Court No. - 1
Case :- WRIT - C No. - 40497 of 2019 Petitioner :- Laser Power And Infra Private Limited Respondent :- U P Power Corporation Ltd. And 2 Others Counsel for Petitioner :- Alexander Iqbal,Sarvanand Pandey Counsel for Respondent :- Amit Krishna,Ajay Kumar
Hon'ble Ramesh Sinha,J. Hon'ble Ajit Kumar,J.
Heard Sri G.K. Singh, learned Senior Advocate, assisted by Sri Sarvanand Pandey, learned counsel for the petitioner, Sri Ajay Kumar, learned counsel appearing for respondent nos.2, 3 & 4 and Sri Amit Krishna, learned counsel for the respondent nos.1 and 5. Perused the record.
By means of this petition under Article 226 of the Constitution of India, the petitioner has questioned the order dated 26.4.2019 whereby the respondent-Chief Engineer has restrained the petitioner-Company from participating in any public tender for a period of three years and further the order dated 20.6.2019 was passed whereby the communication has been made to all the Corporations to the effect that the petitioner-Company has been debarred from participating in any public tender process for a period of three years. Thus, in effect by the order impugned the petitioner has been placed on a holiday list for the period of three years, and it is argued that this act amounts to an act of blacklisting.
The argument advanced by learned counsel for the petitioner is that since the order putting the petitioner-Company on a holiday list amounts to an action having adverse civil consequences, the order necessarily was required to be proceeded by a well informed show cause notice of the proposed action giving opportunity to the petitioner to contest the notice and the subject matter contained therein and forward such explanation as he may deem necessary. The averment to that effect has specifically been pleaded in paragraph no.34 of the writ petition which runs as under:
"That the petitioner company has been blacklisted by the impugned order dated 26.4.2019 without any opportunity of hearing and on the basis of allegations in regard to whom neither the proper procedure was followed nor those allegations can be taken as true because even the petitioner do not know that what were the sample which were sent for testing and what were the conditions under which those materials were placed during the last eight months from the date of their supply if they belongs to the petitioner because even the slight mishandling can cause damage to the cable wires and further everything has been done without the knowledge of the petitioner and without any opportunity for him to rebut the allegations."
Initially, while we entertained the writ petition, we direct the learned counsel for the contesting respondents to have instruction in the matter. On the last date, the instructions were placed before this Court and having perused the instruction we had passed the following order:
"Pursuant to our order dated 09.12.2019, today Sri Ajay Kumar, learned Advocate appearing for respondent nos. 2, 3 & 4 has obtained instruction and placed the same before the Court.
It is sought to be urged by learned Advocate appearing for respondents Sri Ajay Kumar that a number of notices in the nature of show cause were issued to the petitioner from time to time, a detailed chart of which has been provided in paragraph no. 3 of the instructions and, therefore, he submits that the petitioner had been served with proper show cause notices of the proposed action of putting the petitioner on a Holiday List which tantamounts to the action of blacklisting the Firm.
We find these notices already appended with the writ petition and we do not see anything coming out of from the recitals of these notices that there was any mention of the proposed action of putting the petitioner on a Holiday List.
In such view of the matter, prima facie we are not satisfied that the petitioner had been offered opportunity of hearing before passing the order impugned.
At this stage learned counsel appearing for the respondents Sri Ajay Kumar prays for a day's time to have further instruction in the matter. Accordingly the case is adjourned today and directed to posted tomorrow i.e. 17.12.2019."
