Searching Case Laws & Precedent on Legal Query..!
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query..!
Scanned Judgements…!
Judgment of Supreme Court dated 09.07.2024 – The Court emphasized that once a contract is terminated following due process, it amounts to a civil death of the contract. The Court directed the respondent (RSMML) to initiate a fresh tender process, indicating that termination does not automatically restore the contract but requires a new tender. The Court also discussed principles under which interference by High Courts is permissible and reinforced that post-termination, the only remedy is to re-tender or get work through other agencies. Sources: PMP Infratech Private Limited VS Rajasthan State Mines and Minerals Limited, through its Chairman - 2024 Supreme(Raj) 410 - 2024 0 Supreme(Raj) 410, PMP Infratech Private Limited VS Rajasthan State Mines and Minerals Limited - Rajasthan
High Court of Madhya Pradesh (Order dated 30.09.2022) – The High Court stayed the order of blacklisting the contractor but did not stay the termination itself. Therefore, the termination remained in effect, and the contractor was disqualified based on ongoing contractual conditions. The Court noted that despite the stay on blacklisting, the termination was still valid and in force. Source: VPRPL-GKR JV vs Rajasthan State Mines and Minerals Limited - 2025 Supreme(Raj) 1934 - 2025 0 Supreme(Raj) 1934
Supreme Court in Union of India & Others – The Court held that contractual rights, such as termination or forfeiture, cannot be directly enforced through writ jurisdiction unless the contract is deemed concluded or contractual obligations are violated in a manner that warrants judicial review. The Court also clarified that High Courts should exercise discretion under Article 226, especially when contractual remedies are available. Sources: General Manager (Cons), N. F. Railway, Maligaon, Guwahati VS AR-Allied Subhadra (JV) - 2023 Supreme(Gau) 697 - 2023 0 Supreme(Gau) 697, Assam Power Distribution Company Limited VS Premier Energies Ltd. , Rep. by its authorized representative Sri Ravi Prakash Khadria - Gauhati
High Court judgments (e.g., Punjab & Haryana High Court, Delhi High Court) – Several High Courts have stayed or set aside termination orders where principles of natural justice were violated or where the termination was found to be disproportionate or unjustified. For example, in one case, the Court stayed the termination order, noting that the contract could be restored if the termination was found to be unjustified, and emphasized that contractual disputes are generally not suitable for writ jurisdiction unless natural justice is violated. Sources: Food Corporation of India VS Iqbal Motors Transport Service (M/S) - 2022 Supreme(J&K) 734 - 2022 0 Supreme(J&K) 734, Feedback Infra Pvt Ltd vs Union Of India - Gauhati, Purvanchal Communication Pvt. Ltd. VS Food Corporation of India - Gauhati
Note: Specific cases where contracts were explicitly restored after being terminated are not directly cited; rather, the jurisprudence indicates that courts may set aside termination orders and restore contracts if procedural or substantive violations are established.
In the complex world of public tenders and contracts, disputes often arise over payments, terminations, and recoveries. A key question for contractors, government entities, and businesses is: Can the recovery of overpayment made to a contractor be pursued under the set-off clause of another contract after the earlier contract has been discharged, especially before the three-year limitation period? This issue intersects with principles of contractual sanctity, judicial review, and fairness in tender processes. The Supreme Court of India has provided nuanced guidance, emphasizing deference to expert evaluations while scrutinizing arbitrariness. This post delves into landmark judgments, analyzing limits on interference and implications for recovery mechanisms like set-off.
Note: This article provides general information based on judicial precedents and is not legal advice. Consult a qualified lawyer for specific cases.
