S P Telecom vs Railtel Corporation Of India Limited
- Court
- Delhi High Court
$~3
* IN THE HIGH COURT OF DELHI AT NEW DELHI
rd
% Date of Decision: 23 April, 2026
+ O.M.P.(I) (COMM.) 51/2026 & I.A. 3569/2026
S P TELECOM .....Petitioner
Through: Mr. Udit Seth, Adv.
Mob: 9899495968
Email: [email protected]
versus
RAILTEL CORPORATION OF INDIA LIMITED .....Respondent
Through: Mr. Ashok Singh, Adv., with Mr.
Ashok Singh Parmar, AM (Legal)
Mob: 9313649228
Email: [email protected]
CORAM:
HON'BLE MS. JUSTICE MINI PUSHKARNA
MINI PUSHKARNA, J (ORAL) :
1. The present petition has been filed under Section 9 of the Arbitration
and Conciliation Act, 1996 (“Arbitration Act”), seeking interim protection
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against the action of blacklisting vide Letter dated 24 November, 2025,
issued by the respondent, on the ground that the blacklisting was done
without issuing a prior show cause notice. As per the said Letter, the
petitioner has been blacklisted for a period of three years, disallowing the
petitioner to participate in the respondent’s future tenders in any region.
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2. The parties entered into the Contract Agreement dated 04 October,
2023, for maintenance of the optical fiber cable network in Viramgam-
Gandhidham-Bhuj (HQ – Samkhyali) section of Ahmedabad, for a period of
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By:HARIOM SHARMA
Signing Date:26.04.2026
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three years. The petitioner had performed the contract for about two and a
half years.
3. As per the case put forth by the petitioner, in the remaining six
months towards the end of the year 2024, frequent OFC damages occurred
due to parallel third-party railway works. Despite the petitioner’s
nd
explanations and a joint inspection on 22 November, 2025 confirming
deployment of manpower and equipment, the respondent terminated the
contract and blacklisted the petitioner for a period of three years vide
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Termination Letter dated 24 November, 2025, without issuing a prior show
cause notice. Thus, the present petition has been filed.
4. Learned counsel appearing for the petitioner submits that a notice
ought to have been issued by the respondent calling upon the petitioner to
show cause, before any action for blacklisting could be taken by the
respondent.
5. In response, learned counsel appearing for the respondent submits that
petitioner was maintaining fiber cables, and despite notice, work was not
completed, on account of which, contract was terminated.
6. He submits that blacklisting has been done in terms of Clause 29 of
Special Conditions of Contract between the parties, and since blacklisting is
part of the clause stipulating termination, no separate show cause notice was
required to be issued for blacklisting.
7. He further submits that pursuant to the directions passed by this
Court, he has taken instructions for referring the matter to arbitration, and
accordingly, he submits that the matter can be referred to arbitration in terms
of the Arbitration Clause in the Special Conditions of Contract, entered
between the parties.
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By:HARIOM SHARMA
Signing Date:26.04.2026
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8. Having heard learned counsels appearing for the parties, at the outset,
this Court notes that there is a clear admission by the respondent that no
notice, as such, stating that the respondent proposes to take action for
blacklisting of the petitioner, has been issued by the respondent. The
respondent has sought to justify the same on the ground that no separate
notice for blacklisting was required, as the stipulation regarding blacklisting
was incorporated in the clause which also stipulated regarding termination.
9. In this regard, it is apposite to refer to Clause 29 of Special Conditions
of Contract entered between the parties, which is reproduced as under:
“xxx xxx xxx
xxx xxx xxx”
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10. Perusal of the aforesaid clause shows that the respondent has the
authority to terminate the contract in case of default of the contractor and to
debar the contractor from participating in the tender for the balance work.
11. However, merely on account of the fact that an authority is vested in
respondent for terminating the contract or debarring a contractor, the same
cannot mean that the Principles of Natural Justice are not to be followed.
Wherever any action is sought to be taken by an authority, issuance of
requisite show cause notice and opportunity to show cause and grant of
hearing, if required, is sine qua non for proper exercise of authority in
accordance with the Principles of Natural Justice.
12. It is settled law that no one can be condemned unheard. Therefore,
issuance of a notice before taking any action for blacklisting of the petitioner
was imperative. In this regard, reference be made to the judgment in the case
of A.K.G. Construction and Developers Pvt. Ltd. Versus State of
1
Jharkhand and Others , wherein, the Supreme Court has held as follows:
“xxx xxx xxx
22. Returning to the facts of the present case, at the outset, it is
apparent that the show cause notice dated 04.06.2024 does not
purport to be a show cause notice for blacklisting at all. It perhaps
expects the contractor to assume that it is for termination as well as
for blacklisting. Even if we accept the submissions of Mr. Kumar
Anurag Singh that, as there is no provision for prior notice before
termination, this show cause notice must be taken to be for
blacklisting, we are of the opinion that it still falls short of the
requirement of a proper show cause notice for blacklisting. This is
for the reason that as the decision to blacklist is independent of the
decision to terminate, the Department must demonstrate application
of mind before it takes the next step of blacklisting the contractor,
over an order of termination. Upon taking such a decision, it must
also issue a show cause notice calling upon the contractor to explain
why a consequential order of blacklisting should also not be passed.
