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Judgment
Heard Mr. S.B.K. Manglam, learned counsel assisted by Mr. Awnish Kumar, learned counsel appearing on behalf of the petitioner as well as Mr. Y.V. Giri, learned Senior Counsel, assisted by Mr. Neeraj Kumar Gupta, learned counsel appearing on behalf of the respondent company.
This writ application has been filed for the following relief(s):-
“(I)For issuance of an appropriate writ in the nature of CERTIORARI for quashing the letter dated 07.05.2026 issued under the signature of Respondent no.5 on behalf of HPCL Biofuels Limited and contained in Ref. HBL/GBD/26 dated 07.05.2026, whereby and where under the Respondent HPCL Biofuels Limited has been pleased to terminate the contract with the petitioner for conversion of existing 60 KLPD Molasses/ Juice Distillant to due mode and expansion to 70 KLPD along with new cogen plant at Sugauli.
(II)For issuance of an appropriate writ in the nature of CERTIORARI for quashing the Notice Inviting Tender Ref. HBL/TEN/PUB/26-27/001 being Tender ID No.2026 HPCLB-2746981 issued by the Respondent HPCL Biofuels Limited for construction of part of the aforesaid conversion at Sugauli before termination of agreement with the petitioner in pursuance of the agreement of Respondent company with the petitioner.
(III)For issuance of an appropriate writ in the nature of MANDAMUS, commanding and directing the Respondent Authorities not to proceed any further for encashment of Bank Guarantee submitted by the petitioner as per the terms of agreement until the disposal of the present writ petition and all other consequential relief for which the writ petitioner would be found entitled under the facts and circumstances of the case.
(IV)For issuance of any other appropriate writ/writs, order/orders, direction/directions for which the writ petitioner would be found entitled under the facts and circumstances of the case.”
Learned counsel appearing on behalf of the petitioner states that Notice Inviting Tender (NIT) was published on 22.02.2023 under the authority of respondent HPCL Biofuel Limited for conversion of existing 60 KLPD Molasses/ Juice Distillery to duel mode and expansion to 70 KLPD along with New Cogen Plant at Sugauli and since the petitioner company was also one of the participants in the tender process and since he was L-1, therefore, the contract was allotted to the petitioner company and Letter of Acceptance (LOA) [Annexure-P-2] was issued by the respondent company vide LOA/HBL/23-24/127 dated 08.08.2023 under EPCC Package and agreement was executed between the petitioner and the respondent company. Learned counsel appearing on behalf of the petitioner further submits that after receipt of the LOA dated 08.08.2023, the petitioner company visited the site to proceed with the work, but when the petitioner company noticed a lot of difficulties in proceeding with the work, an information in this regard was given to the respondent company through various letters and realizing the difficulties at the site in proceeding with the work, various amendments were also made in the plan.
Learned counsel appearing on behalf of the petitioner further contended that the petitioner would submit that when the strength of the earth to proceed with the work with open foundation was not suitable at the site, since the site was full with restricted water, the open foundation was covered with deep and heavy pile, it consumed a lot of time to begin with the work. Apart from that, there were many other hindrances to proceed with the work like demolition of existing structures and shifting of the scrap which also took a lot of time to begin with the work.
Learned counsel appearing on behalf of the petitioner further submits that as per the LOA, the work allotted to the petitioner was to be completed till 15.08.2024. Thereafter, at the request of the petitioner, the period for completion of the work was extended for some time but later on, the same was not extended. Thereafter, the petitioner again made a request for extension of time, but the same was not entertained. Learned counsel appearing on behalf of the petitioner further urged that due to cumulative effect of the circumstances at the site, change in project report, paucity of fund etc., the petitioner did not complete the project till 15.08.2024, which was the time stipulated in the LOA and again during the extended period of contract, which was solely attributable to the respondent company.
Learned counsel appearing on behalf of the petitioner further submits that even if the petitioner company was working on the site on adjustment with the respondent, however, the petitioner company received a show-cause notice dated 07.04.2026, issued under the signature of the Deputy General Manager, Project, H.P.C.L. Biofuels Limited (Respondent No. 5), but the said show-cause notice dated 07.04.2026 did not reflect that the show-cause notice had been issued by the respondent company for termination of contract. Thereafter, the petitioner filed a detailed reply on 18.04.2026, within the stipulated time mentioned in the show-cause notice, describing the reason for delay in completion of the project and discussing all the points raised in the show-cause notice. Learned counsel appearing on behalf of the petitioner further submits that before the expiry of the period granted to the petitioner for submitting his reply, Notice Inviting Tender (NIT) was published by the respondent company on 13.04.2026 vide Tender Reference No. HBL/TEN/PUB/26-27/001 being Tender ID No. 2026_HPCLB_274698_1 inviting tender for completion of remaining work of the conversion at Sugauli site.
