2026 Supreme(Raj) 1090

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR
SAMEER JAIN, J.
JCL Infra Private Limited - Petitioner
Versus
Jaipur Development Authority, Through Its Secretary - Respondent
S.B. Civil Writ Petition No. 8120 of 2025 Connected With S.B. Civil Writ Petition No. 17571 of 2024
Decided On : 02-06-2026

State instrumentality cannot unilaterally withdraw a public contract without establishing contractor default; such arbitrary action violates Article 14 and principles of natural justice, promissory estoppel, and legitimate expectation.

Headnote:(A) Constitution of India, 1950 - Articles 14, 19(1)(g), 21, 226 - Public Works Financial and Accounts Rules, Part-II - RPWR-100 (Rajasthan Public Works Rules) - Special Conditions of Contract - Clause 32 (Withdrawal of work), Clause 2 (Compensation for delay), Clause 3 (Risk & Cost Clause), Clause 37 (Refund of Security Deposit), Clause 45 (Price Variation) - Indian Contract Act, 1872 - Sections 14, 73.

(B) Administrative law - Principles of natural justice - Audi alteram partem - State or its instrumentality, while acting in contractual matters, must adhere to fairness, reasonableness, and non-arbitrariness under Article 14 - Withdrawal of a contract without affording opportunity of hearing and without attributing default to the contractor is arbitrary and unsustainable - The validity of an administrative order must be judged on the reasons recorded therein and cannot be supplemented by subsequent affidavits (reliance on Mohinder Singh Gill v. Chief Election Commissioner - Paragraphs 8, 41).

(C) Contract - Promissory estoppel and legitimate expectation - Where a contractor, acting on the representation of the State, alters its position to its detriment by making substantial investments, the State cannot resile from its promise arbitrarily - The doctrine applies even against the government (reliance on IFGL Refractories Ltd. v. Orissa State Financial Corporation - Paragraphs 115-116, 133; U.P. Power Corporation Ltd. v. Sant Steels & Alloys (P) Ltd.; Sivanandan C.T. v. High Court of Kerala - Paragraph 44).

(D) Public contracts - Judicial review - Jurisdiction under Article 226 is maintainable even in contractual disputes when the action of the State is arbitrary, violative of natural justice, or involves a public law element (reliance on ABL International Ltd. v. Export Credit Guarantee Corporation of India Ltd.; Subodh Kumar Singh Rathore v. Chief Executive Officer - Paragraphs 36, 37, 57, 58). (E) Contractual interpretation - Clause 32 of the Special Conditions - Invocation requires (i) a justifiable reason, (ii) contractor’s failure to maintain progress, (iii) default attributable to the contractor, (iv) specific notice, (v) engagement of alternative agency at risk and cost - In the absence of contractor default, the clause cannot be invoked - Grant of extension without levy of liquidated damages and release of bank guarantees without deduction indicate waiver of alleged breach - The burden to prove default lies on the employer (Paragraphs 38-42, 47-52).

Facts of the case:
The petitioner, a private company, was awarded an EPC contract by the Jaipur Development Authority (JDA) for traffic improvement and beautification work at a major crossing, including construction of a flyover, for a total value of Rs. 184.30 crores. The contract was executed on 27.12.2022 with a completion period of 12 months. The petitioner mobilised resources, submitted drawings, and incurred expenditure of approximately Rs. 40 crores, executing work worth Rs. 20.41 crores. Due to site constraints, objections from third parties (like an educational institution), and administrative hurdles, progress was delayed. JDA granted a suo motu extension up to 30.04.2024 without any penalty. However, on 24.04.2024, JDA issued a letter withdrawing the entire work under Clause 32 of the contract, citing vague reasons such as “site conditions”. Subsequently, JDA released the petitioner’s bank guarantees unconditionally. During the pendency of the first writ petition challenging the withdrawal, JDA issued a fresh tender for preparation of a Detailed Project Report (DPR) for the same flyover project, prompting a second writ petition.

Findings of Court:
The court held that the withdrawal of the contract was arbitrary and illegal because: (i) the delay was attributable to JDA’s own administrative shortcomings and not to the petitioner; (ii) no opportunity of hearing was given; (iii) the impugned order was non-speaking and lacked any finding of contractor default; (iv) JDA’s subsequent conduct (extension, release of bank guarantees) contradicted its claim of default; (v) the fresh tender was an attempt to circumvent the subsisting contract without any valid policy change. The court quashed both the withdrawal letter and the fresh NIB to the extent it related to the same project, and directed JDA to proceed with the contract, allowing the petitioner’s claims for price variation and other dues. The court also directed an inquiry into the decision-making process by the Chief Secretary of the State.

Issues: 1. Whether the writ petitions are maintainable despite the contractual nature of the dispute and the alleged lack of proper authorization. 2. Whether the invocation of Clause 32 and the consequent withdrawal of the contract were legally sustainable. 3. Whether the doctrines of promissory estoppel and legitimate expectation applied. 4. Nature, scope, and validity of the power exercised under Clause 32.

