Delhi High Court - Orders
Nkg Infrastructure Limited vs Central Public Works Department & Anr on 29 May, 2025
Author: Sachin Datta
Bench: Sachin Datta
$~111
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 7922/2025
NKG INFRASTRUCTURE LIMITED .....Petitioner
Through: Mr. Manish Gupta, Ms. Deepti
Verma, Mr. Ankit Gupta and Mr.
Shaurya A. Singh, Advocates.
versus
CENTRAL PUBLIC WORKS DEPARTMENT & ANR.
.....Respondents
Through:
CORAM:
HON'BLE MR. JUSTICE SACHIN DATTA
ORDER
% 29.05.2025 CM APPL. 34886/2025 (Exemption)
1. Allowed, subject to all just exceptions.
2. The application stands disposed of.
W.P.(C) 7922/2025 &CM APPL. 34885/2025 (for interim relief)
3. The present petition has been filed by the petitioner assailing an office order dated 13.05.2025 whereby the respondent no. 1 / Central Public Works Department (CPWD) has debarred the petitioner for a period of three years. The said office order reads as under:-
"No. CSQ/CM/18 (4)/Enlist Misc./2023/217 Dated: 13.05.2025 OFFICE ORDER Sub: Debarment of M/s NKG infrastructure Limited Enlisted in Class-I (Super category from tendering in CPWD Works for a period of two years from the date of issue of this order.
1. Whereas, the work of "C/o Permanent Campus of Indian Institute of Management (IIM), Amritsar, Punjab. Phase-I (SH- Construction of Various Buildings including Civil, Electrical & Mechanical, Furniture and Horticulture Works/Services/Developments on Turnkey/EPC Basis)"
was entrusted to M/s NKG Infrastructure Limited under agreement no. 01/EE/APD/2020-21.
2. Whereas, the time period for completion of above work was 22 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/06/2025 at 23:36:19 months having stipulated date of start and completion of the project 17.07.2020 and 16.05.2022 respectively and subsequently extended up to 31.03.2024 to complete the work, but the work is still under progress as on 08.05.2025.
3. Whereas, as per Rule 13.6 of Rules for Enlistment of Contractors in CPWD 2024, the contractor may be debarred, if it is established that contractor:
a. "Fails to execute a contract or executes it unsatisfactorily".
4. Whereas, M/s NKG Infrastructure Limited have violated the conditions at Serial No. 5 and 11 of your Enlistment order issued vide office order No. 10 (Composite)-1 (Super) from file No. C/14- 1(Super)/Composite/01/2017 dated 09.12.2019. The relevant part of sl.No. 5 of enlistment order "They shall have to abide by terms and conditions of the NIT/Contract/Agreement as they stand or as may be altered from time to time" and that at Sl. No. 11 of Enlistment order "They shall abide by the Enlistment Rules of the department as amended from time to time".
5. Whereas, a show notice was issued to M/s NKG Infrastructure Limited vide letter No. CSQ/CM/18(4)/Enlist Mist/2023/544 dated 20.08.2024 to show cause within 15 days of the issue of notice as to why disciplinary action should not be taken against you under Rule 13 of the Rules for Enlistment of Contractors in CPWD 2024.
6. Whereas a reply was submitted by M/S NKG Infrastructure Limited vide letter No. Nil dated 03.09.2024.
7. Whereas, by failing to execute the contract satisfactorily and violating the conditions of enlistment, M/s NKG Infrastructure Limited has made themselves liable for action for debarment as per Rule 13.6 of Rules for Enlistment of Contractors in CPWD 2024 (amended time to time)".
8. Whereas, as reported by Director IIM Amritsar, vide his office letter dated 12.05.2023, that Institute has been incurring approximately 9 Crore per annum in the leasing of Hostels faculty and staff accommodation, running of chartered buses to commute student to the transit campus from their hostels for classes etc.
9. After carefully considering the reply of show cause notice, taking into consideration of all the facts placed on record, circumstances of the case, recommendation of SDG (Chandigarh) and recommendations of the Empowered Committee, the Enlisting Authority found that action against M/s NKG Infrastructure Limited is justified in above mentioned rules and in exercising the powers conferred on "Rules for Enlistment of Contractors in CPWD 2024", the enlisting authority has debarred M/s NKG Infrastructure Limited for a period of two years from the date of issue of this order. The debarment period would entail the followings:-
i. Ban on participation in the tendering process in CPWD and PWD (Delhi) ii. Ban on award of contract for works in CPWD and PWD (Delhi).
