inkinccorporation@gmail.com Himachal Pradesh High Court
Reserved On 31.12.2025 vs State Of Hp And Others on 27 February, 2026
2026:HHC:4957
IN THE HIGH COURT OF HIMACHAL PRADESH,
SHIMLA
.
CWP No. 6271 of 2024
Reserved on 31.12.2025
Pronounced on: 27.02.2026
M/s Zenith-Event & Services and another
…Petitioners.
of
Versus
State of HP and others …..Respondents.
Coram: rt
The Hon’ble Mr. Justice G.S. Sandhawalia, Chief Justice.
The Hon’ble Mr. Justice Jiya Lal Bhardwaj, Judge.
Whether approved for reporting? Yes.
For the petitioners: Mr. R.K. Bawa, Senior Advocate with
Mr. Ajay Kumar, Advocate.
For the respondents: Mr. Pranay Pratap Singh, Additional
Advocate General.
G.S. Sandhawalia, Chief Justice.
Petitioner No. 1, which is a partnership firm, duly
registered with the Directorate of Industries, Government of
Himachal Pradesh who by the medium of the instant
petition, seeks quashing of impugned orders having
endorsement dated 09.02.2024 (Annexure P-14) and
impugned action/order of respondents No. 2 and 3
forfeiting the performance security and earnest money as
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contained in the noting sheet and further to release the
earnest money/security amount deposited by the petitioners
.
in compliance of the terms and conditions of notice inviting
tender dated 12.09.2023 published in daily newspaper, i.e.,
The Tribune dated 13.09.2023 (Annexure P-4). By virtue
of the impugned order dated 09.02.2024 (Annexure P-14),
of
the respondents have forfeited a sum of Rs.15,67,597/- out
of this sum of Rs.16,00,000/- of Security Deposit/Earnest
rt
Money and refunded only Rs.46,887/- on account of being
the proportionate amount of unauthorized encroachment
surrounding the German Hangers occupied by the petitioner
as reported by the possession/Encroachment Removal
Committee.
2. Apparently respondent No.2 issued notice
inviting tender dated 12.09.2023, (Annexure P-4) for the
allotment of space, including complete erection and
installation of FOUR GERMAN HANGERS in Dussehra Mela
(Sports), Ground Dhalpur for Dussehra festival, 2023 which
was to be submitted in the office of respondent No.2 on or
before 28th September, 2023 upto 2.00 pm with clearly
marked on the top of envelope “Bid for allotment of space,
including complete erection and installation of German
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Hanger No…” bids respectively along with German Hanger
number applied for in block letters”, as per the terms and
.
conditions contained in Annexure P-5 (colly). It was also
provided that the bids will be opened on the same day at
2.30 pm at DRDA Hall, Kullu in the presence of bidders and
tender committee. The application forms could be
of
downloaded from the official website of Deputy
Commissioner office Kullu and tender fee was to be
rt
submitted along with technical bid in the shape of demand
draft in favour of Deputy Commissioner-cum-Vice Chairman,
Dussehra Festival Committee. Earnest money of Rs. 1.00
(Rs. One Lakh) per German Hanger in the shape of bank
draft/FDR in favour respondent No.2 was required to be
attached along with technical bid and the bid, without
earnest money would be summarily rejected. Respondent
No.3 is stated to have also issued addendum dated
19.09.2023, (Annexure P-6) containing further
instructions/terms and conditions for the subject tender.
3. The petitioners filed their bid for allotment of
space, including complete erection and installation for Four
ODAY \German Hangers in Dussehra Mela Ground Dhalpur
for Dussehra festival, 2023. The bids of the petitioners were
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approved by the respondents/Dussehra festival Committee
as petitioners were the highest bidders. The petitioners
.
were allotted four numbers of German Hanger No.1, 2, 3
and 4 vide letter of approval dated 06.10.2023 Annexure P-
7) for Rs.2,03,22,615/-.
