#contract termination

The Kerala High Court ruled that the state cannot withhold or claim damages upon contract termination unless it proves actual financial loss, mandating the return of the security deposit with 9% interest. This reinforces the principle that liquidated damages must reflect real harm, not serve as punitive leverage in public procurement - a critical safeguard for contractors.

Andhra Pradesh High Court quashes termination of a PDS contractor without notice, ruling that principles of natural justice apply even in essential public supply chains. The court held that abrupt termination without opportunity to be heard violates constitutional rights under Articles 14, 19(1)(g), and 21, setting a precedent for procedural fairness in government contracts.

MP High Court rules that exclusion of contract termination disputes from arbitration does not extend to payment claims for work already performed. The court appointed an arbitrator under Section 11, reinforcing that arbitrability is determined by the nature of the dispute, not the contract clause.

The Rajasthan High Court has affirmed that forfeiture of a security deposit is lawful when a contractor systematically breaches railway safety protocols under the amended Standard Conditions of Contract. This sets a critical precedent for public infrastructure tenders, signaling that compliance with operational safety standards is non-negotiable and breaches will trigger automatic financial consequences without requiring proof of malicious intent.

The Gauhati High Court has ruled that contractual parties must exhaust internal grievance mechanisms before seeking judicial intervention, dismissing a writ petition challenging FCI's contract termination. This reinforces that administrative remedies are not optional stepping stones but mandatory prerequisites in public procurement disputes, affecting contractors across government agencies nationwide.

Karnataka High Court rules that contractors cannot claim price escalation post-tender rejection, even if work commenced, as oral assurances are unenforceable against written tender conditions. The judgment reinforces that public procurement contracts must strictly adhere to their explicit terms, protecting government entities from unintended financial liabilities.

The Himachal Pradesh High Court ruled that contractual termination clauses permitting termination 'without cause' do not override explicit notice requirements in the agreement. The ruling reinforces that procedural compliance remains binding, protecting consultants and service providers from abrupt contract withdrawals without prior notice.

Madras High Court holds that termination of contract after expiry of extended time is legally void; forfeiture of deposits invalid without subsisting contract.