Arbitrariness by a State authority is impermissible and demands intervention under Article 14 of the Constitution, even in cases of purely contractual matters.

JUDGMENT :

1. This is a writ application wherein the writ petitioner is a Company carrying on the business of managing, operating and running a bar-cum-restaurant attached to Pathik Motel under the West Bengal Tourism Development Corporation Limited (in short ‘WBTDCL’), the defendant no.1 herein. It is the case of the writ petitioner that by an agreement dated September 19, 2013 the petitioner had entered into an agreement with the defendant no.1 to run a bar cum restaurant in the Pathik Motel at Durgapur, West Bengal.

2. Mr. Basu, learned Senior Advocate appearing on behalf of the petitioner has placed the agreement between the parties for management and operation of the bar cum restaurant (hereinafter referred to as “the agreement”). He placed reliance on clause 5 of the agreement to indicate that the agreement was for a period of five years with an option of extension for two terms of three years each. He further submitted that the restaurant was running till the passing of the order passed by the Supreme Court in the case of State of Tamil Nadu represented by Secretary and ors. Vs. K. Balu & ors. (2018) 3 S.C.C. He submitted that by the Supreme Court order a ban of sorts had been imposed wherein bars were not allowed to operate within 500 meters from the outer edge of the National highway. The Supreme Court order had been passed on March 31, 2017 and the impact of the same continued for a period of six months.

3. Mr. Basu further relied on clause 28 being the Force Majeure clause and stated that due to the event of force majeure, the petitioner was unable to make payment of Minimum Annual Guaranteed Return (in short ‘MAGR’) as per clause 7.3 of the agreement as also the Achievement Fee as per clause 7.1(iii). He further submitted that on August 24, 2018 the petitioner had written to the WBTDCL with regard to renewal of the agreement as per clause 5. He submitted that till date no reply to this letter has been received by the writ petitioner. He further submitted by a letter dated 24th September, 2018 the WBTDCL issued a show-cause notice upon the petitioner stating therein that an amount of Rs.3,40,000/- was pending from the petitioner as full and final payment of the MAGR. The show-cause notice further stated that the Achievement Fees as per clause 7.1(iii) was also payable by the writ petitioner. The said show cause notice concluded with the warning that if the pending amounts are not paid within 30 days the contract would be terminated forthwith along with legal actions that may be initiated by the WBTDCL as per law.

4. Mr. Basu further submitted that a reply to the said notice was given by the petitioner on October 5, 2018 stating therein that the balance payment due would be made by the petitioner upon reconciliation of accounts and requested the WBTDCL for renewal of the agreement for a further period of three years as per clause 5 of the agreement.

5. Mr. Basu submitted that surprisingly on October 9, 2018 a notice issued by the WBTDCL was received by the petitioner that stated that as the agreement had expired on September 9, 2018, the petitioner was to vacate the premises and hand over peaceful possession to the concerned authority with immediate effect. It was further stated that in the event of failure to hand over the premises before October 31, 2018, WBTDCL shall take the course of legal action against the petitioner.

6. Mr. Basu indicated to this Court that having issued a show cause notice on September 24, 2018 wherein a one-month grace period had been given to the petitioner i.e. till October 24, 2018, the action of the WBTDCL in directing the writ petitioner to vacate the premises on October 9, 2018 was absolutely arbitrary and against well established principles in law. He submitted that not only were the principles of natural justice not followed but the same had been given a complete go by.

7. Mr. Basu also submitted that the whimsical and capricious action of the WBTDCL needed to be struck down by this Court