Third-party obstructions beyond a contractor's control constitute force majeure, rendering contract termination for consequential delays arbitrary.

The Petitioner was awarded a tender by Rajasthan State Mines and Minerals Ltd. (RSMML) on 17.07.2023 for loading and transporting limestone at Sanu mines, Jaisalmer

A formal agreement was executed on 16.08.2023

The Petitioner failed to commence work within the stipulated 30 days due to obstructions and illegal pressure from the Jaisalmer Truck and Dumper Association

The Petitioner sought police protection via a writ petition and subsequent contempt proceedings, wherein the State admitted to establishing a police outpost to resolve the law-and-order crisis

Internal note-sheets of RSMML acknowledged that the delay (53 days) and subsequent production shortfall were due to "force majeure" conditions beyond the Petitioner's control

Despite these internal findings, RSMML issued an order on 24.12.2023 terminating the contract, forfeiting the security deposit (including a bank guarantee of ₹5.27 crores), and blacklisting the Petitioner for three years

The Petitioner challenged this order, asserting that the delay was covered under the Force Majeure clause of the NIT

The Court applied the principles of judicial review in contractual matters as established in Tata Cellular v. Union of India, which permits intervention in cases of arbitrariness, irrationality, or procedural impropriety

It relied on M.P. Power Management Co. Ltd. v. Sky Power Southeast Solar India Pvt. Ltd., holding that the State must act fairly even in non-statutory contracts and that writ jurisdiction is not barred by the mere existence of a contract if the State’s action is palpably unreasonable

The Court further interpreted Clause 4.65 of the NIT regarding "Force Majeure," which includes "any other cause beyond reasonable control of the party affected"

Principles regarding the sanctity of public tenders from Subodh Kumar Singh Rathour v. CEO were also applied to prevent the capricious exercise of executive power

The Court rejected the Respondent's objection to maintainability, noting that while courts exercise restraint in tender matters, they must intervene when State action is arbitrary

It found that the "disputed questions of fact" regarding law-and-order issues were actually admitted facts, as evidenced by RSMML’s own internal note-sheets and submissions made in previous contempt proceedings

On the merits, the Court observed that Clause 4.65 was illustrative, not exhaustive; the truck union agitation and the necessity of police escort for daytime-only operations fell within the ambit of "causes beyond reasonable control"

The Court highlighted the "contradictory approach" of the State: RSMML’s internal records treated the situation as Force Majeure and recommended waiving penalties, yet the formal impugned order cited the same delays as grounds for termination

This inconsistency rendered the termination, forfeiture, and blacklisting arbitrary and irrational

Since the underlying termination was void, the consequential blacklisting and forfeiture lacked any legal foundation

It ruled that the Petitioner could not be held liable for delays or shortfalls occasioned by circumstances beyond their control

The Court quashed and set aside the impugned order dated 24.12.2023 in its entirety, including the termination, blacklisting, and forfeiture

The Petitioner was permitted to continue the balance duration of the contract, especially as RSMML admitted the Petitioner's performance post-Force Majeure was satisfactory

The writ petition was allowed