M/S. Menakshi Con Vs South Eastern Coalfields Limited (S E C L)

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CGHC010265042026

2026:CGHC:29855-DB

NAFR

HIGH COURT OF CHHATTISGARH AT BILASPUR

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WPC No. 3673 of 2026

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M/s. Menakshi Con a Firm Duly Registered Under Applicable Law, Through its Managing Partner and Authorized Signatory Shri Anil Kumar Bandhi, S/o Shri Bandi Pullaiah Aged About 52 Years Having Its Registered Office At Dwarakamai 2nd Floor, H.No. 8-2- 269-S/ 8 Sagar Society Street No. 1 Road No. 2 Banjara Hills, Hyderabad - 500034 Telangana.

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... Petitioner

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versus

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1 - South Eastern Coalfields Limited (SECL) Through Its Chairman Managing Director, Having Its Registered Office At S E C L Bhawan, Seepat Road, Bilaspur- 495006 Chhattisgarh

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2 - The General Manager (Operations), South Eastern Coalfields Limited, Kusmunda Area P.O. Kusmunda Colliery District- Korba Chhattisgarh- 495454

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3 - The General Manager (Contract Management Cell), South Eastern Coalfields Limited, S E C L, Bhawan, Seepat Road Bilaspur- 495006 Chhattisgarh

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4 - Coal India Limited (CIL) Through Its Chairman Cum Managing Director, Having Its Registered Office At Coal Bhawan, Premises No. 04- M R Plot No. A F - III Action Area - 1 A, New Town, Rajarhat Kolkata - 700156 West Bengal Acting

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5 - Union of India Through The Secretary, Ministry of Coal, Shastri Bhawan, New Delhi – 110001

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ROHIT KUMAR CHANDRA Digitally signed by ROHIT KUMAR CHANDRA

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6 - HDFC Bank Ltd, Through its Branch Manager, Having Office at WBO Group 1st Floor 18/3 IT Pari, Gayatri Nagar, Mouza Parsodi Nagpur – 440022

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	... Respondents
___________________ For Petitioner	______________________________________ : Mr. Prafull N. Bharat, Senior Advocate assisted by Mr. Kaustubh Singh Thakur, Advocate
For Respondents/SECL	: Mr. Manoj Paranjpe, Senior Advocate assisted by Mr. Anumeh Shrivastava, Advocate
For Respondent/UOI :	Ms. Annapura Tiwari, Central Government Counsel

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Hon'ble Shri Ramesh Sinha, Chief Justice Hon'ble Shri Ravindra Kumar Agrawal, Judge

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Order on Board

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Per Ramesh Sinha, Chief Justice

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15. 07.2026

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1. Heard Mr. Prafull N. Bharat, learned Senior Advocate assisted by Mr. Kaustubh Singh Thakur, learned counsel for the petitioner. Also heard Mr. Manoj Paranjpe, learned Senior Advocate assisted by Mr. Anumeh Shrivastava, learned counsel appearing for the respondents/SECL as well as Ms. Annapurna Tiwari, learned Central Government Counsel, appearing for respondent/ UOI.

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2. The present writ petition has been filed by the petitioner under Article 226 of the Constitution of India seeking following reliefs :

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“(i) That, this Hon'ble Court may graciously be

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pleased to allow the present writ petition preferred by the petitioner and issue an appropriate Writ, Order or Direction, more particularly a Writ of Certiorari, quashing and setting aside the Impugned Order dated

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29.06.2026 bearing Ref. No. SECL/KA/GM(O)/26bearing 27/67 (Annexure P/1);

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(ii) That, this Hon'ble Court may graciously be pleased to issue an appropriate Writ, Order or Direction, more particularly a Writ of Mandamus, directing Respondent No. 1 to discharge and release the Performance Bank Guarantee No. 102GT02260700006 dated 11.03.2026, issued by HDFC Bank Ltd. (Respondent No.2), without invoking or encashing the same, and to return the original Bank Guarantee to the Petitioner;

