IMPORTANT POINT
The court established that contractual termination and debarment must comply with the specific terms of the agreement and adhere to principles of natural justice.

JUDGMENT :

HARISH TANDON, J.

1. The Union of India has filed the Intra-court Appeal assailing the judgment dated 18.05.2022 passed by the Single Bench whereby and whereunder the letter of termination and debarring the Respondent no. 1 from participating in future tender in the South-Eastern Railway was quashed and set aside with a consequential direction upon Railway Authorities to intimate the date to the Respondent no. 1 to resume the operation of loading and unloading in terms of the agreement after considering the issues raised by the said respondent on the difficulties faced by him in operation for loading and uploading at both the sites for which such agreement was entered into.

2. The facts discerned from the respective pleadings of the parties exposit that a tender was floated by the South-Eastern Railway in respect of leasing of 23 tonne parcel van (VPH) on a round basis in different trains wherein the Respondent no. 1 was adjudged as the highest bidder. The letter of allotment was issued to the Respondent no. 1 with stipulation that the said respondent has to submit the security deposit to the tune of Rs. 1 crore and odd by way of a Fixed Deposits. The Respondent no. 1 was further directed to execute an agreement and it is not in dispute that all such formalities were completed and the site was also handed over to the Respondent no. 1. The said agreement stipulated that the commencement of loading and uploading at Shalimar and the Ahmedabad Stations shall commence within a stipulated time upon payment of an advanced freight. Undisputedly, the respondent commenced the loading and uploading at Shalimar and Ahmedabad stations but was facing difficulties at the Shalimar Station because of irregular placement of the parcel vans and the perishable goods which has to be staged in open shade having a limited life cannot be uploaded because of its self-short life.

3. The Respondent no. 1 caused a letter dated 17th June, 2019 to the Railway Authorities disclosing such difficulties and requested the authorities to take a conscious decision to remove such difficulties which is causing a loss to the business. Simultaneously, another letter was issued on the next date intimating the authorities for suspension of the leased parcel van until the grievances so raised is addressed and the remedial measures are taken at their end. The Railway Authorities did not respond to the aforesaid letter nor any remedial measures were taken which constrained the Respondent no. 1 to cause a reminder letters on 9th December, 2019 and 4th August, 2020 respectively. The Railway Authorities caused a letter dated October 1, 2020 citing certain clauses of the agreement which provides for termination of a contract and forfeiture of the security deposit and the right of the lease holder to terminate the agreement after serving 60 days’ notice to the Railway Administration and in such event not only the security deposit shall be forfeited but the said lease holder shall be debarred from entering into any tender for next two years with the rider that such debarment would not operate upon the existing tender, if any.

4. Immediately the Respondent no. 1 responded to the said letter and reminded the authorities that the difficulties/problems which were intimated to the Railway Administration has not been addressed and if such problem is resolved, the commencement may be restarted. It was stipulated that in the event no step has taken by taking a remedial measure, the security deposit should be refunded and also the loss, the Respondent no. 1 suffered by investing money in marketing, infrastructure etc., should also be compensated. In order to complete the sequel of events since there was no response from the end of the Railway Administration after the letter dated 09.10.2020 was issued by the Respondent no. 1, a further letter dated 06.10.2021 was caused reiterating the stand taken in the letter dated 09.10.2020. In response to the said letter, the Railway Administ