Delhi HC Sets Aside NTPC Renewable's Termination Notice and Suspension Order Against Solar Module Supplier

The Delhi High Court held that NTPC Renewable invoked the wrong contractual clauses to terminate awards and issued a suspension order without any show cause notice or hearing.

A Division Bench of the High Court of Delhi, comprising Justice Tejas Karia and Justice Madhu Jain, on 22 June 2026 partly allowed a writ petition filed by Grew Energy Private Limited, a manufacturer of Solar Photovoltaic Modules, against NTPC Renewable Energy Limited. The court set aside a termination notice dated 08.04.2026 to the extent it relied on Clauses 42.0 and 43.0 of the General Purchase Conditions, and separately quashed a suspension order dated 01.06.2026 for being issued without a show cause notice or any opportunity of hearing. The bench declined to interfere with the retender notice dated 10.04.2026 but made clear that no risk-purchase action against Grew Energy could be founded on Clause 43.0 of the General Purchase Conditions or on the premise that the retender constituted a valid risk-purchase procurement.

The Dispute Before the Court

NTPC Renewable Energy Limited, a Government of India enterprise under the Ministry of Power, issued an Invitation for Bids on 31.07.2025 for the supply and transportation of Solar PV Modules for a 1000 MW Solar Park project covering three blocks in Lalitpur and Chitrakoot, Uttar Pradesh.

Grew Energy submitted its bid on 20.08.2025 and, after participating in an e-Reverse Auction, accepted the L1 bid price on 07.11.2025. NTPC Renewable issued six Notifications of Award on 24.12.2025, and Grew Energy accepted them on 29.12.2025. The parties then moved towards execution of a formal contract agreement.

From January 2026 onwards, Grew Energy repeatedly sought postponement of the contract signing, citing the non-availability of its authorised signatories and, later, disruption to supply chains and a sharp rise in raw material prices caused by the West-Asian conflict. NTPC Renewable issued a Default Notice on 16.02.2026, calling upon Grew Energy to execute the contract agreement and submit the Contract Performance Guarantee within 30 days. Grew Energy's response extended the bid security but did not execute the agreement, requesting instead a six-month extension and invoking force majeure.

On 08.04.2026, NTPC Renewable issued the Termination Notice under Clauses 42.0 and 43.0 of the General Purchase Conditions. The following day, it encashed the bid security under Clause 24(c) of the General Purchase Conditions. A Retender Notice was issued on 10.04.2026 for fresh bids on the same package. On 01.06.2026, NTPC Renewable issued a Suspension Order under its Policy for Debarment from Business Dealings, barring Grew Energy from participating in any tender by NTPC Limited, its subsidiaries and joint ventures for six months.

Grew Energy challenged all three actions before the High Court under Article 226 of the Constitution.

The Legal Issues

The bench identified three questions for consideration: first, whether the Termination Notice was bad in law because NTPC Renewable invoked Clause 42.0 of the General Purchase Conditions when Clause 24(c) of the General Purchase Conditions and Clause 34.0 of the Special Purchase Conditions specifically prescribed the consequences for failure to execute the contract agreement and submit the Contract Performance Guarantee; second, whether the Retender Notice warranted interference; and third, whether the Suspension Order could have been issued without a show cause notice and without affording Grew Energy a hearing.

Contractual Framework: Specific Remedy Prevails Over General Clause

Grew Energy's central argument on the termination was that the bidding documents contained a specific remedy for the precise default that had occurred. Clause 24(c) of the General Purchase Conditions provided that failure to submit the Contract Performance Guarantee was sufficient ground for annulment of the award and forfeiture of the bid security. Clause 34.0 of the Special Purchase Conditions prescribed the same consequences for non-signing of the contract agreement. Clause 45.0 of the Special Purchase Conditions further stipulated that the Special Purchase Conditions would prevail over the General Purchase Conditions.

Clause 42.0 of the General Purchase Conditions, by contrast, empowers the employer to terminate where a supplier fails to remedy a default in performance within thirty days of notice. Clause 43.0 applies where a supplier fails to supply material of acceptable quality within the scheduled delivery period, allowing the employer to procure from another source at the supplier's risk and cost and to forfeit the Contract Performance Guarantee.

The bench accepted Grew Energy's reading. At the time of the Termination Notice, no material had been tendered for delivery, no scheduled delivery period had expired, and no Contract Performance Guarantee had ever been submitted — that security arises only after execution of the formal contract. The court held that Clause 43.0 had simply not been triggered. As for Clause 42.0, the bench applied the settled principle that a specific provision governing a particular default must be preferred over a general one. Since Clause 24(c) of the General Purchase Conditions and Clause 34.0 of the Special Purchase Conditions specifically addressed the consequences of the very default in question, NTPC Renewable could not have reached for the general termination power in Clause 42.0.

The court was careful to limit the effect of this finding. It expressly preserved NTPC Renewable's action of annulling the NOAs and encashing the bid security under Clause 24(c) of the General Purchase Conditions and Clause 34.0 of the Special Purchase Conditions. The finding of default itself was not disturbed.

