[Cites 6, Cited by 0]
Rajasthan High Court - Jodhpur
M/S. Shree Ji Resources Llp vs The Union Of India (2026:Rj-Jd:17260) on 15 April, 2026
Author: Kuldeep Mathur
Bench: Kuldeep Mathur
[2026:RJ-JD:17260]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
S.B. Civil Writ Petition No. 17871/2024
M/s. Shree Ji Resources LLP, New Colony, Aditya Cement Road,
Near Petrol Pump, Shambhupura Samri, Chittorgarh, Raj.
Through its Partner Shri Naresh Dev Bamal S/o Shri Ram Ratan
Jat Patniya, Aged About 41 Years, Resident Of Shambhopura,
Chittorgarh (Raj.).
----Petitioner
Versus
1. The Union Of India, Through The General Manager (Wr),
Railway Department, New Delhi.
2. The Divisional Railway Manager, Ratlam Division, Western
Railway, Ratlam.
3. The Sr. Divisional Commercial Manager, (Sr. Dcm) Ratlam
Division, Western Railway, Ratlam.
4. The Sr. Divisional Operation Manager, (Sr. Dcm) Ratlam
Division, Western Railway, Ratlam.
5. The Area Regional Manager, Chittorgarh, Ratlam Division,
Western Railway.
6. The Chief Commercial Inspector, Chittorgarh, Ratlam
Division, Western Railway.
7. The Station Superintendent, Near Shambhupura Railway
Station, Ratlam Division, Western Railway.
----Respondents
For Petitioner(s) : Mr. Sajjan Singh Rajpurohit
Mr. Rajat Rajpurohit
Mr. Ankit Somani
For Respondent(s) : Mr. Bharat Vyas, AGC, through V.C.
Mr. Mukesh Thanvi, Sr. CGSC
Mr. Vaibhav Bhansali
HON'BLE MR. JUSTICE KULDEEP MATHUR
ORDER
Reserved On: 07/04/2026
Pronounced On: 15/04/2026
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1. The present writ petition under Article 226 of the
Constitution of India has been filed by the petitioner-firm assailing
the order dated 14.10.2024 (Annexure-11) passed by the Senior
Divisional Commercial Manager, Ratlam, Western Railway, whereby
Contract Agreement No. CA 11 RTM Wagon Cleaning-1 dated
29.09.2023, awarded to the petitioner-firm, was terminated and
the security deposit amounting to Rs. 5,05,000/- furnished by the
petitioner-firm was forfeited.
2. Briefly stated, the facts giving rise to the present writ
petition are that the petitioner-firm is a Limited Liability
Partnership firm duly registered under the GST Act and holding a
Permanent Account Number. The respondent authorities issued an
advertisement dated 09.04.2023 inviting bids for cleaning of all
types of goods trains and disposal/sale of raw material. The
petitioner-firm, being eligible, participated in the bidding process
and was awarded the contract through an e-auction held on
29.09.2023. Consequently, a contract agreement was executed on
30.09.2023 for a period of three years, commencing from
04.11.2023 to 03.11.2026, for cleaning of wagons and disposal of
material in the specified area.
3. It is the case of the petitioner-firm that during execution of
the contract, a communication dated 12.12.2023 was issued by
the respondents alleging certain irregularities in the cleaning of
BOX-N wagons, and a penalty of Rs. 2,02,000/- was imposed. The
petitioner-firm submitted a reply dated 18.12.2023 (Annexure-6)
denying the allegations and explaining the practical difficulties in
cleaning such wagons, inter alia, stating that the wagons were
filled with clinker and, due to communication gaps, certain wagons
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remained unclean. Despite the said reply, the respondents
reiterated the demand for penalty vide communication dated
19.12.2023 (Annexure-7).
4. Thereafter, a show cause notice dated 24.06.2024
(Annexure-8) was issued alleging that the petitioner-firm has
failed to remove raw material from the tracks within the stipulated
time and was using tractor-trolleys between railway lines, thereby
posing safety risks. The petitioner-firm submitted a detailed reply
dated 29.06.2024 (Annexure-8), explaining that adequate
manpower and machinery had been deployed and that delays, if
any, occurred due to operational constraints such as continuous
placement of wagons and limited access for removal of material. It
was also stated that the use of tractors was necessary for
execution of the work.
5. A communication dated 08.07.2024 was thereafter issued by
the respondents advising strict adherence to contractual
conditions. According to the petitioner-firm, the earlier issues
stood resolved and no further action was warranted. However, the
impugned order dated 14.10.2024 (Annexure-11) came to be
passed, whereby the contract was terminated with immediate
effect and the security deposit was forfeited.
6. Aggrieved by the said termination order dated 14.10.2024
(Annexure-11), the petitioner-firm submitted a representation/
appeal dated 17.10.2024 (Annexure-12), which came to be
rejected on 25.10.2024 without due consideration. Despite the
pendency of the said representation, the respondents initiated
steps for a fresh tender process for the same work.