Learned counsel appearing on behalf of the petitioner further submits that since the Notice Inviting Tender (NIT) was issued prior to the date of expiry of the period for filing the reply, mentioned in the show-cause notice, therefore, there is serious doubt created in the mind of the petitioner that the show-cause notice was an empty formality once the respondent had decided to terminate the contract by issuing a fresh tender for partial work. Then suddenly, the petitioner received the termination letter dated 07.05.2026 by which the respondent company terminated the contract of the petitioner for conversion at Sugauli site.
Learned counsel appearing on behalf of the petitioner further submits that the said order of termination is in violation of principles of natural justice and the proposed punishment has not been mentioned in the show-cause notice, which is violation of the settled law of the land, and the said show-cause notice and the termination letter are bad in law and fit to be set aside.
Per contra, learned counsel appearing on behalf of the respondent company submitted that petitioner has not completed the work within the stipulated time and the work progress was very slow, which is in complete violation of the term mentioned in the RFP, which is a part of the LOA.
Learned counsel appearing on behalf of the respondent company states that the work executed by the petitioner at the Sugauli Plant during the preceding one year period, clearly demonstrates the extremely slow pace of execution. It is evident that between March, 2025 and March, 2026, the cumulative physical progress increased only from 66.00% to 72.35%, reflecting a mere 6.35% advancement over the course of an entire year. Though, as per the terms of the contract, he has to complete 100% work within a year, however, the petitioner, from 31st March, 2025 to 31st March, 2026, had done the work of only 6.35%. It shows that the petitioner was not interested to perform the work despite the fact that the respondent was so lenient and granted extension to the petitioner after deducting the liquidity damage. The said conduct of the petitioner established that the petitioner failed to execute the work which resulted into an inordinate delay in completion of the work. Therefore, the respondent company issued a show-cause notice dated 07.04.2026 (Annexure-P-4) and in the said show-cause notice respondent referred to the several correspondences with the petitioner regarding the slow and poor performance of the work and requested to complete the work at the earliest. Learned counsel appearing on behalf of the respondent company further submits that in the said show-cause notice there is detailed mention of the insufficiency and poor performance of the work performed by the petitioner and also in the said show-cause notice the respondent company demonstrated the slow performance of the petitioner in executing the work and further in the said show-cause notice it has been specifically mentioned “In light of the foregoing and breach of contractual obligation by you which have caused inordinate delay to the work progress, you are hereby called upon to show cause in writing within 15 days from the date of the notice as to why the action should not be taken against you including termination of contract as per Clauses 12.2(d) of GTC of Tender at your risk and cost.”
It is clear from the above said paragraph of the show cause notice that specific notice has been given to the petitioner regarding termination of contract and the petitioner was directed to submit the reply within 15 days from the date of the show-cause notice. Thereafter, the petitioner filed his reply. Learned counsel appearing on behalf of the respondent company further submits that the petitioner has filed the detailed reply dated 18th April, 2026 and raised several disputed questions of fact regarding the delayed execution and slow progress of work viz. Unforeseen site conditions, including water-logging and spent wash-affected soil, requirement of extensive piling not envisaged in the contract, restricted work fronts due to ongoing plant operations and multiple crushing seasons and delay in approval and release of payments as also the limited work fronts and sequencing dependencies, site accessibility constraints and ongoing plant operations. Other issues were also raised by the petitioner in the show-cause reply.
Learned counsel appearing on behalf of the respondent further submits that these are the disputed questions of fact, which cannot be adjudicated in the writ jurisdiction under Article 226 of the Constitution of India. Learned counsel appearing on behalf of the respondent further submits that moreover in term 8 of the said show-cause reply, the petitioner specifically answered Clause 12.2(d), termination clause for contract default, and the show-cause reply of the petitioner leaves no iota of doubt that the petitioner was aware of the fact that the show-cause notice was for termination of the contract. Therefore, he answered in respect of termination clause in the show-cause reply. Learned counsel appearing on behalf of the respondent further draws the attention of this Court towards term 5.f. “OWNER MAY DO PART OF WORK”, which is a part of the General Terms & Conditions of Works Contract (hereinafter referred to as “GCC”), which is quoted hereunder:-
“5.f. Notwithstanding anything contained elsewhere in this contract, the owner upon failure of the Contractor to comply with any instructions given in accordance with the provisions of this contract, may instead of Contract and undertaking charge of entire work, place additional labour force, tools, equipment and materials on such parts of the work, as the Owner may decide or engage another Contractor to carry out the balance of work. In such cases, the Owner shall have the right to deduct from the amounts payable to the Contractor the difference in cost of such work and materials with ten percent overhead added to cover all departmental charges. Should the total amount thereof exceed the amount due to the contractor, the Contractor shall pay the difference to the Owner within 15 days of making demand for payment failing which the Contractor shall be liable to pay interest at 24% p.a. on such amounts till the date of payment.”
