Solar Company’s Failure to Sign Contract Allowed NTPC to Cancel Award, Not Blacklist It Without Hearing: Delhi High Court
Facts
Grew Energy Private Limited, a manufacturer of solar photovoltaic modules, participated in a tender issued by NTPC Renewable Energy Limited for the supply and transportation of Solar PV Modules for 1000 MW solar projects at Lalitpur and Chitrakoot in Uttar Pradesh.
The company submitted its bid in August 2025 and later agreed to match the lowest bid price. On 24 December 2025, NTPC issued six Notifications of Award in its favour.
Grew Energy accepted the awards. However, it did not execute the formal contract agreement or furnish the Contract Performance Guarantee within the stipulated period.
The company initially attributed the delay to the unavailability of its authorised signatories and directors. Subsequently, it claimed that the ongoing West Asian conflict had disrupted supply chains and caused a substantial increase in the prices of raw materials, including solar cells and silver.
NTPC issued a default notice directing the company to execute the agreements and furnish the performance guarantee. When Grew Energy failed to comply, NTPC:
- terminated the awarded projects;
- encashed the bid security;
- declared the company ineligible to participate in the retender;
- issued a fresh tender; and
- suspended business dealings with the company for six months.
Grew Energy approached the Delhi High Court under Article 226 of the Constitution, challenging the termination notice, the retender notice and the suspension order.
Issues
- Whether NTPC could invoke the general termination and risk-purchase clauses when the tender documents contained specific provisions governing failure to sign the contract and submit the Contract Performance Guarantee.
- Whether Grew Energy’s failure was governed only by the contractual consequences of annulment of the award and forfeiture of the bid security.
- Whether the company could rely on force majeure arising from the West Asian conflict and increased raw-material prices.
- Whether the fresh tender issued by NTPC required interference because of alleged non-compliance with the Approved List of Models and Manufacturers requirements.
- Whether the six-month suspension of business dealings amounted to debarment or blacklisting.
- Whether NTPC could suspend the company from future tenders without issuing a show-cause notice or granting an opportunity of hearing.
Petitioner’s Arguments
Grew Energy argued that the tender documents prescribed a specific consequence for failure to execute the contract agreement and furnish the Contract Performance Guarantee.
It relied on Clause 24(c) of the General Purchase Conditions and Clause 34 of the Special Purchase Conditions, which provided for annulment of the award and forfeiture of the bid security.
According to the company, these specific clauses excluded the application of the general termination and risk-purchase provisions contained in Clauses 42 and 43 of the General Purchase Conditions.
The company argued that Clause 43 applied only after the supply stage had commenced and where the supplier failed to deliver acceptable material within the scheduled period.
In the present case:
- no formal contract had been executed;
- no material had been supplied;
- no delivery period had expired; and
- no Contract Performance Guarantee had been furnished.
Therefore, NTPC could not impose risk-purchase liability or claim the additional cost of substitute procurement.
Grew Energy also contended that NTPC had already exercised the specific contractual remedy by encashing the bid security and annulling the awards. It could not thereafter impose an inconsistent second remedy for the same default.
The company further relied on the West Asian conflict, disruption of international shipping routes, increased solar-cell prices and rising silver prices as force majeure circumstances beyond its control.
It argued that the retender was issued on materially different regulatory conditions and that the projects did not satisfy the requirements for exemption from compliance with List II of the Approved List of Models and Manufacturers.
Regarding suspension, Grew Energy argued that the order effectively debarred it from all tenders issued by NTPC, its subsidiaries and joint ventures for six months.
The company submitted that such an order had serious civil and commercial consequences and could not be passed without:
- a show-cause notice;
- adequate time to respond;
- an opportunity of oral hearing; and
- a reasoned decision.
It relied on the principles of natural justice and Supreme Court decisions governing blacklisting and debarment.
Respondent’s Arguments
NTPC argued that Grew Energy repeatedly failed to execute the contract agreement and furnish the Contract Performance Guarantee despite several opportunities.
It submitted that the company initially blamed the absence of its authorised representatives but later changed its explanation and relied on adverse market conditions.
According to NTPC, the actual reason for non-performance was the substantial increase in the prices of silver, solar cells and other inputs, which made the contract commercially unviable for Grew Energy.
NTPC argued that commercial hardship or an increase in input prices did not amount to force majeure.
It further submitted that the relevant government memorandum on force majeure applied only to contractors who were not already in default before the specified date. Grew Energy had defaulted much earlier.
NTPC contended that the suspension was not blacklisting because it was limited to six months and applied only to NTPC, its subsidiaries and joint ventures. The company remained free to participate in tenders floated by other organisations.
It also argued that the applicable clause of the Debarment Policy did not expressly require a prior show-cause notice where an agency failed to sign the contract or furnish performance security.
NTPC maintained that the company’s conduct had frustrated the procurement process and forced it to undertake a fresh tendering exercise. The measures imposed were therefore proportionate and necessary to protect public procurement.
Analysis of the Law
The High Court examined the relationship between the general and specific provisions of the tender documents.
Clause 24(c) of the General Purchase Conditions specifically provided that failure to submit the Contract Performance Guarantee constituted sufficient ground for:
- annulment of the award; and
- forfeiture of the bid security.
