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2019 DIGILAW 1746 (ALL)

Babban Singh v. State Of U. P.

2019-07-22

BALA KRISHNA NARAYANA, PRAKASH PADIA

body2019
JUDGMENT : Prakash Padia, J. 1. Heard Sri Hanuman Prasad Dube, learned counsel for the petitioner and Smt. Archana Singh, learned Additional Chief Standing Counsel representing respondents-State. 2. The petitioner has filed the present writ petition with the prayer to quash the order dated 21.6.2019 passed by respondent No.2 with a further prayer to issue a mandamus commanding the respondent No.2 to give effect to the impugned dated 21.6.2019. A further prayer is also made to issue a Mandamus directing the respondent to determine the contract of the petitioner with respect to the mining lease and further to refund the amount deposited by the petitioner under the agreement dated 1.2.2018 including the amount of security along with interest at the market rate. 3. Facts in brief as contained in the writ petition are that the petitioner is a Class A category contractor and registered in various departments of the State Government. An advertisement No.824 dated 7.9.2017 was published/uploaded on the website of the respondents inviting e-tenders for allotment of mining lease of various locations including Plot No.25 comprising of the village Kabra to Deeha and Kakra to Jamunipur. 4. Numbers of e-tenders were submitted by the desirous applicants. The petitioner also submitted e-tender for allotment of mining lease in respect of sand area for the location in question. The tender submitted by the petitioner was found to be most suitable and, therefore, the respondent No.2 vide its order dated 29.11.2017 sanctioned the mining lease in respect of sand for the area in question in favour of the petitioner. Additional District Magistrate (Administration) Allahabad issued a letter of intent in favour of the petitioner on 30.11.2017. Subsequently, an agreement was also executed in favour of the petitioner on 12.1.2018. 5. After the execution of the agreement, when the petitioner went to sand area in the Month of January, 2018 for the purpose of operating mining lease, the petitioner was confronted with certain ante-social and Gunda elements who were excavating sand from the plot in question in an illegal manner. In this regard, the petitioner met with the S.H.O. Police Station Sarai Inayat, Allahabad as well as Circle Officer, Phoolpur, District Allahabad regarding illegal excavation and transportation of the sand from his mining area by ante-social and Gunda elements but nothing was done by the aforesaid authorities. In this regard, the petitioner met with the S.H.O. Police Station Sarai Inayat, Allahabad as well as Circle Officer, Phoolpur, District Allahabad regarding illegal excavation and transportation of the sand from his mining area by ante-social and Gunda elements but nothing was done by the aforesaid authorities. Thereafter the petitioner submitted an application dated 21.1.2018 before the respondent No.2 and 3 stated therein that necessary directions to be issued to the SHO P.S. Sarai Inayat and Circle Officer, Allahabad to prevent illegal mining of sand from his mining area. It is further contended that in spite of the same, no action whatsoever has been taken by the respondent Nos.2 and 3 to verify the illegal mining of sand from the area allotted to the petitioner. 6. A demand notice dated 1.5.2018 was issued to the petitioner by respondent No.3 requiring the petitioner to deposit the amount specified in the demand notice as installment of the mining lease in question and second installment of the first year's lease. The amount of installment as indicated in the notice dated 1.5.2018 was duly deposited by the petitioner but in spite of the same, he was not allowed to operate the mining lease. Since, the petitioner was not permitted to run his mining operation due to the facts as stated hereinabove, the petitioner submitted another application dated 9.5.2018 before respondent Nos.2 and 3 stating again that all the state officials are required to take appropriate action in the matter. 7. It is further contended that since no positive response was given to the petitioner, the petitioner gave a legal notice dated 07.11.2018 under Section 80(1) of the C.P.C. to cancel his lease agreement dated 12.1.2018 and amount deposited by him may be refunded. Since no action was taken, the petitioner had submitted so many representations addressed to the respondent Nos.2/3 from time to time. It is further contended that F.I.Rs were also lodged against various persons by the Police Authorities in this regard. It is further contended that instead of taking appropriate action in the matter, a demand notice dated 26.4.2019 was issued by the respondent No.3 requiring the petitioner to deposit a huge amount under different heads as specified in the notice in question within a period of 30 days. 8. In response to the same, the petitioner submitted a detailed reply on 13.5.2019. 