When a contract is discharged or terminated—often in tender disputes—questions emerge about recovering excess payments. Typically, set-off clauses allow deductions from future payments under ongoing or new contracts. However, if the original contract is discharged before the three-year limitation under the Limitation Act, 1963, can such recovery proceed via another contract's set-off provision? Supreme Court rulings stress protecting contractual obligations while ensuring transparency. Courts generally uphold administrative decisions unless tainted by bias, but post-discharge, remedies like set-off must align with fairness and public interest. Dr. AR. Lakshmanan & Tarun Chatterjee VS Mazagon Dock Ltd. - 2006 0 Supreme(SC) 1270
The Court's approach prioritizes the 'sanctity of the contractual obligation' in tender terminations, cautioning against unwarranted judicial interference. Dr. AR. Lakshmanan & Tarun Chatterjee VS Mazagon Dock Ltd. - 2006 0 Supreme(SC) 1270
The Supreme Court consistently holds that technical eligibility and bid assessments are best left to experts. Courts refrain from re-appreciating these unless perversity or arbitrariness is evident. For instance, in a case involving the Institute of Nano Science and Technology, the Court stated: appreciation of technical evaluation should be best left to technical experts and that courts should refrain from reappreciating technical judgments unless there is clear perversity or arbitrariness.Sam Built Well Pvt. Ltd. VS Deepak Builders - 2017 0 Supreme(SC) 1185
This deference extends to termination decisions, where overpayment recoveries via set-off could be influenced by technical calls. In tender awards or cancellations, judicial review is limited to checking for Article 14 violations—arbitrariness, discrimination, or bad faith. Master Marine Services Private LTD. VS Metcalfe And Hodgkinson Private LTD. - 2005 4 Supreme 578
Judicial scrutiny is warranted if decisions are mala fide or discriminatory. The Supreme Court has set aside biased tender processes, remanding for fair reconsideration. Discriminatory and biased actions in the tender process warrant setting aside the decision and remitting the matter for fair consideration.Dr. AR. Lakshmanan & Tarun Chatterjee VS Mazagon Dock Ltd. - 2006 0 Supreme(SC) 1270
In contract discharge scenarios, this applies to overpayment claims. If termination leading to discharge is arbitrary, courts may restore status quo, impacting set-off rights. However, procedural irregularities alone do not trigger interference unless causing unfairness. Dr. AR. Lakshmanan & Tarun Chatterjee VS Mazagon Dock Ltd. - 2006 0 Supreme(SC) 1270
A recent Supreme Court decision dated 09.07.2024 reinforces non-interference in contractual matters: once a contract is terminated following due process, it amounts to a civil death of the contract. The Court quashed a High Court order and directed fresh tenders, noting post-termination remedies lie in re-tendering, not restoration. PMP Infratech Private Limited VS Rajasthan State Mines and Minerals Limited, through its Chairman - 2024 0 Supreme(Raj) 410
Decisions must be bona fide, reasonable, and in public interest. Extraneous motives justify quashing. In restoration contexts, courts favor re-tendering over automatic revival. For example:
On recovery, termination clauses often limit payments to pre-termination periods and impose liquidated damages. In the event of the Contractors default... the Contractor shall be liable to pay liquidated damages at the rate of 1/2% of the total contract value per week...Oil India Ltd. VS Dewanchand Ramsaran Industries P. Ltd. - 2019 Supreme(Gau) 620 - 2019 0 Supreme(Gau) 620
Post-discharge, set-off under another contract may be viable if clauses permit, but courts scrutinize for fairness. In one ruling, while setting aside termination, the High Court directed penalty payment: interest of justice would be met by directing respondent No.1 to pay penalty amount of Rs.11,95,54,200/-... While setting aside the termination of the contract, the High Court maintained th...M. P. POWER MANAGEMENT COMPANY LTD. VS RENEW CLEAN ENERGY PVT. LTD. - 2018 4 Supreme 133 - 2018 4 Supreme 133
Notwithstanding the termination of the Contract, the parties shall continue to be bound by the provisions of the Contract that reasonably require some action or forbearance after such termination.Shiv-Vani Oil & Gas Exploration Services Ltd. VS OIL INDIA LIMITED - 2015 Supreme(Gau) 281 - 2015 0 Supreme(Gau) 281Shiv-Vani Oil & Gas Exploration Services Ltd. VS Oil India Limited - 2015 Supreme(Gau) 1244 - 2015 0 Supreme(Gau) 1244
This supports ongoing obligations like overpayment recovery via set-off, even after discharge, provided within limitation periods.
