Back
IN THE HIGH COURT OF DELHI AT NEW DELHI
Satish Chandra Sharma, Subramonium Prasad, JJ.
M/s Jai Singh And Co. – Appellant
Versus
National Highways Authority of India – Respondent
W.P.(C) 14848 of 2022 & CM Appls. 45667 of 2022, 48076 of 2022, 53564 of 2022, 53565 of 2022 and W.P.(C) 14884 of 2022 & CM Appls. 45752 of 2022, 48078 of 2022, 53600 of 2022 and 53601 of 2022
Decided On : 13-01-2023
Termination of Contract - NHAI - Clause 35, National Highways Authority of India v. Ganga Enterprises, (2003) 7 SCC 410 - Joshi Technologies International Inc. v. Union of India, (2015) 7 SCC 728 - Kerala State Electricity Board & Anr. v. Kurien Kalathil & Ors., (2000) 6 SCC 293 - State of U.P. & Ors. v. Bridge & Roof Company (India) Ltd., (1996) 6 SCC 2 - Purvankara Projects Ltd. v. Hotel Venus International & Ors., (2007) 10 SCC 33 - New Bihar Biri Leaves Co. & Ors. v. State of Bihar & Ors., (1981) 1 SCC 537 - Bharat Coking Coal Limited & Ors. v. Amr Dev Prabha & Ors., (2020) 16 SCC 759 - Raunaq International Ltd. v. IVR Construction Ltd. & Ors., (1991) 1 SCC 492 - National High Speed Rail Corporation Limited v. Montecarlo Limited & Anr., (2022) 6 SCC 401 - M.P. Power Management Company Limited, Jabalpur v. Sky Power Southeast Solar India Private Limited and Others, 2022 SCC OnLine SC 1591 - Vice Chairman & Managing Director, City and Industrial Development Corporated of Maharashtra Ltd. v. Shishir Realty P. Ltd., 2021 SCC OnLine SC 1141 - Michigan Rubber (India) Limited v. State of Karnataka, (2012) 8 SCC 216 - Raunaq International Ltd. v. I.V.R. Construction Ltd., (1999) 1 SCC 492
Fact of the Case:
The Petitioners challenged the termination of their contracts by NHAI before the last date of submission of tender. The increase in traffic was the sole reason for calling for a fresh RFP by NHAI, resulting in termination of the contracts of the Petitioners without following the due process of contract.
Finding of the Court:
The Court found NHAI's termination of the contracts to be arbitrary, capricious, and whimsical, and not in compliance with the basic requirements of Article 14 of the Constitution of India. The Court held that NHAI's action was ridden purely by profit motives and was not in public interest.
Issues: The issues involved the termination of contracts by NHAI before the expiry date, the increase in traffic as the sole reason for calling for a fresh RFP, and the Petitioners' challenge to the termination of their contracts.
Ratio Decidendi: The Court held that NHAI's termination of the contracts without following the due process of contract and solely based on the increase in traffic was arbitrary, capricious, and whimsical. The Court emphasized the obligation of the State to act fairly and not arbitrarily or capriciously, especially when contractual power is being used for public purpose.
Final Decision: The Writ Petitions were allowed, and pending application(s), if any, were disposed of.
JUDGMENT
Subramonium Prasad, J. W.P.(C) 14848/2022 has been filed by the Petitioner seeking quashing of the fresh Request for Proposal (hereinafter referred to as 'the RFP') dated 13.10.2022, bearing No. NHAI/13013/547/CO/22-23/CB/Saini Mazra FP, issued by the Respondent herein for engagement of User Fee Collecting Agency for Saini Majra Fee Plaza at Kilo meter 28.160 Ambala-Kaithal (PKF-1) KM 0.000 to KM 50.860 of NH-65, on the ground that the Petitioner is operating the toll plaza and the contract, under which the Petitioner was engaged as a user fee collecting agency, is still in existence and there is no allegation against the Petitioner that it has breached/not-fulfilled the conditions subject to which the tender has been awarded to the Petitioner herein. It is the contention of the Petitioner that mere commercial consideration cannot give the State a leeway to cancel an ongoing contract which is to expire in about six month's time.
