1. Heard Mr. Ajay R. Mehta, learned advocate for the petitioners and Mr. A.V. Prajapati, learned advocate for the respondent.
2. On 26.6.2012 the petition was listed for hearing and learned advocate for the petitioners and learned advocate for the respondent elaborately made their submissions. During the hearing, as his major contention, the learned advocate for the petitioners alleged violation of principles of natural justice.
2.1 In light of the material available on record it is claimed, and sought to be demonstrated, that neither any notice about proposed penalty was issued nor any opportunity of hearing was granted.
2.2 In that view of the matter it was inquired from the learned advocate for the respondent as to whether the respondent authority is ready and willing to afford opportunity of hearing to the petitioner or not.
At the request of learned advocate for the respondent, hearing was adjourned so as to enable the learned advocate for respondent to take instruction from the competent authority.
Today Mr. Prajapati, learned advocate for the respondent has submitted that in response to his letter to the competent authority he has not received any instruction and that therefore the Court may pass appropriate order in light of the facts and circumstances of the case and the material available on record.
3. Having regard to the contentions raised by the contesting parties and the material on record, petition requires consideration, more particularly in view of the fact that the petitioners have essentially alleged violation of principle of natural justice. Rule. Returnable today. Mr. Prajapti, learned advocate has waived service of Notice of Rule on behalf of the respondent authority. In the facts of the case and with consent of the learned advocates, the petition is taken up for hearing and final decision today.
4. The respondent authority has appeared and filed reply affidavit resisting the petition. The petitioners have, thereafter filed rejoinder affidavit. Learned advocates for the petitioners and respondent have submitted and declared that the pleadings are complete and neither the petitioners nor the respondent desire to file any other reply. Therefore in view of the said submission and declaration pleadings are taken as complete.
5. Before proceeding further, it is necessary and appropriate to take into account observations by the Court in the order dated 25.8.2011 which read thus:-
3. Heard Mr.Ajay R. Mehta, learned advocate for the petitioners. It is submitted by him that by way of impugned communication dated 16.08.2011, the petitioners have been directed to deposit a penalty of Rs.1,48,29,000/- (Rupees One Crore Forty Eight Lacs and Twenty Nine Thousand), within seven days from the receipt of communication and not later than 25.08.2011, failing which further action will be initiated.
4. It is contended that this communication has been issued, without affording an opportunity of hearing to the petitioners and without issuance of Show-Cause Notice. The Project Director of the Project Implementation Unit, Himmatnagar had recommended a penalty of Rs.2,14,500/- (Rupees Two Lacs Fourteen Thousand and Five Hundreds only) and even for this, the petitioners were not given any intimation. However, now a much higher penalty has been imposed, relying upon the letter dated 04.08.2011, without any intimation, whatsoever to the petitioners, which action is against the principles of natural justice. It is further contended that the impugned order does not contain any reasons for imposition of the penalty.
5. Notice, returnable on 19.09.2011.
6. Interim relief, in terms of Paragraph-24(b), is granted.”
6. So far as the relevant facts leading to present petition are concerned it emerges from the record that somewhere in 2010-2011 the respondent authority had issued notice inviting tender for awarding contract for manning and running toll booth at Vantala. It appears that on completion of the tender process the petitioner No.1 appeared as highest bidder therefore petitioner No.1 was declared successful bidder and contract for one year was awarded to the petitioner No.1. The Deed of Agreement came to be executed between the petitioners and the respondent authority on or around 27.12.2011. It also transpires from the record that while the contract was in the process of execution by the petitioners a Member of Modasa Nagar Palika made a complaint against the petitioners vide his letter dated 2.4.2011 and subsequently on or around 4.4.2011 Himmatnagar Truck Association also filed complaint against petitioners. In view of the said complaints Member of Parliament forwarded the complaints to the concerned Minister. It is claimed that respondent authority addressed a communication dated 18.5.2011 to the petitioner. The said communication reads thus:-
“To, 18th May 2011 Shri K.M. Singhal General Manager M/s. Prakash Asphalting & Toll Highways (I) Ltd.
76, Mall Road, Mhow, Indore (MP)-453441.
Sub:- Collection of toll fee on behalf of Central Government through private agency at Vantala Toll Plaza at Km 416 on NH-8 in the Gujarat State.
Reg. Complaint against over charging at Vantala Toll Plaza. Ref:- GM (CO-II), NHAI-HQ letter dated 11th May 2011.
