HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
D.B. Spl. Appl. Writ No. 1420/2019
M/s. Mohan Traders, Through Its Proprietor Rajkumar Chitora
S/o Shri Pyar Chand Aged About 50 Years, R/o 144, Krishi Mandi
District Udaipur, Rajasthan.
----Appellant
Versus
1. Raj. Rajya Sahkari Upbhokta Sangh Ltd., Through Its
Managing Director, 237, Second Floor, Nehru Sahkar
Bhawan, Bhawani Singh Road, Jaipur.
2. The Directors And Joint Secretary (Admn.), Department
Of Social Justice And Empowerment, Ambedkar Bhawan,
Civil Lines Crossing, Jaipur.
3. Administrator And Registrar, Cooperative Societies,
Rajasthan Rajya Sahkari Upbhokta Sangh Limited, Jaipur.
----Respondents
For Appellant(s) : Mr. N.M.Lodha, Senior Advocate with
Mr.V.D.Dadhich
For Respondent(s) : Mr. Dhanpat Choudhary
HON'BLE MR. JUSTICE SANGEET LODHA
HON'BLE MR. JUSTICE RAMESHWAR VYAS
Judgment
1st April, 2021
PER HON'BLE MR. SANGEET LODHA,J.
1. This intra-court appeal is directed against order dated 30.10.19 of the learned Single Judge of this court, whereby the writ petition preferred by the appellant questioning the legality of order dated 17.10.19 passed by the Managing Director, Rajasthan Rajya Sahakari Upbhokta Sangh Limited ('CONFED'), Jaipur, whereby while withdrawing the certificate of satisfactory (Downloaded on 01/04/2021 at 09:02:59 PM) (2 of 10) [SAW-1420/2019] completion of the work, the appellant has been blacklisted and debarred from entering into business with CONFED for a period of three years.
2. The relevant facts in nutshell are that the appellant, a proprietorship concern, engaged in sales and supply of grains, pulses and other commodities was awarded the contract by the CONFED for supply of specified branded items as per the bid conditions all over Rajasthan in hostels/residential schools of Social Justice & Empowered Department. The agreement was executed between the appellant and CONFED on 13.7.16 which was valid upto 15.7.17. The appellant was served with the notice dated 25.7.17 alleging that the appellant had submitted the bills of 13 challans for payment twice with intention to derive double benefit. Yet another notice dated 1.6.17 was issued with the similar allegation and explanation was sought. The appellant submitted the explanation vide communication dated 11.7.17. Thereafter, the term of the contract was extended upto 15.10.17. On 2.1.19, a certificate of satisfaction completion of supply in terms of the contract was issued to the appellant by the Managing Director, CONFED. Later, on the basis of the inquiry conducted in the back of the appellant, vide order dated 17.10.19 issued by the Managing Director, CONFED, the certificate of completion of satisfactory supply of the commodities issued as aforesaid was withdrawn and the appellant was debarred from entering into contract with the CONFED for a period of three years.
3. Aggrieved by the order dated 17.10.19, the writ petition preferred by the appellant has been dismissed by the learned Single Judge by the order impugned on the ground of availability (Downloaded on 01/04/2021 at 09:02:59 PM) (3 of 10) [SAW-1420/2019] of remedy of appeal, observing that the writ petition involve a horde of disputed question of fact and therefore, the Court is not inclined to exercise its extra ordinary jurisdiction under Article 226 of the Constitution of India.
4. Learned Senior counsel appearing for the appellant contended that the learned Single Judge has seriously erred in dismissing the appeal on the ground of availability of remedy of appeal. Drawing the attention of the Court to the provisions of Section 38 of Rajasthan Transparency in Public Procurement Act, 2012 (for short "RTPP Act"), learned Senior counsel submitted that the appeal as provided under Section 38 of the RTPP Act is available in respect of the dispute relating to initial bidding process and not in respect of the dispute that may arise after award of the contract in favour of the bidder or after completion of such contract. Learned Senior counsel submitted that the 'Bidder' is defined under Section 2 (ii) of the RTPP Act as 'any person participating in a procurement process with a procuring entity'. The role of the bidder comes to an end after expiry of the procurement process which ends on award of the contract or cancellation of the process. Learned Senior counsel submitted that once the certificate for satisfactory completion of supply was issued, there was no occasion for the respondents to initiate the penal action. Learned Senior counsel submitted that after issuing the notices seeking explanation, no notice was issued to the appellant proposing blacklisting and straight away after lapse of more than two years since issuance of the notice, the order impugned was passed by the respondent authority and thus, apparently, the order impugned passed without extending an (Downloaded on 01/04/2021 at 09:02:59 PM) (4 of 10) [SAW-1420/2019] opportunity of hearing to the appellant, is ex facie violative of principles of natural justice and thus, the learned Single Judge has seriously erred in dismissing the writ petition on the ground of availability of remedy of appeal under the relevant statute. Learned Senior counsel submitted that after issuance of the notice in the year 2017, the term of the contract was extended and the appellant was issued a certificate of completion of the work and thus, solely on the basis of the inquiry report submitted by the Purchase Committee unilaterally without extending an opportunity of hearing to the appellant, is ex facie illegal and arbitrary.