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(iii) That, this Hon'ble Court may graciously be pleased to issue an appropriate Writ, Order or Direction directing Respondent No. 1 reconsider to Petitioner's the dated 08.05.2026, 13.05.2026 and other representations connected representations, including the Petitioner's invocation of the Government of India, Ministry of Finance, Department of Expenditure No. 1/3/2026-Memorandum Office PPD dated 29.04.2026, in accordance with law and after affording the Petitioner an adequate opportunity of hearing;

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(iv) That, this Hon'ble Court may graciously be pleased to issue an appropriate Writ, Order or Direction directing Respondent Nos. 1 and 4 not to initiate or proceed with any banning/debarment proceedings against the Petitioner in connection with the subject contract except strictly in accordance with the applicable Coal India Limited Guidelines on Debarment of Firms from Bidding and after complying with the principles of natural justice, including issuance of a show cause notice and grant of a

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reasonable opportunity of personal hearing;

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(v) Pass such other or further order(s) as this Hon'ble Court may deem fit, proper and expedient in the facts and circumstances of the present case, including the award of costs.”

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3. The present writ petition has been filed by the petitioner challenging the legality and validity of the order dated 29.06.2026 passed by respondent No.2, whereby the Letter of Acceptance (LOA) issued in favour of the petitioner has been cancelled, the Performance Security Deposit (PSD) amounting to Rs.49,19,184/furnished by the petitioner through Bank Guarantee has been forfeited, the petitioner has been disqualified from participating in the Special Purpose Limited Tender (SPLT) process and liberty has been reserved to initiate further proceedings for banning/debarment of the petitioner.

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4. The dispute arises out of a tender floated by respondent No.1 through the Government e-Marketplace (GeM) vide NIT No. 26/GeM/203 dated 15.12.2025 bearing GeM Bid No. GEM/2025/B/7003365 for the work of “Hiring of HEMM for excavating Re-handling OB (not requiring drilling), loading into Tippers, Transportation and unloading the excavated material and silt, dumping, dozing, scraping/removal of Re-handling OB, preparation/maintenance of haul road, water sprinkling and spreading of material” at Kusmunda Open Cast Project, Kusmunda Area, Chhattisgarh. The tender was for a period of 60 days involving excavation of 17,82,058 cubic metres of material at

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a quantity per day of 29,701 cubic metres. The estimated cost of the work was Rs.13,65,63,612.29/- inclusive of GST. The tender documents specifically incorporated a Price Variation Clause (PVC), wherein the base diesel price was fixed at Rs.93.06 per litre as on 22.12.2025 at the nearest IOC/BP PSU retail outlet, and the said base price was a significant component for determination of the bid price and future adjustment of contract rates.

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5. The petitioner participated in the said tender process and submitted its bid at 85.01% of the estimated cost, i.e., 14.99% below the estimated value. Upon evaluation of the bids, the petitioner was declared as the successful bidder and respondent No.1 issued Letter of Acceptance bearing No. SECL/BSP/CMC/LOA/KSM_OBRH/GeM-203/2025-26/586 dated 05.02.2026 in favour of the petitioner. Pursuant thereto, GeM Contract No. GEMC-511687716017645 was generated on 05.02.2026. The total contract value was Rs.1,16,09,272.81/inclusive of GST, and the service period was reflected as commencing from 15.02.2026 and ending on 14.04.2026. As per the terms of the contract, the petitioner was required to furnish Performance Security Deposit of Rs.49,19,184/-. After issuance of the LOA, respondent No.2 issued various reminders dated 10.02.2026, 15.02.2026, 20.02.2026 and 24.02.2026 for submission of the PSD. Since the petitioner faced processing delays at HDFC Bank, Nagpur, it submitted a request dated

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24.02.2026 seeking extension of time for furnishing the PSD. The said request was considered and accepted by respondent No.2 vide communication dated 03.03.2026, whereby the time for submission of PSD was extended till 11.03.2026. In compliance with the said extension, the petitioner furnished the Performance Security Deposit through Bank Guarantee No. 102GT02260700006 dated 11.03.2026 issued by HDFC Bank Ltd., Nagpur, for an amount of Rs.49,19,184/-, valid up to 03.03.2027. Thereafter, the work site was handed over to the petitioner vide communication dated 17.03.2026 and the formal Work Order was issued on 20.03.2026.