4. The Committee constituted under Dussehra
of
Festival-2023 is stated to have allocated space for four
No(s) German Hangers (Dome) to the petitioners, who were
rt
the highest bidders, after completion of all the codal
formalities. The petitioners had deposited security amount
in the form of 04 FDRs of Rs. 1.00 lakh each and one FDR of
Rs. 12.00 lakh pledged by the petitioner No.1 in favour of
respondent No.2. As per terms and conditions of the tender,
the petitioners were required to deposit earnest money @
Rs. 1.00 lakh per German Hanger in the shape of bank draft
in favour of Deputy Commissioner-cum-Vice Chairman,
Dussehra Festival Committee, Kullu and further the
petitioners were required to deposit performance security
deposit of Rs. 4.00 lakhs (Rs. Four Lakhs) only per German
Hanger in the shape of bank draft/FDR in favour of Deputy
Commissioner-cum-Vice Chairman, Dussehra Festival
Committee, Kullu being highest bidder/successful bidder.
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5. As per Clause 9 of the terms and conditions as
contained in Annexure P-1 of the notice inviting tender, it
.
was provided that the successful bidder has an option to get
his EMD adjusted in the amount of security deposit. It was
further provided under the said Clause that the amount of
security deposit shall be returned after successful
of
completion of the job/Dussehra festival subject to the
recommendation of the technical Committee and approval
rt
of the authority. The petitioners had deposited FDRs
deposit/ pledged FDRs, total amounting to Rs. 16.00 lakhs
with the respondents in pursuance to the notice inviting
tender. The letter dated 02.05.2024 (Annexure P-8) (colly)
has been issued by the Branch Manager, Union Bank, Kullu
to the petitioner No.2 along with copies of all 4 FDRs of Rs.
1.00 Lakh each and one FDR of Rs. 12.00 lakh, pledged by
the petitioners in favour of Deputy Commissioner-cum-Vice
Chairman, Dussehra Festival Committee, Kullu.
6. It is averred that in pursuance to the notice
inviting tender, petitioners had completed the job of
erection and installation of four German Hangers in
Dussehra Mela (Sports), Ground Dhalpur for Dussehra
Festival, 2023. Petitioners are stated to have performed
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their job strictly in consonance with the terms and
conditions of notice inviting tender dated 12.09.2023. It is
.
further averred that in the proceedings of the negotiation
meeting held for allotment of space, including complete
erection and installation of four German hangers held on
01.10.2023 (Annexure P-9) under the Chairmanship of
of
Hon’ble Chief Parliamentary Secretary (MPP & Power, Forest,
Tourism and Transport), HP. Government-cum-Chairman,
rt
Dussehra Festival Committee, Kullu, in addition to the space
allotted to the petitioners, some more space was provided
towards the site of Basket Ball Court by way of shifting
location of fire tenders. After negotiations, petitioners gave
their consent to undertake the work of complete erection
and instillation of four German Hanger at Rs. 1,72,22,555/-
excluding GST.
7. It is further averred that after the completion of
Dussehra festival on 12.11.2023, petitioners handed over
the vacant spaces allotted to them to the authorities
concerned and requested the authorities to release
performance security deposit and earnest money in their
favour. All the 04 FDRs of Rs. 1.00 lakh, each and FDR of
Rs.12 lacs pledged which were required to be released and
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returned back to the petitioners after successful completion
of Dussehra festival were also not released.
.
8. It is further submitted that the respondents,
without there being any rhyme and reason or plausible
grounds, instead of releasing the FDRs amounting to Rs.
16.00 lakhs, as aforesaid, started some inquiry proceedings
of
with regard to alleged violation of the terms and conditions
of the tender on ground of encroachments during festival
rt
period. The Town & Country Planner, Division Town,
Planning Office, Kullu, District Kullu vide its letter dated
03.01.2024 sent to respondent No.3, report/site plan
showing alleged encroachment on 14.12.2023 and
03.01.2024 along with its enclosures (Annexure P-11)
(colly), without notice to the petitioners. The entire
proceedings carried out by the respondents are stated to be
one-sided and without giving any opportunity of being heard
to the petitioners. The petitioners were never
heard/associated with the said inquiry proceedings. After
holding the alleged inquiry proceedings, respondents
decided to forfeit the performance security amount and
earnest money deposited by the petitioners as per terms
and conditions of the tender notice. The petitioners are
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stated to have sought information under Right to
Information Act, 2005 from the respondents asking for
.
