The court finds NTPC's actions against Grew Energy Private Limited to be in violation of specific contractual provisions and principles of natural justice.
The Delhi High Court, in a significant judgment, has set aside the termination and suspension orders issued by NTPC Renewable Energy Limited against Grew Energy Private Limited. The court found that the termination of contracts and issuance of suspension orders by NTPC did not adhere to specific contractual provisions and principles of natural justice.
The case, titled "Grew Energy Private Limited v. NTPC Renewable Energy Limited," was heard by a division bench comprising Justices Tejas Karia and Madhu Jain. Grew Energy Private Limited, a company engaged in the manufacture and sale of Solar PV Modules, challenged the termination notice, retender notice, and suspension order issued by NTPC concerning a major 1000 MW Solar Park Project.
The court observed that NTPC invoked general provisions under Clauses 42.0 and 43.0 of the General Purchase Conditions (GPC) to terminate the contract, despite the existence of specific provisions like Clause 24(c) of the GPC and Clause 34.0 of the Special Purchase Conditions (SPC) that prescribed the consequences for the alleged contractual breaches. The court emphasized that specific remedies take precedence over general provisions, thus rendering NTPC's invocation of Clauses 42.0 and 43.0 impermissible.
Furthermore, the suspension order, which equated to debarment under NTPC’s policy, was issued without a show-cause notice or an opportunity for Grew Energy to be heard, violating principles of natural justice. The court highlighted that such orders, having serious civil and commercial consequences, require adherence to procedural fairness.
While the court did not interfere with the retender notice, it clarified that no action against Grew Energy could be sustained based on Clause 43.0 of the GPC or on the premise that the retender notice constituted a valid risk-purchase procurement against the company.
The judgment underscores the importance of adhering to contractual specifics and ensuring due process in administrative actions, particularly in cases involving significant commercial and civil implications.
Bottom line:-
The termination of contracts and issuance of suspension orders require adherence to specific contractual provisions and principles of natural justice. Invocation of general provisions in the presence of specific remedies is impermissible.
Statutory provision(s): Article 226 of the Constitution of India, Clauses 24(c), 42.0, and 43.0 of the General Purchase Conditions (GPC), Clause 34.0 of the Special Purchase Conditions (SPC), Principles of Natural Justice, Clause 2.2 of the Policy for Debarment from Business Dealings.