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6. According to the petitioner, after issuance of the work order, it undertook necessary steps for mobilization of manpower and machinery for execution of the contract. However, commencement of the work was affected due to circumstances beyond the control of the petitioner, particularly the disruption caused in the global supply chain due to the ongoing West Asia conflict, which adversely affected transportation and availability of Heavy Earth Moving Machinery, spare parts and related equipment. The petitioner further contends that another serious impediment was the unprecedented increase in diesel prices. It is stated that the entire bid was prepared on the basis of the contractual base diesel price of Rs.93.06 per litre mentioned in the NIT. However, subsequently, the diesel price increased substantially to approximately Rs.140 per litre, resulting in an

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increase of more than 50% from the base price. It is further pleaded that restrictions imposed on diesel allocation, limiting supply to approximately 300 litres per day against the project's requirement of around 12,000 to 15,000 litres per day, created severe operational difficulties. The petitioner accordingly requested the respondents to clarify the applicable diesel rate and sought implementation of the Price Variation Clause incorporated in the contract.

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7. Respondent No.2 thereafter issued a notice dated 07.04.2026 under Clause 6.1 of the General Terms and Conditions, requiring the petitioner to commence the work within 15 days, failing which action for forfeiture of Performance Security Deposit and debarment would be initiated. The petitioner submitted a detailed reply dated 18.04.2026 explaining the circumstances causing delay and assured that the machinery was in transit and the work would commence shortly. The petitioner also submitted representations dated 21.04.2026 and subsequent dates highlighting the diesel crisis and requesting assistance from the respondents for supply of diesel on a recoverable basis.

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8. The petitioner further relies upon the Office Memorandum dated 29.04.2026 issued by the Ministry of Finance, Department of Expenditure, Government of India, whereby the West Asia conflict was recognized as a Force Majeure event and directions were issued to grant extension of contractual completion period without levy of penalty in eligible cases. The petitioner invoked the said

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Force Majeure provisions by submitting representation dated 08.05.2026 seeking extension of time. The petitioner also submitted documents demonstrating mobilization of resources, including details of vehicles and machinery, request for medical examination of workmen, list of deployed personnel and a detailed mobilization schedule.

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9. According to the petitioner, despite the aforesaid communications and documentary evidence demonstrating its bona fide intention to execute the work, respondent No.2 proceeded to pass the impugned order dated 29.06.2026 without considering the petitioner's subsequent representations, without granting any further opportunity of hearing and without considering the applicability of the Force Majeure Office Memorandum. By the said order, the LOA was cancelled, PSD was forfeited and further adverse action was proposed against the petitioner. Hence, the present petition has been filed challenging the said action as arbitrary, unreasonable, contrary to the contractual terms, violative of principles of natural justice and unsustainable in law.

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10. Mr. Prafull N. Bharat, learned Senior Advocate appearing for the petitioner submits that the impugned order dated 29.06.2026 passed by respondent No.2 is arbitrary, illegal and contrary to the terms and conditions of the contract as well as the material available on record. It is contended that the respondents have proceeded against the petitioner mechanically without appreciating the genuine difficulties faced by the petitioner and

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without considering the fact that the delay in commencement of work occurred due to extraordinary circumstances beyond the petitioner's control. Learned Senior Advocate submits that the petitioner was a successful bidder after participating in a transparent tender process and had quoted its rates strictly on the basis of the tender conditions, particularly the base diesel price of Rs.93.06 per litre and the Price Variation Clause incorporated in the LOA. It is argued that the respondents themselves recognized the importance of diesel price fluctuation by incorporating the PVC in the contract, and therefore, the petitioner was entitled to seek appropriate adjustment in view of the unprecedented escalation in diesel prices. The failure of the respondents to clarify the applicable diesel rate despite repeated requests has rendered the execution of the contract financially impossible and commercially unviable.

