The Bombay High Court on Friday quashed a notice issued to a software company, suddenly terminating its services on the ground that one of its directors was booked in a criminal case for committing fraud in the Teachers Eligibility Test (TET) exams. The HC said that this wasn't any ground for the Maharashtra State Council of Examination (MSCE) to terminate the contract.
A bench of Justices Gautam Patel and Madhav Jamdar was hearing a plea filed by Winner Software Pvt. Ltd. challenging the notice issued by MSCE by which it terminated its agreement signed in February last year.
The firm was roped in for providing services regarding the conducting of Optical Mark reading (OMR) based examinations for the state-based scholarship examination for students of Class V & Class VIII in the National Talent Examination (NTE) and National Means-cum-Merit scholarship and also some other examinations.
The bench noted that the MSCE terminated the services with no "forewarning" let alone a show-cause notice or a hearing.
"This was done ostensibly invoking the for convenience clause of the contract. The only basis was that one of the company’s directors was named as an accused in a criminal complaint registered by the cyber police, Pune city while he was a director of some other company and in respect of that other company," the bench noted in its orders.
"That allegation related to certain alleged malpractices and fraud in the TET examination. That was also historical at a remote point in time, 2017-2018," the judges noted.
"We do not see how it is possible for either of the authorities to dredge up some historical thing that may have happened against one particular director on account of his association with some other entity," the bench noted, adding, "The contract in question is between an artificial entity (Winner), a juristic entity of perpetual succession, and the authorities. There is no contract with any individual director that could permit the authorities to take recourse to any such cause of action.
"In any case, given the consequences of such an action, namely an immediate termination, the very least that was required was some sort of notice followed by an opportunity to the company and also to the person named to show cause why the proposed action should not be taken," the bench said adding that such termination would have obvious financial consequences on the company. "We, therefore, are compelled to see this as a straightforward violation of Article 14 on the ground of irrationality, unreasonableness and arbitrariness in addition to a violation of the principles underlying Article 19(1)(g)," the bench held.