Sri Ajay Kumar, learned counsel for the contesting respondents submits that situation remains the same as there is nothing further to inform the Court about the action that has undergone or the procedure that has been followed while passing the order impugned. Thus, the averment as made in paragraph-34 of the writ petition remains unrebutted and the fact situation emerges is that before the passing of the order dated 26.4.2019, no show cause notice was ever issued to the petitioner at any point of time informing him of the proposed action and inviting objection. The law on the point is well settled by now as in the case of Gorkha Security Services vs. Government (NCT of Delhi) and others (2014)9 SCC 105 vide paragraph 21, 22 and 28 the Court has held thus:
"21. The Central issue, however, pertains to the requirement of stating the action which is proposed to be taken. The fundamental purpose behind the serving of Show Cause Notice is to make the noticee understand the precise case set up against him which he has to meet. This would require the statement of imputations detailing out the alleged breaches and defaults he has committed, so that he gets an opportunity to rebut the same. Another requirement, according to us, is the nature of action which is proposed to be taken for such a breach. That should also be stated so that the noticee is able to point out that proposed action is not warranted in the given case, even if the defaults/ breaches complained of are not satisfactorily explained. When it comes to black listing, this requirement becomes all the more imperative, having regard to the fact that it is harshest possible action.
22. The High Court has simply stated that the purpose of show cause notice is primarily to enable the noticee to meet the grounds on which the action is proposed against him. No doubt, the High Court is justified to this extent. However, it is equally important to mention as to what would be the consequence if the noticee does not satisfactorily meet the grounds on which an action is proposed. To put it otherwise, we are of the opinion that in order to fulfil the requirements of principles of natural justice, a show cause notice should meet the following two requirements viz:
i) The material/ grounds to be stated on which according to the Department necessitates an action;
ii) Particular penalty/action which is proposed to be taken. It is this second requirement which the High Court has failed to omit.
We may hasten to add that even if it is not specifically mentioned in the show cause notice but it can be clearly and safely be discerned from the reading thereof, that would be sufficient to meet this requirement.
................
28. In the instant case, no doubt show cause notice dated 6.2.2013 was served upon the appellant. Relevant portion thereof has already been extracted above. This show cause notice is conspicuously silent about the blacklisting action. On the contrary, after stating in detail the nature of alleged defaults and breaches of the agreement committed by the appellant the notice specifically mentions that because of the said defaults the appellant was "as such liable to be levied the cost accordingly". It further says "why the action as mentioned above may not be taken against the firm, besides other action as deemed fit by the competent authority". It follows from the above that main action which the respondents wanted to take was to levy the cost. No doubt, notice further mentions that competent authority could take other actions as deemed fit. However, that may not fulfil the requirement of putting the defaulter to the notice that action of blacklisting was also in the mind of the competent authority. Mere existence of Clause 27 in the agreement entered into between the parties, would not suffice the aforesaid mandatory requirement by vaguely mentioning other "actions as deemed fit". As already pointed out above in so far as penalty of black listing and forfeiture of earnest money/ security deposit is concerned it can be imposed only, "if so warranted". Therefore, without any specific stipulation in this behalf, respondent could not have imposed the penalty of black listing."
Applying the above test and the exposition of law as has emerged from the judgment of the Apex Court and to the facts of the case, we find that the case in hand is squarely covered by the judgment of the Apex Court and the factual position also is admitted to the respondents that no specific notice was issued to the petitioner inviting objection of the proposed action that has come to be taken vide order dated 26.4.2019 that is the principal order and hence the order dated 26.4.2019 cannot be sustained in law.
In view of the above, the writ petition succeeds and is allowed. The order dated 26.4.2019 putting the petitioner on a holiday list for three years debarring him from participating in any public tender by the respondents, is hereby quashed. Since the principal order has been quashed by us under this order, we also quash the consequential order 20.6.2019 passed by the Deputy Secretary. However, since we are allowing this petition on a technical plea of violation of principles of natural justice as being a case where the show cause notice was never issued to the petitioner before passing the order impugned, we hereby provide with a liberty to the respondents to proceed afresh in accordance with law, in the light of the judgment and the observations made hereinabove.
The present petition is allowed to the above extent.
(Ajit Kumar, J.) (Ramesh Sinha, J.) Order Date :- 17.12.2019 Deepika