Delhi High Court: Government Companies Cannot Ban Firms from Future Tenders Without Hearing Them

The Delhi High Court has held that government-owned companies cannot suspend or debar businesses from participating in future tenders without first providing them an opportunity to be heard. The Court ruled that such actions have serious civil and commercial consequences and must comply with the principles of natural justice.

A Division Bench of Justice Tejas Karia and Justice Madhu Jain delivered the judgment while partly allowing a petition filed by Grew Energy Private Limited against NTPC Renewable Energy Limited (NREL). The dispute arose from a tender for supplying solar photovoltaic modules for 1,000 MW solar projects in Uttar Pradesh. Although Grew Energy was awarded contracts in December 2025, it failed to execute the formal agreement and furnish the required Contract Performance Guarantee.

The company argued that global supply chain disruptions and geopolitical tensions in West Asia had significantly increased costs and affected logistics, making performance of the contract difficult. It claimed these circumstances amounted to force majeure and sought additional time.

The High Court rejected this contention, observing that the company had already defaulted before the Government issued any force majeure-related memorandum. The Court held that the difficulties cited were essentially commercial hardships arising from market conditions and could not excuse contractual obligations. It noted that adverse market conditions or reduced profitability do not automatically constitute force majeure.

However, the Court found fault with NTPC’s decision to suspend Grew Energy from participating in future tenders for six months. The suspension extended not only to NTPC but also to its subsidiaries and joint ventures, affecting the company’s ability to compete for future business opportunities.

The Bench held that such a suspension effectively operates like a debarment and therefore cannot be imposed without issuing a show-cause notice and granting a reasonable opportunity of hearing. Since NTPC failed to follow this procedure, the suspension order was quashed for violating principles of natural justice.

While setting aside the suspension, the Court upheld NTPC’s finding that Grew Energy had defaulted on its contractual obligations. It also allowed NTPC’s retendering process to continue and left questions relating to damages and other contractual claims open for determination in appropriate proceedings.

Case: Grew Energy Private Limited v. NTPC Renewable Energy Limited

Court: Delhi High Court

Bench: Justice Tejas Karia and Justice Madhu Jain

Decision Date: 22 June 2026.