Judgment :-

T.S. Thakur, J.

1. Leave granted.

2. This appeal by special leave arises out of an order dated 8th August, 2007, passed by a Division Bench of the High Court of Madhya Pradesh at Jabalpur whereby Writ Appeal No.491 of 2007 filed by the appellant has been dismissed and the order passed by the learned Single Judge dismissing Writ Petition No.720 of 2007 affirmed. Multiple rounds of litigation between the parties have been aptly recapitulated in the order passed by the Single Judge of the High Court in Writ Petition No.720/2007 and refreshed by the Division Bench of the High Court while dismissing the writ appeal filed against the same. It is in that view unnecessary for us to recount the entire factual background in which the controversy in this appeal arises except to the extent it is absolutely necessary for us to do so for the disposal of this appeal.

3. National Highway Authority of India Ltd. (NHAI for short) invited tenders for award of a contract for collection of fee for the use of National Highways from Km. 61.00 to Km.103 on Morena-Gwalior Section of National Highway No.3. Appellant too among others made an offer which was accepted by the NHAI in terms of its letter dated 14th March, 2006 asking the appellant to submit a demand draft for a sum of Rs.2,20,00,125/- towards performance security and a bank guarantee for a similar amount to be valid for a period of 15 months for the due observance of the terms and conditions contained in the contract. Both these requirements were satisfied by the appellant with the result that a contract for collection of user fee commencing from 1st April, 2006 to 31st March, 2007 was finally allotted in its favour. It is not in dispute that pursuant to the said allotment the appellant started collecting the prescribed fee as per the terms and conditions of the agreement and also started depositing monthly instalments stipulated under the same.

4. Certain violations were in due course noticed by the NHAI including complaints to the effect that the appellant was collecting excess fee from vehicles passing through Toll Plaza. This resulted in the termination of the collection contract by the competent authority in terms of a letter dated 27th July, 2006, and forfeiture of the performance security of Rs.2,20,00,125/-. Termination ordered by the respondent triggered litigation between the parties that took several rounds before the High Court. We are not immediately concerned with the nature of those proceedings and the orders passed in the same from time to time. What is important is that the termination of the contract had once been quashed by the High Court whereupon the same was terminated for a second time after a show-cause notice and a personal hearing to the appellant in compliance with the direction issued by the High Court in its order dated 25th January, 2007.

5. Aggrieved by the fresh termination of the contract as also the forfeiture ordered by the competent authority, the appellant filed Writ Petition No.720 of 2007 before the High Court of Madhya Pradesh. By his order dated 18th June, 2007, a Single Judge of the High Court allowed the said petition in part and while upholding imposition of penalty and forfeiture of performance guarantee, quashed the revocation of the bank guarantee by the respondent, as unfair and unreasonable having regard to the fact that the respondent had already received Rs.7,33,33,750/- towards collection charges, Rs.2,20,00,125/- towards forfeiture of the performance security and a penalty amount of Rs.2,41,097/- making a total of Rs.9,55,74,970/- which was more than Rs.8,80,00,500/- the amount contracted to be paid to the respondent. The High Court held that the termination of the contract and the forfeiture of the performance security for the breaches committed by the appellant were perfectly justified in the light of the report submitted by the agency deployed by the respondent to collect material regarding overcharging of fee and other violation