When a contract contains a clause providing for its cancellation in the event of non-fulfilment of the specified conditions, the authorities can, on such non-fulfilment, go ahead and cancel the contract even without giving the other side an opportunity of being heard. In Jayrambhai Khodabhai Patel vs. Gujarat Agro Industries Corporation Ltd, petitioner got an allotment of agro business centre from the Respondent on the condition among others that he would fulfil certain purchase targets from the corporation.

The truth was the petitioner, far from achieving these targets, had not even started his operations. The Court found nothing wrong in cancellation of the allotment in such a scenario and said that there was no need for serving a show cause notice in the face of palpable and glaring non-fulfilment of the contract. Principles of natural justice cannot be straight-jacketed, it said, while pointing to the clause in the contract permitting cancellation which itself served as notice. It also criticised the petitioner for rushing to the court and not pursuing arbitration as provided in the contract if at all he felt that his rights were violated which in fact were not.

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