Judicial review in commercial contracts is restricted to gross arbitrariness, irrationality, or mala fides.

The Petitioner, a registered society, entered into an agreement on 31-05-1989 with the Special Area Development Authority (SADA) for the construction and maintenance of public toilets in Bhilai for a 30-year term

Following the succession of SADA by the Municipal Corporation Bhilai (Respondent No. 1), the Petitioner claimed their contract was extended via letters dated 16-02-2023 and 17-02-2023, purportedly granting rights until 15-02-2028

Respondents issued communications on 03-03-2026 and 05-03-2026, directing the Petitioner to hand over management to Respondent No. 4

The Respondent No. 1 argued that the original term expired in 2019 and the Petitioner operated without authority until 2023.

The Petitioner participated in a new 2026 Expression of Interest (EOI) process, where they were allotted only one toilet, while others were granted to different agencies

The Petitioner challenged the 2026 communications via a writ petition under Article 226 of the Constitution

Whether the extension letters of 2023 entitle the Petitioner to continue management of all subject toilets until 2028 despite the expiration of the original 1989 agreement

Whether the Court should exercise its power of judicial review under Article 226 to interfere in a contractual/commercial dispute involving a public body

The Court applied the principles of judicial restraint in contractual matters under Article 226 of the Constitution of India.

Tata Motors Limited v. The Brihan Mumbai Electric Supply & Transport Undertaking (BEST) and Others (2023), which establishes that courts should not interfere in commercial transactions of the State unless there is gross arbitrariness, mala fides, or irrationality

Silppi Constructions Contractors v. Union of India (2020), emphasizing "fair play in the joints" for government bodies in contracts

Jagdish Mandal v. State of Orissa (2007), which holds that power of judicial review will not be invoked to protect private interests at the cost of public interest in tender matters

The Court observed that the original 30-year agreement expired in 2019, and the Petitioner failed to produce any document proving legal authority to continue the work between 2019 and 2023

Consequently, the extension mentioned in Clause 9 of the 2023 contract could not be viewed as a valid continuation of the expired 1989 agreement

Crucially, the Court noted that the Petitioner had participated in the new 2026 EOI process called by the Respondents. By participating in the new tender and being found eligible for only one toilet, the Petitioner could not later challenge the handover of the other toilets based on the previous 2023 extension

The Court reasoned that interference in such commercial functions is unwarranted unless overwhelming public interest is at stake, which was not demonstrated here

The Court held that contractual disputes and the evaluation of tenders are essentially commercial functions where principles of equity stay at a distance, and the Petitioner’s participation in the new selection process precluded their claim for an automatic extension

No relief was granted against the impugned communications dated 03-03-2026 and 05-03-2026