Can Indian Railways penalise a vendor for deviating from an approved QAP despite identical product quality?

LawSikho
August 27, 2025
Category: Calcutta High Court

Calcutta HC upholds sanctity of RDSO Quality Assurance Plans, distinguishes APAR Industries, confirming that deviation from an approved QAP attracts contractual penalty in vendor delisting cases — binding authority for railway procurement.

Summary

Category	Data
Case Name	WPA/14430/2025 of JWL KOVIS INDIA PRIVATE LIMITED AND ANR Vs UNION OF INDIA AND ORS.
CNR	WBCHCA0297222025
Date of Registration	30-06-2025
Decision Date	26-08-2025
Disposal Nature	DISMISSED
Judgment Author	Hon’ble Justice Amrita Sinha
Court	Calcutta High Court
Overrules / Affirms	Affirms
Questions of Law	Whether penalty imposed for non-adherence to QAP 2 is proper
Ratio Decidendi	The Authority’s approved Quality Assurance Plan (QAP 2) is binding on vendors; any deviation, even if the end-product is identical in quality, without prior approval, violates contractual terms and attracts prescribed penalties. Courts will not override clear, pre-established procedural safeguards intended to ensure safety and uniformity in railway equipment. Differentiation between QAP 2 and QAP 3 cannot be retrospectively applied. Uniform enforcement of technical specifications is essential to prevent uncertainty and protect public interest.
Judgments Relied Upon	APAR Industries Limited vs. Union of India, (2023) SCC Online Bom 350
Logic / Jurisprudence / Authorities Relied Upon by the Court	Emphasis on sanctity of approved QAP. Contractual penalty clauses under tender document. Necessity of prior authority approval. Risk of uncertainty and safety concerns. Distinction from APAR Industries where prohibition was introduced later.
Facts as Summarised by the Court	Petitioner supplied brake disks produced in India under a Transfer of Technology arrangement instead of sourcing casting from approved vendor in Slovenia in QAP 2; authority issued show cause notice and downgraded vendor list status; appeal was dismissed; petitioners challenged penalty in writ petitions.

Practical Impact

Category	Impact
Distinguishes	APAR Industries Limited vs. Union of India, (2023) SCC Online Bom 350

What’s New / What Lawyers Should Note

Strict adherence to approved Quality Assurance Plans (QAP): deviation, even if product quality identical, invites penalty.
Subsequent approval under a newer QAP (QAP 3) cannot validate past non-compliance with QAP 2.
Joint venture or Transfer of Technology does not exempt vendor from contractual QAP obligations.
High Court will not interfere with industrial procurement authorities enforcing technical specifications.
Distinction drawn from APAR Industries: prohibition against in-house manufacture must pre-exist relevant QAP.

Summary of Legal Reasoning

Authority’s power to approve vendors and enforce QAP provisions derived from contract and tender conditions.
After QAP 2 required outsourcing casting from Kovis, Slovenia, petitioners supplied locally without prior approval.
Show cause notice and opportunity given; penalty by downgrading vendor list status was appealable and affirmed.
Court held that quality identity does not negate need for procedural approval; risk to safety and uniformity.
Differentiated from APAR: there prohibition introduced later, making retrospective application unfair; here QAP 2 was operative.
Enforcement of clear contractual terms ensures no uncertainty, nepotism, or safety compromise.

Arguments by the Parties

Petitioner

Deviation sparked by Make in India policy and Transfer of Technology joint venture; product quality certified by Slovenia team.
No compromise on quality; supplies accepted; downgrading disproportionate.
Appeal issues not properly considered.

Respondent (Union of India)

QAP 2 expressly mandated outsourcing casting from Kovis, Slovenia; no in-house provision.
QAP 3 permitting localization came into effect only after deviation; supplies prior to that violated QAP 2.
Tender conditions allowed penal action for major non-compliance; authority acted to maintain QAP sanctity.

Factual Background

JWL Kovis (India) Pvt. Ltd., under a Transfer of Technology from Kovis Slovenia, began manufacturing brake disks in India for LHB coaches. Under QAP 2 (effective September 2022) the raw casting had to be sourced from Slovenia. In November 2024 the Railway issued a show cause notice for non-compliance, downgraded the vendor upon finding supplies made locally without prior approval, and the appellate authority rejected the vendor’s appeal. The vendor challenged the penalty in writ petitions, which were dismissed.

Statutory Analysis

Quality Assurance Plan 2 (QAP 2): mandated outsourcing of brake disk casting from Kovis, Slovenia; no in-house manufacture permitted.
Quality Assurance Plan 3 (QAP 3): introduced from 22 May 2024, allowing in-house manufacture subject to tests and field approval.
Tender Document: includes penal clauses for “major non-compliance” with approved QAP, authorising downgrading of vendor.

Alert Indicators

🔄 Conflicting Decisions – Distinguishes APAR Industries Limited vs. Union of India, (2023) SCC Online Bom 350

Citations

APAR Industries Limited vs. Union of India, (2023) SCC Online Bom 350.