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7. Learned counsel for the petitioner-firm submits that the
impugned order dated 14.10.2024 (Annexure-11) is arbitrary,
illegal, and violative of the principles of natural justice, inasmuch
as no adequate opportunity of hearing was afforded to the
petitioner-firm prior to termination of the contract. It is further
submitted that the petitioner-firm had been performing its
contractual obligations diligently since November 2023 by
deploying adequate manpower and machinery, and the allegations
levelled by the respondents are misconceived and do not reflect
the actual working conditions at the site.
8. It is contended that the respondents have wrongly invoked
Clause 18.1 (Termination Clause) of the Indian Railway Standard
General Conditions of Contract, issued vide policy dated
27.04.2022. A bare perusal of the said clause indicates that it
primarily contemplates termination in cases involving illegal
gratification or corrupt practices on the part of the contractor.
However, no such allegation has been levelled against the
petitioner-firm in the present case.
9. Learned counsel for petitioner-firm further submits that
previous contractors executing similar work at the same location
had been using 4-5 tractors along with JCB machines, which was
a known and accepted practice by the Railway authorities. It is
contended that the respondents cannot now adopt a contrary
stand and penalize the petitioner-firm for following the same
method. It is also contended that any delay in removal of material
occurred due to factors beyond the petitioner's control, including
continuous rake movement, lack of adequate space, and other
operational constraints known to the respondents.
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10. It is further submitted that although a show cause notice
dated 24.06.2024 was issued and duly replied to on 29.06.2024,
the impugned order has been passed without proper consideration
of the petitioner's explanation, thereby rendering the decision
arbitrary. It is also contended that the earlier penalty stood
effectively waived vide advisory dated 08.07.2024, and therefore,
reliance on the same allegations for termination is unjustified.
11. Lastly, it is submitted that the appeal preferred by the
petitioner-firm on 17.10.2024 was rejected on 25.10.2024 in a
mechanical manner without due application of mind.
12. Learned counsel for the petitioner-firm has placed reliance
on the following judgments passed by Hon'ble Supreme Court of
India as well as the Hon'ble High Court of Calcutta:-
(i) Harbanslal Sahnia & Anr. vs. Indian Oil
Corporation Ltd. & Ors., reported in (2003) 2
SCC 107.
(ii) West Bengal Small-Scale Industries
Development Corporation Ltd. & Anr. vs.
Hindustan Detergent Corporation & Ors.,
reported in 2006 (6) Cal HCN 180.
(iii) Subodh Kumar Rathour vs. Chief Executive
Officer & Ors., reported in (2024) 15 SCC 461.
13. On these grounds, it is prayed that the impugned
termination order dated 14.10.2024 (Annexure-11) be quashed
and set aside, and the contract be restored in favour of the
petitioner-firm.
14. Per contra, learned counsel for the respondents submits that
the present writ petition is not maintainable under Article 226 of
the Constitution of India, as the dispute arises purely out of a
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contractual relationship and does not warrant interference under
writ jurisdiction.
15. It is contended that the applicable clause is contained in the
"Standard Conditions of Contract for Commercial Earning and NFR
Contracts Awarded through E-Auction," issued by the Ministry of
Railways vide Railway Board Letter No. 2022/TC(FM)/10/4 dated
13.06.2022 (Annexure R/1), and not the earlier version relied
upon by the petitioner-firm.
16. Learned counsel further submits that adequate opportunity
was afforded to the petitioner-firm, including consideration of its
reply to the show cause notice and the appeal dated 17.10.2024,
which was rejected on 25.10.2024 after due consideration.
17. On merits, it is submitted that the petitioner-firm repeatedly
failed to comply with contractual stipulations, particularly with
regard to removal of material within the prescribed time of six
hours, resulting in accumulation of coal near railway tracks and
posing serious safety risks. It is further submitted that the
petitioner-firm engaged in unsafe practices, including
unauthorized use of tractors between railway lines despite express
prohibition communicated vide advisory dated 08.07.2024.
(Annexure-R/6)
18. Learned counsel for respondents further placed reliance on
the inspection report dated 29.09.2024, which reflects
accumulation of coal near tracks, uneven surfaces affecting rake
examination, and non-compliance with safety norms. It is also
alleged that the petitioner-firm engaged in hazardous activities
such as use of burning sigdi near combustible material, erection of
a temporary hut near OHE poles, and obstruction of inspection
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and maintenance work. Despite repeated warnings and imposition
of penalty, the petitioner-firm failed to rectify its conduct.
Accordingly, it is submitted that the termination order is justified
and the writ petition deserves dismissal.
19. Learned counsel for the respondents has placed reliance on
the following judgments passed by the Hon'ble Apex Court:
(i) Indian Thermal Power Ltd.V State of M.P and
Ors., reported in (2000)3 SCC 379.
(ii) Shubash Jain V. Rajeshwari Shivam, reported
in (2021)20 SCC 454.
(iii) National Highway Authority of India V. Ganga
Enterprises, reported in (2003)7 SCC 410 .
(iv) Noble Resources Ltd. V. State of Orrisa,
reported in (2006)10 SCC 236.
