Allowed

Dirghayu Preventive Health Care Pvt. Ltd. v. The District Magistrate Cum Chairman And Ors.

Patna HC26 Mar 2014L.P.A/148/2014

Case brief

AI extract

What is this about?

High Court allowed a Letters Patent Appeal, set aside a Single Judge order dismissing a writ against a hospital contract termination, and quashed the termination due to violation of natural justice, holding that the appellant was not given a copy of the inspection report or notice to show cause.

What did the court decide?

The order dated 27.09.2013 in C.W.J.C. No. 19421 of 2013 is set aside, and the termination order dated 29.08.2013 is quashed.

Dirghayu Preventive Health Care Pvt. Ltd. Vs The… — Service and Employment | Patna HC (2014)

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IN THE HIGH COURT OF JUDICATURE AT PATNA Letters Patent Appeal No.148 of 2014

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Civil Writ Jurisdiction Case No. 19421 of 2013

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====================================================== Dirghayu Preventive Health Care Pvt. Ltd. through its Chairman Cum Managing Director Ashraf Khan, S/o Late Ramzan Khan, R/o Moh.Kachisarai, P.S.- Mithanpura, District- Muzaffarpur. .... .... Appellant. Versus 1. The District Magistrate –cum- Chairman, District Health Society, East Champaran at Motihari. 2. The Civil Surgeon –cum- Member Secretary, District Health Society, East Champaran at Motihari.

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The Superintendent, Sadar Hospital, East Champaran at Motihari.

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The Deputy Superintendent, Sadar Hospital, East Champaran at Motihari .... .... Respondents. ====================================================== Appearance : For the Appellant/s : Md. Shoib Alam, Advocate : Ms. Fauzia Shakil, Advocate : Mr. Shailesh Kumar, Advocate For the Respondent/s : Mr. Kishore Kumar Sinha, Advocate

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====================================================== CORAM: HONOURABLE MR. JUSTICE I. A. ANSARI AND HONOURABLE MR. JUSTICE SAMARENDRA PRATAP SINGH CAV ORDER

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(Per: HONOURABLE MR. JUSTICE I. A. ANSARI)

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7 26-03-2014 This Letters Patent Appeal has been preferred against the order, dated 27.09.2013, passed by a learned Single Judge, in C.W.J.C. No. 19421 of 2013, refusing to accede to the prayer of the appellant to set aside the order, dated 29.08.2013, issued by the Member Secretary, District Health Society -cumCivil Surgeon, Motihari, East Champaran, whereby respondent No.2 has terminated the agreement, whereunder the appellant herein was required to supply Electrical Energy to Sadar

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Patna High Court LPA No.148 of 2014 (7) dt. 26-03-2014

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Hospital, at Motihari.

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2. The material facts, which gave rise to the present appeal, may, in brief, be set out as under:

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( i) In response to a notice inviting tender by respondent Nos. 1 and 2 herein, namely, District Magistrate-cumChairman, District Health Society, East Champaran, at Motihari and Member Secretary, District Health Society-cum-Civil Surgeon, Motihari, East Champaran, respectively, the appellant herein participated, amongsts others, in the tender process and received, from respondent No.2, the work order under letter, dated 04.01.2013, approving the rate at which the appellant had agreed to provide to Sadar Hospital, Motihari, uninterrupted supply of electricity through silent generator having capacity of 62.05 KVA.

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3. Closely following the issuance of the said work order, an agreement, in writing, was entered into, on 07.01.2013, between the appellant and respondent No.2 incorporating therein the terms and conditions subject to which the supply of electricity from the end of the appellant herein to Sadar Hospital, East Champaran, Motihari, was to take place. The agreement, so entered into, was for a period of three years commencing from

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03.01.2013 and ending on 02.01.2016.

