M/S. Menakshi Con vs South Eastern Coalfields Limited (S E C … on 15 July, 2026

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    Chattisgarh High Court

    M/S. Menakshi Con vs South Eastern Coalfields Limited (S E C … on 15 July, 2026

    Author: Ramesh Sinha

    Bench: Ramesh Sinha

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                       CGHC010265042026                                2026:CGHC:29855-DB
                                                                                        NAFR
                                HIGH COURT OF CHHATTISGARH AT BILASPUR
                                               WPC No. 3673 of 2026
                       M/s. Menakshi Con a Firm Duly Registered Under Applicable Law,
                       Through its Managing Partner and Authorized Signatory Shri Anil Kumar
                       Bandhi, S/o Shri Bandi Pullaiah Aged About 52 Years Having Its
                       Registered Office At Dwarakamai 2nd Floor, H.No. 8-2- 269-S/ 8 Sagar
                       Society Street No. 1 Road No. 2 Banjara Hills, Hyderabad - 500034
                       Telangana.
                                                                                  ... Petitioner
                                                       versus
                       1 - South Eastern Coalfields Limited (SECL) Through Its Chairman
                       Managing Director, Having Its Registered Office At S E C L Bhawan,
                       Seepat Road, Bilaspur- 495006 Chhattisgarh
                       2 - The General Manager (Operations), South Eastern Coalfields
                       Limited, Kusmunda Area P.O. Kusmunda Colliery District- Korba
                       Chhattisgarh- 495454
                       3 - The General Manager (Contract Management Cell), South Eastern
                       Coalfields Limited, S E C L, Bhawan, Seepat Road Bilaspur- 495006
                       Chhattisgarh
                       4 - Coal India Limited (CIL) Through Its Chairman Cum Managing
                       Director, Having Its Registered Office At Coal Bhawan, Premises No.
                       04- M R Plot No. A F - III Action Area - 1 A, New Town, Rajarhat Kolkata
                       - 700156 West Bengal Acting
    
    ROHIT
                       5 - Union of India Through The Secretary, Ministry of Coal, Shastri
    KUMAR
    CHANDRA
    Digitally signed
                       Bhawan, New Delhi - 110001
    by ROHIT
    KUMAR
    CHANDRA
                                         2
    
    6 - HDFC Bank Ltd, Through its Branch Manager, Having Office at WBO
    Group 1st Floor 18/3 IT Pari, Gayatri Nagar, Mouza Parsodi Nagpur -
    440022
                                                       ... Respondents

    _________________________________________________________
    For Petitioner : Mr. Prafull N. Bharat, Senior Advocate
    assisted by Mr. Kaustubh Singh Thakur,
    Advocate
    For Respondents/SECL : Mr. Manoj Paranjpe, Senior Advocate
    assisted by Mr. Anumeh Shrivastava,
    Advocate
    For Respondent/UOI : Ms. Annapura Tiwari, Central Government
    Counsel

    Hon’ble Shri Ramesh Sinha, Chief Justice
    Hon’ble Shri Ravindra Kumar Agrawal, Judge

    SPONSORED

    Order on Board
    Per Ramesh Sinha, Chief Justice

    15.07.2026

    1. Heard Mr. Prafull N. Bharat, learned Senior Advocate assisted by

    Mr. Kaustubh Singh Thakur, learned counsel for the petitioner.

    Also heard Mr. Manoj Paranjpe, learned Senior Advocate assisted

    by Mr. Anumeh Shrivastava, learned counsel appearing for the

    respondents/SECL as well as Ms. Annapurna Tiwari, learned

    Central Government Counsel, appearing for respondent/ UOI.

    2. The present writ petition has been filed by the petitioner under

    Article 226 of the Constitution of India seeking following reliefs :

    “(i) That, this Hon’ble Court may graciously be
    pleased to allow the present writ petition preferred by
    the petitioner and issue an appropriate Writ, Order or
    Direction, more particularly a Writ of Certiorari,
    quashing and setting aside the Impugned Order dated
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    29.06.2026 bearing Ref. No. SECL/KA/GM(O)/26-

    bearing 27/67 (Annexure P/1);

    (ii) That, this Hon’ble Court may graciously be
    pleased to issue an appropriate Writ, Order or
    Direction, more particularly a Writ of Mandamus,
    directing Respondent No. 1 to discharge and release
    the Performance Bank Guarantee No.
    102GT02260700006 dated 11.03.2026, issued by
    HDFC Bank Ltd. (Respondent No.2), without invoking
    or encashing the same, and to return the original
    Bank Guarantee to the Petitioner;

    (iii) That, this Hon’ble Court may graciously be
    pleased to issue an appropriate Writ, Order or
    Direction directing Respondent No. 1 reconsider to
    Petitioner’s the dated 08.05.2026, 13.05.2026 and
    other representations connected representations,
    including the Petitioner’s invocation of the
    Government of India, Ministry of Finance, Department
    of Expenditure No. 1/3/2026-Memorandum Office
    PPD dated 29.04.2026, in accordance with law and
    after affording the Petitioner an adequate opportunity
    of hearing;