supply of copy of complaint, inquiry order, copy of
encroachment report, copy of order issued for forfeiture of
the earnest money deposited by the petitioners, copy of
letter issued by the authorities to the petitioner No.1 for
of
removal of alleged encroachments, copy of letter issued to
the petitioner for removal of German Hangers and copy of
notice issued
rt to the petitioners regarding alleged
encroachments made by the petitioners. In pursuance to the
aforesaid application under RTI Act, 2005, (Annexure P-
12) (colly), the respondents supplied the information,
informing that copy of complaint is not available with them
and in so far as letter issued to the petitioners for removal
of alleged encroachments made by them in the area
surrounding the German Hangers is concerned, respondents
have replied that no such information is available.
9. The petitioners had also sought information
under RTI Act, 2005 with regard to any report submitted by
the Encroachment, Removal and Quick Reaction Committee
constituted by respondent No.2 against the alleged
encroachments by the petitioners in German Hanger
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installed in Kullu Dussehra festival, 2023. In response to the
said application under RTI Act, 2005, respondents have
.
replied (Annexure P-13) (colly) that no such information is
available with them. The respondents are stated to have
unlawfully and illegally deducted an amount of Rs.
15,67,597/- out of the total amount of Rs. 16.00 lakhs
of
deposited by the petitioner as earnest money and
performance security. Since the respondents are stated to
rt
have arbitrarily and illegally deducted the aforesaid amount
out of the earnest money/performance security amount
deposited by the petitioners, the instant petition came to be
filed.
Stand of the respondents.
10. In the reply filed by the respondents-State, the
stand taken is that as per point No.21 of the terms &
conditions, the matter arising out of this contract will be
under the jurisdiction of Kullu Court and the petitioner has
not exhausted the alternative remedy as the matter in hand
is purely a civil matter, with a dispute of less than
Rs.1,00,00,000/- and the Civil Court could be approached.
During the Dussehra festival, it was noticed by the
Inspection Committee that the unauthorized encroachment
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had been done in addition to the already allotted space.
After the Dussehra festival, the petitioners have submitted
.
an application on 27.11.2023 to release the performance
security of Rs.16,00,000/- which had been deposited with
Dussehra Festival Committee as per the terms & conditions
of the tender documents. On account of the additional
of
financial gains made by subletting this additional
encroached area without paying due charges/rent to the
rt
Dussehra Committee, the petitioners had been rightly
penalized.
11. The jurisdiction of this Court was questioned on
the ground that the Apex Court in National Highway
Authority of India Vs. Ganga Enterprises and another
(2003) 7 SCC 410, has held that the disputes relating to
contracts cannot be agitated under Article 226 of the
Constitution of India.
12. Reliance was also placed upon condition No.31 of
the addendum to the tender notice, wherein it has been
provided that there would be no encroachment out side the
German Hangers and if any violation is found during the
event, penalty of the amount equal to the cost of per sqf
rate of German Hangers will be imposed out of the
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performance security deposit of the concerned bidder.
Reference was also made to the award letter dated
.
06.10.2023 (Annexure P-7), wherein as per points No.3
and 13, the petitioners would not have any right on the
open space in front, back or sides of the German Hangers
and any deviation would attract forfeiture of security
of
amount/imposition of penalty to be decided by the
concerned committee. Resultantly, it was averred that the
rt
area of 31954.96 square feet was allotted to the petitioners
and the inspection report was sought from
Possession/Inspection Sub Committee on 14.12.2023. The
report of the Town & Country Planner, Division Town
Planning Office, Kullu, District Kullu, Himachal Pradesh
dated 03.01.2024 is (Annexure R-II), and as per the site
inspection carried out by the encroachment removal
committee, it was found that the allottees of German
Hangers (Dome) have encroached the area in addition to
the space allocated to them as per the detailed sketch/site
plan showing the encroachment and actual space allocated
has been prepared and the same is enclosed herewith as
Annexure-A. The aerial photographs of the GERMAN
HANGERS are also attached by the respondents.
