Satis Goel vs State Of Orissa And Others

Dr. B.R. Sarangi, J

The petitioner, who is a transport contractor (Level-II), has filed this writ petition to quash the order no.1830 dated 17.05.2020 passed by the Collector, Sundargarh blacklisting him from participating in all tender process of civil supplies as well as other departments for a period of two years across the State, and consequential order no.1837 dated 17.05.2020 passed by the District Manager, OSCSC Ltd., Sundargarh vide Annexure-6 terminating the agreements, as the same have been passed in violation of principles of natural justice.

The factual matrix of the case, in hand, is that the petitioner was selected for appointment as transport contractor (Level-II) for Koira, Bonai, Lahunipada and Gurundia blocks in the district of Sundargarh, pursuant to the decision of the District Tender Committee, Sundargarh for the financial year 2017-19, but the District Manager-opposite party no.3 restricted execution of agreement till 31.03.2018. Thereafter, the petitioner was called upon to make security deposit and additional security deposit as per the guidelines of the tender as well as to furnish the documents as per claue-11 of the tender paper, as indicated in those letters, which includes the carriage by Road Act, 2007 and the Carriage by Road Rules, 2011 and the license issued under the Contract Labour (Regulation and Abolition) Act, 1970. The petitioner, having complied all the requirements, separate agreements were executed by the Corporation in respect of each of the blocks. The term of appointment was extended and separate agreements were executed for the extended period. Such arrangement was made on account of single bid in the fresh tender process requiring de-novo process as well as the time requisite for execution of fresh tender vis-à-vis the need of continuous supply of food stock under Public Distribution System. Accordingly, it was decided and communicated to the General Manager (PDS) of the Corporation to extend the terms of the appointment of all the Level-I, Level-II transport contractors till the appointment of new contractors or extend the period, whichever is earlier. The validity of license under OPDS (Control) Order, 2016 and Security deposit for the extended period were directed to be ensured, for the purpose. The term of appointment of the petitioner stood extended up to 20.05.2020 in terms of the letter dated 28.04.2020 of the Managing Director, Odisha Civil Supplies Corporation Ltd.

2.1 During process of execution of the job of loading of the stock of 200 bags of rice and unloading the same at Fair Price Shop, allegation of carriage of the PDS rice in the tipper bearing registration no. OD-14 B 6865 engaged by the petitioner was detected at Khandahar hill top on 27.04.2020 and on that basis, FIR was lodged and the license of the petitioner was suspended by the Sub-Collector, Bonai, which was communicated to the petitioner by the Marketing Inspector, Lahunipada on 14.05.2020. Following the order of suspension dated 14.05.2020 communicated to the petitioner by the Marketing Inspector, a notice of show cause, vide letter no.2018 dated 15.05.2020, was issued by the Sub- Collector, Bonai as the licensing authority, to show cause regarding diversion of 96 bags of PDS rice to Choda Hatting near Sujit Kar Ration Shop situated at Choda Hatting upper Khadadhar area in the same tipper which was engaged by the petitioner on 26.04.2020 for transportation of PDS rice from Lahunipada Depot to Sashyakela G.P. Such notice of show cause dated 15.05.2020 was received by the petitioner on 18.05.2020. Therefore, in terms of the said letter, the petitioner is required to file reply to the show cause by 21.05.2020. Although the petitioner submitted his reply to the show cause on 20.05.2020, but the Collector, Sundargarh, without considering such reply to the show cause notice, on 17.05.2020 passed order blacklisting the petitioner from participating in all tender process of civil supplies as well as other departments for a period of two years across the State. Consequentially, the District Manager, OSCSC, Ltd., vide order dated 17.05.2020 under Annexure-6, terminated the extended agreements of the petitioner which were valid till 20.05.2020. Hence this application.