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4. The agreement stipulated that the appellant, as service provider, shall work under over-all control of District Health Society, Motihari/Civil Surgeon -cum- Chief Medical Officer, East Champaran, and concerned Medical Officer incharge of the PHC/Sadar. The agreement also stipulated that the performance of the appellant, as service provider, would be assessed on an interval of every ten days and if at any point of time, it was found that the service provider had not been working as per the terms of the contract, or the quality of the work done was poor, then, the contractor would be removed from the work and the contract would be terminated. The agreement further stipulated that the service provider, i.e. the appellant herein, shall be paid its dues by the Civil Surgeon-cum-Chief Medical Officer, East Champaran/Superintendent, Sadar Hospital, as per guidelines of the Government by account payee cheque on the basis of the rates finalized by District Purchase Committee. The agreement made it clear that in case of any dispute, all legal matters would be subject to the jurisdiction of the Civil Court, East Champaran, Motihari.

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5 . Acting upon the agreement, which had been so

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entered into by the parties concerned, the appellant started supply of electricity. When the appellant had been so providing electricity, a letter was issued, on 22.01.2013, by respondent No.4, namely, Deputy Superintendent, Sadar Hospital, East Champaran, at Motihari, alleging to the effect that the appellant herein, as service provider, was found, on 22.01.2013, at 11.00 AM, to have been supplying electricity to the said hospital by a 15 KVA generator instead of supplying electricity from a generator having capacity of 62.05 KVA.

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6 . Promptly reacting to the letter, dated 22.01.2013, aforementioned, the appellant herein submitted its reply, on 23.01.2013, denying the allegation of having supplied electricity from 15 KVA generator. In this regard, the appellant herein contended that on 22.01.2013, at 11.00 AM, the service from the generator had been stopped inasmuch as the generator was being repaired and this was, according to the appellant, apparent from the logbook, which showed the details of supply of electricity from the generator. On this aspect, the appellant, as service provider, also pointed out that on 22.01.2013, 15 KVA generator was being actually used for the purpose of repairing 62.05 KVA generator and not for supplying electricity to Sadar Hospital,

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Motihari.

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7. Thereafter, on 01.04.2013, another letter was issued to the appellant by respondent No.4 stating to the effect that on 29.03.2013, when inspection was carried out, it was found that electricity was being supplied by the appellant, as the service provided, from a 25 KVA generator; whereas in terms of the agreement, which the parties had, the service provider was required to make supply of electricity from generator having capacity of 62.05 KVA. By means of this letter, dated 01.04.2013, respondent No.4 asked the appellant, as the service provider, to offer its explanation making it clear that in the ordinary course, a complaint would have been made to the superior authorities.

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8. Aggrieved by the contents of the letter, dated 01.04.2013, aforementioned, the appellant, vide its letter, dated 25.04.2013, issued to respondent No.2, requested respondent No.2 to get the load and KVA of generator set, in question, verified by a technical person/electrical engineer. By its letter, dated 25.04.2013, addressed to respondent No.2, the appellant informed the latter that a technical inspection, as regards the capacity of the generator set used by the appellant, would take

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place, on 30.04.2013, at 2.00 PM, at Sadar Hospital, Motihari, for the purpose of determining the load and KVA of the Generator set and requested respondent No.2 to be present at the time of technical inspection. An inspection was accordingly conducted and the persons, so conducting the technical inspection, opined that the service provider was found to have been using a generator, which had the capacity of 82.5 KVA. This inspection was, admittedly, carried out in presence of respondent No. 2 and Assistant Chief Medical Officer. A certificate was accordingly issued by the technical expert indicating therein that the senior officers of the hospital, in question, were present.

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9 . The above inspection was followed by a letter, dated 11.07.2013, issued by respondent No. 2 to the appellant herein alleging to the effect that the appellant had been providing electricity from a generator having capacity of 25 KVA instead of 62.05 KVA. making it also clear that if the capacity of the generator, in question, was not appropriately improved within two days, the contract would be terminated and the earnest money would be forfeited.

