Contracts to continue unless terminated by State Government

(i) Every contract, entered into for any service, sale or supply in India and in force immediately before the appointed day shall, unless terminated under sub-section (2), within a period of five years from the appointed day, continue to be of full force and effect against or in favour of the State Government or as the case may be, the successor Government Company.

(ii) The State Govenunent may, if it is satisfied that any contract referred to in sub-section (1) is unduly onerous or has been entered into a bad faith or is determined to the interests of tha Government or the successor Government Company; as the case may be by order in writing, either terminate such contract or make such alterations or modifications therein, as it may think fit.

Provided that the State Government shall not terminate any contract or make any alteration or modification therein except after giving to the parties to the contract, a reasonable opportunity of being heard and except