Termination of contract and debarment of a contractor must be in accordance with the terms of the contract and the principles of natural justice, and the work in question must have a public character to be justiciable in a judicial review.

JUDGMENT :

The Court:- 1. The petitioner has challenged the termination of the petitioner and debarment from participating in the respondent’s contracts for two years.

2. Learned counsel for the petitioner submits that the respondents have acted mala fide and arbitrarily. During pendency of a previous writ petition by the petitioner, against the alleged mala fide action of the respondent’s, the respondents terminated the petitioner’s contract. The previous writ petition thus became infructuous and the same was withdrawn with liberty to file a fresh writ petition on the subsequent cause of action. Accordingly, the present writ petition was filed but during the pendency of the same, the remaining work has been given to a third party.

3. It is argued that the petitioner had substantially done the work under the contract between the parties and, if another extension was given, it would have completed the entire work.

4. It is argued that the petitioner was granted extension twice. As such, time was not the essence of the contract even as per the conduct of the respondents.

5. It is next argued that the termination of contract by the respondents was de hors the contract entered into between the parties.

6. Learned counsel places reliance on Clause 2D of the Conditions of Contract which contemplates that the contractor shall be liable to pay compensation if, during review of progress of work as per sub-clause C of Clause 2, it is found that the progress is falling behind schedule as given in the Approved Work Programme, and after the respondents intimating the contractor to expedite the work to achieve the progress.

7. Under sub-clause C, it is submitted that the contractor is to ensure good progress during the execution of the work in all cases in which the time allowed for any work exceeds one month after the Approved Work Programme. In the event of any shortfall in performance measured against the said programme, a penalty has been stipulated in the said Clause.

8. It is argued that the stipulation in the contract speaks about levy of compensation on the petitioner and, as per Clause 3, if the liability to pay compensation amounts to the whole of his security deposit, only then the question of termination of contract arises.

9. In the absence of any such allegation, the termination is bad.

10. It is further argued that, in any event, since the petitioner was on the verge of completion of the work, it would be beneficial for all concerned if the petitioner was given a further opportunity to complete the work, instead of awarding the balance work to a third party.

11. It is argued that although extension of time was given till June 4, 2022, before the expiry of the same, that is, on March 29, 2022, the termination was effected.

12. Hence, the said termination is vitiated due to violation of the principles of natural justice as well as is in contravention of law and the contract between the parties.

13. No proper reason of termination was given by the respondents. Further, it is argued by the petitioner that no opportunity of hearing was given to the petitioner, nor was any show-cause notice issued prior to blacklisting the petitioner. Hence, the termination and the blacklisting ought to be set aside.

14. Learned counsel for the petitioner places reliance on a judgment of the Supreme Court reported at (2018) 6 SCC 157 [Madhya Pradesh Power Management Company Limited Vs. Renew Clean Energy Private Limited and another]. Placing particular reliance on paragraphs 13 and 14 of the same, it is argued that if the contract permits imposition of penalty, the contractor is liable to pay penalty. But the action of termination of the contract was held arbitrary and to have been rightly set aside by the High Court in the said case. Accordingly, in the said case, the Supreme Court awarded penalty and set aside the termination.

15. Learned senior counsel appearing for the respondent-Authorities controverts the petitioner’s submissions and argues th