[Cites 3, Cited by 0]
Delhi High Court
Abishek Kumar vs Indian Railway Catering And Tourism ... on 7 February, 2026
Author: Amit Bansal
Bench: Amit Bansal
$~7
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 7th February, 2026
+ W.P.(C) 800/2026 & CM APPL. 3950/2026
ABISHEK KUMAR .....Petitioner
Through: Mr. Jitender Mehta, Mr. Lalit Kumar,
Mr. Abhinav Kumar, Mr. Avaneesh
Singh & Mr. Shivam Pahal,
Advocates.
versus
INDIAN RAILWAY CATERING AND
TOURISM CORPORATION LIMITED .....Respondent
Through: Ms. Manisha Singh, Mr. Kanav
Khatana & Ms. Jyoti Singh,
Advocates.
CORAM:
HON'BLE MR. JUSTICE AMIT BANSAL
AMIT BANSAL, J. (Oral)
1. The present writ petition has been filed impugning the letter dated 3rd
December, 2025 issued by the respondent/IRCTC in terms of which the
petitioner has been debarred for a period of one (1) year from participating
in future projects of the respondent/IRCTC. The petitioner also impugns the
letter dated 25th November, 2025 in terms of which the contract of the
petitioner has been annulled.
2. Notice in the present petition was issued on 20th January 2026.
3. Counter-affidavit has been filed on behalf of the respondent.
4. In the present case, the petitioner was awarded a temporary license-
cum-commencement of On-Board Catering Services in Train No. 12289-90,
CSMT-NGP, pursuant to a Notice Inviting Limited E-Tender
No.2025/IRCTC/TSV/06/MAY/27 issued by the respondent/IRCTC.
5. In terms of the Letter of Award dated 12th June 2025, the petitioner
was required to deposit the following sums of money.
Description Amount / Details
License fee Rs. 5,78,999/-
GST @ 18% Rs. 1,04,220/-
Total Rs. 6,83,219/- (to be paid at
IRCTC/WZ)
Security deposit Rs. 68,322/- (10% of the Quoted
LF to be submitted within 05
working days as advised by
IRCTC (to be deposited in
IRCTC/WZ))
Spl. Security deposit NIL
RDS deposit Rs. 13,664/- (to be paid at
IRCTC/WZ)
6. The license was to operate from 1st July, 2025 and hence, the
aforesaid payments had to be made by the petitioner by 25th June 2025.
7. The letter of award also provided that there is no provision for
delayed payment and the failure to pay as per the schedule would be treated
as default and action would be taken in accordance with the Tender
Conditions.
8. It is the case of the petitioner that he suffered from medical issues and
hence, he could not make payment within the aforesaid time frame.
9. However, the petitioner did make the requisite payments to the
respondent on 8th July 2025.
10. Three (3) reminders were sent on behalf of the respondent/IRCTC to
the petitioner on 16th June 2025, 23rd June 2025 and 28th June 2025, calling
upon the petitioner to pay the requisite amounts.
11. On 12th July, 2025, the respondent/IRCTC awarded the Contract to a
third-party.
12. On 15th July, 2025, a communication was issued by the
respondent/IRCTC to the petitioner stating that, in view of the non-
compliance of the terms and conditions of the Contract, the Earnest
Money/SEMD deposited at the time of empanelment/Security Deposit has
been forfeited and the petitioner's empanelment in the TSV category was
kept on hold. Further, the petitioner was directed to deposit a security
deposit of Rs. 2,00,000/- for reinstatement of his empanelment in the TSV
category.
13. A show cause notice was issued by the respondent/IRCTC to the
petitioner on 15th September 2025, invoking Clause 5.2 of the Tender
conditions, as to why the requisite action in terms of the said clause should
not be taken against the petitioner. For ease of reference, Clause 5.2 of the
Tender conditions is set out below:
"Clause 5. Security Deposit.
5.2 Failure to pay License Fee/Security Deposit/Other Charges-
"In the event of failure of payment of license fee or any other
charges payable to the IRCTC/Railway, IRCTC will be at liberty to
forfeit Earnest Money/SEMD deposited at the time of
empanelment/Security deposit and terminate the contract forthwith
without prejudice to any rights of IRCTC and to cancel the
allotment and also debar licensee from participating in tender of
IRCTC for upto one year"."