Force Majeure Plea Rejected

Grew Energy argued that the West-Asian conflict had caused severe disruption to international shipping and a sharp increase in silver prices, making contract execution at the August 2025 bid prices commercially unviable. It relied on an office memorandum dated 29.04.2026 issued by the Procurement Policy Division, Ministry of Finance, which notified that the ongoing West-Asian conflict was to be treated as war, thereby permitting invocation of force majeure.

The bench rejected this plea. The Force Majeure OM applied only to entities that were not already in default prior to 27.02.2026. Grew Energy had admittedly failed to execute the contract agreement and furnish the Contract Performance Guarantee well before that date. The court also observed that the difficulty projected was, in substance, commercial hardship arising from market conditions, which does not absolve a party of its contractual obligations.

The bench noted that Grew Energy's own Default Notice Response had stated: “proceeding with supply of SPV Cells at the prices quoted in August 2025, would result in substantial financial losses for us.” This, the court found, pointed to a commercial calculation rather than a genuine force majeure event.

Retender Notice: No Interference, Questions Left Open

Grew Energy contended that the Retender Notice was arbitrary because it required compliance only with ALMM List I, whereas the last date for submission of bids under the retender fell after the cut-off date of 31.08.2025 fixed by the Ministry of New and Renewable Energy for List II compliance. It also argued that for a valid risk-purchase claim, substitute procurement must be on substantially similar conditions, and that the Retender Notice departed from those conditions with a mala fide intent to saddle Grew Energy with risk-purchase liability.

The bench declined to examine this challenge. Having already found that Clause 43.0 of the General Purchase Conditions could not have been invoked in the facts of this case, the court held that the challenge to the Retender Notice founded on the List II Exemption OM did not need to be decided. The Retender Notice was left undisturbed, but the court clarified that all questions concerning the applicability and interpretation of the List II Exemption OM were left open.

Critically, the bench added that no action against Grew Energy could be sustained on the basis of Clause 43.0 of the General Purchase Conditions or on the premise that the Retender Notice constituted a valid risk-purchase procurement against Grew Energy.

Suspension Order Quashed for Breach of Natural Justice

The Suspension Order issued on 01.06.2026 under Clause 6.1(b) read with Clause 6.3.3 of NTPC's Policy for Debarment from Business Dealings barred Grew Energy from participating in any future tender by NTPC Limited, its subsidiaries and joint ventures for six months. Bids already submitted but not yet opened were to be rejected, and no award could be placed in Grew Energy's favour during the suspension period. A repeat default within three years would trigger a two-year ban.

NTPC Renewable's defence was that Clause 6.3.3 of the Debarment Policy, which specifically addresses failure to sign the contract agreement or submit the Contract Performance Guarantee, does not contemplate issuance of a show cause notice. The omission, it argued, was deliberate.

The bench rejected this position. It began with Clause 2.2 of the Debarment Policy, which expressly equates “withholding”, “suspension” and “banning” with debarment. Once suspension is equated with debarment by the policy itself, NTPC Renewable could not argue that procedural safeguards were inapplicable merely because the action was styled as suspension rather than banning.

The court drew on three Supreme Court decisions cited by Grew Energy — M/s Techno Prints v. Chhattisgarh Textbook Corporation (2025 INSC 236), Blue Dreamz Advertising Private Limited v. Kolkata Municipal Corporation ((2024) 15 SCC 264), and Gorkha Security Services v. Government (NCT of Delhi) ((2014) 9 SCC 105) — which collectively hold that orders of debarment or blacklisting carrying serious civil consequences cannot ordinarily be passed without adherence to the principles of natural justice, and that debarment should not be readily resorted to in ordinary cases of contractual breach, particularly where a bona fide dispute exists.

The bench also noted that the introduction to NTPC's own Debarment Policy records that, since banning of business dealings entails civil consequences, adequate opportunity of hearing must be afforded and any explanation tendered must be considered before an order is passed. No show cause notice was issued to Grew Energy, and no opportunity of hearing was given before the Suspension Order was made. The Suspension Order was accordingly set aside.

Order

The Division Bench allowed the writ petition in the following terms:

The Termination Notice dated 08.04.2026 is set aside to the extent it is founded upon, or seeks to give effect to, Clauses 42.0 and 43.0 of the General Purchase Conditions. NTPC Renewable's action of annulling the NOAs and encashing the bid security under Clause 24(c) of the General Purchase Conditions and Clause 34.0 of the Special Purchase Conditions is not disturbed.

The Suspension Order dated 01.06.2026 is set aside for violation of the principles of natural justice.

The Retender Notice dated 10.04.2026 does not warrant interference, but no action against Grew Energy can be sustained on the basis of Clause 43.0 of the General Purchase Conditions or on the premise that the Retender Notice constitutes a valid risk-purchase procurement against Grew Energy. All questions on the applicability and interpretation of the List II Exemption OM are left open.

The court clarified that it has not adjudicated upon any claim available to either party in relation to termination of the contract or award of damages, and all rights and contentions in that regard are expressly reserved for appropriate proceedings.