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11. Mr. Bharat further submits that the petitioner never committed any deliberate breach or abandoned the contract. On the contrary, the petitioner continuously acted in furtherance of the contract by furnishing the Performance Security Deposit within the extended period granted by the respondents, arranging machinery, mobilizing manpower, submitting details of vehicles and equipment, and taking steps for mandatory medical examination of workmen. It is contended that the findings recorded by respondent No.2 that the petitioner failed to take any tangible steps towards commencement of work are contrary to the

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admitted documents available on record. It is further argued that the respondents failed to appreciate the impact of the West Asia conflict, which was subsequently recognized by the Government of India, Ministry of Finance, as a Force Majeure event vide Office Memorandum dated 29.04.2026. Learned counsel submits that the petitioner fulfilled the conditions prescribed in the said memorandum as it was not in default on 27.02.2026 and was, in fact, granted extension for submission of PSD by the respondents. Therefore, the petitioner was entitled to consideration of extension of time without imposition of penalty or forfeiture.

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12. Mr. Bharat contended that the action of forfeiting the Performance Security Deposit is wholly disproportionate and contrary to Clause 6.1 of the contract, which permits forfeiture only when the contractor commits default without reasonable cause or valid reason. It is argued that in the present case, the petitioner had demonstrated sufficient and valid reasons for delay, which were neither considered nor dealt with by the respondents. It is further contended that the impugned order has been passed in violation of principles of natural justice. Learned counsel submits that after submission of detailed representations dated 08.05.2026, 13.05.2026, 19.05.2026 and 26.05.2026 along with supporting documents, the respondents were required to consider the same and provide an effective opportunity of hearing before taking the extreme step of cancellation of LOA and forfeiture of PSD.

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However, without considering the relevant material and without granting any opportunity of personal hearing, the impugned order has been passed. Learned counsel lastly submits that the impugned action is also arbitrary as the respondents have ignored their own conduct in granting extension for submission of PSD and thereafter abruptly resorted to cancellation and forfeiture. It is therefore prayed that the impugned order dated 29.06.2026 be quashed and the respondents be directed to restore the contract, release the Performance Security Deposit and grant appropriate extension of time in terms of the Government of India Force Majeure guidelines and the contractual provisions.

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13. Per contra, Mr. Manoj Paranjpe, learned Senior Advocate, appearing for the respondents/SECL submits that the present petition is devoid of merit and deserves to be dismissed, as the action taken by the respondents is strictly in accordance with the terms and conditions of the tender document and the contractual provisions governing the parties. It is submitted that the petitioner was declared the successful bidder pursuant to the tender process for the work of re-handling of OB and allied activities at Kusmunda OC Project, and thereafter Letter of Acceptance was issued in favour of the petitioner on 05.02.2026. The petitioner was required to furnish the Performance Security Deposit and commence execution of the awarded work within the stipulated period. Learned counsel would submit that the contention of the petitioner that the site was not handed over and, therefore, the

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contractual period for commencement of work had not commenced is wholly misconceived and contrary to the record. It is submitted that the work site was duly handed over to the petitioner vide communication dated 17.03.2026 and thereafter the Work Order was issued on 20.03.2026. As per the contractual conditions, particularly the clause relating to the scheduled period of completion, the period for execution of work commenced after expiry of the prescribed period from the date of issuance of the Letter of Acceptance or handing over of the site, whichever was later. Therefore, there was no ambiguity regarding commencement of contractual obligations upon the petitioner. Learned counsel further submits that despite handing over of the site and issuance of the Work Order, the petitioner failed to mobilize the required manpower, machinery and resources for commencement of the work. It is submitted that the petitioner was specifically directed by the General Manager (Mining), Kusmunda Project, vide communication dated 02.04.2026, to immediately mobilize adequate resources and commence the work. However, despite such instructions, the petitioner failed to commence the execution of the work within the stipulated period, resulting in issuance of a statutory notice dated 07.04.2026 under Clause 6.1 of the General Terms and Conditions of the contract. It is submitted that in response to the said notice, the petitioner, vide its communication dated 18.04.2026, assured the respondents that the work would be commenced shortly. Similar assurances

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were also given during telephonic communications. However, instead of commencing the work, the petitioner subsequently raised issues relating to the West Asia conflict, escalation of diesel prices and alleged shortage of diesel supply. Learned counsel submits that the said grounds are merely an afterthought and cannot justify the failure of the petitioner to commence the work, particularly when the respondents had already assured supply of diesel for execution of the project and had repeatedly granted sufficient opportunities to the petitioner to mobilize and commence the work.

