Rajasthan High Court quashes JDA’s withdrawal of OTS flyover contract, orders inquiry against erring officers

Jaipur: The Rajasthan High Court has quashed the Jaipur Development Authority’s withdrawal of an ongoing EPC contract for a flyover and traffic-improvement project at the OTS crossing on JLN Marg, Jaipur, holding that the invocation of a “for any reason whatsoever” termination clause without any determination of contractor default was void ab initio and violative of Article 14 of the Constitution.

Justice Sameer Jain held that the delay in execution was squarely attributable to the JDA, which had failed to discharge its foundational obligation to provide a clear, encumbrance-free site and to approve drawings within a reasonable time, and that by granting an extension of time without levying liquidated damages and returning the contractor’s bank guarantees, the authority had waived any alleged default and could not thereafter attribute the delay to the contractor.

“A contracting authority cannot approbate and reprobate, having treated the contract as valid and subsisting, it cannot later attribute delay to the contractor without any intervening material change,” the Court observed, holding that the subsequent invocation of Clause 32 to withdraw the work was “ex facie inconsistent with the prior conduct of the respondents and is legally untenable.”

The lead petition, filed by JCL Infra Private Limited, assailed a fresh Notice Inviting Bid issued on 03.04.2025 for preparation of a detailed project report (DPR) for a proposed elevated road, to the extent it covered the flyover at the OTS junction. A connected petition challenged the JDA’s letter dated 24.04.2024 withdrawing the work earlier allotted to the petitioner under a Letter of Acceptance dated 14.12.2022. With the consent of counsel, the Court took up the writ petition concerning the withdrawal as the lead case, the common questions of law applying to both petitions on a mutatis mutandis basis.

The petitioner had been awarded the EPC contract for “traffic improvement and beautification work at OTS Crossing, JLN Marg,” with a contract agreement executed on 27.12.2022, founded on a DPR prepared by the JDA’s appointed consultant, Sincere Architects Engineers Pvt. Ltd. According to the petitioner, it mobilised men, machinery and resources, submitted survey reports, designs and disposal and traffic-movement plans through a series of communications in 2023, and repeatedly sought the requisite site approvals. It contended that despite this, the JDA failed to accord the necessary approvals, that investments aggregating approximately Rs. 40 crore had been made of which work worth Rs. 20.41 crore stood completed, and that the authority had in fact extended the completion timeline to 30.04.2024 — thereby acknowledging that the contract subsisted — before abruptly withdrawing the work under Clause 32.

Counsel for the JDA opposed both maintainability and merits. It was urged that the petitions were not instituted by a duly authorised person, that the petitioner had approached the Court with unclean hands by suppressing communications highlighting design deficiencies, and that the lis arose purely from a contractual relationship replete with disputed questions of fact better suited to a civil or commercial court. On merits, it was contended that Clause 32 permitted withdrawal “for any reason whatsoever,” that time was the essence of the contract and the petitioner had failed to achieve even pro-rata progress, and that the fresh NIB pertained to a distinct project conceived under the Chief Minister’s Budget 2025–26 with a reduced financial outlay and an altered lane configuration necessitated by objections from MNIT Jaipur and the OTS authorities.

Rejecting these contentions, the Court found from the JDA’s own note-sheets and contemporaneous correspondence that the obligation to provide a clean, obstruction-free site and timely approvals vested solely with the authority, and that the petitioner had diligently performed its reciprocal obligations. It held that the grant of extension without liquidated damages and the return of the bank guarantees, without invoking the penal clauses of the contract, established that no breach had ever crystallised against the petitioner. The fresh NIB for a new DPR for the same project, the Court said, was “manifestly arbitrary,” disclosing no rational or technical basis and appearing to be “an afterthought devised to justify an otherwise arbitrary decision.”

The Court held that State action in contractual matters remained amenable to judicial review under Article 14 where it was arbitrary or actuated by extraneous considerations, and that the existence of contractual remedies did not denude it of that jurisdiction. It relied on the Supreme Court’s decisions in K. Shyam Sunder, Shishir Realty Pvt. Ltd. and Subodh Kumar Singh on the sanctity of public tenders and the doctrine of legitimate expectation, quoting:

“We do not say for a moment that the State has no power to alter or cancel a contract that it has entered into. However, if the State deems it necessary to alter or cancel a contract on the ground of public interest or change in policy then such considerations must be bona fide and should be earnestly reflected in the decision-making process and also in the final decision itself. Otherwise, it would have a very chilling effect as participating and winning a tender would tend to be viewed as a situation worse than losing one at the threshold.”

Holding that the invocation of Clause 32 without any determination of default rendered the action void ab initio, the Court allowed both petitions. It quashed the order dated 24.04.2024 and the NIB to the extent it pertained to the OTS flyover, directed the JDA to proceed with execution under the subsisting contract while duly considering price variation and other permissible claims, and held that the petitioner would be entitled to all consequential benefits.

The Court went further, directing an inquiry into the decision-making process in view of what it described as “glaring inconsistencies” between the stand taken before it and the contemporaneous record. Observing that the officer swearing affidavits acts not merely as a departmental functionary but “as an extended arm of the justice delivery system,” it directed the Chief Secretary of the State of Rajasthan to take appropriate measures against the erring officer(s) within two months of the date of pronouncement, and directed that appropriate proceedings be initiated for what it found to be prima facie misrepresentation before the Court.

Title: JCL Infra Private Limited v. Jaipur Development Authority & Ors.

Case No.: S.B. Civil Writ Petition No. 8120/2025, connected with S.B. Civil Writ Petition No. 17571/2024

Citation: [2026:RJ-JP:20730]

Counsel for petitioner: Mr. S. S. Hora with Mr. Adesh Arora and Mr. OP Singh Tanwar

Counsel for respondent: Mr. Amit Kuri with Mr. Ayush Sharma; Mr. Devendra Gupta, Director Engineer JDA-1