In a significant ruling on fairness in government contracts, the Calcutta High Court has set aside Eastern Railway’s decision to cancel a parcel leaseholder’s registration and impose a five-year debarment.
Justice Smita Das De held that merely preparing two manifests for unloading at different railway terminals does not automatically amount to fraud-especially when there is no proven loss to the Railways.
The judgment was delivered on February 11, 2026, in the case of Ram Babu Yadav vs Union of India & Ors.
Read also:- Bombay HC Disposes Unmarried Woman’s Abortion Plea, Cites Supreme Court Ruling on MTP Rights
Background of the Case
The petitioner, Ram Babu Yadav, is the sole proprietor of M/s Maa Kali Enterprise, a firm engaged in transporting goods through leased parcel vans of the Railways.
In 2018, he was awarded a contract to operate a parcel van between Sealdah and New Delhi, with permission to load and unload goods at Kanpur Central.
Trouble began after a preventive vigilance check conducted on February 7, 2019. Railway authorities alleged that:
- The consignment was overweight by 1046.1 kg.
- Two manifests were prepared from a single loading point.
- The second manifest was allegedly used at Kanpur Central.
- There were violations of contractual clauses relating to declaration and documentation.
Following a show-cause notice and reply, the Railway authorities cancelled the petitioner’s registration in June 2019. His security deposit was forfeited, and he was debarred from fresh registration for five years.
An appeal was rejected. Earlier, a coordinate bench of the High Court had directed reconsideration. However, in August 2023, the appellate authority reaffirmed the cancellation. This led to the present writ petition.
Read also:- Calcutta High Court Refuses to Quash Forgery Case Linked to 1963 Land Deed, Orders Police Prob
Petitioner’s Arguments
Counsel for the petitioner argued that:
- Preparing two manifests was a logistical necessity for unloading at two different terminals.
- The total declared weight remained within permissible limits.
- There was no financial loss to the Railways.
- The show-cause notice did not specifically warn of debarment for five years.
- Penal provisions under the Railway policy were wrongly applied.
The petitioner also contended that cancellation and blacklisting without clear proof of intent violated principles of natural justice.
Railway’s Stand
Eastern Railway defended its action, claiming:
- Only one manifest should have been submitted from the originating station.
- The second manifest was not properly endorsed.
- There was deliberate concealment.
- Contractual clauses permitted cancellation and debarment for false declarations.
The Railway maintained that the act amounted to deliberate fraud and justified forfeiture of registration and security deposits.
Read also:- Bombay High Court Flags Flawed Tree-Felling Notices, Closes Pune Coconut Trees Case
Court’s Observations
After examining the contract clauses and Railway policy circulars, the Court framed the key issue: whether preparing two manifests from a single loading point amounted to a “false declaration” with intent to defraud.
Justice Das De observed that the policy clauses relied upon by the Railways applied primarily to false declarations made at the stage of registration or tender participation-not to operational documentation during contract execution.
“The circular does not treat manifest discrepancies or operational lapses as offences warranting cancellation,” the Court noted.
Importantly, the Court found:
- No proof of freight loss was demonstrated.
- The total weight declared across both manifests matched the actual physical load.
- There was no evidence of concealment of goods.
- Fraud requires proof of intention (mens rea), which was absent.
The bench emphasized that blacklisting has serious consequences and must follow strict standards of fairness. Citing established legal principles, the Court remarked that debarment creates a civil disability and cannot be imposed mechanically.
“Mere splitting of documentation for delivery at two different geographical terminals does not prima facie establish intent to defraud,” the Court observed.
On the allegation of forged signatures, the Court stated that such matters require proper investigation and cannot be assumed without proof.
The Court also held that penalties must be proportionate. Imposing a five-year ban and forfeiture without proving deliberate falsification was “shockingly disproportionate.”
Read also:- Kerala High Court Orders Probe Into ₹14 Lakh Sabarimala Staff Transfers During Mandala
Decision
The High Court quashed:
- The cancellation order dated June 24, 2019.
- The appellate order dated August 14, 2023.
It directed the Railways to:
- Restore the petitioner’s eligibility to participate in existing and future contracts.
- Refund ₹50,000 registration fees along with the security deposit.
- Pay interest at 2% per annum if the refund is delayed beyond eight weeks.
The writ petition was allowed, and the connected application was disposed of.
Case Title: Ram Babu Yadav vs Union of India & Ors.
Case No.: W.P.A. No. 5673 of 2024
Decision Date: 11 February 2026