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13. It is in such circumstances, the deduction of
Rs.15,67,597/- out of the total amount of Rs.16,00,000/- in
.
the form of five FDRs had been done. It was also averred
that the petitioners had been repeatedly warned to remove
the encroachment verbally not only by the respondents but
also by the respective teams constituted for this purpose
of
and to maintain law and order. During the Dussehra
Festival the whole administration was preoccupied with
rt
multiple duties and it was not possible to hold the detailed
enquiry at that time. The question of issuing notice and
giving opportunity of being heard did not arise as the
respondent acted in pursuance to the contract i.e.
Annexure P-6 and Annexure P-7. It was admitted that
the encroachment removal and quick action team had been
constituted for removal of encroachments, specially those
obstructing public passage, exit routes and fire tender path,
Disaster Management related issue and additionally, a
possession/Inspection Sub Committee has been constituted
for ensuring proper possession of the allottees as per the
allotments and effective monitoring of unauthorized
encroachment of allottees during the festival. The action
had been taken by the Dussehra Festival Committee suo
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motu based on the information received from its sub-
committees and formal complaint was not required in the
.
matter.
Stand in the replication:-
14. In response to the said reply filed by the
respondents-State, the petitioners by filing the rejoinder (sic
of
replication) have pleaded that the impugned actions of the
respondents are arbitrary, discriminatory and violative of
rt
Articles 14 and 19 of the Constitution of India and against
the principle of natural justice and therefore, the writ Courts
power could not be questioned. It is denied that they have
ever encroached the space beyond the permissible
limit/area, as allotted through tender process and there was
no complaint made by the concerned authorities during the
Dussehra festival. The Committee had never reported any
alleged encroachment nor any notice had been issued and
the Dusshera Festival had continued from 24.10.2023 to
12.11.2023 and on conclusion of the festival, the vacant
space/ground was handed over to the Authority.
15. At the time of the handing over the
space/ground, no encroachment was ever detected or
pointed out by the Authorities and no report as such had
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been made. The alleged Inspection Report was wrong and
incorrect and had been prepared more than two months
.
after handing over the space/ground by the petitioners. The
entire report had been prepared at the back of the
petitioners on 03.01.2024 and the vacation of the space was
done in the month of November, 2023 after the conclusion
of
of the Dussehra festival on 12.11.2023.
16. The report as well as sketch site-plan or the
rt
photographs attached did not depict the correct position
and from the perusal of the photographs also no alleged
encroachment was visible and the respondents are
unlawfully penalizing the petitioners.
17. Resultantly, it was pleaded that there is no
violation of the terms & conditions of points No.3 and 13 of
the Award letter dated 06.10.2023 (Annexure P-7) in the
report and map prepared was actually incorrect.
18. The lack of show-cause notice and opportunity of
being heard was highlighted and the fact that the inquiry
should have been held and arbitrariness of deducting the
huge amount out of security amount was highlighted in the
absence of any complaint as such.
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Arguments of the Counsels:-
19. Learned Senior Counsel for the petitioners has
.
mainly highlighted the issue that no show-cause notice was
issued while referring to the first internal communication
dated 14.12.2023 (Annexure R-1), whereas the Dusshera
Festival had already ended on 12.11.2023. The forfeiture
of
had been made at the belated stage without resorting to the
principle of natural justice, while placing reliance upon the
rt
judgment of the Apex Court in Gorkha Security Services
Vs. Govt. of NCT of Delhi, AIR 2014 SC 3371.