    (iv) That, this Hon’ble Court may graciously be
    pleased to issue an appropriate Writ, Order or
    Direction directing Respondent Nos. 1 and 4 not to
    initiate or proceed with any banning/debarment
    proceedings against the Petitioner in connection with
    the subject contract except strictly in accordance with
    the applicable Coal India Limited Guidelines on
    Debarment of Firms from Bidding and after complying
    with the principles of natural justice, including
    issuance of a show cause notice and grant of a
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    reasonable opportunity of personal hearing;

    (v) Pass such other or further order(s) as this
    Hon’ble Court may deem fit, proper and expedient in
    the facts and circumstances of the present case,
    including the award of costs.”

    3. The present writ petition has been filed by the petitioner

    challenging the legality and validity of the order dated 29.06.2026

    passed by respondent No.2, whereby the Letter of Acceptance

    (LOA) issued in favour of the petitioner has been cancelled, the

    Performance Security Deposit (PSD) amounting to Rs.49,19,184/-

    furnished by the petitioner through Bank Guarantee has been

    forfeited, the petitioner has been disqualified from participating in

    the Special Purpose Limited Tender (SPLT) process and liberty

    has been reserved to initiate further proceedings for

    banning/debarment of the petitioner.

    4. The dispute arises out of a tender floated by respondent No.1

    through the Government e-Marketplace (GeM) vide NIT No.

    26/GeM/203 dated 15.12.2025 bearing GeM Bid No.

    GEM/2025/B/7003365 for the work of “Hiring of HEMM for

    excavating Re-handling OB (not requiring drilling), loading into

    Tippers, Transportation and unloading the excavated material and

    silt, dumping, dozing, scraping/removal of Re-handling OB,

    preparation/maintenance of haul road, water sprinkling and

    spreading of material” at Kusmunda Open Cast Project,

    Kusmunda Area, Chhattisgarh. The tender was for a period of 60

    days involving excavation of 17,82,058 cubic metres of material at
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    a quantity per day of 29,701 cubic metres. The estimated cost of

    the work was Rs.13,65,63,612.29/- inclusive of GST. The tender

    documents specifically incorporated a Price Variation Clause

    (PVC), wherein the base diesel price was fixed at Rs.93.06 per

    litre as on 22.12.2025 at the nearest IOC/BP PSU retail outlet,

    and the said base price was a significant component for

    determination of the bid price and future adjustment of contract

    rates.

    5. The petitioner participated in the said tender process and

    submitted its bid at 85.01% of the estimated cost, i.e., 14.99%

    below the estimated value. Upon evaluation of the bids, the

    petitioner was declared as the successful bidder and respondent

    No.1 issued Letter of Acceptance bearing No.

    SECL/BSP/CMC/LOA/KSM_OBRH/GeM-203/2025-26/586 dated

    05.02.2026 in favour of the petitioner. Pursuant thereto, GeM

    Contract No. GEMC-511687716017645 was generated on

    05.02.2026. The total contract value was Rs.1,16,09,272.81/-

    inclusive of GST, and the service period was reflected as

    commencing from 15.02.2026 and ending on 14.04.2026. As per

    the terms of the contract, the petitioner was required to furnish

    Performance Security Deposit of Rs.49,19,184/-. After issuance of

    the LOA, respondent No.2 issued various reminders dated

    10.02.2026, 15.02.2026, 20.02.2026 and 24.02.2026 for

    submission of the PSD. Since the petitioner faced processing

    delays at HDFC Bank, Nagpur, it submitted a request dated
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    24.02.2026 seeking extension of time for furnishing the PSD. The

    said request was considered and accepted by respondent No.2

    vide communication dated 03.03.2026, whereby the time for

    submission of PSD was extended till 11.03.2026. In compliance

    with the said extension, the petitioner furnished the Performance

    Security Deposit through Bank Guarantee No.

    102GT02260700006 dated 11.03.2026 issued by HDFC Bank

    Ltd., Nagpur, for an amount of Rs.49,19,184/-, valid up to

    03.03.2027. Thereafter, the work site was handed over to the

    petitioner vide communication dated 17.03.2026 and the formal

    Work Order was issued on 20.03.2026.

    6. According to the petitioner, after issuance of the work order, it

    undertook necessary steps for mobilization of manpower and

    machinery for execution of the contract. However,

    commencement of the work was affected due to circumstances

    beyond the control of the petitioner, particularly the disruption

    caused in the global supply chain due to the ongoing West Asia

    conflict, which adversely affected transportation and availability of

    Heavy Earth Moving Machinery, spare parts and related

    equipment. The petitioner further contends that another serious

    impediment was the unprecedented increase in diesel prices. It is

    stated that the entire bid was prepared on the basis of the

    contractual base diesel price of Rs.93.06 per litre mentioned in

    the NIT. However, subsequently, the diesel price increased

    substantially to approximately Rs.140 per litre, resulting in an
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    increase of more than 50% from the base price. It is further

    pleaded that restrictions imposed on diesel allocation, limiting

    supply to approximately 300 litres per day against the project’s

    requirement of around 12,000 to 15,000 litres per day, created

    severe operational difficulties. The petitioner accordingly

    requested the respondents to clarify the applicable diesel rate and

    sought implementation of the Price Variation Clause incorporated

    in the contract.

