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2026 Supreme(Del) 252
IN THE HIGH COURT OF DELHI AT NEW DELHI
AMIT BANSAL, J.
Abishek Kumar – Appellant
Versus
Indian Railway Catering and Tourism Corporation Limited – Respondent
W.P. (C) No. 800 of 2026, C.M. APPL. No. 3950 of 2026
Decided On : 07-02-2026
For the Appellants : Jitender Mehta, Lalit Kumar, Abhinav Kumar, Avaneesh Singh, Shivam Pahal
For the Respondents: Manisha Singh, Kanav Khatana, Jyoti Singh
Debarment penalties must be proportionate to the misconduct, with judicial review applicable to actions by state instrumentalities to ensure fairness and reasonableness.
Headnote:(A) Contract Law - Authority of State Instrumentality - Action of debarment from future contracts on grounds of delayed payment - Judicial review on fairness, reasonableness, and proportionality established in M/s Kulja Industries Ltd. v. Western Telecom Project BSNL and Coimbatore District Central Coop. Bank v. Employees Assn. (Paras 26-28)
(B) Proportionality - Even in case of breach, penalties must be proportionate to the misconduct. (Paras 32-34)
(C) Administrative decisions are subject to the principles of natural justice. (Paras 20-21)
Facts of the case:
The petitioner was debited by the respondent for a delay of 13 days in payment for a catering contract, leading to annulment of the contract and a one-year debarment from future tenders. The petitioner cited medical issues for the delay.
Findings of Court:
The debarment of the petitioner was deemed disproportionate as it extended beyond requisite penalty for delay and was quashed, allowing the continuation of the petitioner’s empanelment.
Issues: Whether the response to the show cause notice was received, legality of imposing a one-year debarment.
Ratio Decidendi: The court ruled that while the delay warranted action, the imposed penalty of a one-year debarment was disproportionate given the context and circumstances of minor default.
Result: The impugned debarment was quashed.
| Table of Content |
|---|
| 1. petitioner debarred for contract violations (Para 1 , 4 , 5 , 6 , 8 , 9 , 10 , 12 , 17 , 19) |
| 2. petitioner's argument on penalty disproportionality (Para 20 , 21 , 22 , 23 , 24) |
| 3. judicial review principles on contract actions (Para 25 , 26 , 31 , 33 , 34) |
| 4. proportionality in penalties and administrative action (Para 27 , 29 , 38) |
| 5. quashing the debarment order (Para 36 , 39) |
JUDGMENT :
AMIT BANSAL, J.
1. The present writ petition has been filed impugning the letter dated 3rd December, 2025 issued by the respondent/IRCTC in terms of which the petitioner has been debarred for a period of one (1) year from participating in future projects of the respondent/IRCTC. The petitioner also impugns the letter dated 25th November, 2025 in terms of which the contract of the petitioner has been annulled.
2. Notice in the present petition was issued on 20th January 2026.
3. Counter-affidavit has been filed on behalf of the respondent.
4. In the present case, the petitioner was awarded a temporary license- cum-commencement of On-Board Catering Services in Train No. 12289-90, CSMT-NGP, pursuant to a Notice Inviting Limited E-Tender No.2025/IRCTC/TSV/06/MAY/27 issued by the respondent/IRCTC.
5. In terms of the Letter of Award dated 12th June 2025 the petitioner was required to deposit the following sums of money.
6. The license was to operate from 1st July, 2025 and hence, the aforesaid payments had to be made by the petitioner by 25th June 2025.
7. The letter of award also provided that there is no provision for delayed payment and the failure to pay as per the schedule would be treated as default and action would be taken in accordance with the Tender Conditions.
8. It is the case of the petitioner that he suffered from medical issues and hence, he could not make payment within the aforesaid time frame.
9. However, the petitioner did make the requisite payments to the respondent on 8th July 2025.
10. Three (3) reminders were sent on behalf of the respondent/IRCTC to the petitioner on 16th June 2025, 23rd June 2025 and 28th June 2025, calling upon the petitioner to pay the requisite amounts.
11. On 12th July, 2025, the respondent/IRCTC awarded the Contract to a third-party.
12. On 15th July, 2025, a communication was issued by the respondent/IRCTC to the petitioner stating that, in view of the non- compliance of the terms and conditions of the Contract, the Earnest Money/SEMD deposited at the time of empanelment/Security Deposit has been forfeited and the petitioner’s empanelment in the TSV category was kept on hold. Further, the petitioner was directed to deposit a security deposit of Rs. 2,00,000/- for reinstatement of his empanelment in the TSV category.
13. A show cause notice was issued by the respondent/IRCTC to the petitioner on 15th September 2025, invoking Clause 5.2 of the Tender conditions, as to why the requisite action in terms of the said clause should not be taken against the petitioner. For ease of reference, Clause 5.2 of the Tender conditions is set out below:
“Clause 5. Security Deposit.
5.2 Failure to pay License Fee/Security Deposit/Other Charges:
“In the event of failure of payment of license fee or any other charges payable to the IRCTC/Railway, IRCTC will be at liberty to forfeit Earnest Money/SEMD deposited at the time of empanelment/Security deposit and terminate the contract forthwith without prejudice to any rights of IRCTC and to cancel the allotment and also debar licensee from participating in tender of IRCTC for upto one year".”
14. To be noted, Clause 5.2 provides for the following penal action against a licensee:-
i. Forfeiture of Earnest Money/SEMD deposited at the time of empanelment/ Security Deposit ii. Termination of the Contract iii. Cancellation of Allotment iv. Debarment of the licensee from participating in the Tender of IRCTC for upto one (1) year.
15. It is the case of the petitioner that he did not receive the aforesaid show cause notice and hence, no reply was given to the said show cause notice.
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