1
2026 SCC OnLine SC 520
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By:HARIOM SHARMA
Signing Date:26.04.2026
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The letter must be indicative of the proposed decision to blacklist
and the requirement of the contractor to respond to it. The show
cause notice dated 04.06.2024 falls short of these requirements.
Similarly, the final order of blacklisting, dated 23.08.2024, also does
not list the reasons as to why an order of blacklisting has become
necessary.
xxx xxx xxx
24. As a consequence of our decision to set aside the blacklisting
order, we would have required the Department to issue a fresh show
cause notice indicative of the reasons as to why a blacklisting order
is felt necessary and to thereby call upon the contractor to show
cause. However, in view of the fact that the order of termination cum
blacklisting was passed on 23.08.2024, and since then almost more
than one and a half year has already passed, without there being a
stay of the said order in the meantime, we are of the opinion that the
relief to be granted can suitably be moulded by directing that the
order of blacklisting will cease to operate with immediate effect. This
order will benefit the appellant more than the Department, because
directing issuance of a fresh show cause notice will only lead to
further litigation.
xxx xxx xxx”
(Emphasis Supplied)
13. Likewise, in the case of UMC Technologies Private Limited Versus
2
Food Corporation of India and Another , the Supreme Court held as
follows:
“xxx xxx xxx
| 21. Thus, from the above discussion, a clear legal position emerges | |
|---|---|
| that for a show-cause notice to constitute the valid basis of a | |
| blacklisting order, such notice must spell out clearly, or its contents | |
| be such that it can be clearly inferred therefrom, that there is | |
| intention on the part of the issuer of the notice to blacklist the | |
| noticee. Such a clear notice is essential for ensuring that the person | |
| against whom the penalty of blacklisting is intended to be imposed, | |
| has an adequate, informed and meaningful opportunity to show | |
| cause against his possible blacklisting. |
24. A plain reading of the notice makes it clear that the action of
blacklisting was neither expressly proposed nor could it have been
2
(2021) 2 SCC 551
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By:HARIOM SHARMA
Signing Date:26.04.2026
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| inferred from the language employed by the Corporation in its show- | |
|---|---|
| cause notice. After listing 12 clauses of the “Instruction to Bidders”, | |
| which were part of the Corporation's bid document dated 25-11-2016, | |
| the notice merely contains a vague statement that in light of the | |
| alleged leakage of question papers by the appellant, an appropriate | |
| decision will be taken by the Corporation. In fact, Clause 10 of the | |
| same Instruction to Bidders section of the bid document, which the | |
| Corporation has argued to be the source of its power to blacklist the | |
| appellant, is not even mentioned in the show-cause notice. While the | |
| notice clarified that the 12 clauses specified in the notice were only | |
| indicative and not exhaustive, there was nothing in the notice which | |
| could have given the appellant the impression that the action of | |
| blacklisting was being proposed. This is especially true since the | |
| appellant was under the belief that the Corporation was not even | |
| empowered to take such an action against it and since the only clause | |
| which mentioned blacklisting was not referred to by the Corporation | |
| in its show-cause notice. While the following paragraphs deal with | |
| whether or not the appellant's said belief was well-founded, there | |
| can be no question that it was incumbent on the part of the | |
| Corporation to clarify in the show-cause notice that it intended to | |
| blacklist the appellant, so as to provide adequate and meaningful | |
| opportunity to the appellant to show cause against the same. |
| 25. The mere existence of a clause in the bid document, which | |
|---|---|
| mentions blacklisting as a bar against eligibility, cannot satisfy the | |
| mandatory requirement of a clear mention of the proposed action in | |
| the show-cause notice. The Corporation's notice is completely silent | |
| about blacklisting and as such, it could not have led the appellant to | |
| infer that such an action could be taken by the Corporation in | |
| pursuance of this notice. Had the Corporation expressed its mind in | |
| the show-cause notice to blacklist, the appellant could have filed a | |
| suitable reply for the same. Therefore, we are of the opinion that the | |
| show-cause notice dated 10-4-2018 does not fulfil the requirements | |
| of a valid show-cause notice for blacklisting. In our view, the order | |
| of blacklisting the appellant clearly traversed beyond the bounds of | |
| the show-cause notice which is impermissible in law. As a result, the | |
| consequent blacklisting order dated 9-1-2019 cannot be sustained. |
(Emphasis Supplied)
14. Considering the submissions made before this Court, a prima facie
case has been established by the petitioner. This Court also takes note of the
fact that the petitioner has been in continuous contractual relationship with
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Signing Date:26.04.2026
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the respondent since the year 2005 spanning over 21 years and is presently
executing various maintenance contracts across various territories in India.
