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IN THE HIGH COURT OF JHARKHAND AT RANCHI
RAJESH SHANKAR, J.
M/s R.S. Traders, represented by its Proprietor namely, Rajiv Ranjan Singh – Appellant
Versus
The State of Jharkhand – Respondent
W.P.(C) No. 810 of 2020
Decided on : 05-12-2022
Natural Justice - Municipal Corporation Agreement - Jharkhand Municipal Act, 2011 - Regulation, 2017 - [HOARDING TAX] - [Municipal Corporation Agreement] - [Jharkhand Municipal Act, 2011, Regulation, 2017] - The court discussed the violation of principles of natural justice, the authority of the State Government to interfere with the municipal corporation's administrative decisions, and the validity of the second agreement executed in contravention of the law. The court emphasized the importance of fair and reasonable actions by the State, the need for public auction in granting state largesse, and the significance of complying with the terms and conditions of agreements.
Fact of the Case:
The petitioner participated in a tender for hoarding tax/advertisement tax collection and entered into an agreement with the respondent no. 3. The agreement was subsequently cancelled by the Municipal Corporation, and a fresh tender was awarded to another party.
Finding of the Court:
The court found that the petitioner failed to comply with the terms of the initial agreement and that the extension of the contract for five years without following due process of law was in violation of the Regulation, 2017. The court dismissed the writ petition but allowed the petitioner to claim damages in a competent court of law.
Issues: Violation of principles of natural justice, authority of the State Government to interfere with municipal corporation's decisions, validity of the second agreement executed in contravention of the law, and the petitioner's claim for damages.
Ratio Decidendi: The court held that the petitioner's violation of the terms and conditions of the initial agreement and the irregular extension of the contract rendered the claim for arbitrariness on the part of the respondents impermissible. The court emphasized the importance of fair and reasonable actions by the State and the need for public auction in granting state largesse.
Final Decision: The writ petition was dismissed, but the petitioner was allowed to claim damages against the respondent no. 3 before the competent court of law.
JUDGMENT :
The writ petition was initially filed for quashing letter no. 624 dated 14.02.2020 issued by the respondent no.2 – Joint Secretary, Department of Urban Development and Housing, Ranchi to the Municipal Commissioner, Deoghar Municipal Corporation.
2. During pendency of the writ petition, a supplementary affidavit was filed on behalf of the petitioner on 23.11.2021 confining the prayer made in the writ petition to the extent of quashing letter no. 642 dated 24.02.2020 (Annexure-4 to the writ petition) issued by the Assistant Municipal Corporation, Deoghar Municipal Corporation, Deoghar, whereby the agreement dated 03.07.2018 executed between the petitioner and the respondent no. 3 has been cancelled on the direction of the respondent no. 2 issued vide letter no. 624 dated 14.02.2020.
3. Learned counsel for the petitioner submits that a tender was invited by the Municipal Commissioner, Deoghar Municipal Corporation, Deoghar for making settlement with respect to collection of hoarding tax/advertisement tax from persons desirous of publicity and advertisement of their brand by fixing posters, boards, hoardings and other advertisement mediums etc. within the jurisdiction of Deoghar Municipal Corporation. The petitioner participated in the said tender and was declared successful. Thereafter, an agreement was executed between the petitioner and the respondent no. 3 on 19.05.2018 for a period of one year commencing from 12.04.2018 and expiring on 31.03.2019. The petitioner erected several hoardings for advertisement, however, due to widening of roads, many hoardings were removed and the petitioner suffered huge loss. The Deoghar Municipal Corporation after approval of the Board, executed a fresh agreement on 03.07.2018, the period of which was from 12.04.2018 to 31.03.2023. Pursuant to the said agreement, the Deoghar Municipal Corporation instructed the petitioner to install unipole hoardings and accordingly, the petitioner started erection of such hoardings getting orders from desirous persons so as to collect hoarding tax on behalf of the respondent no. 3. The petitioner vide letter dated 26.11.2018, informed the respondent no. 3 that it had commenced the first phase of establishing unipoles and thereafter on the direction of the respondent no. 3, the petitioner deposited a total sum of Rs. 4,65,000/- in the account of Deoghar Municipal Corporation. The Department of Urban Development and Housing through its Joint Secretary vide letter no. 624 dated 14.02.2020 addressed to the Municipal Commissioner, Deoghar Municipal Corporation inter-alia directed to cancel the agreement executed in favour of the petitioner and to issue a fresh tender. Pursuant to the said letter, the Assistant Municipal Commissioner, Deoghar Municipal Corporation, Deoghar cancelled the settlement of the petitioner vide letter no. 642 dated 24.02.2020.
4. It is also submitted that the State Government cannot interfere with working of the municipal corporation which is governed under the provisions of the Jharkhand Municipal Act, 2011 and, therefore, issuance of letter dated 14.02.2020 is without jurisdiction. It is well settled that the State even in the matter of contract has to act fairly and reasonably and any action which violates Article 14 of the Constitution of India is liable to be struck down. It is further submitted that no notice was ever served upon the petitioner by the respondents and the said act of cancellation of the agreement without issuing prior notice to the petitioner and providing an opportunity of hearing to it is wholly unfair and arbitrary. After cancellation of the agreement of the petitioner, a fresh tender was floated under the signature of the Municipal Commissioner, Deoghar Municipal Corporation, Deoghar inviting bids for the financial year 2020-21, whereupon the petitioner served legal notice to the Chief Executive Officer, Deoghar Municipal Corporation, Deoghar on 27.03.2020 and requested to keep the said NIT in abeyance till
The importance of fair and reasonable actions by the State, the need for public auction in granting state largesse, and the significance of complying with the terms and conditions of agreements.
A public authority cannot cancel a contract arbitrarily without valid reasons, especially when the contract was executed within the authority's term.
The cancellation of a tender based on a quashed blacklisting order without a stay is arbitrary and unsustainable under judicial review, affirming the obligation of authorities to act fairly in public....
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