Sir, With reference to above subject, a complaint against over charging at Vantala Toll Plaza has been received by this office. The same has also been referred to our NHAI HQ. New Delhi. Hence, it is hereby requested to attend to this office on 20th May 2011 at 11:00 am.
Thanking you, Yours faithfully, Project Director PIU-Himatnagar”
6.1 The petitioners have also claimed that the petitioners were called for meeting on 26.5.2011. The petitioner has submitted that it had filed a reply dated 10.6.2011. The petitioners have claimed that though the complainant withdrew his complaint the authority has disregarded the said fact and proceeded to pass the impugned order. The petitioners have claimed that along with their reply dated 10.6.2011 they had also forwarded copy of the letter withdrawing the complaint. It emerges from the record that local authority of the respondent recommended imposition of penalty to the tune of Rs.2,14,500/- vide its letter dated 15.7.2011. It is alleged that the said recommendation also was made without any notice to and / or hearing the petitioners. After mentioning such details the petitioners have alleged that the petitioners suddenly received a communication from respondent's corporate office whereby the competent authority of the respondent imposed penalty to the tune of Rs.1,48,29,000/-. The petitioners have alleged that the said communication dated 4.8.2011 imposing penalty in the sum of Rs.1,48,29,000/- was issued without any show case Notice and / or without levelling any charge against the petitioners and / or without any notice proposing to impose penalty or without giving any opportunity of hearing to the petitioners. It is also alleged that subsequently by letter dated 16.8.2011 the Project Director communicated said decision to the petitioners and asked the petitioners to make payment of penalty imposing vide decision dated 4.8.2011. The petitioners responded to the said communication by its letter dated 17.8.2011. However, the respondent did not respond to the said in any manner. Hence, present petition.
7. With the aforesaid facts in backdrop the petitioners have prayed below mentioned relief/s:-
“24 (a) Issue a writ of mandamus or any other writ, order or direction quashing and setting aside impugned order dated 4th August 2011 as well as 16th August 2011 imposing a penalty of Rs.1,48,29,000/- on the petitioner and may be pleased to direct the respondent authority not to impose any penalty.
(b) Pending hearing and final disposal of the present petition, be pleased to restrain the respondent authority from taking any coercive action against the petitioners including invocation of Performance Bank Guarantee issued by the petitioners for recovery of penalty of Rs.1,48,29,000/- imposed on the petitioners vide orders dated 4th August 2011 and 16th August 2011.
(c) Be pleased to grant ad-interim relief in terms of paragraph (b) hereinabove. (d)...............
(e) ”
7.1 The respondent authority has filed reply affidavit. It is claimed by the respondent that the action of imposing penalty is in consonance with Clause 18 of the Agreement which authorizes imposition of penalty. The said details are mentioned by the respondent authority in paragraph No. 4 of its reply which read thus:-
“4. With regard to para 1 and 2, I state that the same are matter of record. However, I deny the averments made in para 3 inasmuch as the order dated 16.8.2011 is in accordance with the terms of the contract after providing reasonable opportunity of hearing to the petitioners and after taking into consideration and on arriving satisfaction that the petitioner No.1 has charged User Fee in excess of the prescribed rate as per clause 18 of the Contract which read as under:-
Clause 18 PENALTY FOR CHARGING EXCESS USER FEE:
(a) In case, it is observed and / or established to the satisfaction of the Authority that the fee collecting agency has charged User Fee in excess of the prescribed rate, the Authority may impose a penalty of an amount equal to fifty times of the actual amount so charged per day for 30 days i.e. (actual amount charged X 30 days X 50). After three such incidents of levy of penalty for excess charging, the part performance security of an amount equal to 1 (one) months agreed remittance i.e. Rs.1,04,26,000/- (Rupees One Crores Four Lac Twenty Six Thousand Only) as per amount quoted at clause 2 of Schedule-IV shall be forfeited in addition to such recoveries. The contractor shall have to replenish the forfeited performance guarantee, in the same mode as it was deposited earlier, within 10 days of such forfeiture to continue with the collection work failing which the contract shall be terminated and the balance performance guarantee shall also be forfeited. If the incident of excess charing is again observed and / or established to the satisfaction of the authority, after forfeiture of part performance guarantee, the contract shall be terminated and the entire performance guarantee shall be forfeited.
(b) The termination under this clause shall make the contractor liable for unconditional forfeiture of the performance security.
(c) The termination under this clause in addition to unconditional forfeiture of the performance security shall make the contract liable for debarring from assigning future work with authority.”