14. To be noted, Clause 5.2 provides for the following penal action
against a licensee:-
i. Forfeiture of Earnest Money/SEMD deposited at the time of
empanelment/ Security Deposit
ii. Termination of the Contract
iii. Cancellation of Allotment
iv. Debarment of the licensee from participating in the Tender of
IRCTC for upto one (1) year.
15. It is the case of the petitioner that he did not receive the aforesaid
show cause notice and hence, no reply was given to the said show cause
notice.
16. Pursuant to the communication dated 15th July 2025, a sum of Rs.
2,00,000/- was deposited by the petitioner on 5th November 2025, towards
the security deposit for reinstatement of the petitioner's empanelment.
17. On 25th November 2025, taking note of the fact that the petitioner has
failed to respond to the show cause notice, the respondent/IRCTC annulled
the Contract of the petitioner, in terms of Clause 5.2 of the Tender
Conditions.
18. On 2nd December 2025, a representation was sent by the petitioner to
the respondent/IRCTC seeking the recall of the communication dated 25th
November 2025, annulling the Contract of the petitioner.
19. Subsequently, vide communication dated 3rd December 2025, the
respondent/IRCTC decided to debar the petitioner from participating in
future projects of the respondent/IRCTC for a period of one (1) year, from
the date of issuance of the letter.
20. Mr. Mehta, counsel appearing on behalf of the petitioner, submits that
the action taken by the respondent/IRCTC against the petitioner is wholly
arbitrary, unjust and disproportionate.
21. He submits that for a delay of a few days in making the payments
towards the license, the petitioner has been faced with unjust and
disproportionate consequences of not only annulment of the contract and
forfeiture of the security deposit but also debarment for a period of one (1)
year.
22. He further submits that the penal consequences began from 15th July
2025, when the petitioner was disempanelled and now, vide letter dated 3rd
December 2025, the respondent/IRCTC seeks to debar the petitioner for a
further period of one (1) year from the said date.
23. Reliance is placed on the judgment of the Supreme Court in M/s
Kulja Industries Ltd. v. Western Telecom Project BSNL1, as well as
judgment of this Court in Jayanta Kumar Ghosh Outdoor Catering (P) Ltd.
v. Indian Railway Catering & Tourism Corpn. Ltd.2 and judgment of
Division Bench in Indian Railway Catering & Tourism Corpn. Ltd. v.
Jayanta Kumar Ghosh Outdoor Catering (P) Ltd.3.
24. Ms. Manisha Singh, counsel appearing on behalf of the
respondent/IRCTC, has taken the Court through various Clauses of the
Tender in terms of which the respondent/IRCTC has the power to not only
forfeit the earnest money/security deposit as well as the license fee, but also
to annul the contract of a licensee and also debar the licensee from
participation in future tenders. She submits that the show cause notice was
duly sent to the petitioner through email, however, the petitioner failed to
(2014) 14 SCC 731
2020 SCC OnLine Del 151
2020 SCC OnLine Del 2301
respond to the same.
25. I have heard counsel appearing on behalf of the parties and perused
the material placed on record.
26. Reference may be made to the judgment of the Supreme Court in
Kulja Industries (supra) wherein it was held that even in contractual
matters, the decision of a State instrumentality to blacklist or debar a
contractor is subject to judicial review on the touchstone of fairness,
reasonableness, natural justice and proportionality, and that the penalty
imposed must bear a reasonable nexus with the gravity of the misconduct.
Paragraph no.20 of the said judgment is set out below:
"20. It is also well settled that even though the right of the writ
petitioner is in the nature of a contractual right, the manner, the
method and the motive behind the decision of the authority
whether or not to enter into a contract is subject to judicial
review on the touchstone of fairness, relevance, natural justice,
non-discrimination, equality and proportionality."
...
27. The Supreme Court also laid down the factors to be considered for
debarring a contractor in paragraph no.22 of the aforesaid judgment, which
is set out below:
"22. The guidelines also stipulate the factors that may influence the
debarring official's decision which include the following:
a) The actual or potential harm or impact that results or may result
from the wrongdoing.
b) The frequency of incidents and/or duration of the wrongdoing.
c) Whether there is a pattern or prior history of wrongdoing.
d) Whether contractor has been excluded or disqualified by an agency
of the Federal Government or have not been allowed to participate in
State or local contracts or assistance agreements on a basis of
conduct similar to one or more of the causes for debarment specified
in this part.
