Summary
Cancellation of a public-private underpass-maintenance and advertising arrangement was quashed as arbitrary. Contractual relations did not exclude writ review of executive action violating Article 14. Internal file notes revealed that the stated technical and policy reasons did not genuinely drive the decision, which followed ministerial instructions. Later retendering and transfer of control could not extinguish the successful bidder’s accrued rights.
Issues
- When State action in contractual matters is amenable to Article 226 review.
- Whether internal file notes may be examined to test a formal decision.
- Whether technical defects, policy change or prospective revenue gains justified cancellation.
- Whether later retendering and transfer of maintenance and revenue rights defeated the appellant’s accrued rights.
Provisions considered
- Articles 14 and 226, Constitution of IndiaThe State remains bound to act fairly and rationally in contractual dealings. An executive cancellation outside the contract’s termination terms could be reviewed for arbitrariness; the Court quashed it after examining the actual decision-making process. (¶¶ 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 65, 68, 69, 70, 71, 122, 129, 130)
Held
- A contractual relationship does not immunise the State from Article 14. Writ relief remains discretionary and ordinary remedies may be appropriate for purely contractual disputes, complex factual controversies or contractual dispute-resolution procedures. But palpably arbitrary executive action may be corrected under Article 226; allegations of ordinary breach alone do not suffice. (¶¶ 51, 52, 53, 54, 55, 56, 57, 58, 59)
- Here the authority did not invoke a contractual breach by the appellant or terminate under the agreed terms. It purported to cancel the tender for technical faults through executive power. That action carried a public duty of rationality and fairness, supplied the public-law element and made the writ petition maintainable. (¶¶ 60, 61, 62)
- Internal notes ordinarily create no enforceable right before approval, formalisation and communication. That rule does not prevent the court from examining the notes and deliberations underlying an official decision to determine whether its stated reasons were genuine and whether extraneous considerations influenced it. (¶¶ 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89)
- The file disclosed no contemporaneous consideration of the supposed technical ambiguities. Officials repeatedly sought legal advice, but cancellation followed ministerial instructions before that advice was obtained. The later notice’s technical-fault rationale did not reflect the actual decision-making process. (¶¶ 90, 91, 92, 93, 94, 95, 96, 97, 98, 105)
- The December 2022 policy order left the relevant control and advertisement revenue rights with KMDA, and the appellant’s maintenance duties differed from the functions transferred. KMDA’s own subsequent retendering further contradicted the asserted need to cancel because of that transfer. The later September 2023 transfer could not retrospectively validate the cancellation. (¶¶ 100, 101, 102, 103, 104, 106, 107, 132, 133)
- Public interest cannot be reduced to a speculative possibility of higher revenue. The authority’s own records described the arrangement as financially beneficial and warned of disruption to maintenance if it ended. A claim of policy change or public interest must be supported by genuine, cogent material, while giving weight to stability and fairness in existing contracts. (¶¶ 108, 109, 110, 111, 112, 113, 114, 115, 116, 118)
- The tender already required relevant experience; apprehended lack of expertise did not justify bypassing the agreed termination mechanism. Cancellation was an arbitrary exercise of executive power on extraneous considerations. Public authorities must respect valid concluded tenders, and exceptional alteration or cancellation for policy or public interest must be bona fide and reflected in the process and decision. (¶¶ 119, 120, 121, 122, 124, 125, 126, 127, 128, 129, 130)
- Because cancellation was non-est, a fresh tender awarded to a third party and subsequent transfer of the underpasses’ operation, maintenance and revenue rights did not defeat the appellant’s accrued rights. The cancellation notice was quashed and the High Court judgment set aside. (¶¶ 131, 132, 133, 134)
Result
Appeal allowed; cancellation notice dated 7 February 2023 quashed and High Court judgment set aside. Later retendering and administrative transfer do not defeat the appellant’s accrued rights.