20. Counsel for the respondents-State has
vehemently submitted that the order was justified in the
facts and circumstances and has placed reliance upon the
report, which has been annexed alongwith Annexure R-2
and also communication dated 14.12.2023 (Annexure R-
1), whereby the inspection report had been called by the
Additional District Magistrate, Kullu, Himachal Pradesh
regarding unauthorized occupations/encroachments to the
space allotted to the German Hangers during the Kullu
Dussehra Festival-2023. It is thus submitted that as per the
report, the allotted areas have been specifically shown and
the encroachment area has also been demarcated. An effort
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has also been made and reference to the photographs as
such showing the alleged encroachments on the sides of the
.
German Hangers to submit that the petitioners had violated
the terms & conditions of the Contract and therefore, the
Writ Court as such would not exercise discretionary
jurisdiction and had placed reliance upon the judgment of
of
the Apex Court in National Highway Authority of India
(supra).
rt
Our reasoning:-
21. Keeping in view the arguments raised and the
pleadings, we are of the considered opinion that the writ
petition is liable to be allowed, keeping in view the law laid
down as such by the Apex Court consistently that the
principles of natural justice as such have to be followed
when civil consequences are entailed. As noticed, out of
Rs.16,00,000/- a paltry sum of Rs.46,887/- has been ordered
to be refunded and the State has forfeited a sum of
Rs.15,67,597/- without even giving the petitioner
opportunity of being heard and therefore, the action of the
respondents can be stated to be arbitrary and therefore, the
jurisdiction of the writ Court as such cannot be held to be
barred in any manner. We are not convinced with the
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arguments that the petitioner would be liable to file a Civil
Suit as such for recovery of the said amount as pleaded on
.
account of the arbitrariness and the writ Court as such
would be having jurisdiction once it is not the action of the
private individual but the State is resorting to the exercise
of the executive power without even following the
of
procedure prescribed as per settled principles.
22. The judgment of the Apex Court referred to in
rt
National Highway Authority of India (supra) would not
stand in a way, as it was a case, where the respondents as
such had given a bid Security and withdrawn his bid after
they had been found to be the highest bidder and after the
official respondents had accepted his offer, resultantly,
leading to the encashment of the bank guarantee. It was in
such circumstances, the order of the High Court as such was
set aside and it was held that the invocation of the bank
guarantee could not be held to be against the terms and
therefore directions for refund could not have been ordered
and the said judgment thus would have no application to
the facts and circumstances of the present case.
23. As per Clauses 3, 9 and 13 of the allotment letter
dated 06.10.2023 (Annexure P-7), the party did not have
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any right on the open space in front, back or sides of the
German Hangers and the allotment was only upto
.
12.11.2023 and any deviation from conditions will attract
forfeiture of security amount/imposition of penalty to be
decided by the concerned committee. The said clauses
read as under:-
of
“3. The Party shall not have any right on the
open space in front, back or sides of the
German Hanger.
rt 4 to 8xxxxx
9. Allotment will be allowed upto 12.11.2023.
10 to 12xxxxx
13. Any deviation from above conditions will
attract forfeiture of security amount/imposition
of penalty to be decided by concerned
committee.”
24. Similarly once one is to go through the terms of
the addendum dated 19.09.2023 (Annexure P-6), there
will be no encroachment out side the German Hangers, if
any violation is found during the event penalty of the
amount equal to the cost of per sqf. rate of German Hangers
will be imposed out of the performance security deposit of
the concerned bidder. The said clause reads as under:-
“31. There will be no encroachment out side of
the German Hangers, if any violation found
during the event penalty of the amount equal
to the cost of per sqf rate of German Hanger
will be imposed out of the performance security
deposit of the concerned bidder.”
