Nagpur: In a significant relief to a manpower outsourcing firm, the Nagpur Bench of the Bombay High Court has stayed the cancellation of its contract and disqualification from the Government e-Marketplace (GeM) portal, which was initiated by Mineral Exploration Corporation Limited (MECL) over a one-day delay in salary payment to a staff member.
The case pertains to a contract awarded by MECL to Guest Hospitality for manpower supply and outsourcing services. As per the agreement, the company had previously delayed salary payments on two occasions. On a third instance, there was a delay of just one day in releasing the salary of one employee. Citing this, MECL terminated the contract through a letter dated April 29, 2025.
Gold Rate
17 June 2025
Challenging the termination and the subsequent blacklisting on the GeM portal, the company approached the High Court. After hearing the matter, the court observed that disqualifying the petitioner from participating in GeM tenders solely on the basis of a one-day delay was excessive and unwarranted.
During the hearing, the petitioner’s counsel highlighted two letters issued by the employee in question, Chainali Sahare, dated February 7 and February 11, 2025. These letters indicated that the delay occurred because Sahare initially requested the salary be credited to a new bank account. However, facing technical issues, she later requested the salary be paid into her old account. The company complied the following day.
Despite this, MECL not only terminated the agreement but also issued a recovery order demanding Rs 10,07,778, equivalent to 10% of the contract value, citing breach of contractual terms.
The petitioner argued that the contract termination and financial penalty would bar them from participating in any future tenders on the GeM platform, thereby severely impacting their business.
After considering arguments from both sides, the High Court noted that the delay pertained to only one out of 26 employees, and even that was only for a day. The court ruled it was appropriate to stay the effect of MECL’s April 29 letter to the extent that it disqualifies the petitioner from participating in other GeM tenders.
The court clarified that while the termination of the current contract remains valid and unaffected, MECL cannot, until further orders, withhold the amount of Rs 10,07,778 from any bills payable to the petitioner. However, the amount may be kept in abeyance pending the final outcome of the case.
