M/S Asian Fertilizers Ltd. vs State Of U.P. And 3 Others
2015 Latest Caselaw 5301 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

Court No. - 2
 

 
Case :- WRIT - C No. - 66573 of 2015
 

 
Petitioner :- M/S Asian Fertilizers Ltd.
 
Respondent :- State Of U.P. And 3 Others
 
Counsel for Petitioner :- Chandan Sharma
 
Counsel for Respondent :- C.S.C.,Ved Byas Mishra
 

 
Hon'ble Ran Vijai Singh,J.

Heard Sri U.N. Sharma, learned senior counsel assisted by Sri Chandan Sharma, learned counsel for the petitioner, learned standing counsel for the State-respondents and Sri Ved Byas Mishra, learned counsel for respondent no. 4.

Through this writ petition prayer has been made to issue writ of certiorari quashing the order dated 10.11.2015 passed by the Notified Authority (Fertilizers)/District Agriculture Officer, Gorakhpur whereby the authorization as well as certificate of registration of the petitioner company has been cancelled. Another prayer has been made for quashing the order dated 10.11.2015 passed by the Appellate Authority/Director of Agriculture U.P. Lucknow rejecting the appeal under Clause 32-A of the Fertilizers Control Order, 1985 against order dated 29.9.2015 and 1.10.2015. Further prayer has been made to quash the consequential order dated 5.10.2015 passed by Chief General Manager (Marketing) U.P. Lucknow blacklisting the petitioner company.

The facts giving rise to this case are that petitioner has a letter of authorization for supply of fertilizer manufactured by the petitioner issued under the Fertilizer Control Order, 1985 (in short the Order). The petitioner has supplied fertilizer to the State government pursuant to the supply order issued on 23.7.2015. It appears that after supply of the said fertilizer, sample of the fertilizer was taken from the godown on 1.9.2015 and was sent for testing. The sample got failed, therefore, while exercising the power vested in the authority under Clause 31 of the Order, a show cause notice was issued to the petitioner as to why his letter of authorization be not cancelled. While doing so letter of authorization was also suspended. The petitioner was given a week time to file his reply. The petitioner appeared before the authority on 24.9.2015 and sought three days time. The case was taken up on 26.9.2015 on which date three days time was granted to the petitioner.

The petitioner has filed his reply on 29.9.2015. It is stated that without considering the petitioner's reply the order of cancellation was passed on 29.9.2015. Seeking recall of this order an application was filed by the petitioner on 1.10.2015 which was rejected on the same day by observing that the reply on 29.9.2015 was filed on 5:00 PM and prior to that order was passed.

Aggrieved by the aforesaid order the petitioner herein has filed appeal under Clause 32 of the Order before the Director Agriculture, who happens to be appellate authority under the Control Order. The appellate authority too has dismissed the appeal vide order dated 10.11.2015.

It would further appear from the record that Chief General Manager (Fertilizers/Marketing) issued a show cause notice for blacklisting the petitioner.

While assailing this order Sri Sharma, who appears for the petitioner, submits that in view of the instruction issued by the Director before supplying the fertilizer manufactured by the manufacturer the samples of the same are taken in presence of the authorities in three phials and the same are sent for testing and only after passing of the test, it is supplied. In the petitioner's case, samples were taken on 17.7.2015 and after sample has passed the test the fertilizer was supplied to the respondents therefore if any sample phails taken from the fertilizers available in the godown of the State fails, for that the petitioner's authorization could not be cancelled.

Sri Sharma has invited attention of the Court towards few paras of memorandum of understanding quoted in para-10 of the writ petition which is reproduced herein under:-

" 3- izFke i{k }kjk ftad lYQsV ds dz; vkns'k vkiwfrZdrkZ dks fd;s tk;sxs] f}rh; i{k }kjk izR;sd ykaV dk mRiknu iw.kZ gksus dh lwpuk ;w0ih0 LVsV ,xzks dks nh tk,xhA izcU/k funs'kd] ;w0ih0 LVsV ,xzks }kjk dks nh tk,xhA izcU/k funs'kd ;w0ih0 LVsV ,xzks }kjk nks&rhu vf/kdkfj;ks dh Vhe dk xBu fd;k tk,xk] ftlesa mi d`f"k funs'[email protected] d`f"k vf/kdkjh] {ks=h; izcU/[email protected] izcU/kd ,oa QSDVjh [email protected] izksMD'ku eSustj lnL; gksxsA Vhe }kjk QSDVjh esa tkdj mRikfnr ykV ds uewus fy;s tk,xs vkSj ykV dks lhy djsxsA bl izdkj laxzghr uewuks es ls ,d uewuk foHkkxh; ySc vkSj nwljk uewuk Jhjke ySc ubZ fnYyh dks Hkstk tk,xkA bu nksuks ds VsLV ifj.kkeks ds vk/kkj ij ykV dks ikl vFkok Qsy djus dk fu.kZ; fy;k tk,xkA bl izzdkj ijh{k.k ij gksus okyk O;; lEcfU/kr vkiwfrZdrkZ }kjk ogu fd;k tk,xkA ykV ds ikl gksus dh n'kk ess foHkkxh; vf/kdkfj;ks dh mifLFkfr es mRiknd ds ifjlj ls mRikn dks fMLiSp djk;k tk,xkA

