Court emphasizes strict adherence to contract termination clauses and principles of natural justice in the case of M/s. Group No.5 Security Service.
In a significant ruling, the Orissa High Court has dismissed the writ petition filed by M/s. Group No.5 Security Service, challenging the termination of their contract by the State of Odisha. The division bench, comprising Chief Justice Harish Tandon and Justice Murahari Sri Raman, delivered the judgment on January 13, 2026. The court underscored the necessity for authorities to strictly adhere to the terms and conditions outlined in contractual agreements, particularly regarding the termination process specified in the Request for Proposal (RFP).
The dispute arose when the authorities terminated the contract with M/s. Group No.5 Security Service due to alleged deficiencies in performance, including issues with staff performance and non-compliance with statutory obligations like EPF and ESI submissions. The petitioner had previously succeeded in challenging an earlier termination notice on grounds of procedural non-compliance with Clause 4.8 of the RFP, which mandates a clear thirty days' notice and an opportunity to rectify deficiencies.
In the present case, the court found that the authorities had complied with the procedural requirements by issuing a notice on September 9, 2025, and subsequently terminating the contract on October 27, 2025, after considering the petitioner’s response. The petitioner contended that the notice period calculation was flawed and that principles of natural justice were violated. However, the court rejected these arguments, stating that the computation of the notice period does not fall under the Limitation Act, 1963, as it pertains to contractual obligations rather than legal proceedings.
The judgment emphasized that the thirty days' notice requirement is distinct from the effective date of termination and confirmed that the authorities had provided adequate opportunity for the petitioner to address the deficiencies. The court also clarified that it would not interfere with the termination decision as it complied with the contractual terms and did not breach any statutory obligations.
The ruling has broader implications for contract law, reinforcing the significance of adhering to contractual clauses and the principles of natural justice in termination proceedings. The court refrained from commenting on the appointment of the opposite party No.5, as a separate writ petition on that matter is pending.
Bottom Line:
Termination of contract must strictly adhere to the terms and conditions laid down in the agreement, particularly with respect to notice period and remedial measures as specified in the Request for Proposal (RFP).
Statutory provision(s):
- Clause 4.8 of the Request for Proposal (RFP)
- Principles of Natural Justice
- Section 12 of the Limitation Act, 1963 (mentioned for reference)
M/s. Group No.5 Security Service v. State of Odisha, (Orissa)(DB) : Law Finder Doc Id # 2839832