    7. Respondent No.2 thereafter issued a notice dated 07.04.2026

    under Clause 6.1 of the General Terms and Conditions, requiring

    the petitioner to commence the work within 15 days, failing which

    action for forfeiture of Performance Security Deposit and

    debarment would be initiated. The petitioner submitted a detailed

    reply dated 18.04.2026 explaining the circumstances causing

    delay and assured that the machinery was in transit and the work

    would commence shortly. The petitioner also submitted

    representations dated 21.04.2026 and subsequent dates

    highlighting the diesel crisis and requesting assistance from the

    respondents for supply of diesel on a recoverable basis.

    8. The petitioner further relies upon the Office Memorandum dated

    29.04.2026 issued by the Ministry of Finance, Department of

    Expenditure, Government of India, whereby the West Asia conflict

    was recognized as a Force Majeure event and directions were

    issued to grant extension of contractual completion period without

    levy of penalty in eligible cases. The petitioner invoked the said
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    Force Majeure provisions by submitting representation dated

    08.05.2026 seeking extension of time. The petitioner also

    submitted documents demonstrating mobilization of resources,

    including details of vehicles and machinery, request for medical

    examination of workmen, list of deployed personnel and a detailed

    mobilization schedule.

    9. According to the petitioner, despite the aforesaid communications

    and documentary evidence demonstrating its bona fide intention

    to execute the work, respondent No.2 proceeded to pass the

    impugned order dated 29.06.2026 without considering the

    petitioner’s subsequent representations, without granting any

    further opportunity of hearing and without considering the

    applicability of the Force Majeure Office Memorandum. By the

    said order, the LOA was cancelled, PSD was forfeited and further

    adverse action was proposed against the petitioner. Hence, the

    present petition has been filed challenging the said action as

    arbitrary, unreasonable, contrary to the contractual terms, violative

    of principles of natural justice and unsustainable in law.

    10. Mr. Prafull N. Bharat, learned Senior Advocate appearing for the

    petitioner submits that the impugned order dated 29.06.2026

    passed by respondent No.2 is arbitrary, illegal and contrary to the

    terms and conditions of the contract as well as the material

    available on record. It is contended that the respondents have

    proceeded against the petitioner mechanically without

    appreciating the genuine difficulties faced by the petitioner and
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    without considering the fact that the delay in commencement of

    work occurred due to extraordinary circumstances beyond the

    petitioner’s control. Learned Senior Advocate submits that the

    petitioner was a successful bidder after participating in a

    transparent tender process and had quoted its rates strictly on the

    basis of the tender conditions, particularly the base diesel price of

    Rs.93.06 per litre and the Price Variation Clause incorporated in

    the LOA. It is argued that the respondents themselves recognized

    the importance of diesel price fluctuation by incorporating the PVC

    in the contract, and therefore, the petitioner was entitled to seek

    appropriate adjustment in view of the unprecedented escalation in

    diesel prices. The failure of the respondents to clarify the

    applicable diesel rate despite repeated requests has rendered the

    execution of the contract financially impossible and commercially

    unviable.

    11. Mr. Bharat further submits that the petitioner never committed any

    deliberate breach or abandoned the contract. On the contrary, the

    petitioner continuously acted in furtherance of the contract by

    furnishing the Performance Security Deposit within the extended

    period granted by the respondents, arranging machinery,

    mobilizing manpower, submitting details of vehicles and

    equipment, and taking steps for mandatory medical examination

    of workmen. It is contended that the findings recorded by

    respondent No.2 that the petitioner failed to take any tangible

    steps towards commencement of work are contrary to the
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    admitted documents available on record. It is further argued that

    the respondents failed to appreciate the impact of the West Asia

    conflict, which was subsequently recognized by the Government

    of India, Ministry of Finance, as a Force Majeure event vide Office

    Memorandum dated 29.04.2026. Learned counsel submits that

    the petitioner fulfilled the conditions prescribed in the said

    memorandum as it was not in default on 27.02.2026 and was, in

    fact, granted extension for submission of PSD by the

    respondents. Therefore, the petitioner was entitled to

    consideration of extension of time without imposition of penalty or

    forfeiture.