8. In response to the same, the petitioner submitted a detailed reply on 13.5.2019. It is contended that since no action was taken and the petitioner was not being allowed to operate mining operation, the petitioner preferred a writ petition before this Court being Writ C No.19246 of 2019 (Babban Singh Vs. State of U.P. and two others) with the relief inter-alia to quash the demand notice dated 26.4.2019. During the pendency of the writ petition, order dated 21.06.2019 was passed by respondent No.2 by which the lease granted to the petitioner was cancelled and the petitioner was blacklisted for a period of two years. When the petitioner came to know regarding the aforesaid order, he withdrew Writ C No.19246 of 2019 on 11.7.2019 with a liberty to file a fresh petition. Now the petitioner has preferred the present writ petition challenging the order dated 21.6.2019 passed by the respondent No.2 by which respondents cancelled his mining lease and directed the petitioner to deposit a sum of Rs.1,27,68,000/- towards installments (Third and Fourth installments of first year and first and second installments of second year), Rs.3,76,960/- towards T.C.S. and Rs.18,84,800/- towards District Mineral Foundation Trust. 9. It is contended by learned counsel for the petitioner that the order impugned passed by the respondent No.2 is arbitrary, unjust, illegal and liable to be set aside by this Court due to following reasons :- (i) No opportunity of personal hearing was given to the petitioner before passing the order impugned by which not only the lease of the petitioner was cancelled, his security amount was forfeited but he has also been blacklisted for two years. (ii) The show cause notice was issued to the petitioner by Senior Mines Officer but the order impugned has been passed by the District Magistrate. (iii) Nothing has been stated in the show cause notice regarding blacklisting of the petitioner but in the impugned order, the petitioner was also blacklisted without giving any opportunity of hearing as such the order of blacklisting passed against the petitioner is in complete violation of principles of natural justice. 10. On the other hand, it is contended by Smt. Archana Singh, learned Additional Chief Standing Counsel, that since terms and conditions contained in the lease deed were violated by the petitioner, therefore, the action was rightly taken by the respondent No.2. 10. On the other hand, it is contended by Smt. Archana Singh, learned Additional Chief Standing Counsel, that since terms and conditions contained in the lease deed were violated by the petitioner, therefore, the action was rightly taken by the respondent No.2. It is further contended by her that the order impugned in the present writ petition is absolutely perfect and valid order does not warrant any interference specially under Article 226 of the Constitution of India. 11. Heard learned counsel for the parties and perused the record. With the consent of learned counsel for the parties, this writ petition is disposed of finally at the admission stage itself. 12. The petitioner has assailed the order dated 21.06.2019 passed by respondent No.2, i.e. District Magistrate, Prayagraj by which reply submitted by the petitioner was rejected and an order was passed directing the petitioner to deposit a sum of Rs.1,27,68,000/- towards installments (Third and Fourth installments of first year and first and second installments of second year), Rs.3,76,960/- towards T.C.S. and Rs.18,84,800/- as contribution to District Mineral Foundation Trust. Apart from the same, the petitioner was also black listed for a period of two years. 13. From perusal of the record it is clear that before passing the impugned order no opportunity of personal hearing was given to the petitioner. It is also clear from perusal of the record that notices were issued by the Senior Mines Officer but the impugned order was passed by the respondent No.2, i.e. District Magistrate Prayagraj. Apart from the same, it is also clear that although nothing is contained in the show cause notice regarding factum of blacklisting of the petitioner but while passing the order impugned, the petitioner was also blacklisted for a period of two years. 14. The order impugned is in two parts:- (i) recovery against the petitioner (ii) blacklisting of the petitioner for two years. 15. Insofar as the first part is concerned, it is clear from the record that the notices were issued to the petitioner by the Senior Mines Officer, Prayagraj but the order was passed by District Magistrate Prayagraj, in this view of the matter, we are of the opinion that the order passed by the District Magistrate Prayagraj is in complete violation of principles of natural justice. 16. 16. Insofar as the blacklisting of the petitioner is concerned, From perusal of the impugned order, we find that the respondents have proceeded on the basis of a show cause notice. Nothing has been stated in the show cause notice regarding blacklisting of the petitioner. Learned Standing Counsel has not been able to refute this fact on record. In our opinion, the issue which was not raised even in the show cause notice, therefore, could not be made the basis for blacklisting of the petitioner. 