From the said term, it is apparent that the owner may decide or engage another contractor to carry out the balance work. Therefore, in terms of the said clause, respondent has floated the tender for partial work of Rs. 5 crore as per the GCC and there is no violation of the term.
Learned counsel appearing on behalf of the respondent company further submits that before issuing the tender for partial work, the respondent company intimated the petitioner. He further submits that after receiving the reply to the show-cause notice, the respondent company has considered the issues raised by the petitioner and passed detailed reasoned order while terminating the contract of the petitioner vide termination letter dated 07.05.2026 (Annexure-P-7) of the writ application.
Learned counsel appearing on behalf of the respondent company further submits that in Term- 1.47 of the Special Terms & Conditions for the Supply Contract, it is specifically mentioned that in case of all disputes and differences of whatsoever nature, whether existing or which shall at any time arise between the parties thereto touching or concerning the agreement, meaning, operation or effect thereof or to the rights and liabilities of the parties or arising out of or in relation thereto whether during or after completion of the contract or whether before or after determination, foreclosure, termination or breach of the agreement, either party to the agreement can refer the issue for adjudication to the sole Arbitrator. Learned counsel appearing on behalf of the respondent company has emphasized on the said terms and conditions of the arbitration clause and submits that in catena of judgments, the Hon’ble Supreme Court has held that when there is an alternative dispute redressal mechanism available then the disputed question of fact, as raised in the present matter by filing show-cause reply by the petitioner, cannot be adjudicated in the writ jurisdiction under Article 226 of the Constitution of India.
Learned counsel appearing on behalf of the petitioner, in reply to the submissions made on behalf of the respondent company, submits that alternative remedy is not a bar in maintainability of the writ application, as held by the Hon’ble Supreme Court in the case of Union of India and Others. v. Tantia Construction Private Limited, reported in (2011) 5 SCC 697 and M/s. Godrej Sara Lee Ltd. v. Excise and Taxation Officer-cum-Assessing Authority and Others, reported in AIR (2023) Supreme Court 781.
I have perused the judgment placed by the petitioner. In the said judgments, there is no dispute of any fact as raised in the present writ application. Therefore, the said judgments are not applicable in the present matter.
Learned counsel appearing on behalf of the respondent, on the other hand, relied upon the judgment passed by the Hon’ble Supreme Court in the case of Jagdish Mandal v. State of Orissa and others, reported in (2007) 14 SCC 517, which states as follows:-
“22.Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made “lawfully” and not to check whether choice or decision is “sound”. When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:
(i)Whether the process adopted or decision made by the authority is mala fide or intended to favour someone;
Whether the process adopted or decision made is so arbitrary and irrational that the court can say: “the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached”;
(ii)Whether public interest is affected.
If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.
28.The limited scope of judicial review by the High Court envisaged examination of the question whether there was any material irregularity in the decision-making process or whether the decision of the Committee and consequential rejection of fifth respondent's tender was irrational, unreasonable or arbitrary. The validity of the decision of the Committee taken on the material available at the time of consideration of tenders, cannot be tested with reference to a subsequent police enquiry report submitted in the writ proceedings. Nor can it be held that the Committee acted arbitrarily in not accepting the passbook, on the basis of some report opining that the TD passbook is genuine. The High Court was not sitting in appeal over the decision of the Committee. The High Court could not, therefore, by relying on a subsequent police enquiry report, the correctness of which is yet to be established, hold that the Tender Committee was wrong in rejecting the TD passbook. Further, the High Court missed the issue. The question for consideration was not whether the TD passbook pledged by the fifth respondent is genuine or not. The question for consideration was whether the Committee acted arbitrarily or irrationally in rejecting the said TD passbook.”
Learned counsel appearing on behalf of the respondent company has further relied upon the judgment passed by the Hon’ble Supreme Court in the case of Banshidhar Construction Private Limited v. Bharat Coking Coal Limited and others, reported in (2024) 10 SCC 273, which states as follows:-
“31.In Sterling Computers Ltd. v. M & N Publications Ltd. [Sterling Computers Ltd. v. M & N Publications Ltd., (1993) 1 SCC 445] , this Court while dealing with the scope of judicial review of award of contracts held : (SCC p. 458, para 18)
“18.While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the “decision making process”. In this connection reference may be made to Chief Constable of the North Wales Police v. Evans [Chief Constable of the North Wales Police v. Evans, (1982) 1 WLR 1155 (HL)] where it was said that : (p. 1161)
‘… The purpose of judicial review is to ensure that the individual receives fair treatment, and not to ensure that the authority, after according fair treatment, reaches on a matter which it is authorised or enjoined by law to decide for itself a conclusion which is correct in the eyes of the court.’
