The termination of a contract was deemed arbitrary due to non-consideration of the contractor's representations, violating the principles of natural justice.

Judgment :

Rajesh Mazumdar, J.

1.Mr. D. P. Borah, learned counsel for the petitioner and Mr. B. Sharma, learned Standing counsel, Railways appearing for the respondent No. 1, 2 & 3 were heard on 05.12.2025 and the judgment was reserved. The matter was listed under the column of ‘to be spoken to’ on 9^th of December 2025, and certain clarifications were sought and the matter was fixed for delivery of judgment.

2. The petitioner has preferred this writ petition under Article 226 of the Constitution of India, being aggrieved by the termination notice dated 20.01.2022 issued by the Divisional Engineer/I, N.F Railway, Tinsukia, thereby rescinding the work of “Re-spacing of SC sleeper at Br. No.-561 between BOJ- TSK and Br No. 24 & 30 between SLGR-MRHT Br. No.-14, 24 & 29 between MRHT-DMGN section” and for direction to the respondent authorities not to forfeit the security deposit and not to encash the performance guarantee submitted by the petitioner.

3. It is relevant to note here that the learned counsel appearing for the contesting parties had submitted in consonance that the performance guarantee submitted by the petitioner had been invoked during the pendency of this writ petition and that the work had been completed by other agencies.

4. The facts leading to the institution of this writ petition are that the petitioner had been awarded the work of “Re-spacing of SC sleeper at Br. No.- 561 between BOJ-TSK and Br. No.- 24 & 30 between SLGR-MRHT Br. No.-14 & 24 & 29 between MRHT-DMGN section” after they had successfully participated in a tender process. In this regard, the Letter of Acceptance dated 18.02.2020 was issued vide No. Tinsukia Division Engineering/ 03-TSK -ENGG-48- 2019/00922310015863. The petitioner had deposited the requisite earnest money and performance guarantee. The security money and the performance guarantee deposited by the petitioner totalled at Rs. 10,76,690/- (Rupees ten lakh seventy six thousand six hundred ninety only). The contract agreement was signed between the petitioner and the Divisional Engineer-I N.F Railway, Tinsukia on 10.07.2020.

While the petitioner was carrying out the execution of the work, some technical difficulties arose for which the petitioner approached the respondent authorities for “approval of variation” in the contractual work. By a letter dated 05.03.2021, the petitioner was informed by the Divisional Engineer concerned that he had failed to start the work/show adequate progress and the petitioner was requested to submit a detailed programme for completing the work. Further, the notice required the petitioner to explain as to (i) why sleeper was carried without approved variation and (ii) why new sleeper was not supplied as per the contract agreement provisions. The petitioner replied through his communication dated 08.03.2021, whereby it was explained that the work was stopped because the cost involved in the re-spacing sleeper included re-fixing of 12 nut & bolts for proper specification and this item was excluded in the contract items. It was explained that although approximately 170 sleepers had been re-spaced, the approval for variation was required to continue the work.

5. Subsequently, the required variations were allowed and the petitioner started the work and the bills in this regard were also paid. The petitioner was served a letter dated 16.11.2021 whereby it was alleged that he had failed to show adequate progress and/or to submit a detailed programme for completing the work. The notice dated 16.11.2021 informed the petitioner that he was being given 7 days’ notice in accordance with Clause-62 of Standard General Conditions of Contract to commence t