ORDER
Heard both sides. 2.The Southern Railways proposed to outsource periodical maintenance and breakdown attention of OHE assets in Madurai - Manamadurai - Virudhunagar Section for one year (2024-2025). Tender notification was issued. The writ petitioner offered their bid on 13.03.2024. It was accepted and the contract was awarded to them on 18.04.2024. The contract came to be terminated vide proceedings dated 24.10.2024. Simultaneously, the petitioner was also blacklisted. Challenging the same, the petitioner herein filed W.P(MD)No.28694 of 2024. The learned Single Judge vide order dated 02.12.2024 upheld the
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termination of contract but set aside the order of blacklisting. This order was also confirmed by the Hon'ble Division Bench on 27.03.2025 in W.A(MD)No.53 of 2025.
3.The learned Single Judge while partly allowing the writ petition had granted liberty to the employer / Southern Railways to pass fresh order in respect of debarring the writ petitioner from participating in future tenders after complying with the principles of natural justice. 4.Availing the said liberty, the second respondent issued notice dated 20.03.2025. The petitioner offered their reply. After affording personal hearing, the impugned order dated 07.07.2024 was passed debarring the writ petitioner from participating in future tenders for two years. Challenging the same, this writ petition has been filed. 5.The learned counsel appearing for the writ petitioner reiterated all the contentions set out in the affidavit filed in support of the writ petition. He contended that the show cause notice dated 20.03.2025 is vague and virtually non-speaking. It refers to Clause 7.4 of the General Conditions of Contract (GCC) for Service Contracts, 2018. The said
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Clause merely catalogues the circumstances when an agreement can be terminated. It is silent with regard to debarring. The learned counsel called upon this Court to set aside the impugned order and allow this writ petition as prayed for.
6.I am not swayed by the said submissions. The learned standing counsel for the respondents pointed out that power to blacklist is traceable to Clause 4.11.8 of the General Conditions of Contract (GCC) for Service Contracts, 2018 which reads as follows:
"4.11.8. Whenever the contract is rescinded, the Performance Guarantees shall be encashed / forfeited. The balance work or services for the same shall be got done independently without risk & cost of the failed contractor. The failed contractor shall be debarred for a period of 2 years from the date of such rescindment from participating in the bid which includes delivery of balance services of failed contract. If the failed contractor is a Partnership firm, then every member / partner of such a firm shall be debarred for a period of 2 years from the date of such rescindment from participating in the bid which includes delivery of balance services of failed contract in his/her individual capacity."
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7.The petitioner is obviously bound by the terms set out in GCC-2018. Clause 4.11.8 of the General Conditions of Contract (GCC) for Service Contracts, 2018 states that the failed contractor shall be debarred for a period of two years. This clause should be read along with Clause 7.4. There could be situations when a contract gets terminated for reasons beyond the control of the contractor. In such cases, the contractor cannot be blacklisted. Clause 4.11.8 employs the expression "failed contractor". It implies that the contractor was at fault. It is true that following termination of contract, the party not at fault can resort to certain remedies provided in the contract as well as in law. Clause 4.11.8 reads that blacklisting will have to follow as a matter of consequence. One gets a feeling that it is something automatic. Use of the expression "shall" appears to oblige the employer to debar the contractor if the contract was terminated on account of the circumstances set out in Clause 7.4. The writ petitioner having signed the contract is obviously bound by the said clause. But a contract cannot be interpreted as if it is a piece of statute. Since the power of blacklisting is rather draconian, the aforesaid clause has to be construed in the light of the decisions of the Hon'ble Supreme Court reported in 2025 INSC
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236 (Technoprints v. Chhattisgarh Text Book Corporation). It was observed therein that even if there is no express provision in the contract, the authority has the inherent power of blacklisting. But there should be reasonable ground to exercise such power. The Court reiterated the following three principles laid down in The Blue Dreamz Advertising Pvt. Ltd. & Anr. v. Kolkata Municipal Corp. & Ors. (2024 INSC 589) :
1. In case there exists a genuine dispute between the parties based on the terms of the contract, blacklisting as a penalty cannot be imposed.