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10. Replying promptly to the letter, dated 11.07.2013, aforementioned, the appellant issued a letter, on

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12.07.2013, stating therein that the allegations made were wholly baseless. In this regard, the appellant also stated that bills, for the works done by the service provided, had been verified and passed against supply of electricity from a generator having capacity of 62.5 KVA indicating thereby that the allegations, levelled against the appellant, as service provider, were incorrect inasmuch as the bills would not have been passed if the electricity had not been supplied from generator set of requisite capacity, one of such bills, raised on 01.09.2013, having been passed as late as on 07.09.2013 and actual payments having been made up to June, 2013.

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11. Lastly, respondent No.2 issued a letter, dated 29.08.2013, terminating/cancelling the contract, which the parties had entered into, with a direction that the appellant herein shall remove the entire infrastructure including the generator set within a month from the date of passing of the order.

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12 . In the letter, dated 29.08.2013, terminating the contract, it was mentioned by respondent No. 2 that a team had been constituted for the purpose of inspection, the team had carried out an inspection and the inspection revealed unsatisfactory state of affairs so far as the supply of electricity

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from the end of the appellant, as service provider, to the said hospital was concerned and a direction had, therefore, been given to terminate the contract, in question.

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13. By making a writ application under Article 226 of the Constitution, which gave rise to C.W.J.C. No. 19421 of 2013, the appellant herein put to challenge the termination of the contract by letter, dated 29.08.2013, aforementioned.

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14 . In the order, dated 27.09.2013, passed in the said writ petition, a learned Single Judge of this Court, upon hearing both sides, took the view that the petitioner had been provided opportunity to rectify the deficiencies in the service and, hence, the impugned order of termination of contract cannot be said to be in violation of the rules of natural justice. The learned Single Judge also concluded that the remedy, in the present case, of the petitioner (appellant) lied in raising the issues, in appropriate forum, in terms of the agreement, which the parties had entered into, and that recourse to writ jurisdiction was inappropriate in the present case.

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15 . Confronted with the conclusions, which the learned Single Judge, as pointed out above, had arrived at, the petitioner submitted before the Court that it would make a

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representation to the Chairman, District Health Society, East Champaran, Motihari, and, on this basis, the writ petition was disposed of by order, dated 27.09.2013, aforementioned.

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16 . It is the order, dated 27.09.2013, aforementioned, which stands impugned in the present appeal.

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17 . We have heard Mr. Shailesh Kumar, learned counsel for the appellant, and Mr. Kishore Kumar Sinha, learned counsel for the respondents.

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18 . While considering the present appeal, it needs to be noted that we would have, ordinarily, dismissed this appeal on the ground that the appellant, as a writ petitioner, had submitted, in the writ petition, that it would make a representation to the Chairman, District Health Society, East Champaran, Motihari, and, on the basis of this submission, the writ petition was disposed of. What, however, restrains us from doing so is that the learned Single Judge, as already indicated above, had already concluded that the appellant was afforded opportunity to rectify the deficiencies/defects and, hence, the impugned order of termination, dated 29.08.2013, cannot be said to have been made in violation of the rules of natural justice and it was on account of these conclusions, which the learned Single Judge had reached,

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that the appellant sought to make representation.

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19 . The question, therefore, is: Notwithstanding the fact that the appellant herein had sought to make representation to the respondents concerned, whether the appellant can, now, challenge the order, which the learned Single Judge has passed holding that the termination of the appellant’s contract as not being in violation of the rules of natural justice.

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20 . What appears to have escaped the notice of the learned Single Judge is that apart from the fact that the appellant had not only denied the allegation that it had been found supplying electricity from a generator set having capacity of 15 KVA or 25 KVA, as contended by respondent No. 2 by its letters, dated 22.01.2013 and 01.04.2013, respectively, the appellant had also placed on record the report of inspection, which had been carried out by an electrical engineer showing that the capacity of the generator set, in question, was 82.5 KVA. At best, therefore, the writ petition could have been dismissed on the ground that it involved determination of disputed question of facts; but it could not have been held that the rules of natural justice had been observed before making the order of termination of contract.