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14. Mr. Paranjpe would further submit that the petitioner, despite repeated directions and opportunities, failed to take any effective steps towards commencement of work even during the extended period granted under the notice dated 07.04.2026. It is submitted that the petitioner itself, vide communication dated 23.04.2026, expressed its inability to commence the work, thereby clearly demonstrating its failure to comply with the contractual obligations. Therefore, the respondents were fully justified in invoking Clause 6.1 of the contract and taking consequential action, including cancellation of the Letter of Acceptance and forfeiture of the Performance Security Deposit. Learned counsel further submits that the allegations of violation of principles of natural justice are wholly untenable. The petitioner was repeatedly communicated regarding its failure to commence the work, was issued a notice under Clause 6.1 of the contract, and was granted

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adequate opportunity to explain its position. The petitioner submitted its replies and representations, which were duly considered. After considering the entire material available on record and the repeated defaults committed by the petitioner, the competent authority took the decision in accordance with the contractual provisions. Therefore, no interference under Article 226 of the Constitution of India is warranted.

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15. Mr. Paranjpe further submits that the present petition involves adjudication of disputed contractual issues arising out of the agreement between the parties, and the petitioner has an efficacious alternative remedy available under the terms of the contract. It is submitted that the petitioner has deliberately not placed on record the copy of agreement executed between the parties, which contains Clause 13.3 providing for settlement of disputes between the contractor and SECL through the agreed contractual mechanism. The petitioner, having entered into a contractual arrangement with open eyes, cannot bypass the agreed dispute resolution mechanism and directly invoke the extraordinary writ jurisdiction of this Hon’ble Court. It is submitted that the dispute raised by the petitioner essentially pertains to interpretation of contractual clauses, alleged delay in commencement of work, applicability of force majeure provisions, and justification for forfeiture of Performance Security Deposit. Such matters require examination of contractual obligations and evidence, which cannot ordinarily be undertaken in writ

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proceedings. The petitioner is required to avail the remedy provided under the contract itself.

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16. Mr. Paranjpe lastly submits that the respondents, being a public sector undertaking, are required to ensure timely completion of public projects and cannot permit a contractor to indefinitely delay execution of the awarded work after acceptance of the contract. The petitioner failed to honour its contractual commitments despite repeated opportunities and notices. The impugned action has been taken strictly in accordance with the terms of the contract and does not suffer from any arbitrariness, illegality or violation of any statutory provision. Accordingly, it is prayed that the present writ petition being devoid of merit and involving disputed contractual questions deserves to be dismissed.

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17. We have heard learned counsel appearing for the parties and perused the material available on record.

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18. The present petition has been filed challenging the action of respondent No.2 whereby the Letter of Acceptance issued in favour of the petitioner has been cancelled, the Performance Security Deposit furnished by the petitioner has been forfeited and consequential action has been proposed against the petitioner on account of failure to commence the work awarded under the contract. The principal grievance of the petitioner is that the delay in commencement of work was occasioned due to circumstances beyond its control, particularly the disruption caused due to the

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West Asia conflict, escalation in diesel prices and alleged nonclarification regarding application of the Price Variation Clause. The respondents, on the other hand, have justified the impugned action on the ground that despite handing over of the site, issuance of the Work Order, repeated instructions and issuance of notice under Clause 6.1 of the contract, the petitioner failed to commence the work and thereby committed breach of contractual obligations.

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19. From the documents placed on record, it is not in dispute that the petitioner participated in the tender process, was declared the successful bidder and accepted the terms and conditions of the tender document by submitting its bid. The Letter of Acceptance was issued on 05.02.2026 and thereafter the petitioner furnished the Performance Security Deposit on 11.03.2026 after seeking and obtaining extension of time from the respondents. It is also not disputed that the work site was handed over to the petitioner on 17.03.2026 and the Work Order was issued on 20.03.2026. Therefore, the contention raised by the petitioner that the contractual period had not commenced on account of nonhanding over of the site cannot be accepted.