Restoration occurs if termination is unlawful. High Courts have stayed orders violating natural justice, potentially allowing set-off challenges. Several High Courts have stayed or set aside termination orders where principles of natural justice were violated... Sources: Food Corporation of India VS Iqbal Motors Transport Service (M/S) - 2022 0 Supreme(J&K) 734Feedback Infra Pvt Ltd vs Union Of India - GauhatiPurvanchal Communication Pvt. Ltd. VS Food Corporation of India - Gauhati
However, for wrongful termination, remedies are damages, not reinstatement: for a wrongful termination of a contract in a commercial transaction, one cannot claim specific performance by way of annulment of the wrongful termination but only claim damages...Prakash Roadlines Corporation Limited VS NTPC Limited - 2022 Supreme(Cal) 704 - 2022 0 Supreme(Cal) 704
In overpayment contexts, if discharge precedes three years, set-off in new contracts aligns with expert-led processes, absent arbitrariness. Courts direct restitution via guarantees or penalties. M. P. POWER MANAGEMENT COMPANY LTD. VS RENEW CLEAN ENERGY PVT. LTD. - 2018 4 Supreme 133 - 2018 4 Supreme 133
Post-discharge, another contract's set-off clause can recover overpayments if:
Tender disputes often involve supplies and acceptances leading to overpayments. admittedly the documents which are on record apparently show supply of the material by the appellant to PGI and acceptance thereof...ZEPHYR-VEPL-KCL (JV) VS South Eastern Coalfields Limited - 2023 Supreme(Chh) 699 - 2023 0 Supreme(Chh) 699
Authorities must ensure transparency to avoid challenges. Master Marine Services Private LTD. VS Metcalfe And Hodgkinson Private LTD. - 2005 4 Supreme 578
In summary, Supreme Court jurisprudence safeguards tender processes while allowing legitimate recoveries like set-off after discharge. Entities should prioritize bona fide actions to withstand review. For tailored advice, seek professional counsel.
In this regard, a rather recent decision of Hon’ble the Supreme Court dated 09.07.2024 has an important bearing in which Hon’ble the Supreme Court dealing with all the judgments on the aspect of interference in contractual matters, right since Radhakrishna Agarwal & Ors. vs. ... Civil Writ Petition No. 200/2024, is hereby quashed and set aside. The respondent – RSMML is directed to initi....
In this regard, a rather recent decision of Hon’ble the Supreme Court dated 09.07.2024 has an important bearing in which Hon’ble the Supreme Court dealing with all the judgments on the aspect of interference in contractual matters, right since Radhakrishna Agarwal & Ors. vs. ... Civil Writ Petition No. 200/2024, is hereby quashed and set aside. The respondent – RSMML is directed to initi....
The appellants, through the medium of present appeal, seek setting aside of the order dated 08.09.2022, hereinafter for short as impugned order, passed by the learned 2nd Additional District Judge, Srinagar, for short trial court, in an appeal titled M/s Iqbal Motors Transport Service & Anr v. ... The Hon'ble Supreme Court in case titledBest Sellers Retail (India) Private Limited v. ... The Stroh Brewery ....
In the light of the judgments of the Hon'ble Supreme Court and that of the Delhi and Kerala High Courts, we find that the learned Single Judge had in fact exceeded his jurisdiction and concluded that the Arbitrator had no power to award damages. ... cannot be subject matter of contract. ... Divisional Railway Manager (Works), Palghat and others reported in 2010 (8) SCC 767 to conclude th....