7.2 So far as the petitioners' allegation that the impugned decision and action of the respondent authority of imposing penalty in the sum of Rs.1,48,29,000/- is arbitrary, unjust and in violation of principle of natural justice, the respondent authority has disputed and opposed the said submissions and stated, in the reply affidavit that:-
“6. I state and submit that the petitioners have tried to mislead this Hon'ble Court by mixing up two separate penalties as per aforesaid clause 18 of the contract. I state that by order dated 16.8.2011 (page No.132-Annexure-I) penalty of Rs.1,46,88,000/- was levied pursuant to the complaint dated 20.4.2011 and the revised penalty of Rs.1,41,000/- (which was recommended for Rs.2,14,500/-) levied pursuant to the recommendation made by the Project Director pursuant to subsequent surprise checking made on behalf of the respondent on account of two numbers of vehicles not found in the record of registering re-entry of the vehicle during surprise check and on account of non-complying to NHAI Guidelines regarding making entry in the Server of all categories of vehicles irrespective of single, multiple, pass or exempted category. I, therefore, respectfully submit that the above penalty of Rs.1,41,000/- was imposed over and above the penalty of Rs.1,46,88,000/- which was imposed upon the petitioners by the respondent as per the terms of the contract. Thus the total amount of penalty comes to the tune of Rs.1,48,29,000/- and the same was imposed upon the petitioners by order dated 16.8.2011. I deny that the penalty is imposed upon the petitioners without giving any opportunity of hearing or without giving any show cause notice. I state and submit that the petitioner has made false statement as the facts narrated in the paragraph No.10 of the petition, it is an admitted fact that the meeting was held on 26.5.2011, between the parties with regard to the receipt of the complaint and the petitioner was given an opportunity of hearing to explain and clarify its stand vis-a-vis the complaint of overcharging User Fees received by the respondent. The respondent, thereafter, as provided in clause 18 of the contract, levied the penalty as the respondent authority was satisfied that the petitioner No.1 has charged User Fees in excess of the prescribed rate.”
8. Mr. Mehta, learned advocate for the petitioners has submitted that the respondent authority imposed penalty without issuing any notice and without affording any opportunity of hearing to the petitioners and that therefore the impugned action is bad in law and unsustainable besides being arbitrary. He also submitted that the complaint was withdrawn by the complainant and that therefore also there was no base to impose the penalty. Mr. Mehta, learned advocate for the petitioners also contended that the authority has erred in reaching the conclusion about default on part of the petitioners and the conclusion by the authority that the petitioners committed breach of term of contract by charging higher amount is contrary to the fact and without evidence and therefore unsustainable.
9. Mr. Prajapati, learned advocate for the respondent has relied on the letter dated 18.5.2011 and the meeting said to have been held on 26.5.2011. As regards the petitioners' allegation about alleged violation of principle of natural justice Mr. Prajapati, learned advocate submitted that the respondent authority had issued communication dated 18.5.2011 which is in nature of notice and the petitioners were also called for meeting on 26.5.2011 and that therefore the allegation about violation of principle of natural justice are not justified. He submitted that the conclusion by the competent authority is based on the material available before the respondent authority including the material submitted pursuant to the inspection undertaken by the representative / employee of the respondent and also in light of the complaints received by the respondent. Mr. Prajapati, learned advocate for the respondent also submitted that withdrawal of the complaint was managed by the petitioner and that therefore the respondent authority has not taken into account the said aspect.
10. In light of the facts and circumstances of the case present petition can be disposed of on a short ground viz. violation of principle of natural justice and that therefore it does not appear necessary and appropriate to enter into the controversy and rival contention with regard to the complaints, alleged withdrawal of the complaint and the base of the conclusion recorded by the authority and / or base for imposing penalty.
The petitioners' grievance and respondent's reply – response is required to be examined in light of the fact that the learned Counsel for the respondent could not dispute, and has not disputed the fact emerging from the record that except addressing / forwarding letter dated 18.5.2011 the respondent did not issue any notice, of any nature whatsoever and / or for any purpose whatsoever, to the petitioners informing them the details of the allegations and / or charge if any or did not supply copies of the alleged complaint.
11. On the strength of the communication dated 18.5.2011 the respondent has claimed that the petitioner was called for a meeting and in the said letter / communication it was also mentioned that the complaints received against petitioners were about “over charging at vantala toll plaza” and that therefore the petitioners are not justified in claiming and alleging that penalty has been imposed in violation of principle of natural justice or that the petitioners have not afforded opportunity of hearing. It is not in dispute that on the basis of the said solitary document the respondent claims and contends that petitioner was afforded opportunity of hearing.