Thus, if interim protection is not granted to the petitioner, and the impugned
order with respect to blacklisting is not stayed by this Court, the same shall
cause irreparable damage to the petitioner. Further, balance of convenience
also lies in favour of the petitioner.
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15. Accordingly, the Letter dated 24 November, 2025, to the extent of
blacklisting of the petitioner, is stayed.
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16. On the last date of hearing, i.e., 16 April, 2026, this Court had noted
that there is a valid Arbitration Clause between the parties, and directed the
respondent to take instructions, as to whether this Court can proceed for
appointment of an Arbitrator, in terms of the Agreement between the parties.
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The relevant portion of order dated 16 April, 2026, is reproduced as under:
“xxx xxx xxx
1. This Court has perused the Arbitration Clause, i.e., Clause 28,
of the Special Conditions of Contract (“SCC”), which is reproduced
as under:
“xxx xxx xxx
xxx xxx xxx”
2. Learned counsel appearing for the petitioner submits that there
is no separate Clause with respect to jurisdiction of any other Court.
Thus, he submits that since the venue of the arbitration is at New
Delhi, in absence of any other Clause, the seat of arbitration is also at
New Delhi.
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By:HARIOM SHARMA
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3. He further submits that he has an approximate claim of Rs. 1-
1.15 Crores, based upon various claims, including loss of profit.
4. Since there are disputes between the parties and there is a valid
Arbitration Clause, ultimately the disputes between the parties are to
be settled by the arbitration process.
5. Accordingly, learned counsel appearing for the respondent is
directed to take instructions as to whether this Court can proceed to
appoint an Arbitrator, so that the disputes between the parties can be
adjudicated, in accordance with the arbitration process, in terms of
the agreement between the parties.
xxx xxx xxx”
17. Today, learned counsel appearing for respondent submits that an
Arbitrator can be appointed by this Court.
18. In view of the aforesaid, since the parties are ad idem in regard to the
matter being referred to Arbitration, the statutory requirement of a Legal
Notice under Section 21 of the Arbitration Act for invoking the Arbitration
Clause and, the subsequent requirement of filing a Petition under Section 11
of the Arbitration Act, for appointment of an Arbitrator, are hereby waived
of.
19. Learned counsel appearing for the petitioner submits that the claim of
the petitioner is approximately to the tune of Rs. 1-1.5 crores.
20. He further submits that the Arbitration proceedings be held under the
aegis of Delhi International Arbitration Centre (“DIAC”).
21. Accordingly, considering the submissions made before this Court, the
following directions are issued:
i) Mr. Virender Mehta, Advocate, (Mob: 91+ 9811151865) is appointed
as the Sole Arbitrator to adjudicate the disputes between the parties.
ii) The arbitration proceedings shall be held under the aegis and Rules of
DIAC, Delhi High Court, Sher Shah Road, New Delhi.
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iii) The remuneration of the learned Arbitrator shall be in terms of DIAC
(Administrative Cost and Arbitrators’ Fees) Rules, 2018.
iv) The learned Arbitrator is requested to furnish a declaration in terms of
Section 12 of the Arbitration Act prior to entering into the reference. In the
event of any impediment to the Arbitrator’s appointment on that count, the
parties are given liberty to file an appropriate application before this Court.
v) It shall be open to the respondent to raise counter-claims, if any, in
arbitration proceedings.
vi) It is made clear that all the rights and contentions of the parties,
including, as to the arbitrability of any of the claim, any other preliminary
objection, as well as claims/counter-claims and merits of the dispute of
either of the parties, are left open for adjudication by the learned Arbitrator.
vii) The parties shall approach the learned Arbitrator within two (02)
weeks from the date of appointment of the Arbitrator.
22. It is clarified that nothing contained in the present judgment shall be
construed as an expression of this Court on the merits of the case, which
shall be decided by the learned Arbitrator.
23. Accordingly, the present petition, along with pending application, is
disposed of in the aforesaid terms.
24. The Registry is directed to send a copy of this order to the learned
Arbitrator, as well as, the Secretary, DIAC, for information and compliance.
MINI PUSHKARNA, J
APRIL 23, 2026/ SK/au
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By:HARIOM SHARMA
Signing Date:26.04.2026
17:24:36