IMPORTANT POINT
A public authority cannot cancel a contract arbitrarily without valid reasons, especially when the contract was executed within the authority's term.

JUDGMENT :

SHAMPA SARKAR J.

1. These two writ petitions were heard analogously as similar questions were involved between the same parties.

2. Pursuant to an advertisement published by Lodna Gram Panchayat in the Bartaman and Business Standard Newspaper on June 30, 2021, inviting applications from the public to participate in a tendering process for collection of tolls from vehicles plying between Metedanga and Lodna More Road, the petitioner entered his bid. The bid price was fixed at Rs.14,60,000/-. The conditions mentioned in the tender notice were as follows:

(i) The tender was for three years.

(ii) The participants had to submit their bids in sealed covers.

(iii) Earnest money of Rs.20,000/- has to be deposited.

(iv) The price of the Tender form was Rs.1500/- non-refundable.

(v) The last date for submission of the tender through sealed cover was July 16, 2021 upto 1.00 p.m.

(vi) The date of opening of the tender was July 16, 2021, at 2 p.m.

3. The petitioner, as the highest bidder was selected. Such selection was for a period of three years. On July 19, 2021, the Pradhan of the Gram Panchayat intimated the petitioner that his bid amounting to Rs.15,50,000/-had been accepted. The petitioner was requested to execute a formal contract with the Pradhan of the Lodna Gram Panchayat on a non-judicial stamp paper of Rs.10/-within 15 days from the date of receipt of the letter of acceptance, failing which, the tender would automatically stand rejected and the earnest money would be forfeited. Pursuant to the above letter, an agreement was entered into between the Pradhan of the Lodna Gram Panchayat and the petitioner for a period of three years, with effect from July 19, 2021 to July 18, 2024.

4. The total bid amount was divided into three instalments. The first instalment amounting to Rs.5,02,000/-was scheduled to be paid on July 19, 2021. The second instalment amounting to Rs.5,01,500/-was scheduled to be paid on July 18, 2022 and the last instalment amounting to Rs.5,01,500/-was scheduled to be paid on July 18, 2023.

5. The petitioner paid the first instalment and started the work. The collection of the toll tax was going on smoothly, without any disturbance. No objections were raised. While the petitioner was executing the work of collection of toll tax, a notice was issued by the Block Development Officer, Khandaghosh Development Block, vide Memo No. 2458 dated July 6, 2022 to the Pradhan of the Lodna Gram Panchayat, directing the Pradhan to forthwith cancel the agreement between the gram panchayat and the petitioner from July 18, 2023.

6. The reason assigned by the Block Development Officer was that Rule 13.2 of the Gram Panchayat (Audit, Account and Budget) Rules 2007 (hereinafter referred to as the said Rules), prescribed that the gram panchayat could not execute a lease agreement for a period extending beyond the term of the office of the existing members of the panchayat. As the term of the office of the existing members including the Pradhan of the said Gram Panchayat was due to expire on September 22, 2023, the gram panchayat could not enter into any contract beyond September 22, 2023.

7. On July 11, 2022, the Pradhan replied to the letter of the Block Development Officer intimating the authority that a meeting was held on July 11, 2022 and the members of the panchayat discussed the issue and resolved unanimously that the matter may be considered once again by the Block Development Officer, with sympathy. The Block Development Officer did not intimate anything either to the gram panchayat or to the petitioner.

8. Thus, the notice of the Block Development Officer gave rise to filing of WPA No. 17070 of 2022. The petitioner prayed for a writ of mandamus directing the respondents to withdraw the letter dated July 6, 2023 issued by the Block Development Officer Khandaghosh Development Block and to pass an interim order by restraining the respondents from giving further effect to the said letter. The petitioner contended that Rule 13(2) o