6- f}rh; i{k }kjk mDr lkexzh dh vkiwfrZ ljdkj dks fofHkUu foHkkxks ,oa d`f"k foHkkx dh fofHkUu ;kstuk gsrq ekax ds vuq:i Lohd`fr nj ,oa lEcfU/kr foHkkx dh 'krksZ ds vuqlkj igWqprh njks ij ekud ds vuqlkj dh tk,xhA

7- lkekuksa dh vkiwfrZ gksus ij lacaf/kr {ks=h; izcU/kd }kjk tkjh LVksj jlhn ij **leku fu/kkZfjr ekud ds vuq:i ,oa xq.koRrk ;qDr gS** ij vafdr djrs gq;s LVksj jlhn Hkqxrku gsrq izFke i{k ds eq[;ky; y[kuÅ dks 15 fnu ds vUnj izsf"kr djsxsaA rRi'pkr ijh{k.kksijkUr QeZ dk fu;ekuqlkj Hkqxrku fcdzh dh /kujkf'k izkIr gksus ds mijkUr fd;k tk,xkA

8- vkiwfrZr ftad dh xq.koRrk ijh{k.k gsrq moZjd fu;a=.k vkns'k 1985 dks vUrxZr uewuk vkgfjr fd;k tk,xkA ifj.kke v/kksekud ik, tkus ij vf/kfu;e ds varxZr dk;Zokgh gksus dh fLFkfr esa lEiw.kZ O;; ogu djus dk mRrjnkf;Ro vkiwfrZdrkZ dk gksxkA ,sls v/kksekud LvkWd dks vkiwfrZdrkZ }kjk lwpuk izkIr gksus dh frfFk ls ,d ekg ds Hkhrj vius O;; ij mBkuk vfuok;Z gksxkA "

In his further submissions, once three days time was allowed pursuant to show cause notice for cancellation of the letter of authorization on 26.9.2015 and the reply was filed by the petitioner within three clear days i.e. on 29.9.2015 the concerned respondent has erred in passing the impugned order before expiry of three days. In the submission of Sri Sharma the order has been passed without application of mind.

Learned standing counsel appearing for the State-respondents submits that since the sample of the fertilizers supplied by the petitioner has failed in test therefore he has breached the condition of the letter of authorization therefore his letter of authorization has rightly been cancelled and there is no illegality or infirmity in the same. So far as passing the order without waiting the expiry of three days time on 29.9.2015 is concerned, he submits that the order has been passed after expiry of three days time.

Sri Ved Byas Mishra, who appears for respondent no. 4, who has passed order of blacklisting, submits that the order has been passed after considering the show cause notice and reply filed by the petitioner therefore no infirmity can be attached to the same.

After hearing learned counsel for the parties it would appear from the record, which is not in dispute that the petitioner has filed reply to the show cause notice for cancellation of the letter of authorization on 29.9.2015 but the authority has passed the impugned order without taking into consideration the reply filed by the petitioner.

The petitioners filed recall application on 1.10.2015, which too was dismissed on the same day by observing that the petitioner's reply was received in the Office at 5 p.m. and prior to that, the order was passed. In my view, once three days' time was allowed to the petitioner to file reply on 26.9.2015, the authorities should have wait for three clear days, that is to say upto 29.9.2015, but without waiting the reply, the order was passed even prior to 5 p.m. on 29.9.2015 itself.

The relevant statute provides that before cancelling the letter of authorization or registration, a show cause notice is necessary, meaning thereby, the observance of the principles of natural justice has been made obligatory and once, the show cause notice was given and the petitioner has filed his reply and the reply was on record may be after the decision was taken, once the recall application was filed, in order to meet the ends of justice, that reply ought to have been taken into consideration while considering the application seeking recall of the order, but the authority concerned has taken a very hypertechnical view in not considering the same.

It has been observed in the case of D.K.Yadav Vs. J.M.A. Industries Ltd. Reported in 1993,SCC 259, Mohinder Singh Gill Vs. Chief Election Commissioner, (1978) 1 SCC 405 : (1978) 2 SCR 272, State of W.B. Vs. Anwar Ali Sarkar, 1952 SCR 284: AIR 1952 SC 75: 1952 Cri LJ 510 and Maneka Gandhi Vs. Union of India (1978) 1 SCC 248: (1978) 2 SCR 621 that the procedure for passing an order must be just, fair and reasonable.

