Government actions must be founded on good and sound reasons, and the government's freedom to contract and terminate contracts is restricted.

( 1 ) THIS petition has been filed under Section 9 of the Arbitration and Conciliation Act, 1996, praying that Respondent No. 1, Delhi Transport Corporation, (hereinafter referred to as the DTC) be restrained from taking down or defacing the advertisement panel at the back, as well as on the side panels of DTC buses. The `terms and Condition of the Tender contains an Arbitration clause. It is also not disputed that in the event of disputes arising between the parties these would be referrable to an Arbitrator for his decision.

( 2 ) IT appears that a contract was entered into between the parties in September, 2000 in respect of the `back panel right side space and inside space above window panel for the period 8. 9. 2000 to 27. 9. 2003 in terms of which the Petitioner had to pay a sum of Rs. 10,12,74,984. 00 in equal monthly instalments of Rs. 21,10,322/ -. There is a clause in this Agreement which stipulates that any decrease or increase in the number of buses will not in any manner change/alter the monthly rental fees. By Clause 9 (C) the parties were competent to terminate the contract without assigning any reason, but on giving three months notice in writing. This clause has been invoked by the DTC and after the expiry of three months the contract between the parties was sought to have been terminated with effect from 2. 2. 2003. This letter dated 2. 11. 2002 is reproduced in extensio :

"to the Pioneer Publicity Corporation, 227 , Office Complex, jhandawalan (M-1) new DELHI-110055 sub:- Notice for termination of contract. Sir, the contract for advertisement on buses of D. T. C. was awarded to you vide letter No. Pub/2000/4 (15/633 dated 5. 9. 2000 for East, West, North Zone, and South Zone (w. e. f. 20. 11. 2000 ). The matter has been reviewed by the competent authority in view of the directions of the Hon ble Supreme Court as well as of Govt. of N. C. T. of Delhi and it has been decided to discontinue the advertisement on buses forthwith on the DTC buses. Accordingly, this three months notice is served upon you in accordance with Clause No. 9 (C) of the agreement that your contracts under reference shall stand terminated W. e. f. 1. 02. 2003. This notice will become operative W. e. f. 2. 11. 2002. You are therefore requested to remove all the back panels/inside plates (Left and right over the windowpanes) side paintings and Nut Bolts fitted on the DTC buses within the stipulated period failing which this will be done by DTC at you risk and costs. This issue with the approval of the competent authority. Yours faithfully, sd/- Manager (A) Publicity"

( 3 ) THE Petitioner contends that its subsequent written reminders and requests for furnishing the details of the direction passed by the Hon ble Supreme Court and by the Government of NCT of Delhi has not been replied to. A recall notice dated 4. 1. 2003 was issued on behalf of the Petitioner to the DTC. But since no Reply was received thereto and apprehending that the DTC would act upon its notice dated 2. 11. 2002 the Petitioner has filed the present petition.

( 4 ) MR. CHANDHIOK, learned Senior counsel appearing for the Petitioner has contended that disputes had arisen on an earlier occasion also. By its letter dated 13. 8. 2001 the DTC had stated that a policy decision had been taken that thenceforward no DTC bus shall have any advertisement displayed on the right side of the bus and, therefore, the contract could not be continued with. Clause 9 (C) was invoked and was enforced. It was also stated that thenceforth DTC buses shall have advertisements displayed only on the rear side of the bus as well as small portions inside the bus above the seat of the conductor and fresh tenders would be invited from the prospective bidders. OMP No. 234/2001 was filed and eventually the Arbitral Tribunal passed Status Quo Orders on 9. 11. 2001, and stayed the order of termination issued by the DTC. In OMP No. 366/2001 the DTC was restrained from opening the Tenders received