Subodh Kumar Singh Rathour vs. The Chief Executive Officer & Ors.
Background
The appellant won a competitive tender floated by the Kolkata Metropolitan Development Authority (KMDA) to maintain two underpasses on the E.M. Bypass in Kolkata in exchange for advertisement rights over a 10-year term, and had invested significantly in erecting advertising structures after being declared the successful bidder. When the West Bengal government later transferred general road and drainage maintenance of the E.M. Bypass from KMDA to the Kolkata Municipal Corporation (KMC), while an explicit order clarified that KMDA would retain the right to collect advertisement revenue, KMDA's Executive Engineer nonetheless issued a notice cancelling the appellant's tender and directing him to stop work. The appellant challenged this cancellation before the High Court, which ruled against him, leading to this appeal.
Decision Breakdown
In a lengthy judgment surveying the scope of judicial review over government contracts and tenders, the Supreme Court held that the cancellation was arbitrary and unfair, and was shown (through the internal file-notings) to have been driven by extraneous ministerial interference rather than any genuine change of policy affecting the appellant's contract. The Court emphasised that state action in the contractual and tender sphere is not "unfettered private will" but subject to Article 14 fairness even at the post-award stage, and that any cancellation on the ground of policy change must be bona fide and clearly reflected in the decision-making record. Since the actual handover order left KMDA in charge of advertisement revenue (the appellant's contractual subject matter), the cancellation had no real justification. The Court quashed the cancellation notice and set aside the High Court's judgment, allowing the appeal.
Lesson Learnt
A government body cannot arbitrarily cancel a public contract or tender after award (especially at a minister's informal instance rather than through a genuine, well-documented policy decision) and courts will step in to protect a successful bidder's vested contractual rights when the stated justification for cancellation does not actually match the facts.