Calcutta HC Quashes Road Contract Termination After State's Own Meeting Minutes Showed Contractor Was Blameless

Justice Krishna Rao set aside a July 2025 termination order against URJA INFRA, holding that the State could not reverse a January 2025 decision to foreclose the contract without explanation and then penalise the contractor for flood damage the authorities had themselves acknowledged.

The High Court at Calcutta has quashed the termination of a road-construction contract awarded to Amal Biswas, sole proprietor of URJA INFRA, after finding that the West Bengal Public Works Department acted in flat contradiction of its own recorded decisions. Justice Krishna Rao, sitting singly in the Constitutional Writ Jurisdiction, allowed WPA No. 17733 of 2025 and set aside Memo No. 1515 dated 28 July 2025, which had terminated the contract and initiated forfeiture of the contractor's Earnest Money Deposit and Security Deposit. The court found the termination arbitrary because senior PWD officials had, just six months earlier, formally acknowledged in a minuted meeting that the road damage was caused by flooding and not by any fault of the contractor.

The Contract and the Flood Damage

On 28 February 2024, a Letter of Acceptance-cum-Work Order was issued to URJA INFRA for the construction of Kotalpara Khusiganj Road from 0.00 Kmp to 7.90 Kmp — a riverside embankment protection and strengthening work under the Hooghly Construction Division in the District of Hooghly. The contract period was nine months, with a scheduled completion date of 29 November 2024.

Before the monsoon, the contractor had laid the Dense Bituminous Macadam-I (DBM-I) layer across most of the alignment and Wet Mix Macadam across the remaining stretches, all as per work specifications. In the first week of August 2024, high rainfall and rising water in the Damodar River caused flood-like conditions, with water levels rising 500 to 800 mm below the road crust in several stretches. The executed DBM layer from 3.570 Km to 4.270 Km was totally damaged.

A second, more severe flood struck between 17 and 22 September 2024. The Damodar Valley Corporation (DVC) released water without prior intimation to the contractor. Floodwaters overflowed onto the road, causing seepage through embankments, settlements, and depressions at pavement level. The petitioner sent photographs and letters to the respondent authorities documenting the damage and submitted bills claiming compensation.

A technical audit was commissioned from Professor M. Amarnatha Reddy of IIT Kharagpur. Separately, the Chief Engineer & Director of the Road and Building Research Institute forwarded a test report on 3 October 2024 recording that the “Test Result is within acceptable limit” as per Table 500-13 of MORTH. The court read this as confirmation that the materials used by the contractor met specifications.

The January 2025 Meeting and What It Decided

On 27 January 2025, a meeting was convened at the office of the Engineer-in-Chief and Ex-officio Secretary, Public Works Department, at Nabanna, Howrah. Senior officials of the PWD attended. The Minutes of Meeting recorded several significant conclusions.

The meeting noted that the contractor had executed work as per specifications, that measurements had been recorded in the Measurement Book, and that payment was pending only for the full rate of DBM and certain earthwork quantities due to post-level measurements. It further recorded that the road had been severely damaged due to flooding and the passage of heavily loaded commercial vehicles over the damaged road. Approximately 1.5 Km remained in good condition; the rest was in a dilapidated state.

Most consequentially, the Minutes recorded a decision: an e-file had been initiated for obtaining necessary concurrence for foreclosure of the existing contract with no Defect Liability Period under Clause 3B of the tender agreement. The Executive Engineer was directed to prepare for immediate repair of the road by inviting a fresh Notice Inviting e-Tender under the Non-Plan Head. The contractor's outstanding payments were to be released subject to formal measurements.

The Road and Building Research Institute submitted its own report on 3 April 2025. It concluded that distress noticed during inspection may be co-related with prolonged water stagnation, slope stability, and seepage analysis — factors described as being beyond the scope of the contractor's work.

The State Reversed Course Without Explanation

Five months after the January 2025 meeting, without recalling or withdrawing that decision, respondent no. 6 issued a letter on 2 June 2025 granting a fresh, unilateral extension of time to the contractor for completion of work up to 6 September 2025. The contractor replied on 3 June 2025 pointing out that the extension was defective: it came more than three months after the last extension had expired and ignored the binding Minutes of Meeting of 27 January 2025.

