Simplified Explanation of the Judgment
The Patna High Court recently dismissed a contractor’s plea challenging the termination of her road construction contract under the Pradhan Mantri Gram Sadak Yojana (PMGSY) in Katihar district. The contractor had filed a writ petition against several orders, including the termination of her contract, a demand for recovery of ₹37,18,618, and the decision to re-tender the unfinished work.
The contractor was originally awarded the work under Agreement No. 10/SBD/2018-19 for constructing a rural road from Laliyahi Chowk to Pekha. However, due to alleged delays, the Rural Works Department rescinded the contract on 01.12.2020. Subsequently, the department demanded recovery of over ₹37 lakhs and even recommended blacklisting the contractor.
In her defense, the petitioner argued that:
- She had not been given any show-cause notice prior to the termination.
- The delay was caused by factors beyond her control, including a land dispute, floods, and the COVID-19 pandemic.
- She was ready and willing to complete the remaining work if given an extension similar to other contractors.
The Court had previously directed the concerned department to clarify whether the show-cause notice was ever served. In response, the department submitted a postal acknowledgment dated 15.02.2020 as proof of service.
Upon examining the records, the Court concluded that the petitioner had, in fact, been duly served with a termination notice. Therefore, her claim that the action was taken without notice was not valid.
In light of this, the Court dismissed the writ petition and declined to interfere with the termination or the re-tendering process. However, the Court clarified that this dismissal would not prevent the petitioner from seeking remedy through arbitration, as permitted under Clause 25 of the agreement.
Significance or Implication of the Judgment
This judgment reinforces the importance of procedural compliance in contractual disputes involving government tenders. Contractors must be alert to formal notices and cannot escape contractual consequences simply by denying receipt, especially when official acknowledgment exists.
For government departments, the ruling supports the practice of re-tendering when work is stalled due to contractor inaction, provided the termination process follows due procedure.
Importantly, the Court preserved the contractor’s right to seek arbitration, keeping the door open for a commercial resolution outside of writ proceedings.
Legal Issue(s) Decided and the Court’s Decision
- Issue: Was the termination of the contract done without giving the contractor a fair opportunity or notice?
- Decision: No. The Court found postal evidence that the notice was duly served.
- Issue: Should the High Court interfere with the department’s decision to re-tender the work?
- Decision: No. The re-tendering was found to be legally valid.
- Issue: Can the contractor still pursue a remedy?
- Decision: Yes. The contractor is free to initiate arbitration as per Clause 25 of the agreement.
Case Title
Pallavi Kumari vs. The State of Bihar & Ors.
Case Number
Civil Writ Jurisdiction Case No. 15327 of 2021
Coram and Names of Judges
Hon’ble Mr. Justice P. B. Bajanthri
Hon’ble Mr. Justice Jitendra Kumar
Names of Advocates and who they appeared for
- Mr. Vijay Kumar Singh (For the Petitioner)
- Mr. Ajay, GA (For the Respondents)
Link to Judgment
https://www.patnahighcourt.gov.in/ShowPdf/web/viewer.html?file=../../TEMP/52cd1c81-85a0-4bb2-88bd-c71ce48cea0b.pdf&search=Blacklisting
If you found this explanation helpful and wish to stay informed about how legal developments may affect your rights in Bihar, you may consider following Samvida Law Associates for more updates.
