`Ad contract on Rly sites cannot be renewed automatically`
The Bombay High Court has ruled that a contract to put up hoardings on Railways property for a fixed period cannot be renewed automatically.
Mumbai: The Bombay High Court has ruled that a contract to put up hoardings on Railways property for a fixed period cannot be renewed automatically.
Chief Justice Mohit Shah and Justice Nitin Jamdar, hearing an appeal filed by Sanjeev Gupta, a contractor, held last week: "Prima facie...Since the appellant was awarded the contract with a clear stipulation that the period was for five years, the appellant cannot be said to be have any right for renewal."
The bench disposed of the appeal filed against the May 16 order of a single judge, who had declined to grant interim relief to Gupta in the suit filed by him against the Western Railway. He had sought renewal of contract for display of hoardings for a further period of five years from May 2012.
By a letter dated December 29, 2006, the plaintiff was awarded the original contract, the effective date for commencement of the period of five years was May 17, 2007.
One of the conditions was that after completion of five years, the hoarding structure will become Western Railway`s property.
Navin Parikh and G B Kedia, Gupta`s lawyers, argued that when he was awarded the contract, he had informed the authorities that putting up the infrastructure for hoardings would cost him about Rs 1 crore, and a 10-year contract would be needed to recover the investment.
Railways had told him that his application would be examined and decided as per the policy guidelines.
But WR lawyer Chetan Agarwal said the appellant had no right to get extension of contract, and new tenders had been invited, and quotation of JMD Advertisers was highest.
Gupta`s lawyer said that his client was ready to pay the rate quoted by JMD, but the High Court held that he had no right to renewal.
Interests of the justice will be served if WR was directed to permit Gupta to display advertisements on the same terms and conditions, but at the enhanced amount quoted by JMD advertisers, for the period from May 17 till the contract is awarded pursuant to the new tender process, HC said.