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2026 Supreme(Online)(AP) 19483

HIGH COURT OF ANDHRA PRADESH
K SREENIVASA REDDY
G BHARATHI – Appellant
Versus
THE UNION OF INDIA – Respondent
WP 19327/2023

Advocates:
For the Appellants/Petitioners: P Shashi Vardhan
For the Respondents: Jupudi V K Yagnadutt

Debarment of a contractor for contractual breach without issuing show-cause notice or hearing violates Rule 151 of General Financial Rules, 2017 and principles of natural justice, even if contract provides for automatic debarment.

Headnote:(A) General Financial Rules, 2017 - Rule 151 - Debarment from bidding - Requirement of reasonable opportunity to represent before debarment - Ministry of Railways Debarment Guidelines, 2022 - Show-cause notice and oral hearing mandatory - Principles of natural justice - Audi alteram partem.

(B) Writ Jurisdiction - Maintainability - Arbitration clause in contract does not bar writ petition when challenge is to violation of statutory guidelines and natural justice, not a contractual dispute.

(C) Debarment - Scope - Mere breach of contractual obligation (non-payment of license fee) without guilty conduct does not automatically warrant punitive debarment; drastic measure requires adherence to prescribed procedure.

Facts of the case:
The petitioner, a railway catering contractor, was allotted a catering stall at Guntur Railway Station under a Master License Agreement for five years (2019-2024). She paid license fees for the first four years but failed to pay the fifth year fee by the due date (15.04.2023) or within the 90-day grace period ending 14.07.2023. On the last day, she attempted to pay via the respondent’s web portal, but the portal was under migration and unavailable. The respondents then terminated the license and debarred her from future catering tenders for five years through a letter dated 27.07.2023, without issuing any show-cause notice or granting a hearing. The petitioner challenged the debarment order as illegal and violative of natural justice and the Debarment Guidelines, 2022.

Findings of Court:
The court held that the impugned debarment letter was contrary to Rule 151 of the General Financial Rules, 2017, and the Ministry of Railways Debarment Guidelines, 2022. Under Rule 151(iv), a bidder shall not be debarred without a reasonable opportunity to represent. The guidelines require a show-cause notice, an opportunity for oral hearing, and reasons in the debarment order. The respondents failed to follow any of these steps. The debarment order did not mention any show-cause notice, oral hearing, or reasons. The action was arbitrary and violated the principle of audi alteram partem. The court set aside the debarment letter but declined to order reopening of the stall as the contract period had expired. (Paras 15-18)

Issues: Whether the impugned debarment order dated 27.07.2023 was valid despite non-compliance with statutory guidelines and principles of natural justice? Whether the writ petition was maintainable given the arbitration clause in the agreement?

Ratio Decidendi: Debarment, being a punitive measure, must be preceded by a show-cause notice and a reasonable opportunity of hearing as mandated under Rule 151 of GFR 2017 and the Railway Board’s Debarment Guidelines, 2022. Mere failure to pay license fee on time, without any willful default or misconduct, does not justify bypassing the prescribed procedure. The arbitration clause does not oust the writ jurisdiction when the challenge is based on violation of statutory rules and fundamental rights. Result : Writ Petition allowed in part; impugned debarment letter set aside; consequential relief of reopening stall refused as period expired; no order as to costs. (Para 20)

APHC010378242023 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI [3327]

(Special Original Jurisdiction)

THURSDAY, THE TWELFTH DAY OF MARCH TWO THOUSAND AND TWENTY SIX PRESENT THE HONOURABLE SRI JUSTICE K SREENIVASA REDDY WRIT PETITION NO: 19327/2023 Between:

1. G BHARATHI, W/O KARUNAKARAM, AGED 47 YEARS RAILWAY CATERING CONTRACTOR, NO. 27, MANALMUDU STREET, OPP GOODS SHED, ERODE- 658001, REPRESENTED BY ITS AUTHORISED PERSON NAMELY BATHULA SRINIVASARAO, S/O VENKATESWARLU, AGED ABOUT 38 YEARS, OCC. MANAGER, R/O 20-18-289, D S NAGAR, 5TH LINE, OPPOSITE MSR COULD STORAGEM ETUKUR DOAD, GUNTUR DISTRICT, ANDHRA PRADESH, 522003 ...PETITIONER A N D

1. THE UNION OF INDIA, REPRESENTED BY GENERAL MANAGER RAILWAYS, SOUTH CENTRAL RAILWAY, SECUDRABAD, TELANGANA, 500071

2. THE DIVISIONAL RAILWAY MANAGER, , DIVISIONAL OFFICER SOUTH CENTRAL RAILWAY, GUNTUR, ANDHRA PRADESH.

3. THE SENIOR DIVISIONAL COMMERCIAL MANAGER, SOUTH CENTRAL RAILWAYS, GUNTUR ...RESPONDENT(S):

Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to pass orders particularly one in the nature of writ of Mandamus declaring the proceedings no. GNT/C 79/PF Stall/PF 4 and 5/GNT, dated 27-07-2023 issued by the respondent no.3 is null and void and declare the same as illegal, arbitrary and against the principles of natural justice, against the office Memorandum issued by Department of Expenditure Procurement Policy Division No. F-1/20/2018-PPD dated 2-11- 2021, the Railway Board had issued a debarment guidelines via latter no. 2021/RS(G)/779/17(E33880061 dated 09-11-2022 and consequently quash the proceedings no. GNT/C 79/PF Stall/PF 4 and 5/GNT, dated 27-07-2023 issued by the respondent no.3 and direct the respondents to reopen the catering stall/SMU -3 at platform Nos. 4 and 5 on Guntur Railway Station, by giving an opportunity to pay the licence fee for the year 2023-2024 within stipulated time and pass IA NO: 1 OF 2023 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased pleased to stay of all further proceedings in GNT/C 79/PF Stall/PF 4 and 5/GNT, dated 27-07- 2023 issued by the respondent no.3 and direct the respondents to reopen the catering stall/SMU -3 at platform Nos. 4 and 5 on Guntur Railway Station, giving an opportunity to pay the licence fee for the year 2023-2024 within stipulated time, pending disposal of the writ petition and pass IA NO: 2 OF 2023 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the respondents by giving an opportunity to participate in the future tenders by suspending the impugned proceedings in GNT/C 79/PF Stall/PF 4 AND 5/GNT, dated 27-07-2023 issued by the respondent No.3 and direct the respondents to give an opportunity to pay the licence fee for the year 2023-2024 within stipulated time, pending disposal of the writ petition and pass IA NO: 3 OF 2023 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to permit the petitioner to file the additional affidavit/ additional material papers and consider the additional affidavit/ additional material papers as part and parcel of the above writ petition, pending disposal of the above writ petition and pass IA NO: 4 OF 2023 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to extend the interim orders dated 02-08-2023 granted earlier in IA No. 1 of 2023 in WP no. 19327 of

2023 and pass IA NO: 1 OF 2025 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend the impugned proceedings-

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2026 Supreme(Online)(AP) 19483

HIGH COURT OF ANDHRA PRADESHK SREENIVASA REDDYG BHARATHI – AppellantVersusTHE UNION OF INDIA – RespondentWP 19327/2023

Debarment of a contractor for contractual breach without issuing show-cause notice or hearing violates Rule 151 of General Financial Rules, 2017 and principles of natural justice, even if contract provides for automatic debarment.

Cases Referred (1)

HIGH COURT OF ANDHRA PRADESH
K SREENIVASA REDDY
G BHARATHI – Appellant
Versus
THE UNION OF INDIA – Respondent
WP 19327/2023