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2025 Supreme(Del) 68
IN THE HIGH COURT OF DELHI AT NEW DELHI
MINI PUSHKARNA, J.
M/S KSI Associate & Anr. - Petitioners
versus
Indian Railway Catering and Tourism Corporation Ltd. - Respondent
W.P. (C) 3976 of 2025, CM APPL. 18493 of 2025 & CM APPL. 18494 of 2025
Decided on : 28-03-2025
For the Appellant :Mr. Chetan Lokur with Mr. Nitish Chaudhary, Mr. Vaibhav Kaul, Advocates
For the Respondent:Mr. Saurav Agrawal, Mr. Anshuman Chowdhury, Ms. Prachi Dubey, Advocates
Termination of a contract requires adherence to procedural fairness, including issuing a remedial notice before cancellation.
Headnote:(A) Contract Law - Termination of Contract - The petitioners sought to quash the termination of their catering services contract, arguing that no remedial notice was issued prior to termination, violating contract terms. The court noted the petitioners had invested significantly and found a prima facie case in their favor. (Paras 3, 10, 13, 18)
(B) Procedural Fairness - The court emphasized the need for a fair process, including a notice to remedy breaches before termination. (Paras 13, 18)
Facts of the case:
The petitioners were awarded a tender for catering services but faced termination without proper notice after delays in establishing kitchens.
Findings of Court:
The court stayed the termination and ordered inspection of the kitchens, recognizing the petitioners' investment and the procedural issues involved.
Issues: The main issues included whether the termination was justified without a remedial notice and the readiness of the kitchens for inspection.
Ratio Decidendi: The court ruled that the absence of a remedial notice before termination constituted a breach of contract terms, and the petitioners demonstrated a prima facie case for relief.
Result: The impugned termination letter and order were stayed.
ORDER :
CM APPL. 18493/2025 (For Exemption)
1. Exemption allowed, subject to just exceptions.
2. Application is disposed of.
W.P.(C) 3976/2025 & CM APPL. 18494/2025
3. The present petition has been filed seeking quashing and setting-aside of Termination Letter dated 09th December, 2024, and order dated 12th March, 2025, whereby, representation/appeals of the petitioners were rejected, in re: providing catering services onboard trains in Cluster No. SCR/CLT/B-7.
4. It is submitted that respondent awarded the above tender to the petitioner no.1 vide Letter of Award dated 29th April, 2024, whereby, the petitioners were allowed to provide catering service on 8 trains and in respect of which, it was required to establish 18 base kitchens.
5. Learned counsel appearing for the petitioners has drawn the attention of this Court to the E-tender, on the basis of which, the Letter of Award was issued in favour of the petitioners. The scope of work for kitchen design, as given in the E-tender is reproduced as under:
“xxx xxx xxx
xxx xxx xxx”
6. It is submitted that as per the Letter of Award, it was stated that the Letter of Award consists of two parts, i.e., part (A), which included commissioning of base kitchens at all pre-notified locations of the cluster and part (B) stipulated commencement of services in the notified trains of the cluster. Initially, the contract contemplated establishment of base kitchens within a period of three months from acceptance of Letter of Award extendable by one month. For the said cluster, the base kitchens would have to be commissioned by 13th August, 2024, further extendable up to 13th September, 2024.
7. It is submitted that the petitioners commenced the process of identifying the location of the base kitchen on 11th June, 2024, and requested for inspection. Further, through subsequent Letters dated 27th June, 2024, 18th July, 2024, 20th September, 2024, 26th September, 2024 and 05th October, 2024, the petitioners requested the respondent to make a change in the pre-determined location. Unfortunately, majority of the above requests were neither allowed nor rejected, thereby causing immense delay.
8. It is further submitted that since the respondent had issued several licenses, and in all, 900 kitchens were to be established, the respondent itself found it to be a “Herculean task” to approve so many kitchens in one go. Therefore, the respondent came out with a policy decision vide letter dated 05th August, 2024, wherein, it was stated that the competent authority has decided that such base kitchens which are ready as per expected standards, to the satisfaction of the respondent, the respondent would be commissioning the trains by issuance of Letter of Commencement (“LOC”). The said letter dated 05th August, 2024 is reproduced as under:
9. Further, the respondent issued a Show Cause Notice dated 09th October, 2024, and subsequently, terminated the Letter of Award dated 29th April, 2024. The petitioners preferred representations/appeals against the termination, however, the same was also rejected vide order dated 12th March, 2025.
10. Learned counsel for the petitioners submits that the petitioners had invested a large amount of money for setting up the kitchen.
11. Attention of this Court has been drawn to Clause 7 and 8 of the contract document, Clause 7 of the said contract document, is reproduced as under:
12. This Court notes that with regard to consequence of default, Clause 8 of the contract stipulates as under:
13. Referring to the aforesaid clauses, learned counsel for the petitioners submits that no remedial notice for the purposes of remedying the breach was given to the petitioners, in terms of Clause 8.2. He submits that Show Cause Notice dated 09th October, 2024, was issued straightaway for cancellation, without calling upon the petitioners to remedy the breach, as envisaged in the contract between the parties.
14. Issue notice. Notice is accepted by learned counsel for respondent.
15. Learned counsel for respo
