Allowed

M/S. S.T. Electricals Pvt. Ltd. v. State of U.P. and 9 Others

Allahabad HC19 Dec 2019WRIC/32377/2019

Case brief

AI extract

What is this about?

This writ petition challenged termination of contract and blacklisting of the petitioner by the respondent without a show cause notice. The court held the initial order unsustainable due to violation of natural justice and quashed subsequent orders passed during pendency to frustrate proceedings. The matter was remitted for reconsideration following proper procedure.

What did the court decide?

The impugned orders dated 09.08.2019 and 13.11.2019 quashing the contract and blacklisting the petitioner were quashed. The matter was remitted to the Managing Director to decide after issuing a show

M/S. S.T. Electricals Pvt. Ltd. Vs State… — Contract and Commercial Disputes | Allahabad HC (2019)

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Court No. - 1

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Case :- WRIT - C No. - 32377 of 2019 Petitioner :- M/S. S.T. Electricals Pvt. Ltd. Respondent :- State Of U.P. And 9 Others Counsel for Petitioner :- Pankaj Srivastava Counsel for Respondent :- C.S.C.,Amit Krishna,Kapil Dev Singh Rathore,Mahboob Ahmad

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Connected with

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Case :- WRIT - C No. - 33198 of 2019 Petitioner :- M/S S.T. Electricals Pvt Ltd. Respondent :- State Of U.P. And 9 Others Counsel for Petitioner :- Pankaj Srivastava,Mr. Shashi Nandan (Sr. Advt.) Counsel for Respondent :- C.S.C.,Amit Krishna,Kapil Dev Singh Rathore,Mahboob Ahmad

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Hon'ble Ramesh Sinha,J. Hon'ble Ajit Kumar,J.

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Personal affidavit and Exemption application filed by Sri S.K.Verma, presently posted as Chief Engineer (I.P.D.S.) Purvanchal Vidyut Vitran Nigam Ltd. Vidyut Nagar, Bhikaripur, Varanasi, are taken on record.

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Heard Sri Shashi Nandan, learned Senior Advocate assisted by Sri Pankaj Srivastava, learned counsel for the petitioner and Sri ManisH Goel, learned Senior Advocate and Additional Advocate General, assisted by Sri Ravi Anand Agrawal, learned counsel for the respondents.

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In compliance of our earlier order dated 9.12.2019, Sri S.K.Verma, presently posted as Chief Engineer (I.P.D.S.) Purvanchal Vidyut Vitran Nigam Ltd. Vidyut Nagar, Bhikaripur, Varanasi is personally present before this Court.

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By means of present writ petition, the petitioner had initially challenged the order dated 09.08.2019 filed as annexure 9 to the writ petition whereby subsisting contract of the petitioner with respondent stands terminated and further the petitioner has been blacklisted and has been banned from participating in the tenders of Purvanchal Vidyut Vitran Nigam Ltd. for one year.

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The basic plea that has been taken up by the petitioner in assailing the order is that impugned order has been passed in gross violation of principles of natural justice as no show cause

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notice was ever issued to the petitioner of the proposed action or blacklisting. The pleadings to this effect has been taken vide paragraph 24, 25,26, 27 of the writ petition, which are reproduced hereunder:

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“24. That the impugned action on the part of opposite party no. 5 thereby terminating the contract agreement of the petitioner is not justifiable rather the same is biased one in view of the fact that once the government authorities were informed about misgivings and were aware of every activity which was taking place at the site. Further the officials of the opposite parties were aware that the company had tried their very best to maintain the standard and technical specifications, where it was not at all possible to meet the required demands. The site was also shown to the staff of opposite party no. 5. Apart from that the petitioner received orders from the department to lay the cables at the extreme end side of the road stating the reasons ' possibility of road widening'. While digging the trench, the petitioner observed that there were many water supply connected pipes to the main water supply pipe line in the same vicinity as well as some power cables and bunch of telephone lines already laid down.

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25. That as per established principles of law as laid down by the Hon'ble Apex Court that no contractor can be blacklisted without following the rules of natural justice which require the service of show cause notice coupled with an opportunity of hearing. However, in the present case the order of blacklisting of the petitioner dated 9.8.2019 is passed by the opposite party no. 5 without affording the ample opportunity of hearing to the petitioner rather without considering the practical hardships which were properly explained by the petitioner. In these circumstances the impugned order passed by the opposite party no. 5 is wholly void ab- initio and thus the same is liable to be quashed.

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26. That as a matter of fact the blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for the purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction and fundamental of lair play require that the person concerned should be given an opportunity to represent his case before he is put on the blacklist and the blacklisting order involves civil consequences as it castes a slur. In this of matter, the impugned order passed by the opposite party no. 5 thereby blacklisting the petitioner is wholly whimsical, capricious and the same is liable to be quashed.

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27. That the impugned order dated 9.8.2019 passed by the opposite party no. 5 thereby terminating the agreement no. 621/MD/PuVVNL(V)/P-2?EAV-102/2017-18/EAV-124/ 2017-18 dated 18.7.2018 entered into betw3een M/s. S.T. Electricals Pvt. Ltd. J-56, S-Block, MIDC, Bhosari, Pune (petitioner) and Purvanchal Vidyut Vitran Nigam Ltd., Vidyut Nagar, P.O. DLW, Bhikaripur, Varanasi for 'Construction of 33 KV and 11 KV Underground Cabling works in Gorakhpur District of Gorakhpur zone under Purvanchal Vidyut Vitran Nigam Ltd., Varanasi' with immediate effect and ordering for encashment of bank guarantee with immediate effect and also blacklisting the petitioner's company for three years as well as banning the petitioner's company for participation in future for one eyar in Purvanchal Vidyut Vitran Nigam Ltd. Is wholly unrasonable, unwarranted and in contravention to the well settled principles of natural justice.”

