Allowed

M/s. Sambasiva Milk Transport, v. The State of Andhra Pradesh

Andhra Pradesh HC7 Sept 2021WP/18952/2021

Case brief

AI extract

What is this about?

This judgment allowed a writ petition challenging a notice cancelling a food grain transportation contract. The High Court held that the District Manager lacked the power to terminate under the agreement, which required Vice Chairman sign-off, and that the authorities violated natural justice by not issuing a show cause notice.

What did the court decide?

Set aside the notice cancelling the authorisation issued by the District Manager. Allowed thepetitioners to submit an explanation through a show cause notice.

M/s. Sambasiva Milk Transport, Vs… — Contract and Commercial Disputes | Andhra Pradesh HC (2021)

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THE HON'BLE SRI JUSTICE A.V.SESHA SAI

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WRIT PETITION No.18952 OF 2021

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ORDER:

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Heard Smt.Jami Madhavi, learned counsel for the petitioners, and Sri P.Hemachandra, learned Standing Counsel for A.P.State Civil Supplies Corporation, apart from perusing the entire material available on record.

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Challenge in the present Writ Petition is to the notice bearing No.PDS.Movt./16(1)/FG/Stage-I/2021-22, dated 26.08.2021, issued by the District Manager, APSCSCL, Anantapuramu-fourth respondent herein, cancelling the authorisation of the petitioners. Respondent-Corporation entrusted the contract in favour of the petitioners for transportation of food grains from various buffer godowns in Ananthapuramu District and other places identified by the Head Office/District Administration from time to time to the MLS points in Ananthapuramu District.

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Respondent-Corporation issued a Work Order vide proceedings No.PDS/Movt/FG/Stage-1/2021-22, dated 29.04.2021, and, according to it, the period of contract would be upto 21.09.2021. On the ground of registration of Crime No.362 of 2021 on the file of the Chilamathur Police Station, Ananthapuramu District, alleging diversion of stocks, respondent-Corporation issued the impugned notice bearing No.PDS.Movt./16(1)/FG/ Stage-I/2021-22, dated 26.08.2021.

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AVSS,J W.P.No.18952 of 2021

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It is contended by the learned counsel for the petitioners that, according to Clause (4) (iv) of the agreement, dated 22.04.2021, the respondent-Corporation is empowered and authorised to terminate the contract in the event of there being any diversion or misappropriation of stocks, while the stock remains in the custody of the transporter. It is also the submission of the learned counsel that, as per Clause (7) of the agreement, responsibility can be fastened on the contractor for both the quantity and quality of the food grains, pulses or any other commodity till they are finally delivered at the destination as per the movement order of the District Manager. Learned counsel further submits that the stocks were delivered at the MLS points on 13.08.2021 and the alleged incident took place on 14.08.2021, which prompted the police to register F.I.R.No.362 of 2021. It is further stated by the learned counsel that the alleged incident took place on 14.08.2021 i.e., after delivery of the stock at the MLS points, as such, petitioners herein cannot be saddled with any liability. Eventually, it is submitted by the learned counsel for the petitioners that the respondent authorities did not issue any show cause notice to the petitioners herein before resorting to the impugned action of termination of the authorisation. It is further submitted that, had the show cause notice been issued, petitioners herein would have been in a position to establish the ground realities and the impugned order of termination would not have emanated. Learned counsel also submits that the impugned action is violative of the principles of natural justice.

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AVSS,J W.P.No.18952 of 2021

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On the contrary, strongly resisting the Writ Petition, it is contended by Sri P.Hemachandra, learned Standing Counsel, that Clause (4) of the agreement deals with the termination of contract and, as per clause 4 (ii) of the agreement, the Vice Chairman & Managing Director has absolute right and power to terminate the contract without any notice and is empowered to forfeit the Security Deposit and can also invoke the bank guarantee apart from withholding the pending bills.

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In the instant case, as evident from the impugned order, dated 26.08.2021, the same came to be issued by the District Manager of the Corporation, Ananthapuramu but not the Vice Chairman & Managing Director and the above said Clause enables only the Vice Chairman & Managing Director.

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It is a settled and well established principle of law that any action, which has civil consequences, must necessarily be preceded by notice and opportunity of hearing to the persons likely to be affected by such an action. In the instant case, respondents herein adhered to the said proposition of law in breach.

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For the aforesaid reasons, Writ Petition is allowed, setting aside the impugned notice bearing No.PDS.Movt./16(1)/FG/ Stage-I/2021-22, dated 26.08.2021, issued by the District Manager, APSCSCL, Anantapuramu-fourth respondent herein. However, it is open for the competent authority to issue a show cause notice, asking the petitioners herein to submit

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AVSS,J W.P.No.18952 of 2021

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explanation, and to take appropriate action, strictly in accordance with law, after adhering to the observations made supra. There shall be no order as to costs.

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As a sequel thereto, miscellaneous petitions, if any, pending in this Writ Petition, shall stand closed.

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__________________ A.V.SESHA SAI, J

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07^th September, 2021. Tsy

M/s. Sambasiva Milk Transport, v. The State of Andhra Pradesh

Case brief

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M/s. Sambasiva Milk Transport, v. The State of Andhra Pradesh

Case brief

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What did the court decide?

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