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20. The record further demonstrates that after handing over of the site and issuance of the Work Order, the petitioner was directed by the competent authority vide communication dated 02.04.2026 to mobilize the requisite resources and commence the work. Since the petitioner failed to commence the work, notice dated

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07.04.2026 was issued under Clause 6.1 of the General Terms and Conditions granting fifteen days' time to commence the work, failing which action including forfeiture of Performance Security Deposit was proposed. The petitioner submitted its reply dated 18.04.2026 assuring commencement of work; however, instead of commencing the work, it subsequently expressed inability on account of diesel price escalation and other difficulties.

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21. The contention of the petitioner that the escalation of diesel prices and supply constraints rendered the contract impossible to perform cannot be accepted in the facts of the present case. The petitioner was aware of the terms and conditions of the tender, including the Price Variation Clause, at the time of submitting its bid. Having voluntarily participated in the tender process and accepted the contractual conditions, the petitioner cannot subsequently seek to rewrite the terms of the contract on account of commercial difficulties.

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22. Before adverting to the rival contentions, it would be appropriate to refer to the settled principles governing judicial review in matters relating to public tenders and contractual decisions of the State.

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23. In Michigan Rubber (India) Ltd. (supra), the Hon’ble Supreme Court has categorically held that the terms and conditions of a tender fall within the domain of the tendering authority and that the Court should exercise great restraint in interfering with such conditions unless they are found to be arbitrary, discriminatory or actuated by mala fides.

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24. Similarly, in Jagdish Mandal (supra), the Supreme Court held that judicial review in tender matters is limited and the Court should not interfere unless the decision-making process is shown to be arbitrary, irrational or intended to favour someone.

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25. The Supreme Court in Meerut Development Authority (supra) has further held that the State or its instrumentalities are entitled to cancel a tender process and invite fresh bids in public interest and such decisions should not ordinarily be interfered with unless they are patently arbitrary.

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26. Another important principle was laid down by the Supreme Court in Municipal Corporation, Katra (supra), wherein it was held that a party which does not participate in the tender process cannot subsequently challenge the same.

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27. The law with respect to interference in tender matters is limited to certain extent as has been considered by the Hon'ble Supreme Court in large number of cases including in the case of Tata Motors Limited vs Brihan Mumbai Electric Supply & Transport Undertaking (BEST) and others¹ wherein the Hon’ble Supreme Court has considered the factum of interference in the tender matters and has held as under:

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"48. This Court being the guardian of fundamental rights is duty-bound to interfere when there is arbitrariness, irrationality, mala fides and bias. However, this Court has cautioned time and again that courts should exercise a lot of restraint while

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1 2023 SCC OnLine SC 671

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exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. The courts must realise their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in Judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. The courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give “fair play in the joints” to the government and ublic sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer."

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28. Recently, the Hon’ble Supreme Court, in the matter of Banshidhar Construction Pvt. Ltd. v. Bharat Coking Coal Ltd. & Others , {Civil Appeal No. 11005 OF 2024, decided on

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04.10.2024}, taking note of the decisions rendered in various other celebrated judgments, observed as under:

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“21. There cannot be any disagreement to the legal proposition propounded in catena of decisions of this Court relied upon by the learned counsels for the Respondents to the effect that the Court does not sit as a Court of Appeal in the matter of award of contracts and it merely reviews the manner in which the decision was made; and that the Government and its instrumentalities must have a freedom of entering into the contracts. However, it is equally well settled that the decision of the government/ its instrumentalities must be free from arbitrariness and must not be affected by any bias or actuated by malafides. Government bodies being public authorities are expected to uphold fairness, equality and public interest even while dealing with contractual matters. Right to equality under Article 14 abhors arbitrariness. Public authorities have to ensure that no bias, favouritism or arbitrariness are shown during the bidding process and that the entire bidding process is carried out in absolutely transparent manner.

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29. 22. At this juncture, we may reiterate the wellestablished tenets of law pertaining to the scope of judicial intervention in Government Contracts.