2. Shorn of details, the facts leading to W.P.(C) 14848/2022 are as under:
a) The Respondent herein, vide an e-tender dated 19.11.2021, bearing No. NHAI/13013/547/CO/20-21/EQ/Saini Mazra, invited submissions of e-quotations for engagement of User Fee Collecting Agency for Saini Majra Fee Plaza at Kilo meter 28.160 Ambala-Kaithal (PKF-1) KM 0.000 to KM 50.860 ofNH-65. It is stated that the Petitioner herein participated in the tender process and was declared as a successful bidder. It is stated that on 16.12.2021 the Petitioner was temporarily engaged as the user fee collecting agency for a period of three months. It is stated that on 07.12.2021 a contract was signed between the Petitioner and the Respondent herein engaging the Petitioner as a user fee collecting agency for a period of three months from 08.12.2021 to 08.03.2022.
b) It is stated that even before the expiry of three months, the Respondent herein invited bids for the very same toll plaza vide RFP dated 07.01.2022, bearing No. NHAI/13013/547/CO/21-22/CB/Saini Mazra Fee Plaza. It is stated that the Petitioner once again participated in the tender process and was once again declared a successful bidder. A contract dated 15.02.2022 was signed between the Petitioner herein and the Respondent herein engaging the Petitioner as a user fee collecting agency for a period of one year from 16.02.2022 to 16.02.2023. It is stated that the Petitioner herein also furnished a bid security deposit of Rs.2,08,00,000/- which was valid for a period of fourteen months from 31.01.2022, towards performance security and for due observance of the terms and conditions of the contract and performance of its obligations as per contract for a period of one year.
c) It is stated that on 13.10.2022, i.e. before expiry of the earlier contract, the Respondent herein once again issued a fresh tender, bearing No. NHAI/13013/547/CO/22-23/CB/Saini Mazra FP, for the very same toll plaza. It is this tender which has been challenged in the instant Writ Petition on the ground that issuing a fresh tender amounts to termination of earlier contract and without there being any allegation that the Petitioner herein has not performed his obligations under the contract, the Respondent herein cannot issue a fresh tender before expiry of the subsisting tender.
d) It is pertinent to mention here that the Writ Petition was filed on 18.10.2022. Even though the Petitioner has filed the instant Writ Petition, the Petitioner participated in the tender process and has been declared as the highest bidder and is currently operating the toll plaza. The matter came up for hearing on 20.10.2022, i.e. before the Petitioner submitted his bid, and this Court directed the Respondent not to issue any work order in response to the tender notice dated 13.10.2022 till the next date of hearing. Since there was no stay, the Respondent herein went on with the tender and the Petitioner submitted its bid and it was declared as the highest bidder. The Respondent herein moved an application, being CM APPL.48076
Public authorities must act fairly and cannot arbitrarily terminate contracts without justification, reinforcing the legitimacy of expectations within public-private partnerships.
Section 14 of Act reads as general rejection of tenders.
Parties must promptly challenge tender processes to avoid losing their legal rights; delay and subsequent participation in bidding can preclude judicial relief.
Point of Law : Commercial Vehicles - Toll plazas/posts/barriers - Collection of Toll Tax – Whether rights of petitioner is violated - Conduct of parties is governed by the Contract Agreement and the ....
The court established that while state actions in contractual matters must adhere to principles of fairness and reasonableness, arbitrary debarment from future tenders without due process violates co....
(1) Cancellation of Tender – Sanctity of contracts is a fundamental principle that underpins stability and predictability of legal and commercial relationships – When public authorities enter into co....
Parties to a contract must adhere to its terms despite unforeseen circumstances like force majeure, and disputes arising from such a contract should be resolved through contractual mechanisms, not ju....
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
