20 March 2024 Business Laws >> Business & Commercial Law  

Several companies in Goa won a court case regarding the termination of their billboard lease agreements with the Mormugao Port Road Co Ltd (MPRCL). The court ruled that MPRCL's termination notices violated principles of natural justice.

The companies had signed lease agreements to display advertisements along specific highway locations. MPRCL abruptly terminated these agreements, citing a new policy to remove all billboards for safety reasons. However, the companies argued they had paid lease fees and the agreements had unexpired terms.

The court found that MPRCL failed to follow proper procedures before terminating the contracts. The termination notices didn't mention any breaches by the companies and offered no explanation for how much of their lease payments would be refunded.

Ruling Favors Fair Procedures:

The court emphasized the importance of natural justice, which requires fair treatment in legal matters. In this case, MPRCL should have issued show-cause notices explaining why they planned to terminate the agreements and given the companies a chance to respond.

MPRCL can still pursue termination, but they must follow proper procedures. This includes issuing clear show-cause notices and providing written reasons for any final decisions.

The court also ruled that any future termination orders won't be effective for four weeks after the companies receive them. This gives the companies time to challenge the decisions if necessary.

The case highlights the importance of following proper procedures in contract disputes. Even if a company has a policy change, they must still treat existing agreements fairly.

Control of National Highways (Land and Traffic) Act, 2002