By way of judicial review the court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State. Courts have inherent limitations on the scope of any such enquiry. But at the same time as was said by the House of Lords in the aforesaid case, Chief Constable of the North Wales Police v. Evans [Chief Constable of the North Wales Police v. Evans, (1982) 1 WLR 1155 (HL)] the courts can certainly examine whether “decision-making process” was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution.”
33.It has also been held in ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] , as under : (SCC p. 580, para 53)
“53.From the above, it is clear that when an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution.”
Learned counsel appearing on behalf of the respondent company further relied upon the judgment passed by the Hon’ble Supreme Court in the case of Silppi Constructions Contractors v. Union of India and another, reported in (2020) 16 SCC 489, wherein the Hon’ble Supreme Court held that when a disputed question of fact is involved, the writ petition is not maintainable. For ready reference, Paragraph 20 of the said judgment is quoted hereinbelow:-
“20.The essence of the law laid down in the judgments referred to above is the exercise of restraint and caution; the need for overwhelming public interest to justify judicial intervention in matters of contract involving the State instrumentalities; the courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable; the court does not sit like a court of appeal over the appropriate authority; the court must realise that the authority floating the tender is the best judge of its requirements and, therefore, the court's interference should be minimal. The authority which floats the contract or tender, and has authored the tender documents is the best judge as to how the documents have to be interpreted. If two interpretations are possible then the interpretation of the author must be accepted. The courts will only interfere to prevent arbitrariness, irrationality, bias, mala fides or perversity. With this approach in mind we shall deal with the present case.”
Also, recently, the Hon’ble Supreme Court has passed a detailed order in the matter of Karnataka Power Transmission Corporation Limited v. Rekha & Ors., reported in 2026 INSC 847 and taken note of the order passed in Radha Krishan Industries v. State of H.P., reported in (2021) 6 SCC 771 and observed as under:-
“6.The question of maintainability of the writ petition is no longer res-integra. Numerous judgments of this Court have delineated on this question. We may refer to one such judgment where the principles regarding maintainability have been culled out. In Radha Krishan Industries v. State of H.P.5 [(2021) 6 SCC 771], it has been observed:
"27.The principles of law which emerge are that:
27.1.The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well.
27.2.The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternate remedy is available to the aggrieved person.
27.3.Exceptions to the rule of alternate remedy arise where: (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; (b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation is challenged.
27.4.An alternate remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternate remedy is provided by law.
27.5.When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion.
27.6.In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with."
The Hon’ble Supreme Court also considered the order passed in the case of T.N. Cements Corpn. Ltd. v. Unicon Engineers, reported in (2025) 4 SCC 1, where it further stood clarified that:-
“55.It has been well-settled through a legion of judicial pronouncements of this Court that the writ courts, despite the availability of alternative remedies, may exercise writ jurisdiction at least in three contingencies - (i) where there is a violation of principles of natural justice or fundamental rights;
(ii)where an order in a proceeding is wholly without jurisdiction; or (iii) where the vires of an Act is challenged...”
Applying the aforesaid settled principles to the facts at hand, the core issue for consideration is whether the present dispute warrants interference by this Court under Article 226 of the Constitution of India despite the existence of an alternative remedy. While learned counsel for the petitioner contended that the impugned action suffers from jurisdictional error, learned counsel for the respondent correctly emphasized the limited scope of writ jurisdiction when disputed questions of fact and contractual dispute-resolution mechanisms exist.
As reaffirmed by the Hon’ble Supreme Court in T.N. Cements Corpn. Ltd. (supra), writ jurisdiction despite an alternative remedy is primarily exercisable where there is a violation of principles of natural justice or fundamental rights, absolute lack of jurisdiction, or a challenge to the vires of an Act. The present case falls squarely outside these three exceptions. The show-cause reply and the submissions on record raise complex, disputed questions of fact that require factual appreciation and evidence. These cannot be properly adjudicated in extraordinary writ proceedings, particularly when a dedicated, contractually agreed alternative dispute redressal mechanism is readily available to the parties.
Accordingly, this writ petition is dismissed as not maintainable.
It is clarified, however, that this order shall not preclude the petitioner from exhausting the alternate remedies available under the terms of the agreement or before the appropriate forum. If such proceedings are initiated, the concerned forum shall decide the matter strictly in accordance with law and as expeditiously as possible, entirely uninfluenced by any observation made in this judgment. Liberty is reserved to the petitioner to take appropriate action in accordance with law.
Interim order passed in this case stands vacated.
All pending Interlocutory Application(s), if any, stand disposed of.