(e) Whether and to what extent did the contractor plan, initiate or
carry out the wrongdoing.
(f) Whether the contractor has accepted responsibility for the
wrongdoing and recognized the seriousness of the misconduct.
(g) Whether the contractor has paid or agreed to pay all criminal,
civil and administrative liabilities for the improper activity, including
any investigative or administrative costs incurred by the government,
and have made or agreed to make full restitution.
((h) Whether contractor has cooperated fully with the government
agencies during the investigation and any court or administrative
action.
(i) Whether the wrongdoing was pervasive within the contractor's
organization.
(j) The kind of positions held by the individuals involved in the
wrongdoing.
(k) Whether the contractor has taken appropriate corrective action or
remedial measures, such as establishing ethics training and
implementing programs to prevent recurrence.
(l) Whether the contractor fully investigated the circumstances
surrounding the cause for debarment and, if so, made the result of the
investigation available to the debarring official."
28. Reference may also be made to the judgment of the Supreme Court in
Coimbatore District Central Coop. Bank v. Employees Assn.4 wherein it
was held that administrative penalties are subject to the doctrine of
proportionality and that Courts are empowered to interfere where the
punishment imposed is wholly out of proportion to the alleged misconduct.
The relevant extracts from the said judgment are set out below:
"Doctrine of proportionality
17. So far as the doctrine of proportionality is concerned, there is
no gainsaying that the said doctrine has not only arrived in our
legal system but has come to stay. With the rapid growth of
administrative law and the need and necessity to control possible
(2007) 4 SCC 669
abuse of discretionary powers by various administrative
authorities, certain principles have been evolved by courts. If an
action taken by any authority is contrary to law, improper,
irrational or otherwise unreasonable, a court of law can interfere
with such action by exercising power of judicial review. One of
such modes of exercising power, known to law is the "doctrine of
proportionality".
18. "Proportionality" is a principle where the court is concerned
with the process, method or manner in which the decision-maker
has ordered his priorities, reached a conclusion or arrived at a
decision. The very essence of decision-making consists in the
attribution of relative importance to the factors and considerations
in the case. The doctrine of proportionality thus steps in focus true
nature of exercise--the elaboration of a rule of permissible
priorities.
19. de Smith states that "proportionality" involves "balancing
test" and "necessity test". Whereas the former (balancing test)
permits scrutiny of excessive onerous penalties or infringement of
rights or interests and a manifest imbalance of relevant
considerations, the latter (necessity test) requires infringement of
human rights to the least restrictive alternative. [Judicial Review
of Administrative Action (1995), pp. 601-05, para 13.085; see also
Wade & Forsyth: Administrative Law (2005), p. 366.]
20. In Halsbury's Laws of England (4th Edn.), Reissue, Vol. 1(1),
pp. 144-45, para 78, it is stated:
"The court will quash exercise of discretionary powers in which
there is no reasonable relationship between the objective which is
sought to be achieved and the means used to that end, or where
punishments imposed by administrative bodies or inferior courts
are wholly out of proportion to the relevant misconduct. The
principle of proportionality is well established in European law,
and will be applied by English courts where European law is
enforceable in the domestic courts. The principle of proportionality
is still at a stage of development in English law; lack of
proportionality is not usually treated as a separate ground for
review in English law, but is regarded as one indication of
manifest unreasonableness."
21. The doctrine has its genesis in the field of administrative law.
The Government and its departments, in administering the
affairs of the country, are expected to honour their statements of
policy or intention and treat the citizens with full personal
consideration without abuse of discretion. There can be no "pick
and choose", selective applicability of the government norms or
unfairness, arbitrariness or unreasonableness. It is not
permissible to use a "sledgehammer to crack a nut". As has been
said many a time; "where paring knife suffices, battle axe is
precluded"."