    12. Mr. Bharat contended that the action of forfeiting the Performance

    Security Deposit is wholly disproportionate and contrary to Clause

    6.1 of the contract, which permits forfeiture only when the

    contractor commits default without reasonable cause or valid

    reason. It is argued that in the present case, the petitioner had

    demonstrated sufficient and valid reasons for delay, which were

    neither considered nor dealt with by the respondents. It is further

    contended that the impugned order has been passed in violation

    of principles of natural justice. Learned counsel submits that after

    submission of detailed representations dated 08.05.2026,

    13.05.2026, 19.05.2026 and 26.05.2026 along with supporting

    documents, the respondents were required to consider the same

    and provide an effective opportunity of hearing before taking the

    extreme step of cancellation of LOA and forfeiture of PSD.
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    However, without considering the relevant material and without

    granting any opportunity of personal hearing, the impugned order

    has been passed. Learned counsel lastly submits that the

    impugned action is also arbitrary as the respondents have ignored

    their own conduct in granting extension for submission of PSD

    and thereafter abruptly resorted to cancellation and forfeiture. It is

    therefore prayed that the impugned order dated 29.06.2026 be

    quashed and the respondents be directed to restore the contract,

    release the Performance Security Deposit and grant appropriate

    extension of time in terms of the Government of India Force

    Majeure guidelines and the contractual provisions.

    13. Per contra, Mr. Manoj Paranjpe, learned Senior Advocate,

    appearing for the respondents/SECL submits that the present

    petition is devoid of merit and deserves to be dismissed, as the

    action taken by the respondents is strictly in accordance with the

    terms and conditions of the tender document and the contractual

    provisions governing the parties. It is submitted that the petitioner

    was declared the successful bidder pursuant to the tender

    process for the work of re-handling of OB and allied activities at

    Kusmunda OC Project, and thereafter Letter of Acceptance was

    issued in favour of the petitioner on 05.02.2026. The petitioner

    was required to furnish the Performance Security Deposit and

    commence execution of the awarded work within the stipulated

    period. Learned counsel would submit that the contention of the

    petitioner that the site was not handed over and, therefore, the
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    contractual period for commencement of work had not

    commenced is wholly misconceived and contrary to the record. It

    is submitted that the work site was duly handed over to the

    petitioner vide communication dated 17.03.2026 and thereafter

    the Work Order was issued on 20.03.2026. As per the contractual

    conditions, particularly the clause relating to the scheduled period

    of completion, the period for execution of work commenced after

    expiry of the prescribed period from the date of issuance of the

    Letter of Acceptance or handing over of the site, whichever was

    later. Therefore, there was no ambiguity regarding

    commencement of contractual obligations upon the petitioner.

    Learned counsel further submits that despite handing over of the

    site and issuance of the Work Order, the petitioner failed to

    mobilize the required manpower, machinery and resources for

    commencement of the work. It is submitted that the petitioner was

    specifically directed by the General Manager (Mining), Kusmunda

    Project, vide communication dated 02.04.2026, to immediately

    mobilize adequate resources and commence the work. However,

    despite such instructions, the petitioner failed to commence the

    execution of the work within the stipulated period, resulting in

    issuance of a statutory notice dated 07.04.2026 under Clause 6.1

    of the General Terms and Conditions of the contract. It is

    submitted that in response to the said notice, the petitioner, vide

    its communication dated 18.04.2026, assured the respondents

    that the work would be commenced shortly. Similar assurances
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    were also given during telephonic communications. However,

    instead of commencing the work, the petitioner subsequently

    raised issues relating to the West Asia conflict, escalation of

    diesel prices and alleged shortage of diesel supply. Learned

    counsel submits that the said grounds are merely an afterthought

    and cannot justify the failure of the petitioner to commence the

    work, particularly when the respondents had already assured

    supply of diesel for execution of the project and had repeatedly

    granted sufficient opportunities to the petitioner to mobilize and

    commence the work.

    14. Mr. Paranjpe would further submit that the petitioner, despite

    repeated directions and opportunities, failed to take any effective

    steps towards commencement of work even during the extended

    period granted under the notice dated 07.04.2026. It is submitted

    that the petitioner itself, vide communication dated 23.04.2026,

    expressed its inability to commence the work, thereby clearly

    demonstrating its failure to comply with the contractual

    obligations. Therefore, the respondents were fully justified in

    invoking Clause 6.1 of the contract and taking consequential

    action, including cancellation of the Letter of Acceptance and

    forfeiture of the Performance Security Deposit. Learned counsel

    further submits that the allegations of violation of principles of

    natural justice are wholly untenable. The petitioner was repeatedly

    communicated regarding its failure to commence the work, was

    issued a notice under Clause 6.1 of the contract, and was granted
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    adequate opportunity to explain its position. The petitioner

    submitted its replies and representations, which were duly

    considered. After considering the entire material available on

    record and the repeated defaults committed by the petitioner, the

    competent authority took the decision in accordance with the

    contractual provisions. Therefore, no interference under Article

    226 of the Constitution of India is warranted.

