The firm was denied payment after the commerce and industries department “arbitrarily” withdrew the work order it had released after industries minister Murugesh Nirani objected to the “high cost”. The HC justified its directive by pointing out that “arbitrariness on the part of state empowers it to entertain a petition arising out of a contractual obligation or for a monetary claim”.
Stating that the case was a classic one wherein arbitrariness is writ large owing to political interference in the form of a communication by the minister, the court directed the government to make the balance payment to BBP Studio Virtual Bharat Private Limited, Mumbai, in terms of its invoice dated October 27, 2022.
“Article 14 is that golden thread that is woven through the entire fabric of the Constitution and every bead of State action should pass through it. State action cannot be arbitrary,” Justice M Nagaprasanna said in his order.
The petitioner is a film production house and was engaged on August 11, 2022 to create a 3D film showcasing Karnataka for the Invest Karnataka 2022: Global Investors Meet in November 2022. The work order was issued pursuant to a tender issued by Marketing Communication and Advertising Limited, a subsidiary of state-run MSIL.
However, it was withdrawn on October 25, 2022 and the firm claimed the cancellation was at the instance of the minister who issued a communication on October 21, 2022. After perusing the records, Justice Nagaprasanna noted it is nothing but political interference and it was arbitrary.
Quoting Supreme Court decisions in Unitech and ABL International cases, the judge added that in an appropriate case, a writ petition against a State or its instrumentality arising out of a contractual obligation is maintainable.
“On the bedrock of the principles so laid down by the Supreme Court, if facts are considered, it cannot but be held to be arbitrary. The reason for such arbitrariness is that the expression of interest submitted by the firm was accepted by Marketing Communication and Advertising Limited on the approval of the Invest Karnataka Forum,” the judge noted.
After its approval, the contract was awarded, an agreement was signed, and the petitioner executed the work and just before delivery of the final product, the contract was cancelled, not on any merit/quality of the film, but on political interference, a communication of the minister, the judge noted.
“The minister, on October 21, 2022 communicated that the proposal (for around Rs 4.5-crore) was too high and it was not needed for the department and therefore the contract was cancelled. By then, it had been nearly three months since the work order was issued. Ultimately, the investors meet was over but the State did not permit the firm to display the film and what now remains is the effort, money and time spent on it and the arbitrary state action in cancelling the contract long after issuance of work order,” the judge observed.
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