29. Counsel for the plaintiff has also placed reliance on the judgment of
this Court in Jayanta Kumar (supra), wherein the Court was dealing with a
case where IRCTC, the same respondent as in the present case, had
terminated the contract of the petitioner therein and also forfeited the
security deposit and license fee and debarred the petitioner therein for a
period of three (3) years from participating in future projects of IRCTC on
account of submitting a false Chartered Accountant's certificate. Relying
upon the aforesaid judgments of the Supreme Court in Kulja Industries
(supra) and Coimbatore District (supra), a Coordinate Bench of this Court in
Jayanta Kumar (supra) observed that the punishment imposed on the
petitioner therein for a bona fide mistake is shockingly disproportionate. It
was held that since the petitioner had already lost out on the contract, the
decision to debar the petitioner for a period of three (3) years from
participating in the future projects of the respondent as well as forfeiture of
the licence fee and the security deposit of the petitioner therein by the
respondent/IRCTC, was completely disproportionate and was accordingly,
set aside.
30. IRCTC challenged the aforesaid judgment by way of an appeal before
the Division Bench in LPA 87/2020. The Division Bench did not interfere
with the judgment of the Single Bench, setting aside the debarring order.
However, the Division Bench, in order to balance equities, directed the
recovery of further amounts from the petitioner.
31. Admittedly, the only default committed by the petitioner in the
present case was the delay of about 13 days in deposit of the license fee and
security deposit, which was a condition of the Tender. The petitioner has
given medical reasons for the aforesaid delay in depositing the amounts with
the respondent.
Undoubtedly, the respondent/IRCTC was entitled to take action in terms of
the Tender conditions against the petitioner. No fault can be found with the
decision of the respondent/IRCTC to terminate the Contract of the petitioner
or to forfeit the sum of Rs. 2 lakhs, being the security deposit amount for the
reinstatement of the petitioner's empanelment, in terms of the letter dated
15th July 2025.
32. However, the act of the respondent/IRCTC to debar the petitioner for
a period of one (1) year, when viewed in light of the aforesaid judgments of
the Supreme Court, appears to be wholly disproportionate and cannot be
sustained. It has to be taken note of that the petitioner has already suffered
on account of the default committed by the petitioner, resulting in
termination of the Contract and forfeiture of Rs. 2 lakhs.
33. It is also to be borne in mind that the petitioner was disempanelled as
far back on 15th July, 2025, and hence, was unable to participate in any
contracts of IRCTC from the said date. By way of the impugned
communication dated 3rd December, 2025, the respondent is once again
debarring the petitioner for a further period of one (1) year from the said
date. In the opinion of this Court, this would amount to extending the period
of debarment for a period beyond one (1) year, as stipulated in the Tender
condition.
34. Accordingly, in my considered view, the ends of justice would be met
if the debarment of the petitioner, which is de facto in place from 15th July
2025 till now, for a period of almost seven (7) months, is not extended any
further.
35. In view of the above, the impugned letter dated 3rd December, 2025 to
the extent it debars the petitioner from participating in future contracts of the
respondent for a period one (1) year is hereby quashed.
36. Since the petitioner has already paid a sum of Rs. 2,00,000/-, for fresh
empanelment, in terms of the communication dated 15th July 2025, the
empanelment of the petitioner will continue.
37. In the counter-affidavit of the respondent/IRCTC, it has been
specifically stated that the license fee and security fee are to be refunded to
the petitioner in due course of time. The relevant paragraph from the said
counter-affidavit is set out below:
"34. The Petitioner's letters dated 09.10.2025 and 05.11.2025, seeking bank
details and thereafter depositing an amount of Rs. 2,00,000/- towards EMD for
reinstatement of empanelment, do not in any manner wipe out or cure the earlier
breach committed by the Petitioner in respect of the specific contract for Train
No. 12289-90. Reinstatement of empanelment, even if sought or processed, is
distinct and independent from the contractual consequences arising out of non-
payment of the licence fee for a particular train. Furthermore, it is pertinent to
mention here that the License fee and the security fee are under process and
will be refunded to the Petitioner in due time."
38. In terms of what is stated in the counter-affidavit with regard to the
refund of the license fee, the respondent shall forthwith release the amount
of the license fee and the security deposit/RDS of the petitioner in favour of
the petitioner within two (2) weeks from today. However, no interference is
called for with the decision of the respondent/IRCTC of the forfeiture of
Rs.2,00,000/- deposited by the petitioner in terms of the letter dated 15th July
2025.
39. In terms of the aforesaid, the petition, along with the pending
application, stands disposed of.
AMIT BANSAL, J
FEBRUARY 7, 2026
at