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/06/2025 at 23:36:19 iii. Running contracts shall remain unaffected.
This issues with approval of DG CPWD."
4. The above debarring order has been passed in the backdrop of a Notice Inviting Tender (NIT) bearing No.01/NIT/SE cum PD/APC/2019-20 dated 11.02.2020 issued by the respondent no.1 (CPWD) for construction works to be undertakenat the campus of respondent no. 2 (Indian Institute of Management, Amritsar).Pursuant to this NIT, the petitioner was awarded a contract for construction of the permanent campus of Indian Institute of Management (IIM) Amritsar, Punjab on EPC basis by the respondent no. 1 (CPWD) vide EPC Agreement No. 01/EE/APD/2020-21 dated 12.08.2020. As per the initial timeline stipulated in this EPC agreement, the project completion date for the original work was 16.05.2022 (i.e. 22 months from 17.07.2020), and the date for maintenance work was 16.05.2025 (i.e. additional 36 months thereafter).
5. It is submitted that on 01.09.2021, the respondent no.2 executed an agreement with one of the site representatives of the petitioner. Vide the said agreement, it was agreed that any failure on part of the petitioner to complete/deliver the project work (by the due dates already committed) would entail the petitioner bearing certain hostel rentals and logistic expenses of the respondent no.2.
6. It is emphasised that during the pendency of the work, the petitioner was duly granted multiple extensions of time (EOTs) by the respondent no. 1 without levy of any compensation, which according to the petitioner, unequivocally establish that the delays in the execution of the project work were not attributable to the petitioner but were caused by the factors beyond the petitioner's control. It is further highlighted that the respondent no. 1 had This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/06/2025 at 23:36:19 also granted several provisional extensions on a month-to-month basis, and the due time was extended up till 31.05.2025 as per the last provisional extension letter dated 26.04.2025.
7. Being aggrieved by the non-completion of the project work by the petitioner and non-payment of demand notice issued by respondent no. 2 as a consequence thereof, proceedings under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) were initiated by the respondent no.2 (as Operational Creditor) before the National Company Law Tribunal, New Delhi (NCLT)on 05.03.2024.
8. Vide order dated 29.11.2024 passed by the NCLT in these proceedings, the application under Section 9 of IBC was admitted, and an Interim ResolutionProfessional (IRP) was appointed to take charge of the affairs of the petitioner.
9. However, the said order was subsequently challenged by the petitioner before the National Company Law Appellate Tribunal, New Delhi (NCLAT). In these appellate proceedings, the NCLT order was stayed by the NCLAT vide order dated 03.12.2024 subject to the petitioner depositing 50% of the claim amount.
10. It is highlighted by the petitioner that prior to this, a show cause notice dated 20.08.2024 vide letter no. CSQ.CM/18(4)/Enlist Misc/2023/544 was also issued to the petitioner by the Chief Engineer CSQ (Civil) of respondent no. 1 / CPWD, whereby it was inter alia stated as under:-
5. Whereas, as per Rule 13.6 of extant Rules for Enlistment of Contractors in CPWD, the contractor may be debarred, if it is established that contractor:
a) "Fails to execute a contract or executes it
unsatisfactorily".
k) "Is involved in complaints of serious nature received
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
The Order is downloaded from the DHC Server on 27/06/2025 at 23:36:19 from any source, which have been proved;".
6. Whereas, you have violated Serial No. 5 and 11 of your Enlistment Order issued vide office order No. 10 (Composite)-I- (Super) from file No. C/14-1 (Super)/Composite/01/2017 dated 09.12.2019. The relevant part of sl. No. 5 of enlistment order "They shall have to abide by terms and conditions of the NIT/Contract/Agreement as they stands or as may be altered from time to time and that at Sl. No. 11 of Enlistment order "They shall abide by the Enlistment Rules of the debarment as amended form time to time".
7. Therefore, hereby a notice is given to you to show cause within 15 days of issue of this letter as to why disciplinary action should not be taken against you under Rule 13.6 of extant Enlistment Rules.
8. Please note that in case no cause is shown by you within the stipulated period or the cause shown is not the satisfaction of the Enlisting Authority, disciplinary action will be taken against you as per extant Enlistment Rules any further notice".
11. A detailed reply was sent by the petitioner on 03.09.2024 to the said show cause notice, whereby each aspect raised therein was clarified and duly responded to. It was also sought to be brought out, by drawing attention to relevant factual aspects, that the prolongation of the project was not attributable to the Petitioner. Rather, it was contended that the petitioner has suffered huge losses and the situation was exacerbated on account of non- release of timely payments for Extra Items, GST, etc.
