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2011 DIGILAW 728 (GAU)

Manilal Gupta,Company v. Union of India

2011-09-01

BROJENDRA PRASAD KATAKEY

body2011
JUDGMENT B.P. Katakey, J. 1. The petitioners, the approved Army Service Corps (ASC) contractors, are aggrieved by the orders passed by the Major General Army Service Corps removing their names from the list of approved contractors due to poor performance of the contracts awarded to them and in exercise of the authority conferred under para 19(c)(i) of the Procedure for Conclusion of ASC Contracts for Perishable Items (in short the Procedure) laid down by the Govt. of India, Ministry of Defence. Since in both the writ petitions identical orders are put to challenge and the issue involved is same, those are taken up for disposal together as agreed to by the learned counsel for the parties. The petitioners in WP(C) Nos. 6847/2010 and 6879/2010 were issued with the notices dated 23.10.2009 and 12.12.2009 respectively asking them to show-cause, as to why their names should not be removed from the list of approved ASC contractors for their poor performance, as they have failed to deliver supplies on a number of occasions during the currency of contracts awarded to them for supply or ration items to Army Service Corps at different points and also for grading their services as poor. The petitioners on receipt of show-cause notices submitted almost identical replies on 10.11.2009 and 26.12.2009 respectively, basically contending that there was no intentional failure to perform the contract as during the relevant period of time the crop conditions were not normal and there was natural calamities affecting the food market in the country apart from affecting crop by diseases, which resulted in heavy crop failure and very high price in the market. The petitioners in their replies pleaded force majeure and contended that for the said reason they cannot be penalized by removing their names from the list of approved contractors. The Major General thereafter upon consideration of the replies submitted by the petitioners, passed 2(two) separate orders, one dated 15.04.2010 and the other dated 02.03.2010 which are challenged in WP(C) Nos. 6847/2010 and 6879/2010 respectively, removing their names from the list of approved contractors due to poor performance against the contracts in exercise of the power conferred under the aforesaid Procedure. Both the petitioners thereafter preferred appeal before the Deputy Director General of Supply and Transport, which were dismissed by 2(two) separate orders dated 16.07.2010 and 04.10.2010. 6847/2010 and 6879/2010 respectively, removing their names from the list of approved contractors due to poor performance against the contracts in exercise of the power conferred under the aforesaid Procedure. Both the petitioners thereafter preferred appeal before the Deputy Director General of Supply and Transport, which were dismissed by 2(two) separate orders dated 16.07.2010 and 04.10.2010. The petitioners in these petitions apart from challenging aforesaid initial orders passed by the Major General and have also challenged the subsequent orders passed by the Deputy Director General on appeal. 2. I have heard Mr. K.N. Choudhury, learned Sr. counsel for the petitioners and Mr. R. Sharma, learned Asstt. Solicitor General appearing for the respondents. 3. Challenging the orders passed by the Major General as well as the Deputy Director General, it has been contended by the learned Sr. counsel for the petitioners that since in the show-cause replies filed, pursuant to the show-cause notices issued by the authority, certain grounds were taken explaining the reason for the petitioners' inability to perform the contract in time the authority was duty bound to deal with those grounds taken in the replies while taking the decision relating the removal of the petitioners from the fist of approved contractors so that the petitioners could know the reason for their removal from the list and effectively challenge the same in the appeal provided. According to the learned senior counsel, the orders passed by the Major General do not disclose application of mind to the grounds taken by the petitioners in the replies as the said orders do not disclose consideration of the same. It has therefore been submitted that non-passing of the reasoned order dealing with the grounds taken by the petitioners in the replies violates the principle of natural justice as the petitioners have been deprived from filing effective appeals before the Appellate Authority. The learned counsel further submits that consideration of the grounds taken in the replies by the authority is also necessary to remove the arbitrariness in action, which is one of the facet of principle of natural justice. According to Mr. The learned counsel further submits that consideration of the grounds taken in the replies by the authority is also necessary to remove the arbitrariness in action, which is one of the facet of principle of natural justice. According to Mr. Choudhury, the satisfaction of the authority in arriving at a decision to remove the petitioners from the list of approved contractors must be objective and not subjective and such objective satisfaction would reflect only if the grounds taken by the petitioners in the show-cause replies are considered and dealt with in the orders passed. Mr. Choudhury submits that since the orders passed by the Major General as well as the Deputy Director General are devoid of any reason, the same needs to be set aside and the matter is required to be remitted to the authority to consider the grounds taken by the petitioners in their show-cause replies and to pass speaking orders. Mr. Choudhury in support of his contention has placed reliance on the decision of the Apex Court in M/s. Woolcombers of India Ltd. v. Woolcombers Workers Union & Anr. reported in (1974)3 SCC 318 , in M/s. Erusian Equipment & Chemicals Ltd. v. State of West Bengal & Anr., reported in (1975) 1 SCC 70 and in Kranti Associates Private Limited & Anr. v. Masood Ahmed Khan & Ors. reported in (2010) 9 SCC 496. 