Termination and blacklisting of a contractor based on poor performance is justified, provided due process is followed in accordance with statutory provisions.

JUDGMENT :

SAMEER JAIN, J.

PREFATORY NOTE:

1. Before adverting to the rival submissions and entering upon the arena of arguments advanced by the learned counsel for the respective parties, it is considered apposite to delineate the factual background and the circumstances which have culminated in the present adjudication. Accordingly, the factual matrix, as set forth in the writ petition, is recapitulated hereinbelow for the sake of clarity and proper appreciation of the controversy involved:

1.1 That the petitioner is a Private Limited Company, duly registered under the provisions of the Companies Act.

1.2 That respondent no.1 invited online bids for developing distribution infrastructure at twelve circles of Ajmer DISCOMs in Rajasthan under Revamped Reforms-based and Results-linked, Distribution Sector Scheme (hereinafter referred to as “RDSS”) on 21.10.2022; and the present petition pertains to tender for Chittorgrah Circle bearing RFB No. AVVNL/RDSS/CHR/TN-100 for estimated cost of Rs. 20536 Crore 60 Lacs.

1.3 That the NIT provides total time of frame of twenty seven months including the survey and approval period for completion of project. As per the tender terms, the survey work was to be completed within a period of three months from the date of award, while the supply, erection, testing and commissioning were to be completed within twenty four months, with 25% of the work to be achieved in each six-month block.

1.4 The petitioner, having been declared as the successful bidder, was issued a Letter of Intent (LoI) on 22.03.2023. The Letter of Award followed on 04.04.2023, and thereafter, on 27.06.2023, a formal contract for both supply and erection was executed between the parties. The petitioner also furnished the requisite Performance Bank Guarantees in accordance with the contractual terms.

SUBMISSIONS BY LEARNED SENIOR COUNSEL APPEARING ON BEHALF OF THE PETITIONER:

2. The controversy giving rise to the present proceedings emerged when, vide the impugned order dated 19.06.2025 (Annexure–25), the respondents terminated the contract, invoking Clause 42.2.2 of General Conditions of Contract (hereinafter referred to as “GCC”). The termination was based on allegations of unsatisfactory performance, delay in execution, and failure to achieve scheduled progress; and it being alleged that only 7.29% of the work had been completed against the contractual target of 100%, despite repeated notices and opportunities granted to the petitioner.

3. Learned Senior counsel argued that vide the present petition the impugned order of termination is assailed primarily on the following grounds:

3.1 That by the impugned termination order, the petitioner has also been blacklisted, resulting in its “civil death” by way of debarment from participation in future tenders. It was urged that such blacklisting is contrary to Clause 42 of the contract and violative of the principles of natural justice, particularly in the absence of a specific 14 days’ notice prior to blacklisting. The impugned termination order merely stated that the despite the lapse of more than 26 months, the physical progress of work stood merely at 7.29%, which was termed as “exceptionally poor”. The respondents also referred to earlier notices dated 09.04.2025 and 19.05.2025, wherein it had been stated that failure to accelerate the pace of work would result in termination of contract. Thence, respondents terminated the contract, withal debarred the petitioner from participation in tenders for a period of three years; and immediate forfeiture of the Bank Guarantee submitted by the petitioner against the performance security, as well as the additional Bank Guarantee in respect of the unbalanced bid.

3.2 That the provisions of Section 46 of the Rajasthan Transparency in Public Procurement Act, 2012 (hereinafter referred to as “RTPP Act”) have been erroneously invoked by the respondents.

4. It was urged that the petitioner’s execution plan dated 19.05.2025 had been duly accepted by the res