Specific remedy for contractual default excludes general termination; suspension without hearing violates natural justice.

The Petitioner was awarded projects for the supply of Solar PV Modules via six Notifications of Award (NOAs) dated 24.12.2025

Following the award, the Petitioner failed to execute the formal contract agreement and submit the Contract Performance Guarantee (CPG) by the stipulated deadlines, citing the unavailability of signatories and later, commercial hardships—specifically a spike in silver prices and supply chain disruptions caused by West-Asian conflicts

On 16.02.2026, the Respondent issued a Default Notice. Subsequently, on 08.04.2026, the Respondent issued a Termination Notice under Clauses 42 and 43 of the General Purchase Conditions (GPC), encashed the bid security, and on 01.06.2026, issued a Suspension Order debarring the Petitioner from business dealings for six months without a prior show-cause notice

The Petitioner challenged the termination and suspension under Article 226 of the Constitution

The Court applied the principle of generalia specialibus non derogant, holding that specific contractual provisions prevail over general ones

Respondent's Policy for Debarment from Business Dealings, specifically Clause 2.2, which equates "suspension" with "debarment," and Clause 6.3.3 regarding failures to sign agreements

Administrative law principle that orders entailing "civil consequences," such as blacklisting or debarment, necessitate adherence to the principles of natural justice, as established in Gorkha Securities Services v. Government (NCT of Delhi), M/s Techno Prints v. Chhattisgarh Textbook Corporation, and Blue Dreamz Advertising Pvt. Ltd. v. Kolkata Municipal Corporation

The Court observed that the Petitioner’s default—failing to sign the contract and submit the CPG—occurred at the pre-execution stage

Specific consequences for such defaults were provided under Clause 24(c) of the GPC and Clause 34.0 of the SPC (annulment of NOA and forfeiture of bid security), which the SPC explicitly stated would prevail over general conditions. Therefore, the Respondent’s invocation of Clause 43.0 (risk purchase for supply-stage failures) was legally misplaced as no supply stage had been reached

Regarding the Suspension Order, the Court rejected the Respondent's argument that a show-cause notice was unnecessary under Clause 6.3.3 of the Debarment Policy. Since Clause 2.2 of said policy equates suspension with debarment—leading to significant commercial prejudice and bid rejections—the lack of a prior hearing or reasoned show-cause notice constituted a fatal violation of natural justice

The Court declined to interfere with the Retender Notice as the risk-purchase liability against the Petitioner was already set aside

It set aside the Termination Notice to the extent it relied on Clauses 42.0 and 43.0 of the GPC, though it upheld the annulment of NOAs and forfeiture of Bid Security under Clause 24(c)

The Suspension Order was quashed for violating the principles of natural justice

The Court upheld the Retender Notice but clarified that no action could be sustained against the Petitioner on the basis of "risk-purchase" procurement. All other rights regarding damages were reserved for appropriate legal proceedings