“‘No Blacklisting, Arbitration Available’: Gauhati High Court Rejects Contract Termination Challenge, Says ‘No Perversity in Single Judge’s Findings’”
Isabella Mariam
The Gauhati High Court, in a recent decision delivered by a Division Bench comprising Chief Justice Vijay Bishnoi and Justice N. Unni Krishnan Nair, dismissed an intra-court appeal challenging the termination of a consultancy contract issued by the National Highways and Infrastructure Development Corporation (NHIDCL). The Bench declined to interfere with the termination of the contract and directed the aggrieved party to seek remedy through arbitration proceedings as provided under the contract. The Division Bench, while dismissing the appeal, stated, “the conclusions drawn by the learned Single Judge in the impugned Judgment and Order dated 23.07.2024, being not erroneous, the same would not mandate an interference.”
The Division Bench upheld the Single Judge’s decision that refused to set aside the termination order dated 24.04.2024, while granting liberty to the appellant to invoke the arbitration clause for resolution of the dispute. The Bench further clarified that there was no element of blacklisting involved in the termination order itself.
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The appellant, M/s Feedback Infra Pvt Ltd, acting through its Resolution Professional and authorized representative, contested the termination of a contract originally awarded in August 2021 for providing consultancy services as Authority’s Engineer for the supervision of a highway project under the Bharatmala Pariyojana in Assam. The contract, awarded by NHIDCL, was executed with the appellant and its Joint Venture partner, M/s Armenge Engg. and Management Consultant Pvt. Ltd.
Pursuant to an RFP dated 19.04.2021, the appellant submitted a joint bid, which was accepted. Following the Letter of Acceptance on 04.08.2021 and execution of the contract agreement, the respondent issued a notice to proceed with the work on 25.10.2021. However, performance issues arose when NHIDCL identified deficiencies, leading to a suspension notice on 18.02.2022. The appellant responded on 28.02.2022, but NHIDCL remained unsatisfied, issuing a show-cause notice on 19.10.2023.
The show-cause notice referred to persistent non-performance, including “the failure to deploy key personnel despite prior approvals” and “lack of attendance and mobilization of the Team Leader cum Sr. Highway Engineer, Resident Engineer, and Senior Quality cum Material Expert.” Specifically, it was recorded that “the Resident Engineer joined the project site on 01.03.2023 but has been absent since 29.03.2023 having attendance 4.6% only.” The consultant was warned of termination under Clause 2.9.1 of the General Conditions of Contract (GCC) if no satisfactory action was taken within 60 days. No reply was submitted by the appellant.
Consequently, NHIDCL terminated the contract via a letter dated 24.04.2024, invoking Clause 2.9.1 of the GCC, followed by a debarment notice dated 13.05.2024, debarring the Joint Venture from participating in NHIDCL’s future projects for two years under Clause 2.9.7 of the GCC.
The appellant initially secured partial relief when a Single Judge set aside the debarment notice on 05.06.2024. However, a separate writ petition challenging the termination order itself was dismissed on 23.07.2024, with the learned Single Judge granting liberty to the appellant to invoke arbitration under Clause 8.4 of the contract.
During the appeal hearing, Mr. K. N. Choudhury, Senior Counsel for the appellant, submitted that the appellant was undergoing proceedings under the Insolvency and Bankruptcy Code (IBC) and that the termination was detrimental to its ability to operate as a going concern. He argued that termination would prevent the appellant from participating in future bidding processes due to clauses in RFPs and NITs that disqualify entities with terminated contracts. Mr. Choudhury submitted that “a declaration should be issued to ensure that notwithstanding the termination, the appellant is not barred from future bidding opportunities.”
Conversely, Mr. P. J. Saikia, Senior Counsel for the respondents, countered that the termination was not linked to the IBC proceedings but was based on material breaches of contract. He submitted that “termination was strictly in accordance with the Contract Agreement after providing multiple opportunities for the appellant to cure the deficiencies.”
The Division Bench observed that the appellant’s failure to respond to the show-cause notice was a critical factor. It recorded the learned Single Judge’s findings, stating that the petitioner “had all the time to make a challenge to the clause in the tender notice denying him participation from the bidding process. However, the petitioner has however not done the same.”
The Division Bench also cited the Supreme Court’s ruling in Airport Authority of India vs. Pradip Kumar Banerjee (2025) SSC Online SC 232, observing that interference in intra-court appeals is warranted only when the lower court’s judgment is perverse or legally erroneous. It stated, “applying the ratio of the said decision to the facts of the present case, we are of the considered view that the conclusions reached by the learned Single Judge… does not suffer from any perversity.”
The Court also addressed the appellant’s contention regarding blacklisting, clarifying that “in any event, the impugned termination order, is not an order blacklisting the petitioner from participating in any future bidding process.” The Division Bench further noted that “while the petitioner annexed two tender notices barring participation based on termination, the termination order itself is silent on debarment.”
The Court recorded that the appellant’s argument about vague grounds for termination would have to be addressed in arbitration, stating, “the appellant has already undertaken to take recourse to Arbitration for redressal of its grievance in this connection.”
The Court dismissed the appeal while upholding the learned Single Judge’s order. It held that the appellant should pursue its grievance through arbitration as stipulated in Clause 8.4 of the contract. It declined to issue any blanket direction to prevent the appellant from being disqualified in future tenders.
“Accordingly, the present writ appeal is held to be devoid of any merit and consequently, the same stands dismissed. However, there would be no order as to costs,” the Bench concluded.
Advocates Representing the Parties
For the Appellant: N. Gautam, K. N. Choudhury, Rajive R. Raj
For the Respondents: K. Deka, R. Devi (CGC), P. J. Saikia, R. Bora (Standing Counsel, NHIDCL)
Case Title: M/S Feedback Infra Pvt Ltd vs Union of India and 2 Ors
Neutral Citation: GAHC010175952024
Case No.: WA/313/2024
Bench: Chief Justice Vijay Bishnoi Justice N. Unni Krishnan Nair
[Read/Download order]