5. On the other hand, learned counsel appearing for the respondent submitted that the order passed by the competent authority under Section 43 of the RTPP Act debarring any bidder from participating in tender process is appealable under Section 38 of the RTPP Act and thus, taking into consideration the fact that the petition involves seriously disputed questions of facts, the learned Single Judge has committed no error in dismissing the petition on the ground of availability of remedy of appeal. Learned counsel submitted that vide notice dated 1.6.17, the action was proposed against the appellant under Section 11 read with Section 46 of the RTPP Act and therefore, the contention sought to be raised that order impugned has been passed without giving an opportunity of hearing is absolutely baseless. However, learned counsel fairly submitted that before passing the order on the recommendation made by the Purchase Committee in its meeting held on 16.10.19, no notice was issued to the appellant against the proposed action. Learned counsel submitted that the allegation of appellant withdrawing the double payment of 7 bills (Downloaded on 01/04/2021 at 09:02:59 PM) (5 of 10) [SAW-1420/2019] stands proved on the basis of the documentary evidence on record and thus, the action of the respondent in blacklisting the appellant after due notice, cannot be faulted with.
6. We have considered the rival submissions and perused the material on record.
7. It is well settled that ordinarily when a dispute between the parties requires adjudication of the disputed question of facts, where parties are required to lead evidence which can be determined by the domestic forum chosen by the parties, the writ court would refuse to exercise the discretionary jurisdiction. But then, the rule of exclusion of writ jurisdiction on account of availability of alternative remedy is a rule of discretion and not rule of compulsion and therefore, the availability of the alternative remedy by itself, does not fetter the extra ordinary jurisdiction of the court under Article 226 of the Constitution, which is plenary in nature and is not limited by any other provisions of the Constitution.
8. As laid down by the Constitution Bench of the Hon'ble Supreme Court in the matter of 'A.V.Venkateswaran, Collector of Customs, Bombay vs. Ramchand Sobhraj Wadhwani & Anr.", AIR 1961 SC 1506, the rule that party who applies for issue of a high prerogative writs should before he approaches the court have exhausted the remedies open to it under the law is not one which bars the jurisdiction of the High Court to entertain the petition or to deal with it, but it is rather, a rule which courts have laid down for the exercise of their discretion.
9. Suffice it to say that the availability of alternative remedy to the petitioner, does not operate as bar to the jurisdiction of the (Downloaded on 01/04/2021 at 09:02:59 PM) (6 of 10) [SAW-1420/2019] High Court under Article 226 of the Constitution of India and the court can always exercise its discretion taking into consideration facts and circumstances of the case.
10. Coming to the question regarding observance of principles of natural justice and fair opportunity of hearing to the person against whom the action of blacklisting is contemplated, it needs to be emphasised that the rules of natural justice are assurance of justice and fair play and therefore, any action which has evil and civil consequences, should be taken only after following the principles of natural justice. Further, the observance of principle of natural justice is a rule and exclusion an exception and therefore, unless exceptional circumstances exists, departure therefrom is not permissible under the law.
11. Indisputably, the action in blacklisting of the awardee of the contract on account of malpractices casts stigma and many civil and evil consequences flow therefrom and therefore, such an action could only be taken after following the principles of natural justice.
12. In "M/s. Erusian Equipment & Chemicals Ltd. vs. State of West Bengal & Anr", (1975) 1 SCC, 70, the Hon'ble Supreme Court observed:
"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." (emphasis supplied)
13. Similarly, in "Raghunath Thakur vs. State of Bihar & Ors.", (1989) 1 SCC 229, the Hon'ble Supreme Court observed that (Downloaded on 01/04/2021 at 09:02:59 PM) (7 of 10) [SAW-1420/2019] blacklisting any person in respect of business ventures has civil consequences for future business of the person concerned and therefore, 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 representation against the order.