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In Sterling Computers Limited vs. M/s. M & N Publications Limited and Others² , this Court while dealing with the scope of judicial review of award of contracts held: -

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“18. While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the “decision making process”. In this connection reference may be made to the case of Chief Constable of the North Wales Police v. Evans [(1982) 3 All ER 141] where it was said that: (p. 144a)

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“The purpose of judicial review is to ensure that the individual receives fair treatment, and not to ensure that the authority, after according fair treatment, reaches on a matter which it is

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2 (1993) 1 SCC 445

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authorised or enjoined by law to decide for itself a conclusion which is correct in the eyes of the court.”

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By way of judicial review the court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State. Courts have inherent limitations on the scope of any such enquiry. But at the same time as was said by the House of Lords in the aforesaid case, Chief Constable of the North Wales Police v. Evans [(1982) 3 All ER 141] the courts can certainly examine whether “decision-making process” was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution.”

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In Tata Cellular vs. Union of India³ , this Court had laid down certain priniciples for the judicial review of administrative action.

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“94. The principles deducible from the above are:

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(1) The modern trend points to judicial restraint in administrative action.

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(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.

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(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.

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(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.

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(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of

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3 (1994) 6 SCC 651

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reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.

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(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. Based on these principles we will examine the facts of this case since they commend to us as the correct principles.”

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It has also been held in ABL International Limited and Another vs. Export Credit Guarantee Corporation of India Limited and Others⁴ , as under: -

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“53. From the above, it is clear that when an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution.”

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In Jagdish Mandal vs. State of Orissa and Others⁵ , this Court after discussing number of judgments laid down two tests to determine the extent of judicial interference in tender matters. They are: -

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“22. (i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or Whether the process adopted or decision made is so arbitrary and irrational that the court can say: “the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached;”

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(ii) Whether public interest is affected. If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.”

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5 (2007) 14 SCC 517

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4 (2004) 3 SCC 553

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In Mihan India Ltd. vs. GMR Airports Ltd. and Others⁶ , while observing that the government contracts granted by the government bodies must uphold fairness, equality and rule of law while dealing with the contractual matters, it was observed in Para 50 as under: -

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“50. In view of the above, it is apparent that in government contracts, if granted by the government bodies, it is expected to uphold fairness, equality and rule of law while dealing with contractual matters. Right to equality under Article 14 of the Constitution of India abhors arbitrariness. The transparent bidding process is favoured by the Court to ensure that constitutional requirements are satisfied. It is said that the constitutional guarantee as provided under Article 14 of the Constitution of India demands the State to act in a fair and reasonable manner unless public interest demands otherwise. It is expedient that the degree of compromise of any private legitimate interest must correspond proportionately to the public interest.”

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It was sought to be submitted by the learned Counsels for the Respondents relying upon the observations made in Central Coalfields Limited and Another vs. SLL-SML (Joint Venture Consortium) and Others⁷ , that whether a term of NIT is essential or not is a decision taken by the employer which should be respected. However, in the said judgment also it is observed that if the employer has exercised the inherent authority to deviate from the essential term, such deviation has to be made applicable to all the bidders and potential bidders. It was observed in Para 47 and 48 as under:-

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“47. The result of this discussion is that the issue of the acceptance or rejection of a bid or a bidder should be looked at not only from the point of view of the unsuccessful party but alsofrom the point of view of the employer. As held in Ramana Dayaram Shetty [Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489] the terms of NIT cannot be ignored as being redundant or superfluous. They must be given a meaning and the

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7 (2016) 8 SCC 622

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6 (2022) SCC OnLine SC 574

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24

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necessary significance. As pointed out in Tata Cellular [Tata Cellular v. Union of India, (1994) 6 SCC 651] there must be judicial restraint in interfering with administrative action. Ordinarily, the soundness of the decision taken by the employer ought not to be questioned but the decision-making process can certainly be subject to judicial review. The soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone or a decision “that no responsible authority acting reasonably and in accordance with relevant law could have reached” as held in Jagdish Mandal [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517] followed in Michigan Rubber [Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216].

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Therefore, whether a term of NIT is essential or not is a decision taken by the employer which should be respected. Even if the term is essential, the employer has the inherent authority to deviate from it provided the deviation is made applicable to all bidders and potential bidders as held in Ramana Dayaram Shetty [Ramana Dayaram Shetty v.International Airport Authority of India, (1979) 3 SCC 489] . However, if the term is held by the employer to be ancillary or subsidiary, even thatdecision should be respected. The lawfulness of that decision can be questioned on very limited grounds, as mentioned in the various decisions discussed above, but the soundness of the decision cannot be questioned, otherwise this Court would be taking over the function of the tender issuing authority, which it cannot.”

