Simplified Explanation of the Judgment

In a major relief to a Tamil Nadu-based contractor and a win for public healthcare infrastructure, the Patna High Court approved a mediated agreement between Indira Gandhi Institute of Medical Sciences (IGIMS), Patna, and the contractor involved in constructing additional hospital blocks. This agreement followed a legal dispute that had earlier resulted in the contractor being debarred and the contract being rescinded due to delays.

The petitioner was a construction company entrusted with building additional blocks at IGIMS. However, due to slow progress, the hospital authorities had earlier rescinded the contract and blacklisted the contractor. The contractor approached the Patna High Court seeking relief.

On 21 March 2024, the Court had directed both parties to engage in discussions and arrive at a middle ground to ensure timely completion of this important public project. The result of this direction was a new agreement (Annexure-J) signed between IGIMS and the contractor, which was produced before the Court during the hearing on 5 April 2024.

Under the new agreement:

• Block A and Block D with service blocks are to be completed in the first 4 months.
• The remaining blocks must be completed in the following 4 months.
• The contractor is given a 2-month mobilization period, considering that the earlier rescission had led to withdrawal of personnel and machinery.
• A revised work schedule is to be submitted by the contractor in line with the adjusted timeline.

The contractor’s senior counsel also requested payment of running bills to enable smooth resumption of work. The Court recorded the government’s assurance that funds would be released promptly upon requisition.

The High Court observed that, in light of the amicable settlement:

• The earlier orders of rescission and blacklisting are to be set aside.
• Any penalty for delay may be waived by IGIMS if it is satisfied with the reasons provided by the contractor.

Importantly, the Court held that it would not continue monitoring the case but allowed either party the liberty to seek revival of the petition if required.

Significance or Implication of the Judgment

This judgment has dual significance:

1. For Public Interest: It ensures the swift continuation of a critical healthcare infrastructure project—hospital expansion at IGIMS—without further litigation or administrative delay.
2. For Contractors and Government Bodies: It demonstrates that courts favor practical, negotiated solutions over prolonged litigation, especially when public welfare is at stake.

It also reflects judicial sensitivity to the needs of both parties—protecting institutional interests while allowing a contractor a fair chance to perform, provided terms are agreed upon.

For future contracts and public-private engagements, the judgment sets a precedent that even after blacklisting, if parties mutually resolve disputes in good faith, courts can restore contracts and allow fresh timelines.

Legal Issue(s) Decided and the Court’s Decision with Reasoning

• Whether the blacklisting and rescission of contract should be upheld?
  • No. Since both parties amicably resolved the dispute and signed a fresh agreement, the Court set aside the earlier punitive actions.
• Was there scope for judicial monitoring?
  • No. The Court held that continued supervision was not necessary since the dispute was resolved. Either party could approach the Court if required in the future.
• Is the contractor entitled to claim penalty waiver?
  • Conditionally. The hospital authority may waive penalties if it is satisfied with the reasons furnished by the contractor.
• Was a mobilization period necessary?
  • Yes. The contractor had removed all resources from the site, and the Court upheld the grant of 2 months’ mobilization time.

Case Title
M/s PSK Engineering Construction and Co. v. The State of Bihar & Others

Case Number
CWJC No. 17498 of 2023 and CWJC No. 354 of 2024

Coram and Names of Judges
Hon’ble The Chief Justice
Hon’ble Mr. Justice Harish Kumar

Names of Advocates and Who They Appeared For

• For Petitioner: Mr. Sanjay Singh (Sr. Advocate), Mr. Vikas Kumar, Mr. Rudrank Shivam Singh, Mr. Praveen Kumar
• For State: Mr. Sarvesh Kumar (GP 24), Mr. Alok Ranjan (AC to AAG-5)
• For IGIMS: Mr. Sunil Kumar Singh

Link to Judgment
https://www.patnahighcourt.gov.in/ShowPdf/web/viewer.html?file=../../TEMP/26fdee05-8298-4e04-921c-acd32114b35a.pdf&search=Blacklisting

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