(v) ABL International Ltd.V Export Credit
Guarantee Corporation of India Ltd., reported
in (2004) 3 SCC 553.
20. Heard. Perused the material available on record.
21. Upon hearing learned counsel for the parties and perusing
the record, this Court finds that the controversy essentially arises
out of an alleged breach of contractual obligations. The rights and
liabilities of the parties are governed by the terms and conditions
of the contract, and the dispute pertains to contractual
performance and alleged non-compliance thereof.
22. At the outset, the principal contention of the petitioner-firm
with regard to applicability of Clause 18.1 is misconceived. The
petitioner-firm has sought to rely upon an earlier version of the
termination clause to contend that the same is confined to cases
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involving illegal gratification. However, from the material placed on
record, it is evident that the contract in question is governed by
the "Standard Conditions of Contract for Commercial Earning and
NFR contracts awarded through e-auction", issued by the Ministry
of Railways vide Railway Board Letter No. 2022/TC(FM)/10/4
dated 13.06.2022 (Annexure R/1), which forms part of the
amended contractual framework applicable to the present tender.
The applicability of the said amended clause has not been
effectively rebutted by learned counsel for the petitioner-firm, nor
has any document been placed on record to dislodge the same.
23. A perusal of the aforesaid amended conditions makes it clear
that the scope of the termination clause is not restricted to cases
of illegal gratification, but extends to breach of contractual
obligations and misconduct on the part of the contractor.
Significantly, the applicability of the said amended clause, as
specifically placed on record by the respondents, has not been
effectively rebutted by the petitioner-firm. In absence of any
material to the contrary, this Court has no reason to disbelieve the
contractual framework placed on record by the respondents.
Accordingly, the reliance placed by the petitioner-firm on an
inapplicable or superseded provision is misplaced and cannot be
accepted.
24. This Court is, therefore, of the considered view that the
respondents have rightly invoked the applicable contractual
clause, i.e. Clause 18.1 issued vide Ministry of Railways Letter No.
2022/TC(FM)/10/4 dated 13.06.2022, while passing the impugned
order of termination. Once the governing contractual conditions
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expressly confer such power and breach is reflected from the
material on record, the action of termination cannot be said to be
dehors the contract or legally unsustainable.
25. For ready reference, Clause 18.1 under the "Standard
Conditions of Contract for Commercial Earning and NFR contracts
awarded through e-auction" issued by the Ministry of Railways
vide Railway Board Letter No. 2022/TC(FM)/10/4 dated
13.06.2022 is reproduced as under:
"18. Termination of the contract: 18.1 Railway shall reserve
the right to terminate the contract as a punitive measure
without any notice at any time in case of violation of any of the
terms and conditions of the contract or due to any other
serious misconduct (including but not limited to violation of
Railway Act, 1989, commissioning of an unlawful act which is
not in line with good industry practices, or an activity of moral
turpitude) by the lease holder, forfeiting full EMD/SD amount."
26. It is pertinent to note that the petitioner-firm has repeatedly
failed to comply with its contractual obligations, particularly with
regard to timely removal of material and adherence to prescribed
safety norms. The inspection report dated 29.09.2024 (Annexure
R/8), read with contemporaneous communications, clearly
demonstrates accumulation of coal in close proximity to railway
tracks, unsafe working conditions, and continued use of prohibited
methods despite specific directions issued by the Railway
authorities.
27. It is a settled principle that in contractual matters, the scope
of judicial review under Article 226 of the Constitution of India is
limited to examining the decision-making process and not the
merits of the decision itself. This Court does not sit in appeal over
administrative or contractual decisions of the State or its
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instrumentalities, particularly where such decisions are taken in
furtherance of public safety and are supported by material placed
on record demonstrating breach of contractual obligations.
28. In the present case, the breaches attributed to the
petitioner-firm are not merely technical in nature but have a direct
and significant bearing on safe railway operations, including the
safety of passengers, railway personnel and the public at large.
The material on record, including the inspection report and
contemporaneous communications, prima facie indicates issues
relating to accumulation of material in close proximity to railway
tracks, alleged non-adherence to stipulated timelines for removal
of such material, and use of machinery in operational areas in a
manner stated to be contrary to safety instructions issued by the
Railway Administration. Such allegations, even if arising in the
course of contractual performance, assume greater significance in
the context of railway operations, where safety considerations are
of paramount importance and cannot be compromised.
29. In view thereof, this Court is of the considered opinion that
the action of the respondents, being founded on safety
considerations and duly supported by the applicable contractual
provisions, does not suffer from any arbitrariness,
unreasonableness, or proportionality so as to warrant interference
under Article 226 of the Constitution of India. The respondents-
Railway Administration are at liberty to proceed further in
accordance with law, including taking steps for issuance of a fresh
tender for execution of the work relating to cleaning of goods
wagons and disposal of material.
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30. Accordingly, no case for interference is made out. The writ
petition as well as the stay application stand dismissed.
31. No order as to costs.
(KULDEEP MATHUR),J
-Dinesh/-
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