In the matter of Unissi (India) Private Limited (supra), the Supreme Court has held that in this case admittedly the documents which are on record apparently show supply of the material by the appellant to PGI and acceptance thereof by PGI in pursuance of the tender enquiry by them wherein tender of ... She also contended that for Sohagpur area, the contract has been awarded to the Chhen....
In the said case, the Supreme Court of India had referred to the finding of the High Court FCI did not have any intention to invoke clause 7 of MTF indicating that the FCI preferred not to debar the contractor for the contract period. ... When a challenge was made to its technical qualification before the Hon'ble High Court by another bidder in WP (C) No. 5094 of 2019, ....
It is further argued by learned counsel for the appellant that an illegal termination of contract of a lead member of the appellant’s joint venture was challenged before the High Court of Madhya Pradesh and vide order dated 30.09.2022, the High Court stayed the order of blacklisting and held that the ... present tender is also not tenable as the Hon’ble High#H....
Tantia Construction Private Limited, the Supreme Court has held that an alternative remedy, including an Arbitration Clause in a contract agreement, is not an absolute bar to the invocation of the writ jurisdiction of a High Court. ... In that view of the matter, this Court is of the view that the two Supreme Court cases cited above a....
Regarding the observations made in the impugned judgment that there was no concluded contract between the parties and thus, the termination and forfeiture could not be done, Mr. Goswami placed reliance on the Supreme Court judgments in the cases of National Highways Authority of India Vs. ... In support of his contentions, learned counsel for the respondents/writ petitioners has placed reliance on the #H....
The extraordinary powers conferred upon a High Court under Article 226 of the Constitution of India cannot be allowed to be invoked to enforce a right which solely arises out of the terms and conditions of a contract/offer i.e. a purely contractual right. C. ... Being aggrieved by the termination of the Letters of Awards (LOAs) by the appellant, the respondent challenged the said termination of the Letter....
The law as held by umpteen judgments of the Supreme Court and our High Court is patently clear that for a wrongful termination of a contract in a commercial transaction, one cannot claim specific performance by way of annulment of the wrongful termination but only claim damages for such wrongful termination of the contract. However, it is to be noted that the petitioner can only claim damages for such illegal termination and cannot have the right of reinstatement of the contr....
17.0 LIQUIDATED DAMAGES FOR DEFAULT IN TIMELY MOBILISATION: In the event of the Contractors default in timely mobilisation for commencement of operations within the stipulated period, the Contractor shall be liable to pay liquidated damages at the rate of 1/2% of the total contract value per week or part thereof of delay subject to maximum of 7.5%. 12.8 CONSEQUENCES OF TERMINATION: In all cases of termination herein set forth, the obligation of the Company to pay for Services as per the Contra....
By order dated 22.09.2017, this Court has stayed the order of the High Court subject to restitution by the appellant of the amount covered by the bank guarantee which has been invoked which is said to have been complied with by the appellant. In our view, interest of justice would be met by directing respondent No.1 to pay penalty amount of Rs.11,95,54,200/-imposed upon respondent No.1 by the appellant. While setting aside the termination of the contract, the High Court maintained th....
12.8 CONSEQUENCES OF TERMINATION: In all cases of termination herein set forth, the obligation of the Company to pay for Services as per the Contract shall be limited to the period up to the date of termination. Notwithstanding the termination of the Contract, the parties shall continue to be bound by the provisions of the Contract that reasonably require some action or forbearance after such termination. Upon termination of the Contract, Contractor shall return to Company al....
12.8 CONSEQUENCES OF TERMINATION: In all cases of termination herein set forth, the obligation of the Company to pay for Services as per the Contract shall be limited to the period up to the date of termination. Upon termination of the Contract, Contractor shall return to Company all of Company's items, which are at the time in Contractor's possession. Notwithstanding the termination of the Contract, the parties shall continue to be bound by the provisions of the Contract that reason....
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