Mr. S.K. Dash, learned counsel appearing for the petitioner argued with vehemence indicating that after suspending the licence of the petitioner on 14.05.2020, a notice of show-cause was issued to the petitioner on 15.05.2020 at Annexure-4 granting three days time to give his reply, failing which his license would be cancelled and his name would be recommended to be blacklisted. The petitioner received the said letter on 18.05.2020, therefore three days time was to expire on 21.05.2020. Even though the petitioner submitted his explanation on 20.05.2020, before receipt of the same, the order impugned was passed on 17.05.2020 vide Annexue-6 blacklisting the petitioner from participating in all tender process of civil supplies as well as other departments for a period of two years across the State, and consequentially the District Manager, Odisha State Civil Supplies Corporation Ltd, Sundargarh terminated the extended agreements of the petitioner which were valid till 20.05.2020. It is contended that while passing the order impugned, there has been gross violation of principles of natural justice. Therefore, the same should be quashed. To substantiate his contentions, he has relied upon the judgment of the apex Court in Mohinder Singh Gill v. The Chief Election Commissioner, New Delhi, AIR 1978 SC 851.

Mrs. S. Pattnaik, learned Additional Government Advocate appearing for opposite parties no.1 and 4 contended that since the matter relates to Odisha State Civil Supplies Corporation Ltd. and as such, counter affidavit has been filed by opposite parties no.2 and 3, the matter should be considered on the basis of the pleadings available on the counter affidavit filed by opposite parties no.2 & 3.

Mr. G.C. Mohapatra, learned counsel appearing for opposite parties no.2 and 3 argued with vehemence that the petitioner has committed illegality and irregularity while transporting the PDS commodities. Thereby, he was engaged in illegal transportation of such PDS commodities, which has been substantiated after due enquiry conducted by the investigating officer and the same has been fortified in course of enquiry. As such, FIR was lodged by the Marketing Inspector, Lahunipara. Therefore, by virtue of the order of the Collector, Sundargarh blacklisting the petitioner from participating in all tender process of Civil Supplies as well as other departments for a period of two years across the State, the District Manager, Odisha State Civil Supplies Corporation Ltd., Sundargarh vide order dated 17.05.2020 at Annexure-6 terminated the extended agreements of the petitioner which were valid till 20.05.2020. Thereby, no illegality or irregularity has been committed by opposite party no.2 in taking action against the petitioner, and consequentially prays that the writ petition should be dismissed.

This Court heard Mr. S.K. Dash, learned counsel for the petitioner; Mrs. S. Pattnaik, learned Addl. Government Advocate appearing for opposite parties no.1 and 4; and Mr. G.C. Mohapatra, learned counsel for opposite party-OSCSC Ltd. on virtual mode. Pleadings having been exchanged, with the consent of learned counsel for the parties, this writ petition is being disposed of finally at the stage of admission.

The facts narrated above are not in dispute. Therefore, the only question to be considered by this Court at this stage is that while taking action against the petitioner, whether the authorities have complied the principles of natural justice by giving opportunity of hearing to the petitioner. From the factual matrix, it reveals that the licence of the petitioner was suspended on 14.05.2020, which was communicated by the Marketing Inspector, Lahunipara to the petitioner. But on the allegation of diversion of 96 bags of PDS rice in the tipper bearing registration No.OD 14 B 6865, a notice of show cause was issued by the Sub-Collector, Licensing Authority, Bonai under Annexure-4 dated 15.05.2020 calling upon the petitioner to give explanation in writing within three days, failing which his license would be cancelled for violation of OPDS Control Order, 2016 and his name would be recommended to be blacklisted. Such notice of show cause dated 15.05.2020 was received by the petitioner on 18.05.2020. From that date, three days period was to expire on 21.05.2020, but before expiry of the said period, the petitioner submitted his reply on 20.05.2020 vide Annexure-5. But, without taking into consideration the reply to show-cause, by order of the Collector, Sundargarh blacklisting the petitioner from participating in all tender process of civil supplies as well as other departments for a period of two years across the State, the District Manager, Odisha State Civil Supplies Corporation Ltd., Sundargarh passed the order impugned dated 17.05.2020 at Annexure-6 terminating the extended agreements which were valid till 20.05.2020 with immediate effect. Considering the show-cause issued on 15.05.2020, wherein three days time was allowed to the petitioner to submit his explanation, even that period was to expire on 18.05.2020, before expiry of the said period the order impugned dated 17.05.2020 at Annexure-6 has been passed by the authority. Thereby, the authority has passed the order with undue haste and as such in gross violation of principles of natural justice.

