The Mizoram government cannot abandon a land sale agreement simply because a new political dispensation has taken charge, the Calcutta High Court has ruled, holding that a change in government does not give the State a licence to walk away from contractual commitments.
A Division Bench of Justices Arijit Banerjee and Apurba Sinha Ray described the cancellation of a ₹38.3 crore property sale to Excel Vincom Private Limited as an apparent instance of “regime revenge”.
The Court observed that the government could not withdraw a promise on which a private party had acted and fulfilled its obligations merely because the political leadership had changed.
Setting aside the State government’s decision to cancel the transaction, the Bench directed Mizoram to execute the sale deed within eight weeks.
The dispute revolves around a property at 24, Ashutosh Chowdhury Avenue in Kolkata, which Mizoram had acquired in 1973. The premises housed Mizoram House, serving as a government guesthouse and office facility.
In May 2023, the State government initiated an electronic tender-cum-auction process to dispose of the property. Excel Vincom emerged as the highest bidder, following which an agreement for sale was signed on October 6, 2023.
The transaction, however, ran into trouble after a change of government in Mizoram in December 2023. The new administration cancelled the tender process, citing public interest and opposition from sections of the Mizo community.
The proposed sale had triggered concerns among Mizo residents and organisations in Kolkata. The Kolkata Mizo Students and the Calcutta Mizo Welfare Association had approached the government, highlighting the property’s historical and heritage value, as well as its importance as a place of support for Mizo students and professionals living in the city.
Appearing for the State, Advocate General Biswajit Deb maintained that the cancellation had nothing to do with political differences. He argued that the government had reconsidered the transaction in response to the sentiments of the Mizo community.
He further submitted that the entire amount received from Excel Vincom had been returned. Since the ownership transfer could take effect only after execution of the final sale deed, which had not taken place, the government was entitled to withdraw from the tender process, he contended.
Senior Advocate SN Mookherjee, representing Excel Vincom, disputed this position. He argued that the transaction had progressed well beyond the stage at which the government could simply cancel the tender.
According to the company, communications exchanged between the parties made it clear that all substantive steps had been completed and only execution of the sale deed remained. The abrupt reversal, it argued, followed the change in political leadership.
The High Court found considerable merit in the company’s submissions.
It noted that Mizoram had received the entire sale consideration and had even accepted additional money towards interest arising from a delayed instalment. These actions, the Bench observed, demonstrated that the government had proceeded with the transaction and taken concrete steps towards completing it.
The Court also took note of the fact that the agreement had emerged after detailed discussions between the parties. The State had indicated that formal steps to execute the sale deed would follow the completion of the 2023 Assembly elections.
However, after a new government assumed office, the approach towards the transaction changed. The sale was cancelled unilaterally, without any meaningful discussion with the company.
The Bench found that the State had failed to establish any compelling public interest that could justify abandoning the agreement after the transaction had reached such an advanced stage.
It held that the cancellation was arbitrary, unjustified and contrary to Article 14 of the Constitution, which guarantees equality before the law and protection against arbitrary State action.
Emphasising the obligations of governments entering into commercial agreements, the Court observed that the State must act fairly, reasonably and justly in its contractual dealings. A change in political leadership cannot erase commitments already made by the government.
Finding no legally sustainable reason for scrapping the sale process, the High Court dismissed Mizoram’s appeal against the single-judge order passed in 2024.
The earlier order had directed the State to complete the sale within six weeks. The Division Bench has now directed execution of the sale deed within eight weeks.