Contract cancellation clause valid for defaults; procedural fairness requires opportunity to rebut report before final action.

JUDGMENT

Dated this the 01^st day of April, 2026 This writ petition is preferred being aggrieved by Ext.P11 order, whereby Ext.P5 agreement entered between the petitioner and the 2^nd respondent has been cancelled.

2. The primary contention raised by the petitioner is that the cancellation of Ext.P5 agreement as per Ext.P11 order was based on the report submitted by the 3^rd respondent, whereby it is contended that there is arbitrariness and illegality in cancelling the agreement between the parties. However, it is also pointed out that as per Clause 8 of the agreement, the Deputy Director has the right to cancel the agreement for any default on the part of the contractor in due performance thereof.

3. In such circumstances, the relevance of Exhibit R1(a) comes in, wherein a report has been submitted to the Deputy Director by the Athletic Coach of the District Sports Council. It is specifically stated therein that certain instruments did not meet the quality or standards, that certain items were missing and that some other items were in excess. This is the circumstances under which the recommendation was made to cancel the contract between the petitioner and the 2ndrespondent. Acting upon this, the 2ndrespondent had cancelled the agreement. This is the circumstances under which this writ petition is preferred.

4. Going by the contentions as well as the materials produced, it appears that there is no arbitrariness, as Clause 8 of the agreement gives ample power to the 2^nd respondent to cancel the contract, if there is any default on the part of the contractor in due performance. For that purpose, the Deputy Director relied on the report given by the Athletic Coach of the District Sports Council, wherein the particulars of the items in default have been mentioned. However, I accept the contention of the petitioner that, since the report was not furnished to the petitioner prior to the filing of this writ petition, he did not get sufficient opportunity to challenge the same.

5. Under such circumstance, though I do not find any merit to interfere with Ext.P11 order, I am leaving open the liberty of the petitioner to challenge Ext.R1(a) before the appropriate forum. If the petitioner challenges the same, the 2^nd respondent shall give the petitioner an opportunity with respect to the challenge raised against Ext. R1(a), and an order shall be passed within a period of two months from the date of receipt of such application. It is also clarified that, for the items, which were accepted by the 2^nd respondent, the petitioner shall be paid with the amount as per the agreement. It is concluded that altogether 48 items were supplied, out of which only 20 items were found to be defective. Therefore, the admitted portion shall be paid to the petitioner. For effecting the payment, the 1st respondent District Panchayath shall also take necessary steps.