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Judgment
Vineet Saran, C.J.—The petitioner, which is a construction company, had entered into a contract with Orissa Water Supply and Sewerage
Board (OWSSB)-opp. parties nos.2 and 3, for performance of contract works in respect of Design, Construction, Testing and Commissioning
Gravity Sewers in Sewage Districts I & II of Bhubaneswar City, in connection with the work ""Comprehensive Sewerage System of Bhubaneswar
City under 12th Finance Commission Award"". Admittedly, the contract was initially for a period of two years, which was to commence on
01.02.2008 and to end on 31.01.2010. However, the same was extended from time to time and, lastly, on 21.04.2014, it was extended for a
period of five months i.e. up to 21.09.2014. This extension, as well as the previous extensions, were given after considering the fact that certain
facilities were required to be provided by the opp. parties, which were not provided by them to the petitioner. The last extension order dated
21.04.2014 would itself make it clear that even though there was delay, no penalty was imposed at the time of grant of extension, meaning thereby
that the delay was not on account of the petitioner.
2 Prior to expiry of the extended period, the petitioner had applied for further extension on 14.08.2014, which application remained pending, and
the petitioner was permitted to continue with the work beyond the extended period of 21.09.2014. Then on 25.07.2015, a show cause notice was
issued by the opp. party no.3-Project Engineer to the petitioner, requiring it to show cause as to why appropriate action to rescind the contract be
not taken. A detailed reply dated 13.08.2015 was submitted by the petitioner within time, followed by another reply dated 20.08.2015 and then
by order dated 16.11.2015, the contract has been rescinded on the ground of the petitioner having failed to achieve the target. By the said order,
the entire security deposit has been forfeited and 20% of the value of the left over work was to be realised from the petitioner. Initially, a petition
was filed by the petitioner challenging the notice of show cause dated 25.07.2015. However, during pendency of this writ petition, the impugned
order was passed on 16.11.2015, which has been challenged by way of amendment.
We have heard Shri S.K. Sarangi, learned counsel for the petitioner, Shri B.P. Pradhan, learned Addl. Govt. Advocate for State-opp. party
no.1 and also Shri P.K. Bhuyan, learned counsel for the contesting opp. parties nos. 2 and 3 (OWSSB) and perused the record. Pleadings
between the parties have been exchanged and on consent of the learned counsel for the parties, we are disposing of this petition at the admission
stage.
Though this matter has a chequered history of contract having been initially awarded in 2008, which was to be completed within a period of two
years, but what we notice is that time and again extension had been granted to the petitioner, which was lastly extended up to 21.09.2014.
However, it is not disputed by the learned counsel for the opp. parties, and is also clear from the language of the show cause notice dated
25.07.2015, that the petitioner continued to work even after 21.09.2014. Shri P.K. Bhuyan, learned counsel for opp. parties nos. 2 and 3 has
admitted that the payment for the work done after 21.09.2014 was also made to the petitioner. The notice of show cause dated 25.07.2015 also
makes it clear that the performance of the petitioner after 21.09.2014 was also taken into consideration, and the petitioner was required to show
cause as to why the contract be not rescinded under the provisions of the agreement, meaning thereby that the contract continued to be in
operation. Two replies had been filed by the petitioner within the stipulated time of thirty days as provided in the show cause notice, which gave
detailed reasons for not being able to complete the work in time and also seeking further extension of time. However, all that has been stated in the
impugned order dated 16.11.2015 with regard to the show cause notice and the reply of the petitioner is that ""a show cause notice was served to
them (petitioner) for reply, but the reply furnished by them was far from satisfactory.
Once a show cause notice was given and detailed reply furnished by the parties, it is expected of the authorities to pass an appropriate order
after considering the reply, and not merely stating that the reply was perused which was not found to be satisfactory. Why it was not found to be
satisfactory ought to have been disclosed, which has not been done in the present case. Issuance of notice to show cause and requirement of
furnishing reply is not to be an empty formality. The purpose would not be achieved if the reply is not considered while passing the order.
As we have already stated, the contract was in operation at the time when the impugned order was passed, or else the question of rescinding the
contract would not have been there. The extension granted by the opp. parties from time to time, without imposing any cost or penalty on the
petitioner, would itself make it clear that the delay was not due to the fault of the petitioner but because of the shortcoming or fault of the opp.
parties.
However, on merits, we find that the impugned order is devoid of any reason and on this ground alone the order deserves to be quashed.
Merely completing the formality of giving notice is not sufficient for complying with the principles of natural justice, as once after the notice is issued
and a detailed reply is given by the party, the authority is duty bound to pass a reasoned order only after considering the contents of the reply, and
not by whimsically stating that the reply furnished was not found to be satisfactory.
In view of the aforesaid, we are of the opinion that this writ petition deserves to be allowed and, accordingly, it is allowed. The order dated
16.11.2015 passed by the Project Engineer-opp. party no.3 is quashed. The said opp. party shall, however, have liberty to pass fresh order in
accordance with law after considering the two replies of the petitioner dated 13.08.2015 and 20.08.2015 filed in response to show cause notice
dated 25.07.2015 and meeting the grounds taken in the said replies. There shall be no order as to costs.