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Termination of contract without any justification suffers from vice of arbitrariness and is in breach of the principles of natural justice: High Court of Delhi

There could absolutely be no justification for dislodging the contract without any justification or explanation. Such action of discontinuing services is dishonest and manipulative, suffers from the vice of arbitrariness, and is in breach of the principles of natural justice. These were stated by High Court of Delhi, consisting Justice Vipin Sanghi in the case of M/S Kuldip Tourist Taxi Service vs. Doordarshan Kendra & Ors. [W.P.(C) 168/2022] on 17.01.2022.

The facts of the case are that respondent No. 1 Doordarshan Kendra (DDK), floated a tender for hiring services of a vendor for providing cab hiring services in the year 2015. The petitioner emerged as bidder and an agreement was entered into by respondent No. 1 with the petitioner for providing taxi cars and vans to the said respondent. Though the initial period of the contract was of one year, the same was extendable by one more year, if the services were found satisfactory with the approval of the competent authority. The case of the petitioner is that since the petitioner’s services were found of satisfactory quality, the respondent No. 1 extended the contract not only for the period of one year, but even thereafter. Respondent No. 2 floated the aforesaid tender on GeM Portal for hiring of cabs and taxis on monthly basis for respondent No. 1. The petitioner participated in the said process. There were 14 bidders in all and of whom 4 including the petitioner were found to be technically qualified. The respondent No. 1, however, cancelled the said tendering process in the first week of December, 2021. The petitioner was aggrieved by the said cancellation.

The Counsel for the petitioner submitted that even if the petitioner does not have a vested right for continuation of the pre-existing contract which was extended by the respondents on their own, year after year up to 03.03.2021, the respondents cannot hold the petitioner responsible and victimise him for their own decisions. He submitted that there was nothing irregular in the extensions granted to the petitioner year after year, since the petitioner’s services were never adversely commented upon, and the petitioner continued to provide the services at the same rates as fixed in the year 2015, even though, the market rates over the years have been going up. It was contended that the decisions taken by the respondents are premised on assumption of some wrong doing by the petitioner, even without putting the petitioner to notice thereof, which was wholly impermissible.

The Counsel for the respondent submitted that the petitioner has no vested right to continue to provide its services to the respondents, and DDK, Delhi is free to engage any other service provider other than the petitioner. It was contended that the petitioner cannot have any actionable grievance in that regard. She submitted that since the fresh tender would take some time, the services of M/s City Cabs Co. have been availed by the respondents and the petitioner has no vested right to insist that his services alone should be taken by DDK, Delhi.

The High Court of Delhi held that there is no justification for the respondents to arrive at any such definite conclusion without putting the petitioner to notice, and calling for its explanation. The extensions granted to the petitioner year after year up to 31.03.2021 were at the pre-existing rate, and in the background that there were no complaints in respect of the services provided by the petitioner. As noticed hereinabove, it is not the respondent’s case that the petitioner services were in any way, lacking. There could absolutely be no justification for dislodging the petitioner by another named contractor. The action of the respondents in discontinuing the services of the petitioner by labelling/ brandishing the petitioner as dishonest and manipulative suffers from the vice of arbitrariness, and this conduct of the respondents is completely whimsical, and in breach of the principles of natural justice. Replacement of one service provider with another ad hoc service provider, without justification cannot be permitted particularly when there is no justifiable reason brought on record for the same. The Court, therefore, allowed the petition.

Judgment reviewed by Shristi Suman. Read Judgment

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