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30. In the present case, the respondents have acted strictly in terms of Clause 6.1 of the contract, which empowers the employer to take action including forfeiture of Performance Security Deposit where the contractor, without reasonable cause or valid reason, fails to commence execution of work. The petitioner was issued

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25

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notice, was granted opportunity to explain its position and submitted its replies and representations. Thus, the contention regarding violation of principles of natural justice cannot be accepted.

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31. The reliance placed by the petitioner on the Force Majeure Office Memorandum dated 29.04.2026 issued by the Ministry of Finance also does not assist the petitioner at this stage. Even assuming that the said memorandum was applicable, the benefit thereunder was subject to fulfilment of the conditions prescribed therein. The respondents have disputed the applicability of the said memorandum on the ground that the petitioner had already committed default in commencement of work. The determination of whether the petitioner fulfilled the conditions of the Force Majeure memorandum involves examination of contractual facts and disputed questions, which cannot be adjudicated in exercise of writ jurisdiction.

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32. It is also relevant to note that the petitioner has not placed on record the copy of agreement executed between the parties. The respondents have specifically pointed out that Clause 13.3 of the agreement provides for settlement of disputes between the contractor and SECL through the agreed contractual mechanism. The petitioner, having entered into the contract with full knowledge of the terms and conditions, cannot be permitted to bypass the agreed dispute resolution mechanism and invoke the extraordinary jurisdiction of this Court for adjudication of disputed

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contractual claims.

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33. The Hon'ble Supreme Court in State of U.P. v. Bridge & Roof Co. (India) Ltd., (1996) 6 SCC 22 , has held that where disputes arise out of contractual obligations and require interpretation of contractual terms, the appropriate remedy is through the mechanism provided under the contract and not by invoking writ jurisdiction under Article 226 of the Constitution.

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34. Further, in Joshi Technologies International Inc. v. Union of India, (2015) 7 SCC 728 , the Hon'ble Supreme Court reiterated that although writ jurisdiction may be exercised in contractual matters involving State authorities, such jurisdiction is discretionary and should not ordinarily be exercised where the dispute involves disputed questions of fact or enforcement of contractual rights.

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35. In the present case, the controversy essentially relates to whether the petitioner had sufficient justification for non-commencement of work, whether the Force Majeure clause was attracted, whether the petitioner had mobilized sufficient resources and whether forfeiture of Performance Security Deposit was justified under the contract. These issues require appreciation of contractual obligations and factual determination, which are beyond the scope of judicial review under Article 226 of the Constitution.

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36. The Court also finds that the petitioner cannot claim an absolute right to continue with the contract merely on the ground that it had

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furnished the Performance Security Deposit or had subsequently taken certain steps towards mobilization. The respondents, being a public sector undertaking, are equally obligated to ensure timely execution of public projects and cannot be compelled to continue with a contractor who has failed to commence the work within the stipulated period despite repeated opportunities.

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37. In view of the aforesaid discussion, this Court is of the considered opinion that the action taken by the respondents does not suffer from arbitrariness, irrationality, mala fide or violation of any statutory provision. The impugned order has been passed in exercise of contractual powers after granting sufficient opportunity to the petitioner. No ground is made out warranting interference under Article 226 of the Constitution of India.

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38. Accordingly, the writ petition being devoid of merit is hereby dismissed . However, dismissal of the present writ petition shall not preclude the petitioner from availing any remedy available to it under the dispute resolution mechanism contained in the agreement or in accordance with law. There shall be no order as to costs.

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Sd/- Sd/- (Ravindra Kumar Agrawal) (Ramesh Sinha) Judge Chief Justice

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(Ravindra Kumar Agrawal) (Ramesh Sinha)

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Chandra

M/S. Menakshi Con v. South Eastern Coalfields Limited (S E C L)

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M/S. Menakshi Con v. South Eastern Coalfields Limited (S E C L)

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