In a writ petition filed before the Delhi High Court seeking quashing of a termination notice dated 08-04-2026, a notice inviting tender dated 10-04-2026 (Retender notice) for supply of Solar Photovoltaic Modules (Solar PV Modules) for the 1000 MW Solar Park Project, as well as a suspension order dated 01-06-2026, a Division Bench of Justice Tejas Karia and Justice Madhu Jain set aside the termination notice and suspension order while refusing to interfere in the re-tender notice.
The petitioner company was engaged in the manufacture of Solar PV Modules, whereas NPTC Renewable Energy Limited was a government enterprise functioning under the administrative control of the Ministry of Power. The Ministry of New and Renewable Energy (MNRE) issued an office memorandum dated 02-01-2019 stating that only such models and manufacturers as included in the approved list of models and manufacturers would be eligible for use in government and government-assisted projects.
The said approved list had two lists and by office memorandum dated 28-07-2025, MNRE extended the exemption from compliance with list II and by another memorandum, 31-08-2025 was fixed as the cut-off date for implementation of list II compliance. On 24.12.2025, the respondent awarded the projects to the petitioner and the petitioner conveyed its acceptance of the Notifications of Award, but was subsequently unable to proceed with execution of the contract agreement and submission of the Contract Performance Guarantee (CPG) owing to the non-availability of its authorised signatories and Directors. The respondent issued a notice of contractor’s default dated 16.02.2026, calling upon the petitioner to execute the formal contract agreement and submit the CPG within 30 days. The Petitioner extended the bid security by a default notice response and stated that it was unable to execute the same due to the unavailability of its authorised signatories.
The Procurement Policy Division, Department of Expenditure, Ministry of Finance issued an office memorandum dated 29-04-2026 (Force Majeure OM) notifying that the West-Asian conflict was to be treated as war, permitting invocation of the force majeure clause. The respondent terminated the projects, declared the petitioner ineligible to participate in the retendering, encashed the bid security, and issued a retender notice inviting fresh bids. On 01-06-2026, the respondent issued a suspension order under Clause 6.1(b) read with Clause 6.3.3 of the Policy for Debarment from Business Dealings.
The petitioner contended that the termination notice was erroneously issued by resorting to Clauses 42.0 and 43.0 of the General Purchase Conditions, despite Clause 24(c) of the GPC and Clause 34.0 of the Special Purchase Conditions specifically providing for annulment of the NOAs. It was also argued that the suspension order was issued in violation of the principles of natural justice without a show cause notice or an opportunity of hearing.
The Court noted that the principal issues were –
• Whether the termination notice was liable to be set aside on grounds that the respondent invoked Clause 42.0 of the GPC notwithstanding that Clause 24(c) of the GPC and Clause 34.0 of the SPC specifically prescribed annulment as the consequence of non-execution of the contract agreement and non-submission of the CPG.
• Whether retender notice dated 10-04-2026 warranted interference by the Court.
• Whether the suspension order could have been issued without a show cause notice and without affording the petitioner an opportunity of hearing.
The Court noted that Clause 24(c) of the GPC and Clause 34.0 of the SPC specifically prescribe the consequences of failure to execute the contract agreement and furnish the CPG. It stated that the plea of force majeure by the petitioner could not be accepted since the petitioner had failed to execute the contract agreement and furnish the CPG prior to the issuance of the Force Majeure OM.
It was stated that the stage contemplated under Clause 43.0 of the GPC had not arisen since the default attributed to the petitioner was confined to the non-execution of contract agreement and non-submission of the CPG. The Court ruled that where a specific provision governs a particular default, recourse must be had to such provision in preference to a general provision and stated that the respondent could not have invoked Clause 42.0 for a default for which specific consequences were prescribed under Clause 24(c) of the GPC and Clause 34.0 of the SPC.
Hence, the Court held that the termination notice, insofar as it invoked Clauses 42.0 and 43.0 of the GPC, was liable to be set aside, but clarified that this would not affect the respondent’s action of annulling the NOAs and encashing the bid security under Clause 24(c) of the GPC and Clause 34.0 of the SPC.
The Court found that the retender notice did not warrant interference, but left open all questions concerning the applicability and interpretation of List II Exemption office memorandum. Further, the Court agreed that Clause 2.2 of the Debarment Policy equated suspension with debarment and entailed serious civil consequences. It was noted that by the suspension order, the petitioner was disentitled from participating in future tender enquiries floated by the respondent and its intermediaries during the period of suspension, its bids in pending tender processes were liable to be rejected, and that no award could be placed in its favour.
The Court stated that the introduction to debarment policy recorded that since banning of business dealings entails civil consequences for the concerned agency, adequate opportunity of hearing must be afforded and any explanation tendered must be considered before an order is passed. Hence, the Court opined that the suspension order was issued in violation of the principles of natural justice and could not be sustained.
No ground was found to interfere with the respondent’s decision to treat the petitioner as being in default of its obligations concerning execution of the contract agreement and submission of CPG. However, the Court set aside the termination notice to the aforementioned extent as well as the suspension order for being violative of the principles of natural justice. The Court held that the retender notice did not warrant interference but clarified that no action against the petitioner could be sustained based on Clause 43.0 of the GPC.
Thus, the petition was allowed.