14. In Gorkha Security Services vs. Government of NCT of Delhi & Ors.: (2014) 9 SCC, 105, the Hon'ble Supreme Court while relying upon the decisions in M/s. Erusian Equipment & Chemicals Ltd's case and Raghunath Thakur's case (supra), observed that the action of the blacklisting must be preceded by show cause notice setting up the precise case which noticee is required to meet. The court observed that this would require the statement of imputations detailing out the alleged breaches and defaults committed so that he gets an opportunity to rebut the same. Another requirement as pointed out by the Court is the nature of action which is proposed to be taken for such breach inasmuch as, it is incumbent upon the authority concerned to provide adequate and meaningful opportunity to the person concerned. The court further observed that when it comes to the action of blacklisting which is termed as 'civil death', a harshest possible action, it would be difficult to accept the proposition that without even putting the noticee to such a contemplated action and giving him a chance to show cause as to why such an action be not taken, final order can be passed blacklisting such a person only on the premise that this is one of the actions so stated in the provisions of NIT.
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15. Thus, in the backdrop of the settled position of law noticed as above, it needs to be examined as to whether while passing the order blacklisting the appellant, the respondents have followed the principles of natural justice and extended fair opportunity of hearing to the appellant.
16. Indisputably, in the instant case, in the first instance vide notice dated 25.5.17 with reference to provisions of Section 11 of the RTPP Act, the explanation of the appellant was sought regarding submission of 13 challans for preparation of the bill twice whereas, on the basis of the challans earlier filed, the bill was already prepared by the Department. The said notice was followed by notice dated 1.6.17 with reference to the provisions of Section 11 & Section 46 of RTPP Act. The explanation was submitted by the appellant vide communication dated 11.7.17 explaining that it was only an inadvertent error and there was no intention to obtain the payment of the bills twice. It was clarified that 'errors and omissions' are always accepted. After submission of the reply by the appellant as aforesaid, vide communication dated 9.8.17 the term of the contract awarded to the appellant which was expiring on 15.7.17, was further extended upto 15.10.17. Thereafter, after completion of the contract, a certificate of satisfactory completion of the work was issued to the appellant by the Managing Director, CONFED and no further proceedings pursuant to the notice issued as aforesaid was taken. A perusal of the order impugned in the writ petition dated 17.10.19 has been passed on the basis of the following allegations being found proved against the appellant:
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17. It is pertinent to note that in the notice issued, the explanation of the appellant was sought only in respect of 13 challans submitted twice. There was no allegation that by way of submission of the challans of the supply made twice, the appellant unauthorisedly drawn the payment of Rs.8,99,432.06 twice. There was no allegation either that the supply of the materials made was not of the specification and brand agreed upon. As a matter of fact, the aforesaid allegations are found to be proved solely on the basis of the conclusion arrived at by the Purchase Committee of CONFED in its meeting held on 16.10.19. It is not disputed before this Court that before directing blacklisting of the appellant as aforesaid, vide order dated 17.10.19, no notice was issued to the appellant seeking explanation regarding the allegations alleged to be found proved against him and thus, the order impugned is apparently based on the inquiry made by the respondents in the back of the appellant, the fact which is not disputed by the counsel appearing for the respondents before this Court. Even the reply to the notice earlier issued filed by the appellant has also not (Downloaded on 01/04/2021 at 09:02:59 PM) (10 of 10) [SAW-1420/2019] been taken note of by the respondents while passing the order impugned.
18. In view of the discussion above, we are firmly of the opinion that the order impugned passed by the respondent-Managing Director, CONFED without affording a fair opportunity of hearing to the appellant, is ex facie violative of elementary principle of natural justice and therefore, not sustainable in the eyes of law.
19. In view of the conclusion arrived at as aforesaid, we need not enter into the question raised on behalf of the appellant as to whether against the order impugned, the appeal under Section 38 of the RTPP Act is maintainable or not.
20. In the result, the special appeal succeeds, it is hereby allowed. The order impugned dated 30.10.19 passed by the learned Single Judge is set aside. The writ petition preferred by the appellant is allowed. The order impugned in the writ petition dated 17.10.19 passed by the Managing Director, CONFED, is quashed. It will be open for the respondents to pass the order afresh after giving an opportunity of hearing to the appellant in accordance with law. No order as to costs.
(RAMESHWAR VYAS),J (SANGEET LODHA),J
89-Aditya/-
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