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2024 Supreme(Online)(DEL) 31497
HIGH COURT OF DELHI
Sanjeev Narula, J
ANIL KUMAR MAGGU – Appellant
Versus
FOOD CORPORATION OF INDIA – Respondent
W.P.(C)-13958/2024
Mr. Jeetender Gupta, Advocate; Mr. Manoj, SC; Ms. Aparna Sinha, Advocate
The court upheld the validity of a termination clause allowing a party to terminate a contract without cause, emphasizing contractual autonomy and the limited scope of writ jurisdiction in contractual disputes.
Headnote:(A) Constitution of India, 1950 - Articles 14 and 19 - Contract Law - Termination of contracts - The Petitioner challenged the termination of contracts for handling and transporting food grains, asserting violations of natural justice and fundamental rights. The Respondent terminated the contracts citing administrative reasons, invoking a clause allowing termination without cause. (Paras 1-2, 4-5)
(B) Writ Jurisdiction - The Court held that the writ jurisdiction is not applicable to contractual disputes unless there is a clear violation of public law principles. The Petitioner failed to demonstrate such a violation. (Paras 6-8)
(C) Contractual Autonomy - The Court emphasized that parties are bound by mutually agreed terms, and the Respondent's right to terminate was valid under the contract. The Petitioner’s claims of arbitrariness were rejected as the termination was based on a specific contractual clause. (Paras 9-11)
(D) Interim Relief - The Court denied the request for interim relief, stating that reinstating a terminated contract would undermine the contractual rights of the Respondent. (Paras 12-13)
Facts of the case:
The Petitioner was awarded contracts for handling and transporting food grains but faced termination notices citing administrative reasons. The Petitioner argued that the termination was arbitrary and violated their rights. (Paras 1-5)
Findings of Court:
The Court found no merit in the Petitioner’s claims, affirming the validity of the termination clause and the Respondent's right to terminate the contracts. (Paras 6-13)
Issues: The main issues included the validity of the termination notices, adherence to due process, and the applicability of writ jurisdiction in contractual disputes. (Paras 4-6)
Ratio Decidendi: The Court ruled that the Respondent acted within its contractual rights to terminate the contracts without assigning reasons, and the Petitioner did not establish a violation of fundamental rights or public law principles. (Paras 6-11)
Result: Petitions dismissed.
JUDGMENT
SANJEEV NARULA, J. (Oral):
1. The present petitions challenge the notices dated 13th September, 2024, issued by the Food Corporation of India, terminating two separate contracts awarded to the Petitioner. These contracts were formalized through Signature Not Verified Dgitally Signed W.P.(C) 13958/2024 & W.P.(C) 13977/2024 Page 1 of 9 distinct letters of award: one dated 18th May, 2023, in W.P.(C) 13958/2024, and the other dated 2nd June, 2023, in W.P.(C) 13977/2024, both issued by the Assistant General Manager (Contract) on behalf of the General Manager (Region) of Respondent No. 1. The contracts pertain to the Handling & Transport Contract at FSD Shaktinagar.
2. The Petitioner participated in tenders floated by the Respondent through the GeM portal for handling and transporting food grains and allied materials for a period of two years. Following the tender process, the Petitioner emerged as the successful bidder and was issued acceptance letters on 27th April, 2023 for GeM bid No. GEM/2023/B/3131029, and 1st May, 2023 for GeM bid No. GEM/2023/B/3135666, followed by contract/award letters dated 18th May, 2023, and 2nd June, 2023, respectively. However, on 13th September, 2024 the Respondent terminated both contracts through two notices corresponding to the distinct contracts, effective 30 days from issuance, i.e., 13th October, 2024. For ease of reference, the termination notice annexed in W.P.(C) 13958/2024 is extracted below:
“Dated: Signed Date (By E-mail)
M/s Anil Kumar Maggu, H.No. 416, Sector-9 Faridabad, Haryana, Email: anilkumarmagu@gmail.com Mob.: 9212505672 Subject: Notice regarding termination of the Handling & Transport Contract at FSD Shaktinagar against GeM bid no: GEM/2023/B/3131029 dated 14.02.2023.
Ref: 1.NIT & MTF of tender against GeM bid no:
GEM/2023/B/3131029 dated 14.02.2023.
2. Award letter dated 18.05.2023.
Signature Not Verified Dgitally Signed W.P.(C) 13958/2024 & W.P.(C) 13977/2024 Page 2 of 9 Sir, In reference to subject cited above, it is informed that you were awarded the Handling & Transport Contract at FSD Shaktinagar under Divisional Office Shaktinagar against GeM bid no: GEM/2023/B/3131029 dated 14.02.2023, vide this office letter dated 18.05.2023 for the period of two years (20.05.2023 to 19.05.2025).
Further, as per the terms and conditions Governing Contracts of NIT and MTF of tender under point VIII (ii) i.e Period of Contract reiterated as under:
“The General Manager reserves the rights to terminate the contract at any time during its currency without assigning any reasons thereof by giving Thirty Days' Notice in writing to the Contractor at the notified address and the Contractor shall not be entitled to any compensation by reason of such termination. The action of the General Manager (Region) under this clause shall be final, conclusive and binding on the Contractor.”
Hence, in accordance with above clause of MTF, the Competent Authority has decided to exercise the right to terminate contract of the Handling & Transport Contract at FSD Shaktinagar under Divisional Office Shaktinagar with you due to administrative reasons. The termination will be effective after thirty (30) days from the date of this notice.
The decision of General Manager (Region) in this regard will be final, conclusive and binding upon you. You are requested to ensure necessary compliance within stipulated period.”
3. The Petitioner, aggrieved by the termination notices, has submitted a representation dated 18th September, 2024, to the Grievance Redressal Committee of the Respondent-Corporation, requesting a review and recall of the termination. Despite this submission, no response has been forthcoming from the Respondent. Consequently, the Petitioner has invoked the jurisdiction of this Court under Article 226 of the Constitution of India , 1950, seeking to set aside the termination notices. Additionally, the Petitioner requests a stay on the termination.
Signature Not Verified Dgitally Signed W.P.(C) 13958/2024 & W.P.(C