The soul of natural justice is 'fair play in action'

In HK (An Infant) in re, 1967 1 All ER 226 (DC), Lord Parker, CJ, preferred to describe natural justice as 'a duty to act fairly'.

In Fairmount Investments Ltd. v. Secy of State for Environment, 1976 2 All ER 865 (HL), Lord Russel of Killowen somewhat picturesquely described natural justice as 'a fair crack of the whip'

In R. v. Secy. Of State for Home Affairs, ex p. Hosenball, Geoffrey Lane, LJ, 1977 3 All ER 452 (DC & CA), preferred the homely phrase 'common fairness' in defining natural justice.

A.K. Kraipak and others v. Union of India, AIR 1970 SC 150= (1969) 2 SCC 262, is a landmark in the growth of this doctrine. Speaking for the Constitution Bench, Hegde,J. observed thus:

"If the purpose of the rules of natural justice is to prevent miscarriage of justice one fails to see why those rules should be made inapplicable to administrative enquiries. Often times it is not easy to draw the line that demarcates administrative enquiries from quasi-judicial enquiries. Enquiries which were considered administrative at one time are now being considered as quasi-judicial in character. Arriving at a just decision is the aim of both quasi-judicial enquiries as well as administrative enquiries. An unjust decision in an administrative enquiry may have far reaching effect than a decision in a quasi-judicial enquiry".

In Maneka Gandhi v. Union of India, AIR 1978 SC 597 = (1978) 1 SCC 248, law has done further blooming of this concept. This decision has established beyond doubt that even in an administrative proceeding involving civil consequences doctrine of natural justice must be held to be applicable.

In Swadeshi Cotton Mills v. Union of India, AIR 1981 SC 818, the meaning of 'natural justice' came for consideration before the apex Court and the apex Court observed as follows:-

"The phrase is not capable of a static and precise definition. It cannot be imprisoned in the straight-jacket of a cast-iron formula. Historically, "natural justice" has been used in a way "which implies the existence of moral principles of self evident and urarguable truth". "Natural justice" by Paul Jackson, 2nd Ed., page-1. In course of time, judges nurtured in the traditions of British jurispruduence, often invoked it in conjuction with a reference to "equity and good conscience". Legal experts of earlier generations did not draw any distinction between "natural justice" and "natural law". "Natural justice" was considered as "that part of natural law which relates to the administration of justice."

In Basudeo Tiwary v Sido Kanhu University and others (1998) 8 SCC 194, the apex Court held that natural justice is an antithesis of arbitrariness. It, therefore, follows that audi alteram partem, which is facet of natural justice is a requirement of Art.14.

In Nagarjuna Construction Company Limited v. Government of Andhra Pradesh, (2008) 16 SCC 276, the apex Court held as follows:

"The rule of law demands that the power to determine questions affecting rights of citizens would impose the limitation that the power should be exercised in conformity with the principles of natural justice. Thus, whenever a man's rights are affected by decisions taken under statutory powers, the court would presume the existence of a duty to observe the rules of natural justice. It is important to note in this context the normal rule that whenever it is necessary to ensure against the failure of justice, the principles of natural justice must be read into a provision. Such a course is not permissible where the rule excludes expressly or by necessary intendment, the application of the principles of natural justice, but in that event, the validity of that rule may fall for consideration."

The apex Court in Uma Nath Panday and others v State of U.P. and others, AIR 2009 SC 2375, held that natural justice is the essence of fair adjudication, deeply rooted in tradition and conscience, to be ranked as fundamental. The purpose of following the principles of natural justice is the prevention of miscarriage of justice.

Natural justice, another name of which is common sense justice, is the name of those principles which constitute the minimum requirement of justice and without adherence to which justice would be a travesty. Natural justice accordingly stands for that "fundamental quality of fairness which being adopted, justice not only be done but also appears to be done".

