Contract Cancelled Last Minute On Political Interference, Arbitrary: Karnataka HC Directs State To Pay For Film Made For Global Investors Meet

A single judge bench of Justice M Nagaprasanna quashed the communication dated 25-10-2022 issued by Marketing Communication And Advertising Ltd, cancelling the work order issued for producing the film to the petitioner.

The bench said “After its approval the contract was awarded in favour of the petitioner, agreement was executed for execution of the work and the petitioner executed the work and took the execution of such work to its logical conclusion. Just before delivery of the final product the contract is cancelled, not on any merit/quality of the film, but on political interference i.e., a communication of the Minister (Industries Minister Dr Murugesh Nirani). Therefore, this becomes a classic case where arbitrariness is writ large.”

The global investors meet titled “Invest Karnataka 2022’ was slated to be held between 2nd and 4th November, 2022, with the object of projecting the State and reflecting the role of the State for a play in the global supply chain, the petitioner was sought to be hired for production of a film.

On 16-06-2022 the 3rd respondent/Marketing Communication and Advertising Limited which is a subsidiary unit of Mysore Sales International Limited issued an invitation for expression of interest for appointment of business associates for the event.

On 14-07-2022 the 3rd respondent issued a communication to the petitioner notifying its pre-qualification and successful acceptance of the application of the petitioner. A work order was issued to the petitioner to execute the work.

Once the work order was issued, the petitioner began to work for creation of the 3D film. On 16-09-2022, the 3rd respondent again communicated to the Forum requesting release of advance amount of `1,50,00,000 towards creation of the film, which was also released. On 25-10-2022 the petitioner claimed to be ready to deliver its work to the 3rd respondent in completion of the work order dated 11-08- 2022.

However, the petitioner was informed about the cancellation/withdrawal of the contract/work by a cryptic communication indicating no reason as to why it was being withdrawn. After emails sent to the respondent failed to elicit a positive response, the petitioner approached the court.

The respondents opposed the plea on grounds that a money claim should not be entertained in exercise of the jurisdiction of this Court under Article 226 of the Constitution of India. Moreover, the film of the petitioner was not up to the mark and, therefore, a decision was taken to deny display of the film in the global investors meet as it would be of no use to do so and it is for the poor quality of the film the decision was taken.

Findings:

During pendency of the petition an internal committee was constituted to see the film and come to the conclusion as to whether it was in tune with the parameters for it to be displayed in the Investors Meet. After the committee saw the film it rejected the same, citing it did not meet the required parameters.

Noting the composition of the committee which included Director, Commerce and Industries Department; Additional Director of the same Department, Chief Operating Officer of the Invest Karnataka Forum and the Managing Director of the 3rd respondent.

The bench expressed “There was no expert or an independent entity to assess the film. Who assessed the film are the persons who needed to toe the lines of the Minister for Industries and Commerce Department. It is the communication of the Minister that led to cancellation of the contract, therefore, the constitution of the committee of interested persons, would inspire no confidence of this court for their act of rejection of the film.”

Referring to the communication dated 21-10-2022, issued by the Minister, the bench court said “Just before delivery of the final product the contract is cancelled, not on any merit/quality of the film, but on political interference i.e., a communication of the Minister. Therefore, this becomes a classic case where arbitrariness is writ large.”

Rejecting the contention of the state government to not entertain the petition which raises an issue of money, the court said “In an appropriate case a writ petition against a State or its instrumentality arising out of a contractual obligation is maintainable.”

It added “Merely because some disputed question of fact arise for consideration, it would not be a ground to refuse entertainment of writ petition, writ petition involving a consequential relief of a monetary claim is also maintainable and a writ for such monetary claim would be maintainable notwithstanding an arbitration clause existing in any agreement.”

Finally it said “If it is once established that the action of the respondents which are instrumentalities of the State is vitiated by non-observation of the constitutional tenets of Article 14 of the Constitution of India and arbitrariness in such action is writ large, the State cannot claim comparison with a private individual even in the field of contract.”

It also opined “Article 14 is that golden thread that is woven through the entire fabric of the Constitution of India and every bead of State action should pass through that golden thread. Action of the State cannot be arbitrary.”

Case Title: M/s BBP Studio Virtual Bharat Pvt Ltd And State of Karnataka & Others

Case No: WRIT PETITION NO.21308 OF 2022

Citation: 2023 LiveLaw (Kar) 30

Date of Order: 25-01-2023

Appearance: Senior Advocate Aditya Sondhi a/w advocate Swaroop S for petitioner.

AGA B.V.KRISHNA, for R1,R2

Advocate Mohan Kumar for R3.