IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.12132 of 2009 ***** M/s Kraft through its Proprietor Sri Manish Kumar, Having its Office at Abhay Bhawan, 5th Floor, Fraser Road, P.S. Kotwali, Town and District-Patna. …. …. Petitioner Versus 1. Bihar State Road Transport Corporation through its Administrator, Parivahan Bhawan, Bir Chand Patel Path, Patna-800 001. 2. The Administrator, Bihar State Road Transport Corporation, Parivahan Bhawan, Bir Chand Patel Path, Patna-800 001. 3. The Chief of Operations, Bihar State Road Transport Corporation, Parivahan Bhawan, Bir Chand Patel Path, Patna-800 001. 4. The Chief Accounts Officer, Bihar State Road Transport Corporation, Parivahan Bhawan, Bir Chand Patel Path, Patna-800 001. …. …. Respondents ----------- For the Petitioner : Mr. Y.V. Giri, Senior Advocate Mr. Sangeet Deokuliar, Advocate For the BSRTC : Mr. P.K.Verma, Advocate ----------- 6. 6.11.2009. Heard counsel for the parties. Vide order dated 5.9.2009 a contract awarded to the petitioner for putting up hoardings at various bus stands belonging to the Bihar State Road Transport Corporation has suddenly been annulled without assigning any reason and before the contract has expired. According to the petitioner the contract subsists till May, 2010. The only reason assigned for cancellation is Clause 16.1 of the agreement which laid down that either of the parties after giving three months notice can terminate the agreement without assigning any reason. Learned senior counsel representing the petitioner submits that Clause 16.1 does not give an open ended discretion to the authorities to rescind the agreement without a reasonable cause. Merely because the agreement states that they have the power to do so, reasonableness has to - 2 - be read in the action or decision of the respondents. It is further submitted that there was neither any notice nor any opportunity nor any reason assigned in the order itself before the said termination. Based on the earlier agreement the petitioner has made investments and the sudden termination has implications for him which will hit him financially as well. A counter affidavit has been filed on behalf of the respondent Bihar State Road Transport Corporation. They place reliance again on Clause 16.1 for passing the order impugned. Their stand is that though no reason is assigned, which are not required to be given, in terms of the agreement, the primary motive behind the sudden cancellation of the contract was to augment the financial position of the Road Transport Corporation and to generate more money by going for a fresh tender or auction. This according to them was the primary consideration which compelled them to terminate the agreement midway. No doubt in the agreement itself there is a clause incorporated under 16.1 which gives liberty to both the parties to give three months notice without assigning any reason to end the contract but merely because the clause reads so it cannot be said that no reason need to exist or reason needs to be provided. There has to be some reasonableness in the act as a contract entered between the parties have some legal sanctity and value. Once a relationship is entered between the parties by virtue of execution of the agreement a kind of security is imparted to the relationship and what has been agreed between the parties. The corporation may have the interest of financial kind in its mind in - 3 - terminating the agreement but it is also a fact that any person who takes a tender or enters into agreement after bidding process also has commercial interest and commitment and makes investments accordingly. In this case admitted position is that the contract is to end on 2nd May, 2010, the Court fails to understand the hurry for terminating the contract as if six months period is going to give them a lead or head-start in terms of generation of resources which will pull out the Corporation out from its financial difficulty or mess it is in. From the affidavits and the material which has been brought on record, if the re-tendering had fetched the Corporation a substantial gain or advantage then the Court could have well understood that their object and purpose have been met. From a comparative chart which has been produced showing the bids offered by the various bidders there is hardly any difference or raise of significance. The object and purpose stated in the counter affidavit, therefore, has not been achieved or reached by the Corporation. If that be so, however novel the idea may be of the Corporation in taking such an extreme step, the Court is of the opinion that Clause 16.1 cannot be invoked to terminate a subsisting contract in a manner in which it has been done. There are certain subsequent developments and an affidavit has been filed in this regard which this Court is not willing to go into but at this stage the Court has no hesitation in recording that the cancellation of the contract of the petitioner by virtue of the order dated 5.9.2009 is arbitrary and misplaced, which has been passed without any opportunity of hearing to the petitioner and without stating any reason thereto. The - 4 - Corporation can be well advised to await the expiry of the subsisting agreement before they can go for a fresh advertisement or tender as they like. Annexure-1 is quashed. The writ application is allowed. Pawan/- (Ajay Kumar Tripathi, J.)