Needless to say black listing a businessman is a stigma and affects his career or in the business and prospects therein. Accordingly, such black listing has civil consequences. It is affects reputation of the person black listed not only in his dealings with the Government but in his dealings with other private persons. Accordingly, principle of natural justice is required to be followed in such cases. This is a settled view of the Supreme Court as well as of this Court. (See AIR 1975 SC 266 M/s. Erusian Equipment and Chemicals v. State of West Bengal, AIR 1978 SC 930; Joseph Vilangandan v. The Executive Engineer, P.W.D. Ernakulam, (1971) 1 Cut WR 147; Purna Chandra Das v. Director of Public Instruction, Orissa and (1985) 1 Orissa LR 277 : (AIR 1986 Orissa 220); Dandapani Roule v. State of Orissa).

Mr. S.K. Dash, learned counsel for the petitioner also contended that by order of the Collector on 17.05.2020, the petitioner has been blacklisted, but the said order has not been communicated to the petitioner nor any reason has been assigned for such blacklisting of the petitioner debarring him to carry out business throughout the State and also to participate in the tender process, which itself is a stigma on the petitioner.

"Nihil quod est contra rationem est licitum" means as follows:

"nothing is permitted which is contrary to reason. It is the life of the law. Law is nothing but experience developed by reason and applied continually to further experience. What is inconsistent with and contrary to reason is not permitted in law and reason alone can make the laws obligatory and lasting."

Therefore, recording of reasons is also an assurance that the authority concerned applied its mind to the facts on record. It is pertinent to note that a decision is apt to be better if the reasons for it are set out in writing because the reasons are then more likely to have been properly thought out. It is vital for the purpose of showing a person that he is receiving justice.

In Re: Racal Communications Ltd. (1980)2 All ER 634 (HL), it has been held that the giving of reasons facilitates the detection of errors of law by the court.

In Padfield v. Minister of Agriculture, Fisheries and Food (1968) 1 All E.R. 694, it has been held that a failure to give reasons may permit the Court to infer that the decision was reached by the reasons of an error in law.

In Union of India v. Mohan Lal Capoor, AIR 1974 SC 87 it has been held that reasons are the links between the materials on which certain conclusions are based and the actual conclusions. They disclose how the mind is applied to the subject-matter for a decision whether it is purely administrative or quasi-judicial and reveal a rational nexus between the facts considered and conclusions reached. The reasons assure an inbuilt support to the conclusion and decision reached. Recording of reasons is also an assurance that the authority concerned applied its mind to the facts on record. It is vital for the purpose of showing a person that he is receiving justice.

Similar view has also been taken in Uma Charan v. State of Madhya Pradesh, AIR 1981 SC 1915.

It is worthwhile to mention here that while blacklisting the petitioner, no opportunity of hearing was given to him.

In Smt. Menaka Gandhi v. Union of India, AIR 1978 SC 597, the Constitution Bench of the apex Court held as follows:-

"Although there are no positive words in the statute requiring that the party shall be heard, yet the justice of the common law will supply the omission of the legislature. The principle of audi alteram partem, which mandates that no one shall be condemned unheard, is part of the rules of natural justice."

Similar view has also been taken by this Court in Bijay Kumar Paikaray v. State of Odisha and others, 2017 (I) ILR -CUT- 252 : 2017 (I) OLR-439.

In view of the factual and legal aspects, as discussed above, this Court is of the considered view that the order impugned dated 17.05.2020 under Annexure-6, from which it is evident that the Collector, Sundargarh vide order no.1830 dated 17.05.2020 has blacklisted the petitioner from participating in all tender process of civil supplies as well as other departments for a period of two years across the State, cannot sustain in the eye of law. As such, the consequential order of terminating the extended agreements of the petitioner which were valid till 20.05.2020 passed by the District Manager, OSCSC Ltd. by order of the Collector, Sundargarh also cannot sustain, as the same has been passed in gross violation of principles of natural justice. Thereby, the order dated 17.05.2020 under Annexure-6 is liable to be quashed and is hereby quashed. It would however be open for the opposite parties to take appropriate action afresh after giving opportunity of hearing to the petitioner in conformity with the principles of natural justice.

The writ petition is accordingly allowed. However, there shall be no order as to cost.