12. It is the case of the petitioner that 78 percent of the work stood completed as of 31.03.2024, and the same was duly acknowledged by the respondent no. 1 / CPWD as well. However, on 25.04.2025, another show cause notice vide letter no. 20(6)/ CE cum ED/IITPR/CPWD/418 was issued by the Chief Engineer cum Executive Director of respondent no. 1 / CPWD, whereby the slow progress of the work was referred and it was inter alia stated as under:-
" The work entrusted to you under the agreement referred This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/06/2025 at 23:36:19 above could not be completed within extended date of completion due to your wrongful delay or suspension of work or slow progress of work or because of reasons within your control. Therefore, under the provisions of clause 2 of the above said agreement you have rendered yourself liable to pay compensation.
Therefore, I, in exercise of the powers conferred on me by the aforesaid agreement, for and on behalf of the President of India, hereby give you show cause within 7 days to my satisfaction that why compensation should not be imposed upon you under the provisions of clause 2 of said agreement for delayed/likely to be delayed completion of the work.
Please note that in case no cause is shown by you within the stipulated period or the cause shown is not to my satisfaction, I shall take such actions against you as are contemplated under Clause 2 there under of the said agreement without further notice."
13. A detailed response thereto was also sent with regard to this show cause notice by the petitioner vide letter no. NKG/IIM/ASR/C/1199 dated 08.05.2025, whereby elaborate justification was sought to be given by the petitioner for the delay in completion of the said work.
14. Learned counsel for the petitioner submits that the impugned order dated 13.05.2025, which was issued in furtherance of the show cause notice dated 20.08.2024, is unsustainable in law for the reason that:-
i. It proceeds on the basis that the petitioner has failed to execute the agreement/contract in question; whereas, in actual fact, the execution of the work is still in progress. It is submitted that appropriate extension of time has been granted by the respondent no. 1, and substantial progress has been achieved by the petitioner in this regard. As such, it is submitted that it is untenable to hold that the petitioner has failed to execute the agreement/contract in question.
ii. It fails to take note of the elaborate reasons/ justifications cited by the petitioner for the delay in completion of the project in This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/06/2025 at 23:36:19 the reply to the show cause notice that was issued in this regard. In fact, it is stated that the reply to the show cause notice has not even been taken note of in the said impugned order, much less being dealt with.
iii. As such, it is submitted that the impugned order dated 13.05.2025 imposing a severe/drastic step of debarring the petitioner is in violation of numerous judicial pronouncements, such as M/s Techno Prints v. Chhattisgarh Textbook Corporation &Anr.[by Supreme Court in Civil Appeal No. 2362 of 2025; 2025 INSC 236], M/s Johnson and Johnson Pvt Ltd vs. All India Institute of Medical Sciences New Delhi [by High Court of Delhi in W.P.(C) 5989/2021], Kamladityya Construction Private Limited vs. The Central Public Works Department [by High Court of Calcutta in WPA No. 21702 of 2023; 2023 SCC OnLine Cal 3748], Sarthi Construction and Infra Pvt Limited vs. State of Madhya Pradesh [by High Court of Madhya Pradesh in WP No. 29010/2022].
14. The petitioner also assails the order dated 14.05.2025(issued in furtherance of the show cause notice dated 25.04.2025), whereby compensation is imposed on the petitioner under Clause 2 of the General Conditions of Contract between the parties.
15. Issue notice to the respondents, on necessary steps being taken by the petitioner, through all permissible modes, including electronically.
16. Let reply be filed within a period of four weeks from today. Rejoinder thereto, if any, be filed within a period of two weeks thereafter.
17. Considering that the impugned order dated 13.05.2025 fails to take This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/06/2025 at 23:36:19 notice / deal with the various issues/ explanations given by the petitioner in response to the show cause notice/s, it is directed that till the next of hearing, the operation of the impugned order dated 13.5.2025, shall remain stayed.
18. However, at this stage, this Court is not inclined to interfere with the order dated 14.05.2025 whereby compensation has been sought to be levied on the petitioner.Needless to say, however, the petitioner would be at liberty to pursue its contractual remedies (if any) in respect thereof.
19. List on 17.09.2025.
SACHIN DATTA, J MAY 29, 2025/uk, kg This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/06/2025 at 23:36:19