#Security Deposit Forfeiture

The Madhya Pradesh High Court holds that forfeiting a security deposit after revoking a bidder’s blacklisting violates natural justice, as the penalty lacks independent legal basis and becomes punitive without procedural fairness. This ruling protects contractors in public distribution tenders from disproportionate financial consequences when administrative sanctions are withdrawn.

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.