Contracts awarding work to private parties should not be cancelled without assigning causes, the Supreme Court mentioned on May 8, because it reserved its judgement on an attraction towards a Calcutta High Court order.
A bench comprising Chief Justice D.Y. Chandrachud and justices J.B. Pardiwala and Manoj Misra mentioned private parties, who make investments after bagging a contract, have an affordable expectation of getting a return. “How can a contract be terminated without assigning any reason? A private person invests in pursuance of the award of contract,” the CJI mentioned.
Referring to the details of the case, the CJI mentioned no cause was given for cancellation of the contract.
A division bench of the Calcutta High Court had on May 25, 2023, upheld the decision of a single decide bench which had permitted the cancellation of the contract awarded to a agency headed by Subodh Kumar Singh Rathour.
The agency had secured a contract for sustaining two underpasses on the Eastern Metropolitan Bypass in Kolkata for 10 years. As a part of the contract, the agency was allowed to place commercials each inside and above the underpasses for which he was required to undertake some development work.
However, the contract was terminated by KMDA (Kolkata Metropolitan Development Authority) on February 7, 2023.
The KMDA had made it clear that it will refund the licence charge deposited by Rathour and the fee incurred by him on development exercise, upkeep and so forth.
Senior advocate Rakesh Dwivedi, showing for the KMDA, instructed the Supreme Court {that a} contemporary contract has now been awarded to one other social gathering and Rathour can be compensated.
Senior advocate Shyam Divan, who represented Rahour, mentioned although he did not need disruption of upkeep actions on the underpasses, the impugned communication by which the contract was cancelled, has to be put aside. “We will close it for the judgement,” the CJI mentioned.