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25. Resultantly, it was the bounden duty as such of
the respondents-State to have issued the necessary show-
.
cause notice for the area which had been occupied by the
petitioners outside the German Hangers and specify the
area which had been occupied as and when the German
Hangers were still standing at the spot. Having failed to do
of
so, the respondents now cannot submit that they were busy
as such during the Dussehra Festival as has been averred in
rt
the reply that the administration was pre-occupied with
multiple duties and it was not possible to hold a detailed
inquiry. On the other hand, the stand as such is that the
sub-committee had been constituted for ensuring the proper
possession of the allottees and thus there was no valid
reasons for them to have not issued the requisite show-
cause notice during the pendency of the occupation of the
area which had been allotted so that the petitioners could
have given a detailed reply. The period of occupation has
been mentioned and had such an exercise been conducted,
in case there was any such wrongful occupation, the
petitioners would have removed the same. Having let the
Dusshera Festival as such come to an end when the
petitioners having as such removed the German Hangers on
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the conclusion of the Dussehra Festival after 12.11.2023
and no action having been taken during the said period, the
.
resort as such to call for a report by the respondents
officials on 14.12.2023 (Annexure R-1) and then rely upon
the same on the ground that Annexure R-2 dated
03.01.2024, the office of the Town and Country Planning
of
Department as such had prepared a report is not liable to
be accepted as the basic principles of natural justice have
rt
been violated. The report was prepared at the back of the
petitioners and they had no opportunity as such to rebut the
same as no show-cause notice had been issued to them
during the period, the German Hangers were erected at the
Dussehra Festival ground.
26. Reliance as such on the photographs would not
also show in any manner that the alleged encroachment
was also at the hands of the petitioners and had such a
show-cause notice been issued, they would have duly
replied whether the encroachment was by them or not. The
photographs as such attached with Annexure R-2 also do
not clarify the picture in any manner that the alleged
encroachment if any was at the behest of the petitioners as
the German Hangers have been erected in a clear defined
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line and there was no plausible reasons as such to co-relate
the erection of some temporary sheds beyond the line by
.
the petitioners having failed to put the petitioners to notice
at the relevant time.
27. We are of the considered opinion that the action
of the respondents-State by resorting to the forfeiture is a
of
totally and manifestly arbitrary action denying the
petitioners even an opportunity to respond. The effect of
rt
forfeiture apart from the civil consequences would also thus
in future be an adverse effect against the petitioners for all
times to come and it would have long-lasting civil
consequences in the business prospects.
28. The Rule of Audi Alteram Partem has to be
applied as has been held by the Apex Court in M/s Erusian
Equipment & Chemicals Ltd. Vs. State of West Bengal
and Another (1975) 1 SCC 70, AIR 7975 SC 266 that
the fundamentals of fair play require that the person
concerned should be given an opportunity to represent his
case. The said view was followed in Gorkha Security
Services (supra) and the relevant paragraph reads as
under:-
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“17. It is a common case of the parties that the
blacklisting has to be preceded by a show
cause notice. Law in this regard is firmly
grounded and does not even demand much.
amplification. The necessity of compliance with
the principles of natural justice by giving the
opportunity to the person against whom action
of blacklisting is sought to be taken has a valid
and solid rationale behind it. With blacklisting
many civil and/or evil consequences follow. It is
described as “civil death” of a person who is
foisted with the order of blacklisting. Such an
of
order is stigmatic in nature and debars such a
person from participating in Government
Tenders which means precluding him from the
award of Government contracts. Way back in
rt the year 1975, this court in the case of M/s.
Erusian Equipment & Chemicals Ltd. vs. State
of West Bengal & Anr. (1975) 1 SCC 70 (AIR
1975 SC 266), highlighted the necessity of
giving an opportunity to such a person by
serving a show cause notice thereby giving him
an opportunity to meet the allegations which
were in the mind of the authority
contemplating blacklisting of such a person.
This is clear from the reading of Para Nos.12
and 20 of the said judgment. Necessitating this
requirement, the court observed thus:
“12. Under Article 298 of the Constitution
the executive power of the Union and the
State shall extend to the carrying on of
any trade and to the acquisition, holding
and disposal of property and the makingof contracts for any purpose. The State
can carry on executive function by
making a law or without making a law.
The exercise of such powers and
functions in trade by the State is subject
to Part III of the Constitution. Article 14
speaks of equality before the law and
equal protection of the laws. Equality of
opportunity should apply to matters of
public contracts. The State has the right
to trade. The State has there the duty to
observe equality. An ordinary individual
can choose not to deal with any person.