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21 . What appears to have also not been taken note of

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by the learned Single Judge is that respondent No. 2 had written a letter, dated 11.07.2013, addressed to the appellant, asking the appellant to rectify the defect within two days or else, the contract would be terminated. However, the fact remains that the contract was not terminated pursuant to the letter, dated 11.07.2013, which, according to the learned Single Judge, had given opportunity to the appellant to rectify the deficiencies, if any; rather, in the light of the order of termination, dated 29.08.2013, what led to the termination of the contract was that an inspection, according to the respondents, had been carried out by an inspection team constituted for this purpose and since the inspection team had found, on inspection, unsatisfactory state of supply of electricity, it was decided that the contract be terminated. Nothing was made available by the respondents to show either before the learned Single Judge or before us that a copy of the inspection report had been furnished to the appellant asking for response thereto.

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22 . Situated, thus, it becomes abundantly clear that the inspection report had not been furnished to the appellant nor was any notice issued to the appellant asking the appellant to show-cause, if any, as to why, in the light of the findings of the

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inspection , which had been carried out by the inspecting team, contract, in question, be not terminated.

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23. In short, the order of termination, dated 29.08.2013, did not precede any notice, though the allegation, made by respondent No. 2, would have, if true, left stigma on the appellant No.1’s functioning as service provider; more so, when the contract was not terminated on the allegation that electricity had not been supplied. What had, rather, been alleged against the appellant was the manner of functioning of the appellant as a service provider. The allegations, which had been made against the present appellant, were, if true, amounted to appellant playing fraud on the respondents. This was, undoubtedly, stigmatic in nature and would leave, unless interfered with, a stigma on the quality of service, which the appellant, as a service provider, had provided to the said hospital. The order of termination, dated 29.08.2013, therefore, ought to have preceded by a notice to show cause and as the same has not been done, the order of termination, dated 29.08.2013, needed to be set aside on the ground of having violated the principles of natural justice.

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24 . Since the writ petition involved violation of the principles of natural justice, we are satisfied that in the facts and

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attending circumstances of the present case, High Court’s power under, Article 226 of the Constitution, could have been invoked and the learned Single Judge could not have held that the principles of natural justice stood followed.

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25 . As regards the fact that the agreement, which the parties had entered into, stipulated that in case of dispute, recourse would be taken to the jurisdiction of the Civil Court, East Champaran, Motihari, suffice it to point out that when there was violation of the principles of natural justice, such a stipulation could not have been held to have created a bar to the exercise of extraordinary jurisdiction of the High Court under Article 226 of the Constitution.

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26 . What crystallizes from the above discussion is that the impugned order of termination, dated 29.08.2013, was not sustainable in the face of the facts on record and the law relevant thereto, principally, on the ground of violation of the principles of natural justice.

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27 . Because of what have been discussed and pointed out above, this writ petition partly succeeds. The order, dated 27.09.2013, passed, in C.W.J.C. No. 19421 of 2013, is hereby set aside and, in consequence thereof, the impugned order

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of termination, dated 29.08.2013, shall also stand set aside and quashed.

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28. The respondents will, however, remain at liberty to terminate the contract, in question, in accordance with law, if the condition(s) for such termination exist provided that the principles of natural justice and/or the terms and conditions of the agreement, which the parties have entered into, are not, in any manner, violated.

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29 . In terms of the above observations and directions, this appeal shall stand disposed of.

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30 . No order as to costs.

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(I. A. Ansari, J.)

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S. P. Singh, J: I agree

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Uday/-

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((Samarendra Pratap Singh, J.)

Dirghayu Preventive Health Care Pvt. Ltd. v. The District Magistrate Cum Chairman And Ors.

Case brief

What is this about?

What did the court decide?

Dirghayu Preventive Health Care Pvt. Ltd. v. The District Magistrate Cum Chairman And Ors.

Case brief

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