A show cause notice followed on 13 June 2025. The contractor replied on 18 June 2025. On 2 July 2025, respondent no. 6 imposed a penalty under Clause 2 of the agreement. The contractor replied on 8 July 2025, requesting withdrawal of the penalty and offering to commence rectification work subject to rates being assessed at current schedule of rates. A second show cause notice was issued on 11 July 2025, replied to on 21 July 2025.

The petitioner filed an earlier writ petition, WPA No. 16831 of 2025. On receipt of a copy of that petition, respondent no. 6 issued Memo No. 1515 on 28 July 2025, terminating and rescinding the contract and initiating forfeiture of both the Earnest Money Deposit and the Security Deposit.

On the same day, respondent no. 5 — a higher authority than respondent no. 6 — separately wrote to the petitioner indicating that if the petitioner resumed and completed the work, the penalty imposed under Clause 2 might be reconsidered. Respondent no. 5 also issued a memo to respondent no. 6 permitting it to take action for termination. The court observed that this sequence revealed respondent no. 6 had already issued the impugned termination before respondent no. 5 had made its decision, creating a direct internal contradiction.

The Court's Reasoning

Justice Krishna Rao identified the central question as whether, after the authorities had formally decided on 27 January 2025 to foreclose the contract and invite a fresh tender, they could unilaterally extend the time for the contractor to rectify the very work that the authorities had already decided to foreclose.

The court noted that the State had not pleaded in its affidavit-in-opposition that the January 2025 Minutes of Meeting were inconclusive, unauthorised, or withdrawn. The meeting had been presided over by the Engineer-in-Chief, PWD, and attended by multiple competent officials. Having taken a conscious decision with the full knowledge of the flood damage, the respondents could not, more than five months later and without any justification, reverse course by issuing a unilateral extension and then a termination.

The court also examined the letter dated 2 June 2025 and found it made no reference to the January 2025 meeting. The affidavit-in-opposition filed by the State likewise offered no explanation for the departure from that meeting's conclusions. This silence was treated as significant.

On the question of maintainability, the court relied on the Supreme Court's ruling in Unitech Limited and Others v. Telangana State Industrial Infrastructure Corporation (TSIIC) and Others, (2021) 16 SCC 35, which reaffirmed that a writ under Article 226 is maintainable to assert contractual rights against the State where the action is arbitrary and in violation of Article 14. The presence of contractual dispute resolution mechanisms does not automatically oust the jurisdiction under Article 226, particularly where the State instrumentality has failed to act fairly.

The court drew on Subodh Kumar Singh Rathore v. Chief Executive Officer and Others, (2024) 15 SCC 461, where the Supreme Court held that courts are duty bound to protect the sanctity of contracts duly concluded through a valid tender process and must interfere where a termination amounts to a capricious or arbitrary exercise of power. The ruling in that case articulated that “the courts are duty bound to zealously protect the sanctity of any tender that has been duly conducted and concluded.”

On the issue of time extension, the court applied Kailash Nath Associates v. Delhi Development Authority and Anr., (2015) 4 SCC 136, for the principle that where time is of the essence, it cannot be waived by a unilateral act of one party. The court reasoned that the January 2025 decision was the binding position of the authorities and that the respondents' subsequent unilateral extension — issued more than five months later without any reference to that meeting — was legally untenable.

The respondents had argued that the petitioner had failed to repair the road despite several reminders, that public representatives had submitted a mass representation in August 2024 demanding urgent repairs, and that the authorities had no alternative but to issue show cause notices and ultimately terminate the contract. The court noted that the mass representation cited by the respondents dated from August 2024, well before the January 2025 meeting in which the same public agitation had already been taken into account by the authorities. The meeting had nonetheless concluded that the contractor was not at fault.

Order

Justice Krishna Rao allowed WPA No. 17733 of 2025. Memo No. 1515 dated 28 July 2025, by which the contract was terminated, the Earnest Money Deposit forfeited, and the Security Deposit forfeited, was set aside and quashed. The court directed that parties be entitled to act on a server copy of the judgment placed on the official website of the court. Urgent certified copies were made available subject to compliance with requisite formalities.