    15. Mr. Paranjpe further submits that the present petition involves

    adjudication of disputed contractual issues arising out of the

    agreement between the parties, and the petitioner has an

    efficacious alternative remedy available under the terms of the

    contract. It is submitted that the petitioner has deliberately not

    placed on record the copy of agreement executed between the

    parties, which contains Clause 13.3 providing for settlement of

    disputes between the contractor and SECL through the agreed

    contractual mechanism. The petitioner, having entered into a

    contractual arrangement with open eyes, cannot bypass the

    agreed dispute resolution mechanism and directly invoke the

    extraordinary writ jurisdiction of this Hon’ble Court. It is submitted

    that the dispute raised by the petitioner essentially pertains to

    interpretation of contractual clauses, alleged delay in

    commencement of work, applicability of force majeure provisions,

    and justification for forfeiture of Performance Security Deposit.

    Such matters require examination of contractual obligations and

    evidence, which cannot ordinarily be undertaken in writ
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    proceedings. The petitioner is required to avail the remedy

    provided under the contract itself.

    16. Mr. Paranjpe lastly submits that the respondents, being a public

    sector undertaking, are required to ensure timely completion of

    public projects and cannot permit a contractor to indefinitely delay

    execution of the awarded work after acceptance of the contract.

    The petitioner failed to honour its contractual commitments

    despite repeated opportunities and notices. The impugned action

    has been taken strictly in accordance with the terms of the

    contract and does not suffer from any arbitrariness, illegality or

    violation of any statutory provision. Accordingly, it is prayed that

    the present writ petition being devoid of merit and involving

    disputed contractual questions deserves to be dismissed.

    17. We have heard learned counsel appearing for the parties and

    perused the material available on record.

    18. The present petition has been filed challenging the action of

    respondent No.2 whereby the Letter of Acceptance issued in

    favour of the petitioner has been cancelled, the Performance

    Security Deposit furnished by the petitioner has been forfeited and

    consequential action has been proposed against the petitioner on

    account of failure to commence the work awarded under the

    contract. The principal grievance of the petitioner is that the delay

    in commencement of work was occasioned due to circumstances

    beyond its control, particularly the disruption caused due to the
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    West Asia conflict, escalation in diesel prices and alleged non-

    clarification regarding application of the Price Variation Clause.

    The respondents, on the other hand, have justified the impugned

    action on the ground that despite handing over of the site,

    issuance of the Work Order, repeated instructions and issuance of

    notice under Clause 6.1 of the contract, the petitioner failed to

    commence the work and thereby committed breach of contractual

    obligations.

    19. From the documents placed on record, it is not in dispute that the

    petitioner participated in the tender process, was declared the

    successful bidder and accepted the terms and conditions of the

    tender document by submitting its bid. The Letter of Acceptance

    was issued on 05.02.2026 and thereafter the petitioner furnished

    the Performance Security Deposit on 11.03.2026 after seeking

    and obtaining extension of time from the respondents. It is also

    not disputed that the work site was handed over to the petitioner

    on 17.03.2026 and the Work Order was issued on 20.03.2026.

    Therefore, the contention raised by the petitioner that the

    contractual period had not commenced on account of non-

    handing over of the site cannot be accepted.

    20. The record further demonstrates that after handing over of the site

    and issuance of the Work Order, the petitioner was directed by the

    competent authority vide communication dated 02.04.2026 to

    mobilize the requisite resources and commence the work. Since

    the petitioner failed to commence the work, notice dated
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    07.04.2026 was issued under Clause 6.1 of the General Terms

    and Conditions granting fifteen days’ time to commence the work,

    failing which action including forfeiture of Performance Security

    Deposit was proposed. The petitioner submitted its reply dated

    18.04.2026 assuring commencement of work; however, instead of

    commencing the work, it subsequently expressed inability on

    account of diesel price escalation and other difficulties.

    21. The contention of the petitioner that the escalation of diesel prices

    and supply constraints rendered the contract impossible to

    perform cannot be accepted in the facts of the present case. The

    petitioner was aware of the terms and conditions of the tender,

    including the Price Variation Clause, at the time of submitting its

    bid. Having voluntarily participated in the tender process and

    accepted the contractual conditions, the petitioner cannot

    subsequently seek to rewrite the terms of the contract on account

    of commercial difficulties.

    22. Before adverting to the rival contentions, it would be appropriate

    to refer to the settled principles governing judicial review in matters

    relating to public tenders and contractual decisions of the State.

    23. In Michigan Rubber (India) Ltd. (supra), the Hon’ble Supreme

    Court has categorically held that the terms and conditions of a

    tender fall within the domain of the tendering authority and that the

    Court should exercise great restraint in interfering with such

    conditions unless they are found to be arbitrary, discriminatory or

    actuated by mala fides.

    18

    24. Similarly, in Jagdish Mandal (supra), the Supreme Court held

    that judicial review in tender matters is limited and the Court

    should not interfere unless the decision-making process is shown

    to be arbitrary, irrational or intended to favour someone.

    25. The Supreme Court in Meerut Development Authority (supra)

    has further held that the State or its instrumentalities are entitled to

    cancel a tender process and invite fresh bids in public interest and

    such decisions should not ordinarily be interfered with unless they

    are patently arbitrary.