12. However, in this context, it is appropriate at this stage to take into account below mentioned aspects which emerge from the facts of the case and the material on record:-
12.1 It is also not in dispute that copies of alleged communication / complaint forwarded by the Member of Modasa Nagarpalika and / or Member of Parliament was not supplied to the petitioner.
12.2 It is also not in dispute that any charge / allegation was not framed and served on the petitioners.
12.3 It is also not in dispute that any notice calling for reply / explanation in connection with the complaint and / or qua any charge / allegation was not issued and any reply / explanation was not called for.
12.4 It is not in dispute that any notice calling for explanation from the petitioners as to why penalty should not be imposed) was also not issued by the respondent before passing impugned order.
12.5 The above mentioned undisputed facts demonstrate that the materials on which respondent has substantially or rather wholly relied on viz. complaint allegedly made by the Member of Modasa Nagarpalika or complaint allegedly made by Member of Parliament or reports allegedly made by the officers of the respondent pursuant to the inspection allegedly made by them, were not supplied to the petitioners either before the local authority of the respondent recommended the penalty or before the impugned order imposing penalty came to be passed. Thus, before imposing penalty material on which reliance has been placed was not supplied to the petitioners.
13. A glance at the letter dated 18.5.2011 makes it clear that neither the contents nor the details of the allegations said to have been made in the complaint were not conveyed to the petitioners nor the copies of the complaints allegedly made against the petitioners were supplied to them, before calling petitioners for the meeting of which reference has been made in the letter dated 18.5.2011.
14. Therefore, by any yardstick the said meeting cannot be equated with an inquiry nor can it be said to be any reasonable or effective opportunity of hearing and defence. When the person does not know details of the complaint or allegation made against him he cannot offer any effective defence or even any explanation. In such circumstances the so-called meeting would remain mere eyewash or mock formality.
15. The above mentioned aspects viz.
(1) that any notice containing details of the complaint / allegation or the copy of the complaint was not served on the petitioners before the so-called meeting and / or before the impugned order of penalty came to be passed;
(2) the material on which the authority including the competent authority have relied was not supplied to the petitioners;
(3) any notice about proposed penalty was also not issued and petitioners' response as to the proposed penalty was also not called for;
(4) any charge was not formally framed and any charge / allegations were not informed or supplied to the petitioners;
establish that the so-called meeting cannot be accepted as real, meaningful and effective opportunity of hearing and defence known to law or recognized by law.
The said meeting was an eyewash and mere formality and cannot be treated or considered as effective and meaningful opportunity of hearing and defence.
16. As mentioned hereinabove before making this order opportunity to the respondent was given to clarify as to whether the respondent, is ready and willing to afford opportunity of hearing to the petitioners or not. However, learned advocate for the respondent has not been able to give any response and that therefore present order is required to be passed.
17. In view of the facts which emerge from the record as well as from the submission by learned advocate for the petitioners and respondent and in view of the fact that the respondent has not been able to controvert i.e. in view of undisputed fact that any notice was not issued and copies of complaint were not supplied and any opportunity of effective hearing and defence was also not afforded, the impugned decision of imposing penalty has to be held as violative of principle of natural justice and that therefore it is not possible to uphold the decision.
17.1 Though the respondent has filed reply affidavit any material is not placed on record which would demonstrate that any show cause notice was issued and / or notice and complaint were supplied and / or effective or reasonable opportunity of hearing was granted.
18. Therefore, on the said short ground of violation of principle of natural justice the impugned decisions dated 4.8.2011 and 16.8.2011 are set aside. It is clarified that the Court has not examined the conclusion by the competent authority on merits and present order is not to be construed to mean that the orders are examined on merits and / or they are set aside on merits and / or that the Court has found the penalty unjust or improper on merits.
19. In view of the fact that the orders dated 4.8.2011 and 16.8.2011 are set aside only on short and limited ground of violation of principle of natural justice and the matter is remitted to the competent authority for fresh decision in the subject matter, after affording effective and reasonable opportunity of hearing to the petitioners after issuing appropriate notice as to the allegation along with relevant documents and also about the proposed penalty. The competent authority will independently take necessary and appropriate decision and pass necessary and appropriate fresh order in light of the facts of the case and material available on record without being influenced by any order.
With the aforesaid clarification petition is party allowed. Rule is made absolute to the aforesaid extent. The matter is remitted to the competent authority.
(K.M.THAKER,J.) Suresh*