State Cannot Debar Contractor For Delay After Extending Time During COVID Period: Patna High Court Quashes Debarment

The Patna High Court has held that once the State grants extension of time for completion of contractual work during the COVID-19 period and the contractor completes the work within the extended timeline, the contractor cannot subsequently be debarred on the ground of delay. The Court further held that blacklisting without issuance of a show cause notice violates both statutory rules and principles of natural justice.A Division Bench of Justice Sudhir Singh and Justice Shailendra Singh was hearing a writ petition challenging an order dated 07.01.2021 passed by the Executive Engineer, Public Health Division, Supaul debarring the petitioner-contractor from participating in future tenders, as well as the subsequent appellate order dated 05.03.2024 affirming the debarment. The petitioner's agency had been awarded two public works contracts in October 2019, to be completed within six months. Owing to the outbreak of the COVID-19 pandemic, the petitioner sought extension of time, which was granted by the Chief Engineer till 31.01.2021. The petitioner subsequently completed the works within the extended timeline on 19.01.2021 and 25.01.2021 respectively. However, during the subsistence of the extended period itself, the Executive Engineer issued the impugned debarment order on 07.01.2021. The petitioner later sought revocation of the debarment, following which the Executive Engineer, Superintending Engineer, and Chief Engineer all recommended removal of the debarment after noting that the work stood completed. A satisfaction certificate was also issued in February 2024. Despite this, the appeal against debarment was rejected by the Principal Secretary of the Department. Before the High Court, the petitioner argued that the debarment order was premature since it had been passed before expiry of the extended completion period. It was further contended that no show cause notice or hearing had ever been granted prior to blacklisting. The State defended the action by contending that the debarment was justified on account of delay and unsatisfactory performance in execution of public works contracts. Allowing the writ petition, the High Court observed that the extension granted till 31.01.2021 clearly demonstrated that the authorities had condoned the delay and permitted the petitioner to complete the work within the extended timeframe. The Court noted:“The grant of such extension clearly indicates that the respondents had condoned the delay and permitted the petitioner to complete the work within the extended timeframe, thereby keeping the contractual relationship subsisting.”The Bench further held that despite this extension, the petitioner was debarred even before expiry of the extended timeline, while the records showed that the work had in fact been completed within the extended period and accepted by the department itself. The Court found that while rejecting the petitioner's appeal, the authorities failed to consider crucial facts including the extension order, completion of work within the extended period, and consistent departmental recommendations favouring revocation of debarment. Relying on Tata Cellular v. Union of India and State of Karnataka v. All India Manufacturers Organization, the Bench held that the impugned action suffered from arbitrariness and non-application of mind. Significantly, the Court also found a complete violation of natural justice. It noted that although the impugned order referred to a proposal seeking explanation from the contractor, the State failed to place on record any show cause notice, service report, or material demonstrating that an opportunity of hearing had actually been granted. The Bench observed that Rule 11(c) of the Bihar Contractor Registration Rules mandatorily requires issuance of a show cause notice before blacklisting or debarment, particularly since such orders carry serious civil and commercial consequences. Holding that the debarment order was “premature, arbitrary, and unsustainable in law,” the High Court set aside both the original debarment order and the appellate order affirming it. Case Title: Jai Hanuman Enterprises v. State of Bihar and Others.Case No.: Civil Writ Jurisdiction Case No. 1435 of 2025.Appearance: Mr. Dhananjay Kumar for the Petitioner. Mr. Saroj Kumar Sharma for the Respondent.Click Here To Read/Download Order

State Cannot Debar Contractor For Delay After Extending Time During COVID Period: Patna High Court Quashes Debarment

Rushil Batra

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State Cannot Debar Contractor For Delay After Extending Time During COVID Period: Patna High Court Quashes Debarment

Rushil Batra

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