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The Government cannot choose to
exclude persons by discrimination. The
order of blacklisting has the effect of
depriving a person of equality of.
opportunity in the matter of public
contract. A person who is on the
approved list is unable to enter into
advantageous relations with the
Government because of the order ofblacklisting. A person who has been
dealing with the Government in the
matter of sale and purchase of materialsof
has a legitimate interest or expectation.
When the State acts to the prejudice of a
person it has to be supported by legality.
29. The said view was further followed in UMC
rt
Technologies Private Limited Vs. Food Corporation of
India and another (2021) 2 SCC 551 and in Jagdish
Mandal Vs. State of Orissa (2007) 14 SCC 517, wherein
it has been held that where the process adopted or decision
made is so arbitrary and irrational, the power of judicial
review can be exercised. The same view has been followed
in Michigan Rubber (India) Ltd. Vs. State of Karnataka
& others (2012) 8 SCC 216.
30. In Jagmohan Singh Vs. State of Punjab and
Others (2008) 7 SCC 38, it has been held that forfeiture
of earnest money can only be done by following the
principle of natural justice.
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24 2026:HHC:4957
31. Reliance can also be placed upon the judgment
of the Apex Court in Allied Motors Limited Vs. Bharat
.
Petroleum Corporation Limited (2012) 2 SCC 1,
wherein the termination of the petrol pump dealership had
been done on the ground that samples had been drawn
without even giving a show-cause notice and/or giving an
of
opportunity of hearing.
32. In Uflex Limited Vs. Government of Tamil
rt
Nadu and others, (2022) 1 SCC 165, it was again held
that the power of judicial review is to check whether the
choice of decision is made lawfully and to check whether
the choice of decision is sound and not hit by arbitrariness,
irrationality, unreasonableness, bias and mala fide.
33. Similarly in State Bank of India and others
Vs. Rajesh Agarwal and others (2023) 6 SCC 1, it was
held that classification of fraud without hearing the entity
violates the principle of natural justice and the rules of Audi
Alteram Partem had to be followed even though it was not
provided for in the directives of the RBI.
34. We are also aware of the limitation as such that
the Court should keep restraint and not interfere as such in
the contractual matters and that the State has to be given
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25 2026:HHC:4957
certain latitude while exercising its executive powers.
However, whether the power as such is absolutely illegal,
.
irrational and suffering from procedural impropriety is to be
kept in mind.
35. The law laid down in State of Punjab and
others Vs. Mehar Din (2022) 5 SCC 648 and in
of
Principal Chief Conservator of Forest and other Vs.
Suresh Mathew and others, 2025 SCC online SC 933
rt
has to be kept in mind that the decision as such was not
furthering the public interest or could be termed as a fair
play by the executive and it was always open for the
respondents as such to have duly issued notice during the
time the German Hangers stood erected at the spot so that
the petitioners had adequate opportunity to respond to the
same and put forward their stands. Having not done so and
in spite of the fact that there was a Committee as such
which had been set in place for the said exercise, the action
taken by the respondents cannot be held to be justified in
any manner and cannot be thus sustained.
36. In normal circumstances, we would have
remanded the matter for fresh hearing but no useful
purpose would be served to make a factual inquiry at the
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26 2026:HHC:4957
site as such as the German Hangers are no longer in place
now. Therefore, we quash the order dated 09.02.2024,
.
whereby the amount has been deducted from performance
security and direct the refund of Rs.15,67,597/- within a
period of four weeks from the receipt of the certified copy of
this judgment. The petitioners having not prayed for the
of
interest amount as such in the writ petition, we do not find
any reasons as such now to grant the benefit of interest on
rt
the amount of the performance guranatee which has been
retained by the respondents for this period.
37. Resultantly, the present petition is allowed to
that extent. Pending miscellaneous application(s), if any,
shall also stands disposed of accordingly.
(G.S. Sandhawalia)
Chief Justice
(Jiya Lal Bhardwaj)
Judge
27th February, 2026
(C.M. Thakur/Munish Thakur)
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