Clause 34 of the Special Purchase Conditions similarly dealt with failure to execute the formal contract and furnish the performance guarantee.
Clause 45 further stipulated that the Special Purchase Conditions would prevail over the General Purchase Conditions in case of inconsistency.
By contrast, Clause 42 was a general termination provision concerning failure to remedy a default in contractual performance.
Clause 43 was a risk-purchase provision applicable where a supplier failed to supply material of acceptable quality within the scheduled delivery period. It also contemplated forfeiture of the Contract Performance Guarantee.
The Court applied the settled principle that where a contract contains a specific provision governing a particular default, that provision must ordinarily be applied in preference to a general provision.
Since the alleged default was confined to non-execution of the contract and non-submission of the performance guarantee, the consequences were governed by the specific clauses providing for annulment and forfeiture of bid security.
The supply stage contemplated under the risk-purchase clause had never arisen.
On force majeure, the Court distinguished an event genuinely preventing contractual performance from commercial hardship caused by adverse market conditions.
An increase in raw-material prices or reduced profitability does not ordinarily excuse a bidder from obligations already accepted.
On suspension, the Court examined its actual legal and commercial effect rather than merely its label.
The order prevented Grew Energy from participating in future NTPC tenders, required rejection of its pending bids and prohibited the placement of any new award in its favour.
The Court therefore treated the suspension as a form of debarment carrying serious civil consequences.
Such a measure attracted the principles of natural justice, including prior notice and an opportunity of hearing.
Precedent Analysis
The Court considered the principles laid down in:
M/s Techno Prints v. Chhattisgarh Textbook Corporation
The Supreme Court reiterated that blacklisting or debarment cannot ordinarily be imposed without procedural fairness and consideration of the affected party’s explanation.
The decision also cautioned public authorities against treating every contractual breach as sufficient justification for blacklisting.
Blue Dreamz Advertising Private Limited v. Kolkata Municipal Corporation
The Supreme Court emphasised that debarment has serious commercial consequences and must satisfy the requirements of fairness, proportionality and non-arbitrariness.
Gorkha Security Services v. Government of NCT of Delhi
The Supreme Court held that a show-cause notice preceding blacklisting must clearly inform the affected party of the proposed penal action so that an effective representation can be made.
Applying these authorities, the High Court concluded that NTPC could not avoid the requirement of natural justice merely by describing the action as “suspension” rather than “blacklisting” or “banning.”
The Court also relied on the contractual principle that a specific remedy provided for a particular breach prevails over a general contractual remedy.
Court’s Reasoning
The Court accepted that Grew Energy had defaulted by failing to execute the formal contract and furnish the Contract Performance Guarantee.
It rejected the company’s force majeure argument because the default had occurred before the relevant government memorandum and because the circumstances relied upon substantially amounted to commercial hardship.
However, the Court found that NTPC had applied the wrong contractual provisions while issuing the termination notice.
Clause 43 concerned failure to supply material within the delivery period. In this case, the contract had not reached the supply stage.
No material had been tendered, no delivery deadline had expired and no performance guarantee existed that could be forfeited.
The correct contractual consequence was therefore limited to annulment of the awards and encashment of the bid security under the specific provisions.
The Court accordingly set aside the termination notice to the extent that it invoked the general termination and risk-purchase clauses.
At the same time, the Court preserved NTPC’s annulment of the Notifications of Award and encashment of the bid security.
Regarding the fresh tender, the Court declined to interfere. Once it held that the risk-purchase clause was inapplicable, it did not find it necessary to decide the dispute concerning List II compliance.
However, it left all questions relating to the interpretation and applicability of the List II exemption memorandum open.
On suspension, the Court found that the order had immediate and serious consequences for the company’s future and pending business opportunities.
The Debarment Policy itself equated suspension with debarment. NTPC could therefore not contend that procedural safeguards were unnecessary.
Since no show-cause notice or hearing had been granted, the suspension order violated the principles of natural justice and was liable to be set aside.
Conclusion
The Delhi High Court partly allowed Grew Energy’s writ petition.
The Court held that NTPC was entitled to treat the company as being in default for failing to execute the contract agreement and furnish the Contract Performance Guarantee.
It therefore did not interfere with:
- annulment of the Notifications of Award;
- encashment of the bid security; or
- issuance of the fresh tender.
However, the Court set aside the termination notice to the extent it invoked the general termination and risk-purchase provisions.
It clarified that no risk-purchase liability could be imposed on Grew Energy on the basis of the fresh tender because the contractual stage necessary for invoking that remedy had never arisen.
The six-month suspension order was also set aside because it was issued without a show-cause notice or opportunity of hearing.
The Court left open all independent claims relating to termination, damages and other contractual remedies, permitting both parties to pursue them in appropriate proceedings.
Case Details
Case: Grew Energy Private Limited v. NTPC Renewable Energy Limited
Court: Delhi High Court
Case Number: W.P.(C) 8148 of 2026
Bench: Justice Tejas Karia and Justice Madhu Jain
Date: 22 June 2026
Result: Termination notice partly set aside; six-month suspension quashed; annulment of awards, forfeiture of bid security and retender upheld
