Supreme Court quashes ‘arbitrary’ cancellation of Advertisement Tender by Kolkata Authority
CJI DY Chandrachud & Justices JB Pardiwala & Manoj Misra [09-07-2024]

Read Order: SUBODH KUMAR SINGH RATHOUR v. THE CHIEF EXECUTIVE OFFICER & ORS [SC- CIVIL APPEAL NO. 6741 OF 2024]

LE Correspondent

New Delhi, July 9, 2024: The Supreme Court today struck down the arbitrary cancellation of a tender by the Kolkata Metropolitan Development Authority (KMDA) for the maintenance of two underpasses and advertisement rights

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“We are of the considered opinion that the litigation at hand is nothing but a classic textbook case of an arbitrary exercise of powers by the respondent in cancelling the tender that was issued in favour of the appellant and that too at the behest of none other than the concerned Minister-In-Charge and thereby rendering the Notice of Cancellation dated 07.02.2023 illegal,” a observed a full bench of the apex court headed by Chief Justice of India Justice DY Chandrachud.

The Apex Court held that the cancellation notice dated February 7, 2023 issued to appellant Subodh Kumar Singh Rathour was illegal and actuated by extraneous considerations at the behest of the Minister-in-Charge. Mr. Rathour had been awarded the 10-year tender in June 2022 for the maintenance of the Beliaghata and Swabhumi underpasses, and was granted advertisement rights at these sites. However, in December 2022, the maintenance of the Eastern Metropolitan Bypass, on which the underpasses were located, was transferred from KMDA to the Kolkata Municipal Corporation (KMC).

Though KMDA retained advertisement rights, it first asked Rathour to stop work citing this change in January 2023. Then in February, it cancelled his tender stating there were "technical faults" making it "ambiguous", causing KMDA financial losses. Examining KMDA's internal file notings, the Supreme Court found that the Minister had repeatedly instructed officials to cancel Rathour's tender, overriding their concerns about the legality of doing so without cogent reasons.

The Top Court held the reasons of "change in policy" and "technical faults" to be an afterthought without any basis, as KMDA's own notings showed Rathour's tender was financially beneficial. The arbitrary cancellation was against public interest as it would disrupt maintenance of the underpasses. Upholding the sanctity of public tenders, the Top Court held that cancellation of a contract is a drastic step that deprives a person of valuable rights.

Arbitrary state action in this regard violates Article 14 and erodes public faith in contracts and public-private partnerships. Setting aside the cancellation, the Top Court held that Rathour's accrued rights under the original tender would remain protected notwithstanding the subsequent transfer of control of the underpasses to KMC.