M/S. A.S. MOTORS PVT. LTD. versus UNION OF INDIA AND ORS.

Citation: [2013] 4 S.C.R. 409 · Decided: 21-02-2013 · Supreme Court of India · Bench: T.S. THAKUR · Disposal: Dismissed

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Judgment (excerpt)

[2013] 4 S.C.R. 409 
MIS. A.S. MOTORS PVT. LTD. 
v. 
UNION OF INDIA AND ORS. 
(Civil Appeal No. 1517 of 2013) 
FEBRUARY 21, 2013 
[T.S. THAKUR AND GYAN SUDHA MISRA, JJ.] 
A 
B 
Contract -
Termination of, by respondent-authority -
Termination challenged on ground that principles of natural 
justice requiring a fair hearing to the appellant were not C 
complied with -
Held: Termination of the contract was 
preceded by a show-cause notice issued to the appellant and 
a hearing provided to it by the competent authority -
The 
show-cause notice enclosed with it all relevant documents -
Issue of a show-cause notice and disclosure of material on 
D 
the basis of which action was proposed to be taken against 
the appellant was in compliance with the requirement of 
fairness to the appellant - Absence of any a/legation of ma/a 
tides against those taking action as also the failure of the 
appellant to disclose any prejudice, all indicated that the 
E 
procedure was fair and in substantial, if n_ot strict, compliance 
with the requirements of audi alteram partem - Principles of 
natural justice thus stood substantially complied with. 
Contract - For collection of fee for using stretch of road 
F 
on the National Highway - Awarded to appellant - Contract 
subsequently terminated by respondent-authority -
Termination challenged on ground that there was no real 
basis for the respondent-authority to hold that appellant-
contractor had committed any breach of the terms and 
conditions of the contract warranting its termination - Held: 
G 
Reports submitted by the agency employed by respondent-
authority clearly showed that appellant-contractor was 
indulging in malpractices - If the report submitted by the 
409 
H 
410 
SUPREME COURT REPORTS 
[2013) 4 S.C.R. 
A agency against whom the appellant has no allegation of 
malice or other extraneous considerations to make are 
accepted, no reason why the same could not furnish a safe 
basis for the respondent to take action against the appellant 
especially when it was abusing its position as a contractor, 
B putting the public at large to unnecessary harassment and 
demanding money not legally recoverable from them -
Appel/ant-contractor, thus, not entitled to claim any relief. 
Contract -
Termination of, by respondent-authority -
Fotfeiture of petformance security furnished by appellant-
C contractor- Justification of - Held: Justified - Such fotfeiture 
was available to respondent-authority under the terms of the 
contract and the provisions of s. 7 4 of the Contract Act did not 
forbid the same - An aggrieved party is entitled to receive 
compensation from the party who has broken the contract 
D whether or not actual damage or loss is proved to have been 
caused by the breach - Contract Act, 1872 - s. 72. 
Contract -
Termination of, by respondent-authority -
Revocation of bank guarantee furnished by appellant-
E contractor - Justification - Held: Not justified as respondent-
authority had already recovered the penalty levied by it and 
also fotfeited the petformance security - Though in terms of 
clause 1 B(b) of the contract, the respondent-authority had the 
right to estimate the excess of collection by the appellant-
F contractor and recover the same from it, however, nothing on 
record whether any such estimation was made by the authority 
and if so the basis on which that was done - Without a proper 
estimation of the excess received by the appellant-contractor, 
it was not open to the respondent-authority to invoke the bank 
G guarantee. 
H 
Administrative Law - Natural justice - Rules of - Held: 
Are not rigid, immutable or embodied rules -
To an extent 
there has been a shift from the earlier thought that even a 
technical infringement of the rules is sufficient to vitiate action. 
A.S. MOTORS PVT. LTD. v. UNION OF INDIA 
411 
Administrative Law - Natural justice - Doctrine of audi 
A 
' 
alteram partem - Object of - Held: Is to strike at arbitrariness 
and want of fair play. 
National Highway Authority of India Ltd. (NHAI) had 
allotted to the appellant a contract fc,r collection of fee for 
B 
use of a 42 km stretch of road on the Morena-Gwalior 
Section of National Highway No.3. Complaints were made 
alleging that the appellants had violated c;ontractual 
stipulations between the parties. This resulted in 
termination of the collection contract by the competent 
C 
authority (respondent). 
Aggrieved, the appellant filed writ petition. The High 
Court while dismissing the 

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