Ratio Decidendi: The State, as an instrumentality under Article 12, must act fairly and reasonably even in contractual matters. Clause 32 of the contract could only be invoked when the contractor is in default; the burden to prove default lies on the employer. Here, the contemporaneous record showed that the delay was due to factors beyond the petitioner’s control and that the employer itself had waived any alleged breach by granting extensions without penalty and releasing bank guarantees. Therefore, the withdrawal was arbitrary, violative of Article 14, and contrary to the principles of promissory estoppel and legitimate expectation. Judicial review under Article 226 is permissible to remedy such arbitrary state action.

Result: The writ petitions were allowed. The impugned withdrawal order dated 24.04.2024 and the fresh Notice Inviting Bid (to the extent it pertained to the same project) were quashed. The petitioner was held entitled to consequential benefits and lawful claims. The respondents were directed to proceed with the project in accordance with the subsisting contract and to consider price variation and other permissible claims. An inquiry was ordered into the decision-making process.

JUDGMENT :

Sameer Jain, J.

1. In the present batch of writ petitions, the scope of the controversy involved, albeit not limited to but is broadly and predominantly defined as enumerated ad infra:

SBCWP No. 8120/2025: Is filed assailing the arbitrary and illegal actions of the respondents whereby the respondents have re-invited tender including the component of OTS Flyover in respect of preparation of detailed project report (hereinafter referred to as ‘DPR’) for proposed elevated road from Transport Nagar to Balagi Tri Junction, Jagatpura and from Jothwara at OTS junction, JLN Marg, JDA Jaipur, to extent of flyover at OTS Junction vide NIB No. EE-ROB/RUB-B/01/2025-26 dated 03.04.2025; primarily being governed by the Public Works Financial and Accounts Rules, Part-II .

SBCWP No. 17571/2024: Is filed assailing the letter dated 24.04.2024 issued by the Jaipur Development Authority (hereinafter referred to as ‘JDA’), thereby withdrawing the work allotted to the petitioner vide the Letter of Acceptance No. JDA/EE/TR WORKS-II/LOA/2022-2023/DEC/01 (hereinafter referred to as ‘LoA’) dated 14.12.2022, without affording any rationale of such withdrawal.

Consequently, considering the fact that the writ petitions warrant adjudication on common questions of law and fact; with the consent of learned counsel appearing on behalf of all the parties, S.B. Civil Writ Petition No. 8120/2025 titled as JCL Infra Private Limited V. Jaipur Development Authority and Ors. is being taken up as the lead case. It is cautiously clarified that any discrepancies in the present batch of writ petitions, pertain purely to the factual narratives contained therein and not vis-a-vis the questions of law to be determined by this Court; the instant judgment shall be applicable on both the petitions connected herein/henceforth on mutatis mutandis basis.

SUBMISSIONS ADVANCED AND CONTENTIONS PROFFERED BY THE LEARNED COUNSEL APPEARING FOR AND ON BEHALF OF THE PETITIONER HEREIN ARE AD-SERIATIM:

2. At the threshold, and before adverting to the substantive arguments, the chronological particulars giving rise to the instant controversy, as submitted by the learned counsel appearing for and on behalf of the petitioner are set forth hereinbelow:

2.1 At the very outset, learned counsel appearing on behalf of the petitioner submitted that the petitioner is a company duly incorporated under the provisions of the Companies Act, 2013, bearing CIN U24231UP1980PTC005098, and having its registered office in Meerut. It was submitted that the petitioner has been constrained to approach this Court on account of the manifestly arbitrary, capricious, and unlawful actions of the respondent authorities in re-inviting consultancy services for the preparation of a DPR in respect of the OTS Flyover, notwithstanding the undisputed position that the DPR for the said project had already been prepared and the work stood duly awarded to the petitioner, pursuant to a valid and concluded tender process, and that the petitioner has, in furtherance thereof, incurred substantial financial expenditure and mobilised significant resources of men and machinery.

2.2 It was submitted that the respondents issued a Notice Inviting Bid bearing NIB No. EE-ROB/RUB-B/01/2025-26 dated 03.04.2025 for “Consultancy Services for Preparation of DPR for proposed elevated road from Transport Nagar to Balagiri Tri Junction, Jagatpura and from Jhotwara ROB to Khatipura ROB and flyover at OTS Junction, JLN Marg, JDA Jaipur.” Learned counsel had clarified that the petitioner has confined its challenge only to that segment of the impugned NIB which pertains to the OTS Flyover, inasmuch as the said project had already been awarded to the petitioner through a lawful tendering process and was already under active execution.

2.3 Elaborating further, it was submitted that the petitioner had been awarded the EPC contract vide LoA dated 14.12.2022 bearing No. JDA/EE TR Works-II/LOA/2022-2023/Dec/01 for the work of “Traffic improvement and beaut

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