The judgment emphasizes the significance of natural justice, fairness in action, and the proportionality of penalties in contractual disputes.

Judgment

AMITAVA ROY, C.J. Being aggrieved and vexed by the termination of its contract for installation and operation of Audio-Visual Closed Circuit Television (CCTV) System at Bhubaneswar, Cuttack, Berhampur & Sambalpur Railway Stations and at the forfeiture of the deposits made by it by way of licence fees, security deposit, performance guarantee etc., the petitioner is before this Court seeking its remedial intervention.

2. We have heard Mr. S.K. Sahoo, learned counsel for the petitioner and Mr. D.K. Sahoo, learned counsel for the opposite party.

3. Briefly stated, the indispensable facts are that the petitioner, in response to the tender notice dated 4.11.2010 floated by the East Coast Railway, Khurda Road Division, Bhubaneswar for awarding contract for installation and operation of Audio-Visual Closed Circuit Television (CCTV) System for Cuttack, Bhubaneswar, Puri, Brahmapur, Bhadrak and Jajpur Keonjhar Road Railway Stations under Khurda Road Division, had submitted tender along with the application fees and Earnest Money Deposit (EMD). In response to the NIT dated 17.02.2010 petitioner had offered its bid as well for the same work for Sambalpur Railway Station along with the aforementioned deposits. After opening and on evaluation of the technical and financial bids of the tenderers, the offers of the petitioner were accepted and as demanded, it made deposits towards licence fees, security deposits and performance guarantee to the tune of Rs. 27,07,509/-for these Railway Stations for the work in question. According to the petitioner, together with the application fees, EMD of Rs. 18,15,896/-was also deposited and as such, its total investment summed up to Rs.45,23,405/-. It had also deposited ground rent for 1 year and agreements were executed with the East Coast Railways, Khurda Road Division. The petitioner has claimed also to have paid towards electricity connection for making the CCTV System functional eventually to commence the CCTV operation in Bhubaneswar, Cuttack and Sambalpur Stations on 5.8.2011, 12.8.2011 and 8.6.2011 respectively. In course of the said operation, it also stated to have paid the licence fees for the second six months. It is asserted that when the matter stood thus, all of a sudden, by communications dated 14.01.2012 and 16.01.2012 the contracts were terminated by the opposite party. Petitioner pleaded unsuccessfully with the opposite party-Railway on the termination and has finally sought the refuge of this Court.

4. In the counter filed by the opposite party, they while admitting the pleaded facts pertaining to the tenders as averred by the petitioner for Cuttack, Bhubaneswar, Brahmapur and Sambalpur Railway Stations have asserted that the contract was subject to the the terms and conditions as stipulated. They clarified that the scope of the work extended to providing of information and entertainment to the travelling public/passengers. Letter of acceptance was issued to the petitioner for the installation and operation of the CCTV system in the above stations and it accordingly had deposited licence fees, security deposit and performance guarantee and that agreements were also executed. Thereafter control rooms were provided to it along with electricity for making the system functional. The opposite party stated that after commencement of the telecast, it was reported to the office of the opposite party No.1 (i.e. Sr. Divisional Commercial Manager, East Coast Railway, Khurda Road Division, Bhubaneswar) that on 14.01.2012 at about 15.30 hours some passengers and railway staff had brought to the knowledge of Station Master and Chief Ticket Inspector that objectionable and obscene video clips were being shown on the audio-visual closed circuit television (CCTV) system at Bhubaneswar Railway Station and that the same had created huge public outrage and generated adverse publicity against the Railways. The opposite party have stated that the enquiry that followed, affirmed that the reports were