Calcutta High Court Quashes Termination Of Road Contract, Says State Decided To Foreclose Project After Admitting Flood Damage

The Calcutta High Court has set aside the West Bengal government's decision terminating the contract of a road construction contractor, holding that the authorities acted arbitrarily by disregarding their own earlier decision to foreclose the contract after acknowledging that the damage to the project had been caused by severe flooding and not by any fault of the contractor.Allowing the writ petition filed by Amal Biswas, proprietor of URJA INFRA, Justice Krishna Rao held that once the competent authorities had consciously resolved to foreclose the contract after considering expert reports and the factual circumstances, they could not, without any justification, subsequently grant a unilateral extension of time and require the contractor to rectify the damaged work."The authorities after the period of more than five months without any justification cannot suo moto extend the time for rectification of the work," the Court observed.The dispute arose from a contract awarded in February 2024 for strengthening and protecting the Kotalpara-Khusiganj Road in Hooghly district. During execution of the work, the project site witnessed heavy rainfall followed by devastating floods in September 2024 after the release of water by the Damodar Valley Corporation, causing extensive damage to the road.The petitioner contended that the damage resulted from natural calamities beyond its control. It further argued that expert reports had confirmed that the quality of the executed work met the prescribed standards and that the authorities themselves had subsequently decided to foreclose the contract instead of insisting on repairs.The State, however, maintained that the contractor had failed to repair the damaged road despite repeated notices and reminders. It argued that public inconvenience and representations from local residents necessitated termination of the contract and issuance of a fresh tender.The Court examined the technical audit conducted by Professor M. Amarnatha Reddy of IIT Kharagpur and the report of the Road and Building Research Institute. It noted that the laboratory tests found the work executed by the petitioner to be within the acceptable limits prescribed under the Ministry of Road Transport and Highways (MoRTH) specifications.Justice Rao also placed significant reliance on the minutes of a meeting held on January 27, 2025, attended by senior Public Works Department officials. The minutes recorded that the road had been severely damaged due to flooding and the movement of heavily loaded commercial vehicles. More importantly, the authorities had resolved to initiate foreclosure of the existing contract without invoking the defect liability period and to invite a fresh tender for immediate repairs.The Court found that despite this decision, the authorities, after nearly five months, unilaterally extended the contract period in June 2025 and directed the petitioner to repair the damaged work without explaining why the earlier decision had been abandoned."The respondent authorities have filed report as well as affidavit-in-opposition to the writ petition but the authorities have not explained with regard to the Minutes of Meeting dated 27th January, 2025," the Court observed.The Court further noted that the State had not withdrawn or recalled the decision taken during the January meeting. In such circumstances, the subsequent extension of time and eventual termination of the contract were held to be arbitrary.Justice Rao also found procedural inconsistency in the decision-making process. While the Executive Engineer terminated the contract and initiated forfeiture of the earnest money and security deposit on July 28, 2025, a higher authority on the very same day informed the petitioner that the penalty imposed could still be reconsidered if the repair work was completed. According to the Court, this showed that the termination order had been issued before the competent authority had taken a final decision.Relying on the Supreme Court's decisions in Unitech Limited v. Telangana State Industrial Infrastructure Corporation, Kailash Nath Associates v. Delhi Development Authority, and Subodh Kumar Singh Rathore v. Chief Executive Officer, the Court reiterated that although contractual disputes ordinarily lie outside writ jurisdiction, the High Court can interfere where State action is arbitrary and violates Article 14 of the Constitution.Quoting the Supreme Court, the Court observed that the sanctity of public contracts must be protected and arbitrary termination by public authorities cannot be sustained merely under the guise of administrative discretion.Holding that the State had acted arbitrarily by ignoring its own conscious decision to foreclose the contract despite accepting that the petitioner was not responsible for the flood damage, the Court quashed Memo No. 1515 dated July 28, 2025 terminating the contract and allowed the writ petition.Case Title: Amal Biswas v. State of West Bengal & Ors.Case No.: WPA ...

Calcutta High Court Quashes Termination Of Road Contract, Says State Decided To Foreclose Project After Admitting Flood Damage

Srinjoy Das

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Srinjoy Das

Calcutta High Court Quashes Termination Of Road Contract, Says State Decided To Foreclose Project After Admitting Flood Damage

Srinjoy Das

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