    26. Another important principle was laid down by the Supreme Court

    in Municipal Corporation, Katra (supra), wherein it was held that

    a party which does not participate in the tender process cannot

    subsequently challenge the same.

    27. The law with respect to interference in tender matters is limited to

    certain extent as has been considered by the Hon’ble Supreme

    Court in large number of cases including in the case of Tata

    Motors Limited vs Brihan Mumbai Electric Supply &

    Transport Undertaking (BEST) and others 1 wherein the Hon’ble

    Supreme Court has considered the factum of interference in the

    tender matters and has held as under:

    “48. This Court being the guardian of fundamental
    rights is duty-bound to interfere when there is
    arbitrariness, irrationality, mala fides and bias.
    However, this Court has cautioned time and again
    that courts should exercise a lot of restraint while

    1 2023 SCC OnLine SC 671
    19

    exercising their powers of judicial review in
    contractual or commercial matters. This Court is
    normally loathe to interfere in contractual matters
    unless a clear-cut case of arbitrariness or mala
    fides or bias or irrationality is made out. One must
    remember that today many public sector
    undertakings compete with the private industry.
    The contracts entered into between private parties
    are not subject to scrutiny under writ jurisdiction.
    No doubt, the bodies which are State within the
    meaning of Article 12 of the Constitution are bound
    to act fairly and are amenable to the writ
    jurisdiction of superior courts but this discretionary
    power must be exercised with a great deal of
    restraint and caution. The courts must realise their
    limitations and the havoc which needless
    interference in commercial matters can cause. In
    contracts involving technical issues the courts
    should be even more reluctant because most of us
    in Judges’ robes do not have the necessary
    expertise to adjudicate upon technical issues
    beyond our domain. The courts should not use a
    magnifying glass while scanning the tenders and
    make every small mistake appear like a big
    blunder. In fact, the courts must give “fair play in
    the joints” to the government and ublic sector
    undertakings in matters of contract. Courts must
    also not interfere where such interference will
    cause unnecessary loss to the public exchequer.”

    28. Recently, the Hon’ble Supreme Court, in the matter of

    Banshidhar Construction Pvt. Ltd. v. Bharat Coking Coal Ltd.

    & Others, {Civil Appeal No. 11005 OF 2024, decided on
    20

    04.10.2024}, taking note of the decisions rendered in various

    other celebrated judgments, observed as under:

    “21. There cannot be any disagreement to the legal
    proposition propounded in catena of decisions of this
    Court relied upon by the learned counsels for the
    Respondents to the effect that the Court does not sit as a
    Court of Appeal in the matter of award of contracts and it
    merely reviews the manner in which the decision was
    made; and that the Government and its instrumentalities
    must have a freedom of entering into the contracts.
    However, it is equally well settled that the decision of the
    government/ its instrumentalities must be free from
    arbitrariness and must not be affected by any bias or
    actuated by malafides. Government bodies being public
    authorities are expected to uphold fairness, equality and
    public interest even while dealing with contractual
    matters. Right to equality under Article 14 abhors
    arbitrariness. Public authorities have to ensure that no
    bias, favouritism or arbitrariness are shown during the
    bidding process and that the entire bidding process is
    carried out in absolutely transparent manner.

    29. 22. At this juncture, we may reiterate the well-
    established tenets of law pertaining to the scope of
    judicial intervention in Government Contracts.

    23. In Sterling Computers Limited vs. M/s. M & N
    Publications Limited and Others2, this Court while
    dealing with the scope of judicial review of award of
    contracts held: –

    “18. While exercising the power of judicial review, in
    respect of contracts entered into on behalf of the
    State, the Court is concerned primarily as to whether
    there has been any infirmity in the “decision making
    process”. In this connection reference may be made
    to the case of Chief Constable of the North Wales
    Police v. Evans [(1982) 3 All ER 141] where it was
    said that: (p. 144a)
    “The purpose of judicial review is to ensure that
    the individual receives fair treatment, and not to
    ensure that the authority, after according fair
    treatment, reaches on a matter which it is
    2 (1993) 1 SCC 445
    21

    authorised or enjoined by law to decide for itself
    a conclusion which is correct in the eyes of the
    court.”

    By way of judicial review the court cannot examine
    the details of the terms of the contract which have
    been entered into by the public bodies or the State.
    Courts have inherent limitations on the scope of any
    such enquiry. But at the same time as was said by
    the House of Lords in the aforesaid case, Chief
    Constable of the North Wales Police v. Evans
    [(1982) 3 All ER 141] the courts can certainly
    examine whether “decision-making process” was
    reasonable, rational, not arbitrary and violative of
    Article 14 of the Constitution.”

    24. In Tata Cellular vs. Union of India 3, this Court had
    laid down certain priniciples for the judicial review of
    administrative action.

    “94. The principles deducible from the above are:

    (1) The modern trend points to judicial restraint in
    administrative action.

    (2) The court does not sit as a court of appeal but
    merely reviews the manner in which the decision
    was made.