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On the very first day when petitions came up for admission, we made a pointed querry to the learned Senior Advocate as to how the order could have been passed without giving a show cause notice, learned Senior Advocate Sri Manish Goyal took time to have instructions in the matters. It appears that while time was sought for instructions, respondents proceeded to fulfill the lacuna by issuing notice to the petitioner to participate in the proceedings so as to have the opportunity of hearing and then again passed the order to the same effect as earlier impugned order was passed, on 13.11.2019 and this order has also been challenged by way of amendment application and amendment application having been allowed and the writ petition has also stood amended.

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From perusal of the 2nd order dated 13.11.2019, which is now impugned in the present writ petition, we find that respondents authorities have proceeded to pass fresh order taking it to be as an oral direction by us during pendency of the writ petition whereas we never issued any such direction. The time was sought to have instructions, meaning thereby learned Senior Advocate was to have instruction in respect of the paragraph in which specific pea was taken of non issuance of show cause notice before the order of blacklisting was passed. So we take exception of the observations made in the order by the authority and we are of the view that the order impugned dated 13.11.2019 has been passed only to frustrate writ proceedings.

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Learned Senior Advocate Sri Manish Goyal do admit that authority has manifestly erred in putting under the order impugned certain observations as oral order of this court. However, the order has been sought to be justified on the basis of reasoning assigned therein on merits.

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The entire conduct of the respondent in passing the 2nd order is itself reflective of the fact that prior to passing of the earlier impugned order in the writ peptition dated 09.08.209, no show cause notice was ever issued and petitioner was not afforded any opportunity to explain.

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The accommodation by the Court of the counsel representing respondent should not be taken to be an opportunity to make deficiency good with which, otherwise, the order impugned in the writ petition suffers and, accordingly, we deprecate such practice.

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Learned Senior Advocate could not dispute the legal position that in the matters of blacklisting a specific show cause notice is required to be given to the party or firm of the proposed action as order of blacklisting is having effect of adverse civil consequences.

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We find in the present case that averments made in paragraph 24, 25,26, 27 have remained admitted to the respondents as neither there is any reply to the same in State Counter affidavit nor, any such document has been filed in rebuttal, therefore, and in such view of the matter, therefore, the order dated 09.08.2019 is unsustainable.

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In our such view we are reminded of celebrated judgment of the Apex Court in the case of Gorkha Security Services v. Government (NCT of Delhi) and Others, (2014) 9 SCC 105 wherein vide 29 and 34, the Apex Court has held thus:

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“29) No doubt, rules of natural justice are not embodied rules nor can they be lifted to the position of fundamental rights. However, their aim is to secure justice and to prevent miscarriage of justice. It is now well established proposition of law that unless a statutory provision either specifically or by necessary implication excludes the application of any rules of natural justice, in exercise of power pre-judicially affecting another must be in conformity with the rules of natural justice.

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34) For the aforesaid reasons, we are of the view that the impugned judgment of the High Court does not decide the issue in correct prospective. The impugned order dated 11.9.2013 passed by the respondents blacklisting the appellant without giving the appellant notice thereto, is contrary to the principles of natural justice as it was not specifically proposed and, therefore, there was no show cause notice given to this effect before taking action of blacklisting against the appellant. We, therefore, set aside and quash the impugned action of blacklisting the appellant. The appeals are allowed to this extent. However, we make it clear that it would be open to the respondents to take any action in this behalf after complying with the necessary procedural formalities delineated above. “

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So far second impugned order dated 13.11.2019 is concerned, we are of the view that once the matter was subjudice before this Court, and the fact that we had not

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afforded any opportunity to the respondents to pass fresh order, respondents could not be permitted to preempt the final conclusion of the writ proceedings by passing such orders. Moreover, since the order contains observations recording and directions of the Court which were never issued, the order dated 13.11.2019 can also not be sustained in law and deserves to be set aside.

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In view of above, first order impugned in the writ petition dated 09.08.2019 is quashed to the extent it terminates the agreement of the petitioner's firm black-list it and also bars its future participation in the district. The order dated 13.11.2019 is also hereby quashed. Since the order dated 09.08.2019 has been quashed, consequential notice inviting tender dated 9.8.2019 challenged in the connected matter is also quashed.

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Matter is remitted to be revisited by the Managing Director of the Corporation, namely, respondent no. 3 and accordingly, we hereby provide that petitioner within period of two weeks from today shall file his objection/reply to the reasons assigned in the order dated 09.08.2019 treating it to be a show cause of the proposed action of blacklisting, alongwith certified copy of this order and in such event, Managing Director shall proceed to decide finally the matter within further period of four weeks. Needless to say that the opportunity of hearing shall also be afforded to the petitioner and the order shall be reasoned and speaking one..

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Personal appearance of Sri S.K.Verma, presently posted as Chief Engineer (I.P.D.S.) Purvanchal Vidyut Vitran Nigam Ltd. Vidyut Nagar, Bhikaripur, Varanasi is dispensed with and notice issued to him stands discharged.

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Writ petition thus stands allowed to the above extent.

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Order Date :- 19.12.2019 Sanjeev

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(Ajit Kumar,J.) (Ramesh Sinha,J.)

M/S. S.T. Electricals Pvt. Ltd. v. State of U.P. and 9 Others

Case brief

What is this about?

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M/S. S.T. Electricals Pvt. Ltd. v. State of U.P. and 9 Others

Case brief

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