreement period had run. The High Court Division refused to reject the plaint at the outset. Time is not normally of the essence in contracts for the sale of land (Amir Hossain Sowdagar v Md. Harunur Rashid, 65 DLR (AD) 130). Transactions after expiry could show the agreement was still being performed. The section 21A deposit rule in Abul Kalam v Md. Mohiuddin, 69 DLR (AD) 239, was applied to the facts, as most of the price had been paid and the sellers' title records were incomplete.

Amin Ahmed v State, 69 DLR (2017) 268 (HCD). In possession disputes over land, a Magistrate who learns that a civil suit is pending should first direct the party to seek an injunction from the civil court. Orders under sections 144 or 145 of the Code of Criminal Procedure are for a real risk of breach of the peace. This matters where a landowner and developer contest possession of the site.

Practical guidance

Most delay and payment disputes are won or lost on the paper trail. These steps protect your position before any dispute begins.

For contractors

Give written notice of every delay event and every additional cost as soon as it happens, within the contractual period.

Never act on oral instructions for extra work; confirm them in writing the same day.

Keep an updated programme, daily site diaries, photographs, labour and plant records, and correspondence logs.

Submit extension of time claims with a clear analysis showing how each event delayed completion.

Chase certification and payment in writing, and claim interest expressly.

Before signing a final bill or "no claim" certificate, make sure pending claims are expressly preserved.

For employers

Hand over the site, drawings and approvals on time, or record why you could not.

Decide extension claims promptly and with reasons; silence weakens your liquidated damages position.

Reserve your right to liquidated damages in writing when you accept late completion or issue a completion certificate.

Make deductions only on contractual grounds and notify them clearly.

Before calling a performance guarantee or terminating, follow the contract's notice procedure exactly.

How The Justice Corner can help

The Justice Corner advises contractors, joint ventures, developers and employers on construction contracts in Bangladesh, from drafting to final award. Our work in this area includes:

reviewing contracts and tender documents before signing, including time, payment, liquidated damages and dispute clauses;

drafting delay notices, extension of time claims, variation and payment claims, and replies to show-cause and termination notices;

advising on liquidated damages, retention and bank guarantee disputes, including urgent interim relief;

representing clients in negotiation, adjudication, arbitration and related proceedings before the District Courts and the High Court Division;

resolving disputes between joint venture partners, and between landowners and developers under the Real Estate Development and Management Act, 2010.

If your project is running late, or bills and retention remain unpaid, early advice is the most cost-effective step. Contact us before the next contractual deadline passes.

Mohammad Imam Hossain (Tareq) Advocate, Supreme Court of Bangladesh Barrister-at-Law (Middle Temple) Head of Chamber, The Justice Corner, Dhaka

This article provides general information and is not legal advice. The outcome of any dispute depends on its contract and facts.