    (3) The court does not have the expertise to correct
    the administrative decision. If a review of the
    administrative decision is permitted it will be
    substituting its own decision, without the necessary
    expertise which itself may be fallible.
    (4) The terms of the invitation to tender cannot be
    open to judicial scrutiny because the invitation to
    tender is in the realm of contract. Normally speaking,
    the decision to accept the tender or award the
    contract is reached by process of negotiations
    through several tiers. More often than not, such
    decisions are made qualitatively by experts.
    (5) The Government must have freedom of contract.

    In other words, a fair play in the joints is a necessary
    concomitant for an administrative body functioning in
    an administrative sphere or quasi-administrative
    sphere. However, the decision must not only be
    tested by the application of Wednesbury principle of
    3 (1994) 6 SCC 651
    22

    reasonableness (including its other facts pointed out
    above) but must be free from arbitrariness not
    affected by bias or actuated by mala fides.

    (6) Quashing decisions may impose heavy
    administrative burden on the administration and lead
    to increased and unbudgeted expenditure. Based on
    these principles we will examine the facts of this
    case since they commend to us as the correct
    principles.”

    25. It has also been held in ABL International Limited
    and Another vs. Export Credit Guarantee Corporation
    of India Limited and Others4
    , as under: –

    “53. From the above, it is clear that when an
    instrumentality of the State acts contrary to public
    good and public interest, unfairly, unjustly and
    unreasonably, in its contractual, constitutional or
    statutory obligations, it really acts contrary to the
    constitutional guarantee found in Article 14 of the
    Constitution.”

    26. In Jagdish Mandal vs. State of Orissa and Others 5,
    this Court after discussing number of judgments laid
    down two tests to determine the extent of judicial
    interference in tender matters. They are: –

    “22. (i) Whether the process adopted or decision
    made by the authority is mala fide or intended to
    favour someone; or Whether the process adopted or
    decision made is so arbitrary and irrational that the
    court can say: “the decision is such that no
    responsible authority acting reasonably and in
    accordance with relevant law could have reached;”

    (ii) Whether public interest is affected. If the answers
    are in the negative, there should be no interference
    under Article 226. Cases involving blacklisting or
    imposition of penal consequences on a
    tenderer/contractor or distribution of State largesse
    (allotment of sites/shops, grant of licences,
    dealerships and franchises) stand on a different
    footing as they may require a higher degree of
    fairness in action.”

    4 (2004) 3 SCC 553
    5 (2007) 14 SCC 517
    23

    27. In Mihan India Ltd. vs. GMR Airports Ltd. and
    Others6
    , while observing that the government contracts
    granted by the government bodies must uphold fairness,
    equality and rule of law while dealing with the contractual
    matters, it was observed in Para 50 as under: –

    “50. In view of the above, it is apparent that in
    government contracts, if granted by the government
    bodies, it is expected to uphold fairness, equality
    and rule of law while dealing with contractual
    matters. Right to equality under Article 14 of the
    Constitution of India abhors arbitrariness. The
    transparent bidding process is favoured by the Court
    to ensure that constitutional requirements are
    satisfied. It is said that the constitutional guarantee
    as provided under Article 14 of the Constitution of
    India demands the State to act in a fair and
    reasonable manner unless public interest demands
    otherwise. It is expedient that the degree of
    compromise of any private legitimate interest must
    correspond proportionately to the public interest.”

    28. It was sought to be submitted by the learned
    Counsels for the Respondents relying upon the
    observations made in Central Coalfields Limited and
    Another vs. SLL-SML (Joint Venture Consortium) and
    Others7
    , that whether a term of NIT is essential or not is
    a decision taken by the employer which should be
    respected. However, in the said judgment also it is
    observed that if the employer has exercised the inherent
    authority to deviate from the essential term, such
    deviation has to be made applicable to all the bidders and
    potential bidders. It was observed in Para 47 and 48 as
    under:-

    “47. The result of this discussion is that the issue of
    the acceptance or rejection of a bid or a bidder
    should be looked at not only from the point of view of
    the unsuccessful party but alsofrom the point of view
    of the employer. As held in Ramana Dayaram Shetty
    [Ramana Dayaram Shetty v. International Airport
    Authority of India
    , (1979) 3 SCC 489] the terms of
    NIT cannot be ignored as being redundant or
    superfluous. They must be given a meaning and the

    6 (2022) SCC OnLine SC 574
    7 (2016) 8 SCC 622
    24

    necessary significance. As pointed out in Tata
    Cellular [Tata Cellular v. Union of India
    , (1994) 6
    SCC 651] there must be judicial restraint in
    interfering with administrative action. Ordinarily, the
    soundness of the decision taken by the employer
    ought not to be questioned but the decision-making
    process can certainly be subject to judicial review.

