MP HC Leaves Parking-Contract Cancellation Warning In Place After Contractor Stopped ₹19-Lakh First-Instalment Cheque

The petitioner was awarded a contract for four-wheeler parking for 2026–2027 and entered into a parking licence agreement with the respondent Nagar Parishad on 19 August 2026.

The respondents stated that the petitioner’s cheque for the first instalment was dishonoured on its instruction and that the amount remained unpaid.

Clause 6, which required payment of the bid amount in seven instalments and the issue of seven post-dated cheques, and Clause 8, which provided for action including forfeiture of the security deposit and cancellation of the contract if a cheque was dishonoured.

In the absence of established mala fides or arbitrariness, the exercise of rights arising from the parties’ agreement is not to be interfered with in writ jurisdiction.

The first-instalment cheque was dishonoured following the petitioner’s stop instruction, and the agreement expressly set out the consequences of cheque dishonour.

The Court considered the payment notice and threatened cancellation to be consistent with Clause 8, and found no basis to interfere with the respondent’s contractual action absent mala fides or arbitrariness.

The impugned notice was issued in accordance with Clause 8 and that interference with the respondent’s exercise of contractual rights was unwarranted in the absence of mala fides or arbitrariness.