4. The learned Asstt. Solicitor General appearing for the respondents, on the other hand, supporting the orders passed by the Major General as well as by the Deputy Director General on appeal has submitted that before passing the impugned orders all reasonable opportunities of being heard were afforded to the petitioners and they were issued with the show-cause notices, which were replied by the petitioners and all relevant materials were taken into consideration by the authorities while passing the orders as is reflected from the records maintained by the authorities. The learned Asstt. The learned Asstt. Solicitor General submits that the petitioners on earlier two occasions were also removed from the list of approved contractors and as the petitioners could not perform their contract and their performance were found to be poor, they were accordingly removed from the list of approved contractors for a period of 2(two) years after affording due opportunities and as such the impugned orders cannot said to be passed in violation of the principle of natural justice as has been contended by the petitioners. It has also been submitted that it is evident from the records that other contractors during the same period could perform the contracts and supply the similar perishable items to other units of the Army Service Corps and hence the grounds taken by the petitioners relating to the natural calamities resulting in high rise of the price of the commodities and affecting the crop by different diseases are not at all sustainable. It has also been submitted that the records reveal consideration of those grounds by the authority and the appellate order passed by the Deputy Director General reflects consideration of the grounds taken while rejecting the appeal filed. It has also been submitted that in any case no prejudice has been caused to the petitioners in not reflecting the point wise consideration of the grounds taken in the show-cause replies filed by the petitioners in the initial orders passed by the Major General. The learned Asstt. Solicitor General submits that since the contract is relating to the supply of ration items and other commodities for the consumption by the Army personnel in Army Service Corps, it involves public interest and the petitioners being the contractors cannot refuse to supply the articles on the ground that price has gone up because of the natural calamities or for the reasons cited in the replies to the show-cause notices issued. The learned counsel, therefore, submits that the writ petitions deserve to be dismissed. 5. I have considered the submissions of the learned counsel for the parties and perused the pleadings as well as the records produced by the learned Asstt. Solicitor General. 6. The learned counsel, therefore, submits that the writ petitions deserve to be dismissed. 5. I have considered the submissions of the learned counsel for the parties and perused the pleadings as well as the records produced by the learned Asstt. Solicitor General. 6. The petitioners were issued with the aforesaid notices to show cause as to why they should not be removed from the list of approved contractors on the ground of their inability to perform the contract as well as for poor performance, on receipt of which they submitted their replies as aforesaid taking the plea that they could not perform the contract because of natural calamities, namely, damage of crop, due to infection by various diseases resulting in high rise of price of the commodities in the market at the relevant point of time. By the orders dated 15.04.2010 and 02.03.2010 passed by the Major General, which are challenged in WP(C) Nos. 6847/2010 and 6879/2010 respectively, the petitioners have been removed from the list of approved contractors due to poor performance against the contracts awarded to them. Such removal from the list of contractors is for a period of 2(two) years. The authority of the Major General to remove the approved contractor from the list has not been questioned by the writ petitioners in the present writ petitions. What has been contended is that though the petitioners in the show-cause replies taken up certain grounds why their names should not be removed from the list of approved contractors those have not been dealt with by the Major General as well as by the Deputy Director General in the impugned orders passed. 