    The soundness of the decision may be questioned if
    it is irrational or mala fide or intended to favour
    someone or a decision “that no responsible authority
    acting reasonably and in accordance with relevant
    law could have reached” as held in Jagdish Mandal
    [Jagdish Mandal v. State of Orissa
    , (2007) 14 SCC
    517] followed in Michigan Rubber [Michigan Rubber
    (India) Ltd. v. State of Karnataka
    , (2012) 8 SCC
    216].

    48. Therefore, whether a term of NIT is essential or
    not is a decision taken by the employer which should
    be respected. Even if the term is essential, the
    employer has the inherent authority to deviate from it
    provided the deviation is made applicable to all
    bidders and potential bidders as held in Ramana
    Dayaram Shetty [Ramana Dayaram Shetty
    v.International Airport Authority of India, (1979) 3
    SCC 489] . However, if the term is held by the
    employer to be ancillary or subsidiary, even
    thatdecision should be respected. The lawfulness of
    that decision can be questioned on very limited
    grounds, as mentioned in the various decisions
    discussed above, but the soundness of the decision
    cannot be questioned, otherwise this Court would be
    taking over the function of the tender issuing
    authority, which it cannot.”

    30. In the present case, the respondents have acted strictly in terms

    of Clause 6.1 of the contract, which empowers the employer to

    take action including forfeiture of Performance Security Deposit

    where the contractor, without reasonable cause or valid reason,

    fails to commence execution of work. The petitioner was issued
    25

    notice, was granted opportunity to explain its position and

    submitted its replies and representations. Thus, the contention

    regarding violation of principles of natural justice cannot be

    accepted.

    31. The reliance placed by the petitioner on the Force Majeure Office

    Memorandum dated 29.04.2026 issued by the Ministry of Finance

    also does not assist the petitioner at this stage. Even assuming

    that the said memorandum was applicable, the benefit thereunder

    was subject to fulfilment of the conditions prescribed therein. The

    respondents have disputed the applicability of the said

    memorandum on the ground that the petitioner had already

    committed default in commencement of work. The determination

    of whether the petitioner fulfilled the conditions of the Force

    Majeure memorandum involves examination of contractual facts

    and disputed questions, which cannot be adjudicated in exercise

    of writ jurisdiction.

    32. It is also relevant to note that the petitioner has not placed on

    record the copy of agreement executed between the parties. The

    respondents have specifically pointed out that Clause 13.3 of the

    agreement provides for settlement of disputes between the

    contractor and SECL through the agreed contractual mechanism.

    The petitioner, having entered into the contract with full knowledge

    of the terms and conditions, cannot be permitted to bypass the

    agreed dispute resolution mechanism and invoke the

    extraordinary jurisdiction of this Court for adjudication of disputed
    26

    contractual claims.

    33. The Hon’ble Supreme Court in State of U.P. v. Bridge & Roof

    Co. (India) Ltd., (1996) 6 SCC 22, has held that where disputes

    arise out of contractual obligations and require interpretation of

    contractual terms, the appropriate remedy is through the

    mechanism provided under the contract and not by invoking writ

    jurisdiction under Article 226 of the Constitution.

    34. Further, in Joshi Technologies International Inc. v. Union of

    India, (2015) 7 SCC 728, the Hon’ble Supreme Court reiterated

    that although writ jurisdiction may be exercised in contractual

    matters involving State authorities, such jurisdiction is

    discretionary and should not ordinarily be exercised where the

    dispute involves disputed questions of fact or enforcement of

    contractual rights.

    35. In the present case, the controversy essentially relates to whether

    the petitioner had sufficient justification for non-commencement of

    work, whether the Force Majeure clause was attracted, whether

    the petitioner had mobilized sufficient resources and whether

    forfeiture of Performance Security Deposit was justified under the

    contract. These issues require appreciation of contractual

    obligations and factual determination, which are beyond the scope

    of judicial review under Article 226 of the Constitution.

    36. The Court also finds that the petitioner cannot claim an absolute

    right to continue with the contract merely on the ground that it had
    27

    furnished the Performance Security Deposit or had subsequently

    taken certain steps towards mobilization. The respondents, being

    a public sector undertaking, are equally obligated to ensure timely

    execution of public projects and cannot be compelled to continue

    with a contractor who has failed to commence the work within the

    stipulated period despite repeated opportunities.

    37. In view of the aforesaid discussion, this Court is of the considered

    opinion that the action taken by the respondents does not suffer

    from arbitrariness, irrationality, mala fide or violation of any

    statutory provision. The impugned order has been passed in

    exercise of contractual powers after granting sufficient opportunity

    to the petitioner. No ground is made out warranting interference

    under Article 226 of the Constitution of India.

    38. Accordingly, the writ petition being devoid of merit is hereby

    dismissed. However, dismissal of the present writ petition shall

    not preclude the petitioner from availing any remedy available to it

    under the dispute resolution mechanism contained in the

    agreement or in accordance with law. There shall be no order as

    to costs.

                               Sd/-                                        Sd/-
                    (Ravindra Kumar Agrawal)                          (Ramesh Sinha)
                              Judge                                     Chief Justice
    
    
    Chandra
     



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