Delhi High Court Rejects Grew Energy's West Asian Conflict-Based Force Majeure Plea In NTPC Tender Dispute

The Delhi High Court has held that NTPC Renewable Energy Ltd. was justified in treating Grew Energy Pvt Ltd as a defaulter after it failed to sign a contract agreement and submit a Contract Performance Guarantee under a solar module supply tender.

The court, however, set aside a suspension order against the company and partly quashed a termination notice.

A vacation bench of Justices Tejas Karia and Madhu Jain ruled that Grew Energy had failed to fulfill its obligations. At the same time, the court found that NTPC had relied on contractual provisions that did not apply to the company's default.

"This Court finds no ground to interfere with the Respondent's decision to treat the Petitioner as being in default of its obligations concerning execution of the contract agreement and submission of the Contract Performance Guarantee. However, the reliance upon Clauses 42.0 and 43.0 of the GPC for issuance of the Termination Notice dated 08.04.2026 by the Respondent was not justified. The Termination Notice dated 08.04.2026 is, accordingly, set aside to the extent it is founded upon, or seeks to give effect to, Clauses 42.0 and 43.0 of the GPC.", it ruled.

The dispute arose from a tender issued by NTPC Renewable Energy for the supply of solar photovoltaic modules for 1000 MW solar projects in Uttar Pradesh. Grew Energy was awarded contracts under the tender. It later failed to execute the contract agreement and furnish the performance guarantee.

Before the court, Grew Energy argued that disruptions caused by the West Asian conflict and rising costs prevented it from carrying out its obligations.

The court rejected the argument.

"The plea of force majeure raised by the Petitioner cannot be accepted."

The court noted that the tender documents already specified the consequences of failing to sign the contract agreement and submit the performance guarantee. NTPC had annulled the awards and encashed the bid security.

It ruled that the additional provisions relied upon in the termination notice applied to different situations. They could not be used against Grew Energy for the defaults in question. The termination notice was therefore set aside to that extent.

The court declined to interfere with NTPC's retender notice. It clarified, however, that the retender could not be treated as a valid risk-purchase action against Grew Energy.

Grew Energy also challenged a suspension order that barred it from participating in NTPC tenders.

The court noted that the order had serious civil and commercial consequences. It prevented the company from taking part in future tenders and could lead to rejection of pending bids.

Holding that the order had been issued without following the principles of natural justice, the court set it aside.

It also clarified that it had not decided any claim relating to termination of the contract or damages. Those issues were left open for future proceedings.