7. It appears from the aforesaid orders passed by the Major General that the petitioners have been removed due to poor performance against the contracts awarded and after consideration of the replies filed by them pursuant to the aforesaid show-cause notices issued. The petitioners thereafter filed the appeals before the Appellate Authority, taking the same grounds as has been taken in the show-cause replies. The Deputy Director General vide order dated 04.10.2010 (which is the subject matter in WP(C) No. 6847/2010) rejected the appeal after dealing with the grounds taken in the show-cause replies as well as in the appeal filed by them. For better appreciation the order passed by the Appellate Authority on 04.10.2010 in its entirety is quoted below :- M/s. Manilal Gupta & Co. For better appreciation the order passed by the Appellate Authority on 04.10.2010 in its entirety is quoted below :- M/s. Manilal Gupta & Co. Kalibari Road Dibrugarh-786001 APPEAL AGAINST REMOVAL OF NAME FROM THE APPROVED LIST OF ASC CONTRACTORS Dear Sir, 1. Reference to your Appeal No. Appeal/DGST/MLG/20101 dated 10 May, 2010. 2. Your appeal against the order for removal from the approved list of ASC contractors issued by MG ASC Eastern Command vide HQ Eastern Command letter No. MG ASC/EC/B/42/ST5 dated 15 April, 2010 was considered. In this connection, the following pts emerged : (a) Though your firm is old and specializes in ASC articles, the action for removal of your firm had to be initiated for various reasons. Your firm failed in stns i.e. Kolkata, Narangi, Panitola, Lekhabari and five Del pts in 2 Mtn Div for almost all articles incl CHT. Accordingly contracts were rescinded by respective CF As. (b) There were various seasonal and other factors which had led to increase in rates for perishable items, however, these were applicable for all other ASC contractors in the Comd theatre who have not failed to deliver sups. In fact your firm had failures right from the commencement of the contractual period causing serious inconvenience to troops in difficult areas. (c) Bird Flu had an effect in Eastern Comd during the final yr. 2008-09, however, there were no reasons for short sup of meat gp items during 2009-10. (d) Request for issue of substitutes could not have been accepted as the failure were for all ASC articles, with no effort of making available partial sups. 3. Thus it can be seen your contention is not convincing and justifiable and as such, the decision to remove your firm from the list of registered contractors of HQ Central Command has been correctly taken under provisions of para 19(c)(i) of Government of India, Ministry of Defence letter No. PC/RAKSHA/63060/Q/5TS/3633/D(QS) dated 26 September, 2006. 4. In view of the above, your appeal has been rejected being devoid of any merit. Yours faithfully, Sd/- (V. D. Meena) Dy Dir, ST-5 For DGST 8. 4. In view of the above, your appeal has been rejected being devoid of any merit. Yours faithfully, Sd/- (V. D. Meena) Dy Dir, ST-5 For DGST 8. It is no doubt true that neither in the original order passed by the Major General nor in the appellate order passed by the Appellate Authority, which are challenged in WP(C) No. 6879/2010, the grounds taken in the replies as well as the appeal by the writ petitioners were dealt with point wise. However, it has been mentioned in the said orders that the replies as well as the contention in the appeal filed received due consideration of the authorities concerned. The records produced by the respondents for perusal by the Court also reveal the point wise consideration of the grounds taken by the writ petitioners in the memorandum of appeal filed, while arriving at a final decision by the Appellate Authority. As discussed above, in the order dated 04.10.2010 passed by the Appellate Authority, which is the subject matter in WP(C) No. 6847/2010, the reasons for rejection of the grounds taken in the memorandum of appeal, which were also the grounds taken in the show-cause notices, have been recorded and those grounds were individually considered and rejected by the Appellate Authority. Identical grounds were also taken by the writ petitioners in WP(C) No. 6879/2010 and hence it cannot be said that any prejudice has been caused to the petitioners in not specifically mentioning point wise consideration of the replies in the orders passed by the Major General as well as by the Appellate Authority which are under challenge in WP(C) No. 6879/2010, more so when it is an admitted position of fact that the proprietors of both the firms, namely, Shri Manila I Gupta and Company and M/s. Kamakhya Enterprises are the husband and wife. No argument has been advanced by the learned counsel challenging the grounds given in the order dated 04.10.2010 passed by the appellate authority. 