Administrative orders terminating contracts must provide reasoned consideration of explanations to satisfy natural justice.

COMMON ORDER

The petitioner, in all these writ petitions, challenges the impugned order dated 09.03.2026 passed in Na.Ka.No.370/2022/A1, Na.Ka.No.343/2022/U1, and Na.Ka.No.110/2022/U1 on the file of the fifth respondent. Consequently, the petitioner seeks a direction to the respondents to permit completion of the work and to make payment therefor; or, in the alternative, to direct payment for the work already executed, treating the same as a non-gratuitous act, together with interest at 12% per annum within a time frame to be stipulated by this Court.

2.By the impugned orders, the fifth respondent cancelled the work orders and terminated the contracts dated 05.09.2023, 19.07.2023, and 19.07.2023. It was further ordered that all securities, including the Earnest Money Deposit, Additional Security Deposit, retention money, and any amounts due under the final bill for completed work, shall stand forfeited and credited to the Town Panchayat funds.

3.The fifth respondent had invited tenders under the AMRUT

2.0 Scheme for improvement of water supply systems in the respective Town Panchayats. The petitioner, having participated in the tender process, was declared the successful bidder and awarded the contracts. As per the contract conditions, the works were to be completed within 15 months from the date of handing over of the site.

4.According to the fifth respondent, the petitioner failed to complete the works within the stipulated time. Consequently, several notices were issued calling upon the petitioner to expedite the work and, thereafter, to explain the delay. Despite extension of time, the works remained incomplete. Hence, after issuance of final show cause notices and consideration of the petitioner’s explanations, the impugned orders came to be passed.

5.Heard Mr. TSR. Venkataramana, learned Senior Counsel appearing for the petitioner, Mr. M. Murugan, learned Central Government Standing Counsel appearing for the first respondent, and Mr. M. Ajmalkhan, learned Additional Advocate General appearing for respondents 2 to 5.

6.Final notices were issued to the petitioner alleging failure to complete the works despite extension of time and calling upon the petitioner to show cause as to why the contracts should not be terminated.

7.The petitioner submitted detailed explanations on 02.08.2025, 29.09.2025, and 26.11.2025, setting out reasons for the delay. The receipt of these explanations is not in dispute and is, in fact, recorded in Sl.No.10 of the impugned orders. However, a perusal of the impugned orders reveals that though the explanations are referred to, there is no consideration thereof, nor are any reasons assigned for accepting or rejecting the same.

8.The impugned orders are thus bereft of reasons and suffer from non-application of mind, in violation of the principles of natural justice. On this ground alone, the impugned orders are liable to be set aside.

9.In the result, the writ petitions are allowed and the impugned orders dated 09.03.2026 passed in Na.Ka.No.370/2022/A1, Na.Ka.No.343/2022/U1, and Na.Ka.No.110/2022/U1 by the fifth respondent are set aside. The fifth respondent is directed to consider the petitioner’s explanations dated 02.08.2025, 29.09.2025, and 26.11.2025, and pass reasoned (speaking) orders strictly in accordance with the terms of the tender documents and the conditions of the contracts.

10.It is also noted that the impugned orders do not assign any reasons for forfeiture of the Earnest Money Deposit, Additional Security Deposit, retention money, or amounts due under the final bills. The fifth respondent shall, therefore, specifically address these aspects and pass a reasoned order in accordance with the contractual terms.

11.The above exercise shall be com