IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR BEFORE HON'BLE SHRI JUSTICE SANJEEV SACHDEVA, &

HON'BLE SHRI JUSTICE VINAY SARAF ON THE

7th OF NOVEMBER, 2024 WRIT PETITION No. 26679 of 2024 M/S GULSHAN RAI JAIN II Versus MUNICIPAL CORPORATION, BHOPAL AND OTHERS Appearance:

Shri Naman Nagrath – Senior Advocate with Shri Anand Dixit and Shri Jubin Prasad – Advocate for petitioner.

Shri Anubhav Jain – Government Advocate for the respondent No.1/State.

Shri Sanjay Kumar Agrawal – Senior Advocate with Ms. Ankit Khare – Advocate for respondents.

ORDER Per : Justice Sanjeev Sachdeva

1. Petitioner seeks quashing of letter dated 29.08.2024, terminating the contract of the petitioner; blacklisting the petitioner and appropriating the performance security and security deposit made by the petitioner, pursuant to the award of contract. Petitioner further seeks a direction to the respondent to make balance payment of the running bills/ work done to the petitioner.

2. Respondent Municipal Corporation of Bhopal had invited bids for construction of houses and Development of Infrastructure for slum localities in Bhopal under Prime Minister Awas Yojna. Bid was invited for construction of 2232 flats. Petitioner was successful in the bid and was awarded the contract on 04.02.2019, the term of completion of project was two years.

3. As per the petitioner, the work was delayed on account of factors attributable solely to the respondent and accordingly petitioner requested for extension of time on 25.01.2021, which extension was granted on 02.03.2021. As per the petitioner, work further got delayed on account of factors attributable to the respondents and petitioner once again asked for extension of time on 28.01.2022, which was granted on 11.03.2022. Similar extensions were requested for by the petitioner on grounds attributable to the respondents and extensions were granted from time to time till April, th

2024. As per the petitioner, 28 running bill was raised and payment there under was requested for by the petitioner on 22.04.2024. Said bill was th partly paid. However substantial amount was withheld. Thereafter 29 running bill was raised by the petitioner on 08.07.2024, but payment was not made. Subsequently by communication dated 29.08.2024, respondents terminated the contract and passed an order of blacklisting of petitioner from participation in further contracts for a period of 5 years and also directed appropriation of performance security and security deposit.

4. Learned Senior counsel for the petitioner inter alia contends that there was no show cause notice issued to the petitioner prior to passing the order of blacklisting the petitioner from participation in other projects. It is further contended that termination letter dated 29.08.2024 made no reference to communication dated 15.03.2022 whereby the work was substantially de-scoped. He submits that the work was de scoped on account of factors attributable to the respondents inter alia non availability of adequate land for raising construction. Learned Senior counsel further submits that the termination is contrary to the factual matrix and the appropriation of performance and security deposit is also illegal as no amount has been quantified for the alleged loss suffered. Learned Senior counsel for the petitioner submits that the contract stipulated that prior to termination of the contract, the employer was obliged to give 14 days’ notice to the contractor to rectify the defects and only on the contractor failing to comply with the same could the power to terminate be exercised. He further submits that very basis of termination is incorrect and the respondents have not taken into account the factual matrix and the de-

scoping of the project by reduction of the number of flats.

5. Learned Senior counsel for the petitioner further submits that respondents could not have directed invocation of the bank guarantee without quantification of the loss and damage suffered by the respondents and there i