Specific Contractual Remedy Prevails Over General Clauses: Delhi HC

The Delhi High Court set aside a termination notice and a suspension order issued against a solar module manufacturer, holding that specific contractual remedies for non-execution of an agreement must prevail over general termination and risk-purchase clauses. The Court emphasized that debarment or suspension of business dealings, carrying serious civil consequences, cannot be sustained without adhering to the principles of natural justice.

A vacation bench comprising Justice Tejas Karia and Justice Madhu Jain adjudicated upon the writ petition filed under Article 226 of the Constitution of India, 1950. The dispute arose when the Respondent, a government enterprise, issued a termination notice and a suspension order after the Petitioner failed to execute a formal contract agreement and submit a performance guarantee for a 1000 MW Solar Park Project.

Court's Rationale on Contractual Remedies and Specificity

The Court observed that the Respondent's invocation of general termination and risk-purchase clauses (Clauses 42.0 and 43.0 of the GPC) was legally flawed. It noted that the bidding documents contained specific provisions Clause 24(c) of the GPC and Clause 34.0 of the SPC which explicitly prescribed the consequences for failing to sign the agreement: annulment of the award and forfeiture of the bid security.

The Court, in its reasoning, observed: "It is settled law that where a specific provision governs a particular default, recourse must be had to such provision in preference to a general provision. The Respondent, therefore, could not have invoked Clause 42.0 of the GPC for a default for which specific consequences are prescribed under Clause 24(c) of the GPC and Clause 34.0 of the SPC."

Furthermore, the Court rejected the Petitioner's plea of force majeure regarding market price hikes but maintained that the Respondent could not leapfrog to risk-purchase mechanisms before the supply stage had even commenced.

Violation of Natural Justice in Suspension Orders

Addressing the six-month suspension order, the Court found it to be a form of debarment that was issued unilaterally. Drawing upon precedents like M/s Techno Prints v. Chhattisgarh Textbook Corporation & Anr. ( "2025 INSC 236": 2025 CaseBase(SC) 259), Blue Dreamz Advertising Private Limited v. Kolkata Municipal and Others, and Gorkha Securities Services v. Government (NCT of Delhi) and Others, the Court reiterated that any action entailing civil and commercial prejudice must be preceded by a show-cause notice and a fair hearing.

The Court has the following directions:

"The Termination Notice dated 08.04.2026 is, accordingly, set aside to the extent it is founded upon, or seeks to give effect to, Clauses 42.0 and 43.0 of the GPC. The Suspension Order dated 01.06.2026 is also set aside for violation of principles of natural justice. It is held that Retender Notice dated 10.04.2026 does not warrant interference, however it is clarified that no action against the Petitioner can be sustained on the basis of Clause 43.0 of the GPC or on the premise that Retender Notice dated 10.04.2026 constitutes a valid risk-purchase procurement against the Petitioner."

Background:

The Petitioner, a company registered under the Companies Act, 2013, was awarded projects for supplying Solar PV Modules. However, following the award, the Petitioner requested several extensions to execute the contract, citing the unavailability of authorized signatories and later, a surge in raw material prices (silver) due to the West-Asian conflict. The Petitioner relied on a Force Majeure memorandum from the Ministry of Finance.

The Respondent eventually terminated the award, encashed the bid security, and issued a suspension order barring the Petitioner from future tenders for six months. The Petitioner challenged these actions as arbitrary and contrary to the specific terms of the tender, which only permitted annulment of the award for pre-execution defaults. The Court ultimately allowed the petition in part, protecting the Petitioner from risk-purchase liabilities while leaving the initial annulment of the award intact.

Case Details:
Case No.: W.P.(C) 8148/2026, CM APPL. 38790/2026 & CM APPL. 38791/2026
Case Title: GREW ENERGY PRIVATE LIMITED v. NTPC RENEWABLE ENERGY LIMITED
Appearances:
For the Petitioner(s): Mr. Sandeep Sethi, Senior Advocate along with Mr. Krisna Gambhir, Ms. Shreya Sethi, Mr. Monark Gahlot, Mr. Raunak Dhillion, Mr. Nihaad Dewan, Ms. Priyal Shah, Mr. Himanshu Bhargava & Mr. Parthiv Gandhi, Advocates.
For the Respondent(s): Mr. Rajesh Gupta & Mr. Harpreet Singh, Advocates.

Source: 2026 CaseBase(DEL) 447