9. There is no dispute to the proposition of law that the rules of natural justice are foundational and fundamental concepts in administrative law and applicable to almost whole range of administrative powers. It is however not possible and practicable to precisely define the parameters of natural justice and also it cannot be put within the strait-jacket of a rigid formula. There is no dispute to the proposition of law that the rules of natural justice are foundational and fundamental concepts in administrative law and applicable to almost whole range of administrative powers. It is however not possible and practicable to precisely define the parameters of natural justice and also it cannot be put within the strait-jacket of a rigid formula. What particular rule of natural justice should apply in a given case must depend to a great extent on the facts and circumstances of that case as well as the framework of the law under which the enquiry is made. The principles of natural justice must be modified to take into account the disastrous consequence that follows from their routine application in isolation of realities. There is, however, no distinction between a judicial act and an administrative act. All administrative orders, which involve civil consequences, must be consistent with the rules of natural justice. The basic requirement of the rules of natural justice is that no one should be condemned unheard. In a given case, an order passed by the administrative authority even in violation of the principle of natural justice may not be interfered with by the Court unless the prejudice is shown to have been caused to the party complaining about the violation of principle of natural justice. In the cases in hand, as discussed above, no prejudice has been caused to the petitioner for non-mentioning of the detailed reasons in the orders passed by the Major General on 02.03.2010 and by the appellate authority on 16.07.2010 (subject matter in WP(C) No. 6879/2010) and by the Major General on 15.04.2010 (subject matter in WP(C) No. 6847/2010). 10. The Apex Court in M/s. Erusian Equipment & Chemicals Ltd. (supra) has held that a duty to act fairly by the State in dealing with the individuals can be interpreted as meaning a duty to observe certain aspects of the rules of natural justice. It has also been opined that a body may be under a duty to give fair consideration to the facts and to consider the representations but not to disclose to those persons details of information in his possession and sometimes duty to act fairly can also be sustained without providing opportunity for an oral hearing. It has also been opined that a body may be under a duty to give fair consideration to the facts and to consider the representations but not to disclose to those persons details of information in his possession and sometimes duty to act fairly can also be sustained without providing opportunity for an oral hearing. The Apex Court has held that it will depend upon the nature of the interest to be affected, the circumstances in which a power is exercised and the nature of sanctions involved therein. The Apex Court further opined that the fundamental of fair play require that the person concerned should be given an opportunity to represent his case before an adverse order is passed. The authority is no doubt duty bound to have an objective satisfaction before passing an adverse order. 11. In M/s. Woolcombers of India ltd. (supra) it has been observed by the Apex Court that giving of reasons in support of their conclusions by judicial and quasi-judicial authorities while exercising the initial jurisdiction is necessary to prevent unconscious unfairness or arbitrariness in reaching the conclusions. It has been opined that the authority has to adduce reason, which will be regarded as fair and legitimate by reasonable man and will discard irrelevant or extraneous considerations. Giving the reasons also helps the appellate authority to judge whether such reasons are right or wrong. The said principle is also held to be applicable by the Apex Court even in administrative decision [Kranti Associates Private Limited (supra)]. 12. There is no dispute to the aforesaid proposition of law as enunciated by the Apex Court. However, as discussed above, in the case in hand, the contracts were for supply of perishable commodities for consumption by the Army personnel of Army Service Corps in different units, which involves the public interest. The petitioners being contractors cannot refuse to supply the commodities contracted for on the ground that because of natural calamities and diseases etc. the crops were affected resulting in high price rise. They being the prudent businessmen, claimed to do the business in the line for a long period of time, must foresee such eventuality. The petitioners being contractors cannot refuse to supply the commodities contracted for on the ground that because of natural calamities and diseases etc. the crops were affected resulting in high price rise. They being the prudent businessmen, claimed to do the business in the line for a long period of time, must foresee such eventuality. Moreover, in one of the appellate orders dated 04.10.2010 passed by the Appellate Authority (subject matter in WP(C) No. 6847/2010) the grounds taken in the show-cause replies as well as in the appeal filed were dealt with and rejected, where from it appears that other suppliers during the same time supplied similar commodities to other units of the ASC. Similar were the grounds taken by the writ petitioners in the show-cause replies as well as the appeal filed before the departmental authority. As noticed above, the records produced by the respondents reveal taking into consideration of such grounds in details and therefore, non-recording of detailed reason in the initial orders dated 15.04.2010 and 02.03.2010 passed by the Major General and the appellate order dated 16.07.2010 (subject matter in WP(C) No. 6879/2010) did not cause any prejudice to the petitioners. In view of the aforesaid discussion, the writ petitions are dismissed being devoid of merit. No costs. Petition dismissed.