Rashid Paul

Govt’s and its agencies’ decisions even in matters of contract can’t be arbitrary: J&K HC

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Quashes JKMSCL’s order cancelling contract, blacklisting city-based firm

Srinagar: “The decision-making process of the government or its agencies in contractual matters has to be reasonable and conforming to the requirements of fundamental rights”, the J&K High Court has said.

Passing its judgment in a case filed by a city based firm whose contract had been cancelled by the J&K Medical Supplies Corporation Limited (JKMSCL) for not submitting an undertaking, a bench comprising Justice Ali Mohammad Magrey observed that to allot the works or enter into contract with citizens has to be rational, non-arbitrary and reasonable.

The JKMSCL had also “arbitrarily” blacklisted the firm for two years for failing to file an affidavit for assuring successful performance of contract which was allotted to it.

The firm deals in providing human resource facilities in computer-related software activities.

The court said that the JKMSCL did not provide any opportunity of being heard to the (firm). This course of action is a major punishment, and for such major punishment, as per procedure, fair and due opportunity of hearing had to be offered to it, the court said.

It acknowledged that while law states that there must be judicial restraint in interfering with the administrative action, particularly in the matters of tender or contract, and that, ordinarily, the soundness of the decision taken by the tender issuing authority ought not to be questioned.

However, the decision-making process can certainly be subject to judicial review, it added.

The court observed that the soundness of the decision may be questioned, firstly, if the decision made is so arbitrary and irrational.

The courts can also intervene if the process adopted or decision made by the authority is malafide or intended to favour someone, or third, if the public interest is affected.

“In the instant case,” the court said, “when the firm was not given any opportunity to show cause against the proposed punishment to be imposed against it, in such eventuality, the decision of the Corporation to cancel the contract and blacklist the firm amounts to such action where they have acted in a manner in which no responsible authority acting reasonably and in accordance with the relevant law would have acted.”

The court also rejected contention of the Corporation that in contract matters a Writ Petition was not maintainable.

“In the facts and circumstances of the present case, (it) is not only misconceived, but also misdirected as well,” the court said, adding, “this is so because it is settled legal position that if an authority acts in an arbitrary matter even in a matter of contract, an aggrieved party can approach the court by way of Writ under Article 226 of the Constitution and that the court, depending on the facts of the case, is empowered to grant the relief.”

The court, accordingly, quashed orders of cancellation of the contract as well as blacklisting of the city-based firm by the JKMSCL.

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