After Bidder Paid In Full, Calcutta HC Upholds Order Requiring Mizoram To Complete Kolkata Land Sale, Calls Cancellation “Regime Revenge”

The Government of Mizoram invited an e-tender-cum-e-auction to sell its property at 24, Ashutosh Chowdhury Avenue, Kolkata.

Excel Vincom emerged as the successful bidder, paid the full consideration and applicable penal interest, and entered into an agreement for sale with the Government.

After a change of government and representations from Mizo organisations opposing the sale, the State cancelled the tender process, citing the public interest, and refunded the payments.

The writ petitioners challenged the cancellation. A Single Judge set it aside and directed the State to execute the sale deed; the State appealed.

Under Article 14, the State and its instrumentalities must act fairly, reasonably, and non-arbitrarily in contractual dealings; a contractual dispute may therefore be reviewed under Article 226 where State action is alleged to be arbitrary or unfair (ABL International Ltd. v. Export Credit Guarantee Corporation of India Ltd.; Whirlpool Corporation v. Registrar of Trade Marks).

An alternative remedy, including arbitration, is not an absolute bar to writ jurisdiction; whether to entertain a petition is a matter of judicial discretion.

In an appropriate case, the Court may grant consequential relief, including directing a State instrumentality to honour a contractual undertaking (Gujarat State Financial Corporation v. Lotus Hotels (P) Ltd.).

A tender clause reserving a right to cancel does not permit its arbitrary exercise; where the State seeks to resile from a promise on public-interest grounds, it must demonstrate how that interest justifies overriding the contractual obligation (Vice Chairman & Managing Director, CIDCO v. Shishir Realty Pvt. Ltd.).

Section 114, illustration (e), of the Evidence Act permits a presumption that official acts have been regularly performed.

The Court found that the parties had progressed beyond a mere bid or letter of intent: the State accepted the full consideration, executed an agreement for sale, and corresponded with the purchaser about finalising the conveyance.

Although title would pass only upon execution and registration of the sale deed, that did not entitle the State to withdraw from its contractual promise at will.

The tender’s cancellation clauses remained subject to Article 14 and could not justify arbitrary action.

The State’s reliance on the two representations did not establish an overwhelming or demonstrable public interest sufficient to excuse performance; the timing of cancellation after the change of government further supported the finding of arbitrariness.

The arbitration clause and availability of a suit did not oust writ jurisdiction in the circumstances, and the Court considered consequential relief appropriate.

It dismissed the appeal, upheld the order directing execution of the sale deed in favour of the writ petitioners, extended the time for compliance by eight weeks, and made no order as to costs.