Termination of contracts must adhere to established contractual obligations and procedural requirements; failure to comply with these undermines claims of unreasonableness or arbitrariness in actions taken by the state instrumentality.

ORDER :

NAGESH BHEEMAPAKA, J.

Petitioner is a private limited company engaged in execution of large-scale infrastructure and civil engineering works and has, over the years, undertaken complex projects involving earthwork, bridges, and allied construction activities. Pursuant to an open tender process initiated by Respondent No.2, Petitioner was awarded the subject work. The present writ petition is filed challenging the action of Respondent No.2 in issuing Termination Notice dated 30.09.2025 and the consequential and imminent steps taken and threatened to be taken for invocation of the Bank Guarantees furnished by Petitioner, coupled with forfeiture of amounts admittedly owed and refundable to Petitioner under the contract.

1.1. Petitioner contends that impugned termination and threatened invocation of Bank Guarantees is ex facie arbitrary, unreasonable and vitiated by mala fides. It is specifically pleaded that the alleged delay in execution of works was not attributable to any default on their part, but was occasioned solely due to Respondent No.2's own persistent and admitted lapses, including failure to hand over encumbrance-free and workable site, failure to furnish approved drawings and L- sections essential for execution, failure to freeze and finalise the scope of work introduction of massive variations and additions to the scope long after award of contract, chronic and unjustified delays in release of running account bills and occurrence of force majeure events such as COVID-19 pandemic, unprecedented rains, flooding and cyclonic conditions. All these factors were duly notified to, acknowledged by, and within the active knowledge of Respondent No.2 from time to time.

1.2. Petitioner states that pursuant to the tender invited by Respondent No.2 for the work of ‘Earth work in formation (cutting and banking) and construction of bridges for Railway siding and marshalling yard for (4X270 MW) BTPS, Manuguru, Bhadradri-Kothagudem District’, Petitioner submitted its bid, which was accepted and work was awarded for contract value of Rs.24,22,52,159.40 vide Letter of Acceptance dated 30.05.2020. The original stipulated completion period under the Letter of Acceptance was nine months.

1.3. It is specifically contended that within the said original completion period of nine months, Respondent No.2 neither handed over the site required for execution of works nor furnished the approved drawings necessary for commencement and completion of the work. Despite Petitioner fulfilling all pre- requisites under the tender conditions, including furnishing Performance Bank Guarantee and Additional Performance Bank Guarantee on 12.06.2020, Respondent No.2 failed to execute the formal agreement within the original completion period.

1.4. Petitioner states that L.S. Agreement bearing No.15/2021-22 came to be executed only on 09.09.2021, after a lapse of nearly fifteen months from the date of the Letter of Acceptance dated 30.05.2020. The Agreement so executed was a standard form dotted-line contract, affording no bargaining power to Petitioner and compelling acceptance on a take-it-or- leave-it basis. Petitioner further contends that the salient terms of the contract stipulated, inter alia, completion period of nine months, mandatory release of payments within thirty days from the date of submission of invo