Suspension From Business Dealings Cannot Be Ordered Without Hearing: Delhi High Court Sets Aside NTPC Action Against Solar Company
The Delhi High Court has held that an order suspending a company from participating in future tenders, which is in the nature of debarment, cannot be passed without complying with the principles of natural justice. A Division Bench of Justice Tejas Karia and Justice Madhu Jain thus set aside a suspension order issued by NTPC Renewable Energy against solar module manufacturer Grew Energy...
The Delhi High Court has held that an order suspending a company from participating in future tenders, which is in the nature of debarment, cannot be passed without complying with the principles of natural justice.
A Division Bench of Justice Tejas Karia and Justice Madhu Jain thus set aside a suspension order issued by NTPC Renewable Energy against solar module manufacturer Grew Energy Pvt. Ltd.
It observed that the company's suspension from business dealings entailed serious civil and commercial consequences and, therefore, required a prior show cause notice and an opportunity of hearing.
“By virtue of the Suspension Order, the Petitioner is disentitled, during the period of suspension, from participating in future tender enquiries floated by the Respondent and its subsidiaries; its bids in pending tender processes are liable to be rejected; and no award can be placed in its favour. The Suspension Order, therefore, entails serious civil and commercial consequences,” it observed.
The suspension order arose out of a tender for supply of Solar Photovoltaic (PV) Modules for a 1000 MW Solar Park project.
Petitioner Grew Energy had been awarded six Notifications of Award (NOAs) in December 2025. However, it failed to execute the formal contract agreement and furnish the Contract Performance Guarantee (CPG), initially citing the unavailability of its authorised signatories and later relying on force majeure due to the West Asian conflict, which allegedly disrupted supply chains and escalated raw material prices.
NTPC terminated the awards, encashed the bid security, issued a fresh tender and suspended the company from future business dealings for six months.
Grew Energy argued that under the tender conditions, failure to execute the contract and furnish the CPG attracted only annulment of the awards and forfeiture of the bid security. It contended that NTPC could not additionally invoke general termination clauses and suspend it from future tenders without following due process.
NTPC opposed the plea, contending that the petitioner had defaulted in honouring its contractual obligations despite repeated opportunities and that the applicable debarment policy specifically permitted suspension for such failure.
The High Court upheld NTPC's decision to treat the petitioner as being in default for failing to execute the contract agreement and furnish the CPG. It also rejected the company's plea that the subsequent force majeure notification excused its non-performance, observing that the default had occurred before the force majeure office memorandum was issued and that commercial hardship arising from market conditions could not absolve contractual obligations.
However, the Court held that NTPC could not invoke the general termination clauses when the tender documents specifically prescribed the consequences of non-execution of the contract and non-submission of the CPG, namely annulment of the awards and forfeiture of the bid security.
“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,” it held.
On the suspension order, the Court observed that the company's suspension from business dealings prevented it from participating in future tenders floated by NTPC and its subsidiaries, and thus NTPC could not bypass the procedural safeguards of natural justice merely by labelling the action as suspension.
“orders of debarment or blacklisting ordinarily cannot be passed without adherence to the principles of natural justice…since banning of business dealings entails civil consequences for the concerned agency, adequate opportunity of hearing must be afforded and any explanation tendered must be considered before an order is passed, having regard to the facts and circumstances of the case,” the Court said.
Holding that no show cause notice or opportunity of hearing had been granted before the order was issued, the Court set aside the suspension order as violative of the principles of natural justice.
It however declined to interfere with the retender.
Appearance: For the Petitioner : 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 : Mr. Rajesh Gupta & Mr. Harpreet Singh, Advocates.
Case title: Grew Energy Private Limited v. NTPC Renewable Energy Limited
Case no.: W.P.(C) 8148/2026