17. The central issue, however, pertains to the requirement of stating the action which is proposed to be taken. The fundamental purpose behind the serving of show cause notice is to make the noticee understand the precise case set up against him which he has to meet. This would require the statement of imputations detailing out the alleged breaches and defaults he has committed, so that he gets an opportunity to rebut the same. Another requirement, according to us, is the nature of action which is proposed to be taken for such a breach. That should also be stated so that the noticee is able to point out that proposed action is not warranted in the given case, even if the defaults/ breaches complained of are not satisfactorily explained. When it comes to black listing, this requirement becomes all the more imperative, having regard to the fact that it is harshest possible action. In the case of Gorkha Security Services Vs. Government (NCT of Delhi) and others, 2014 9 SCC 105 , the Supreme Court was pleased to hold that it is incumbent on the part of the department to state in show cause notice that the competent authority intended to impose such a penalty of blacklisting, so as to provide adequate and meaningful opportunity to show cause against the same. Relevant paragraph namely paragraph 27 of the aforesaid judgement is quoted below:- "27. We are, therefore, of the opinion that it was incumbent on the part of the Department to state in the show cause notice that the competent authority intended to impose such a penalty of blacklisting, so as to provide adequate and meaningful opportunity to the appellant to show cause against the same. We are, therefore, of the opinion that it was incumbent on the part of the Department to state in the show cause notice that the competent authority intended to impose such a penalty of blacklisting, so as to provide adequate and meaningful opportunity to the appellant to show cause against the same. However, we may also add that even if it is not mentioned specifically but from the reading of the show cause notice, it can be clearly inferred that such an action was proposed, that would fulfill this requirement. In the present case, however, reading of the show cause notice does not suggest that noticee could find out that such an action could also be taken. We say so for the reasons that are recorded hereinafter." 18. In the case of Erusian Equipment & Chemicals Ltd. Vs. State of West Bengal, 1975 1 SCC 70 , it was held by the Supreme Court that blacklisting has the affect of preventing a person from the privilege and advantage of name into relationship with the Government for purpose of aim. It was held by the Supreme Court in the aforesaid case that the fundamentals of fair play require that a person concerned should be given an opportunity to represent his case. Paragraphs 12 and 20 of the said judgment is quoted below :- "12. Under Article 298 of the Constitution the executive power of the Union and the State shall extend to the carrying on of any trade and to the acquisition, holding and disposal of property and the making of contracts for any purpose. The State can carry on executive function by making a law or without making a law. The exercise of such powers and functions in trade by the State is subject to Part III of the Constitution. Article 14 speaks of equality before the law and equal protection of the laws. Equality of opportunity should apply to matters of public contracts. The State has the right to trade. The State has there the duty to observe equality. An ordinary individual can choose not to deal with any person. The Government cannot choose to exclude persons by discrimination. The order of blacklisting has the effect of depriving a person of equality of opportunity in the matter of public contract. The State has the right to trade. The State has there the duty to observe equality. An ordinary individual can choose not to deal with any person. The Government cannot choose to exclude persons by discrimination. The order of blacklisting has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is unable to enter into advantageous relations with the Government because of the order of blacklisting. A person who has been dealing with the Government in the matter of sale and purchase of materials has a legitimate interest or expectation. When the State acts to the prejudice of a person it has to be supported by legality. 20. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the blacklist." 19. Again in the case of Raghunath Thakur Vs. State of Bihar, 1989 1 SCC 229 the aforesaid principles was reiterated in the following manner: (SCC p. 230, para 4). "4........ But it is an implied principle of the rule of law that any order having civil consequence should be passed only after following the principles of natural justice. It has to be realised that blacklisting any person in respect of business ventures has civil consequence for the future business of the person concerned in any event. Even if the rules do not express so, it is an elementary principle of natural justice that parties affected by any order should have right of being heard and making representations against the order. In that view of the matter, the last portion of the order insofar as it directs blacklisting of the appellant in respect of future contracts, cannot be sustained in law.........." 20. Thus, there is no dispute about the requirement of serving show-cause notice. We may also hasten to add that once the show-cause notice is given and opportunity to reply to the show-cause notice is afforded, it is not even necessary to give an oral hearing. Thus, there is no dispute about the requirement of serving show-cause notice. We may also hasten to add that once the show-cause notice is given and opportunity to reply to the show-cause notice is afforded, it is not even necessary to give an oral hearing. The High Court has rightly repudiated the appellant's attempt in finding foul with the impugned order on this ground. Such a contention was specifically repelled in Patel Engg. [Patel Engg. Ltd. v. Union of India, 2012 11 SCC 257 : (2013) 1 SCC (Civ) 445]." 