2. The penalty of blacklisting may only be imposed when it is necessary to safeguard the public interest from irresponsible or dishonest contractors, and
3. The Corporation being a statutory body, have a higher threshold to satisfy before passing such blacklisting order and therefore, the measures undertaken by it should be reasonable. 8.Let me see if the case on hand would fall within the aforesaid parameters. Clause 7.4 of the agreement provides for determination of contract owing to the contractor's default. As many as 17 circumstances have been set out therein. One such circumstance is failure to adhere to the agreed program of work by a margin of 10% of the stipulated period. In this case, though the contract was awarded on 18.04.2024, the writ
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petitioner did not commence the works even after completion of 189 days. The total contract period itself was only twelve months. The order impugned in this writ petition has catalogued the consequences/risk factors that would entail on account of non-maintenance of TRD(OHE) assets. They are as follows :
1.The tender was awarded for periodical maintenance & Breakdown attention of Over Head Equipments(OHE) assets available in the single line section of Madurai(MDU)- Manamadurai(MNM)-Virudunagar (VPT) section having 132 Track kilometer/111 Route kilometer. The main use of OHE is to deliver high-voltage 25 kilo Volt(kV) alternating current (AC) power from traction substations to the electric locomotives. This power is collected by a device on the train's roof called a pantograph, which maintains constant contact with the contact wire (the lowest wire in the OHE system). If the Over Head Equipments(OHE) are not maintained periodically in an electrified railway system, it leads to a cascade of severe consequences, impacting safety of travelling public/railway employees, reducing the operational efficiency, financial losses to Railways and spoiling the reputation of Railway. Since the contract is also having the Breakdown attention of Over Head Equipments, the non-attention of breakdown in OHE system will leads to severe interruptions in public transport services.
2. If the contact wire worn due to misalignment, has improper tension, or its geometry is compromised, the pantograph can lose
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contact or snag the wire, leading to a de-wirement. This can exert sudden and immense forces on the train's roof, potentially damaging the pantograph and other rooftop equipment, and in severe cases, leading to derailment. Further, the pantograph and the train's roof can suffer extensive damage, requiring costly repairs and taking the rolling stock out of service. Moreover, the broken OHE wire can whip around with tremendous force, potentially striking and injuring people or damaging property.
3. Unmaintained earthing system in the railway station yard area can creates an extreme risk of electric shock or even electrocution for railway personnel, passengers, and the public who might accidentally come into contact with the system. A fault in the OHE, such as a wire break, insulator failure, or short circuit, will trip the protection system, leading to a power outage in that section. This immediately halts train movement.
4. Power outages, de-wirements, or OHE repairs cause significant delays, leading to trains running off schedule, missing connections, and ultimately, a breakdown of the entire railway timetable. In severe cases, services may need to be cancelled. Further, if a section of OHE is damaged, trains might have to proceed at reduced speeds or be rerouted, significantly reducing the line's capacity and causing further congestion.
5. Repairing of damaged OHE is often complex, time-consuming, and expensive, involving specialized equipment and skilled personnel.
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Replacing components, structures, or entire sections of wire incurs significant material and labor costs. Delays and cancellations of train services leads to lost ticket sales, potential penalties from customers and lost cargo revenue in freight operations.
6. Moreover, accidents or injuries resulting from unmaintained OHE can lead to costly lawsuits and compensation payouts. Further, frequent disruptions and safety incidents erode public trust in the railway operation, leading to a decline in ridership and negative media attention.
7.Neglecting routine maintenance accelerates the deterioration of OHE components, forcing premature replacement of expensive assets that should have had a longer service life. This increases the overall life-cycle cost of the infrastructure.
In essence, unmaintained OHE creates a dangerous, unreliable, and financially unsustainable railway system. Proactive and consistent maintenance is not just an operational necessity but a fundamental requirement for the safety, efficiency, and longevity of electrified railway system."
9.The authority has not acted in an arbitrary manner. The power has been exercised only in terms of Clause 4.11.8. The circumstances set out therein stand fulfilled in this case. Principles of natural justice were
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also complied with. A speaking order has been passed. That there was due application of mind is evident on the face of it. Though an order of blacklisting has serious civil consequences for the contractor, the writ court must look at the issue from the perspective of the employer. The writ court will have to view the matter by attaching greater weight to the employer's point of view. On account of the conduct of an erring contractor, the employer will not only have to terminate the contract but also suffer other difficulties. It would be unfair to force the employer to deal with the very same contractor again. It is not as if the contractor has been debarred for eternity. When the period of blacklisting is only two years, different considerations may apply. An order permanently blacklisting a contractor may have to meet a very high threshold. 10.In the case on hand, the employer had made it clear that public interest had suffered on account of the irresponsible conduct on the part of the writ petitioner. The second parameter laid down by the Hon'ble Supreme Court in the above case is attracted. The order impugned in this case thus passes muster.
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11.The contract of the writ petitioner was rescinded on 24.10.2024. The two year period will start from the said date. In other words, the blacklisting imposed on the petitioner will stand lifted with effect from
23.10.2026.
12.With the aforesaid clarification, this writ petition is dismissed. There shall be no order as to costs. Consequently, connected miscellaneous petitions are closed.
03.09.2025
NCC : Yes / No Index : Yes / No Internet : Yes / No MGA/SKM
To
1.The General Manager, Union of India, Southern Railway, Park Town, Chennai - 600 003. 2.The Senior Divisional Electrical Engineer (TRD), Madurai Division, Division Office,
Traction Distribution Branch, Southern Railway, Madurai - 625 016.
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G.R.SWAMINATHAN, J.
MGA/SKM
W.P(MD)No.23464 of 2025 and
W.M.P(MD)Nos.18436 & 18437 of 2025
03.09.2025
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