20. In the case of M/s Mahabir Auto Stores & Ors. Vs. Indian Oil Corporation Ltd, 1990 3 SCC 752 it was held by the Supreme Court that arbitrariness and discrimination in every matter is subject to judicial review. Paragraph 11 of the aforesaid judgment is quoted below :- "It is well settled that every action of the State or an instrumentality of the State in exercise of its executive power, must be informed by reason. In appropriate cases, actions uninformed by reason may be questioned as arbitrary in proceedings under Article 226 or Article 32 of the Constitution. Reliance in this connection may be placed on the observations of this Court in M/s Radha Krishna Agarwal & Ors. v. State of Bihar & Ors, 1977 3 SCC 457 .1t appears to us, at the outset, that in the facts and circumstances of the case, the respondent-company IOC is an organ of the State or an instrumentality of the State as contemplated under Article 12 of the Constitution. The State acts in its executive power under Article 298 of the Constitution in entering or not entering in contracts with individual par- ties. Article 14 of the Constitution would be applicable to those exercises of power. Therefore, the action of State organ under Article 14 can be checked. M/s Radha Krishna Agarwal v. State of Bihar, (supra) at p. 462, but Article 14 of the Constitution cannot and has not been construed as a charter for judicial review of State action after the contract has been entered into, to call upon the State to account for its actions in its manifold activities by stating reasons for such actions. M/s Radha Krishna Agarwal v. State of Bihar, (supra) at p. 462, but Article 14 of the Constitution cannot and has not been construed as a charter for judicial review of State action after the contract has been entered into, to call upon the State to account for its actions in its manifold activities by stating reasons for such actions. In a situation of this nature certain activities of the respondent company which constituted State under Article 12 of the Constitution may be in certain circumstances subject to Article 14 of the Constitution in entering or not entering into contracts and must be reasonable and taken only upon lawful and relevant consideration, it depends upon facts and circumstances of a particular transaction whether heating is necessary and reasons have to be stated. In case any right conferred on the citizens which is sought to be interfered, such action is subject to Article 14 of the Constitution, and must be reasonable and can be taken only upon lawful and relevant grounds of public interest. Where there is arbitrariness in State action of this type of entering or not entering into contracts, Article 14 springs up and judicial review strikes such an action down. Every action of the (1975) 1 SCC 70 . State executive authority must be subject to rule of law and must be informed by reason. So, whatever be the activity of the public authority, in such monopoly or semi-monopoly dealings, it should meet the test of Article 14 of the Constitution. If a Governmental action even in the matters of entering or not entering into contracts, fails to satisfy the test of reasonableness, the same would be unrea- sonable. In this connection reference may be made to E.P. Royappa v. State of Tamil Nadu & Anr, 1974 4 SCC 3 ; Maneka Gandhi v. Union of India & Anr, 1978 1 SCC 248 ; Ajay Hasia & Ors. v. Khalid Mujib Sehravardi & Ors, 1981 1 SCC 722 ; R.D. Shetry v. International Airport Authority of India & Ors, 1979 3 SCC 489 and also Dwarkadas Marlaria and sons v. Board of Trustees of the Port of Bombay, 1989 3 SCC 293 . v. Khalid Mujib Sehravardi & Ors, 1981 1 SCC 722 ; R.D. Shetry v. International Airport Authority of India & Ors, 1979 3 SCC 489 and also Dwarkadas Marlaria and sons v. Board of Trustees of the Port of Bombay, 1989 3 SCC 293 . It appears to us that rule of reason and rule against arbitrariness and discrimination, rules of fair play and natural justice are part of the rule of law applicable in situation or action by State instrumentality in dealing with citizens in a situation like the present one. Even though the rights of the citizens are in the nature of contractual rights, the manner, the method and motive of a decision of entering or not entering into a contract, are subject to judicial review on the touchstone of relevance and reasonableness, fair play, natural justice, equality and non-discrimination in the type of the transactions and nature of the dealing as in the present case." 21. Since in the facts of the present case, there is a complete failure to follow due process, we find ourselves unable to sustain the order dated 21.06.2019 passed by the respondent No.2. 22. We accordingly allow the writ petition and quash the the order dated 21.06.2019. We further clarify that in case the respondents do choose to initiate fresh proceedings for blacklisting the firm of the petitioner, we leave it open to them to do so subject to the observation that the proceedings if initiated shall be undertaken in accordance with law and the observations appearing herein above.