The matter may be examined from another angle too. Once the statute provides that an order of cancellation of registration is to be passed in conformity with the principles of natural justice, the purpose is that no one should contemned unheard and if for any reason somebody has been condemned unheard and he, later on, comes with reasonable explanation for not filing the reply, pursuant to the show cause notice, he has to be heard in order to meet the end of justice by providing the post deicisional hearing which is established principle, in view of the law laid down by the Apex Court in Maneka Gandhi Vs. Union of India AIR 1978 SC 597, Union of India Vs. Tulsi Ram Patel 1985 (3) SCC 398, I.J. Rao Assistant Collector of Customs Vs. Bibhuti Bagh 1989 (3) SCC 202, State of U.P. Vs. Vijay Kumar Tripathi and another, AIR 1995 SC 1130, Bari Doab Bank Ltd. Vs. Union of India (UOI) and others,(1997) 6 SCC 417,Canara Bank Vs. V.K.Awasthi 2005 (6) SCC 321, and Smt. Rasila S. Mehta Vs. Custodian, Nariman Bhavan, Mumbai, AIR 2011 SC 2122 as well as this Court in Muzeeb Vs. Deputy Director of Consolidation and others 1996 (87) RD 66, Tale Singh Yadav Vs. State of U.P. And others, 1998 (33) ALR 440, R.S. Parihar Vs. Life Insurance Corporation of India and others, 2000 2 AWC 1317 All, Chaturgun Vs. State of U.P. 2005 (2) AWC 1256 and Rakesh and others Vs. Collector/District Deputy Director, Consolidation and others 2006 2 AWC 1774 All.

In view of the foregoing discussions, the authority concerned is directed to pass fresh order considering the petitioner's reply. The petitioner is also at liberty to file fresh objection, if any, to the show cause notice within a period of two weeks from the date of receipt of certified copy of the order of this Court. The authority, thereafter, shall pass a reasoned speaking order within a further period of six weeks. It may be observed till the fresh order is passed the earlier order of cancellation of registration shall remain in operation however its further continuance will depend upon the fresh order.

So far as the order of blacklisting is concerned, it would appear from the operative portion of the order, which his reproduced herein under:-

" rRdze esa vkidks rRdky ftad lYQsV 21 izfr'kr dh vkiwfrZ jksdus ds lkFk lkFk dkj.k crkvks uksfVl nsdj 15 fnu esa Li"V djus dks dgk x;k Fkk fd D;ks u mijksDr d`R; ds fy;s vkidh QeZ dks dkyh lwph @CySd fyLV ess Mky fn;k tk;sA dkj.k crkvks uksfVl ds dze esa vkidk mRrj fnukad 03-10-2015 dks izkIr gqvk gSA vki }kjk vius mRrj esa Bksl ,oa i;kZIr lk{; miyC/k ugh djk;s x;s gSA mDr ls Li"V gksrk gS fd vkidh QeZ }kjk d`f"k foHkkx esa vekud ftad lYQsV dh vkiwfrZ dh xbZ gS ftlls fuxe dh Nfo /kwfey gqbZ gSA

vr% vkidks ;w0ih0 ,xzks }kjk fuxe ds lkFk fu"ikfnr ,e0vks0;w0 ,oa d`f"k foHkkx dh 'krksZ ds v/khu Hkfo"; ds fy, dkyhlwph ¼CySd fyLV½ ess Mkyk tkrk gSA"

that the authority concerned has only noted that the petitioner has filed reply but has not filed any the concrete evidence in support thereof. The order does not mention that what was stated in the reply filed by the petitioner and without considering the same order of blacklisiting has been passed. It cannot be doubted that order of blacklisting ought to have been passed considering the petitioner's reply in detail therefore, in my opinion this kind of order will fall in the category of cryptic order.

The Apex Court in Sant Lal Gupta and others vs. Modern Cooperative Group Housing Society Limited and others, (2010) 13 SCC 336 has observed as under:-

"27.....The reason is the heartbeat of every conclusion. It introduces clarity in an order and without the same, the order becomes lifeless. Reasons substitute subjectivity with objectivity. The absence of reasons renders an order indefensible/ unsustainable particularly when the order is subject to further challenge before a higher forum. Recording of reasons is principle of natural justice and every judicial order must be supported by reasons recorded in writing. It ensures transparency and fairness in decision making. The person who is adversely affected must know why his application has been rejected. (Vide: State of Orissa v. Dhaniram Luhar AIR 2004 SC 1794; State of Rajasthan v. Sohan Lal & Ors. (2004) 5 SCC 573; Vishnu Dev Sharma v. State of Uttar Pradesh & Ors. (2008) 3 SCC 172; Steel Authority of India Ltd. v. Sales Tax Officer, Rourkela I Circle & Ors. (2008) 9 SCC 407; State of Uttaranchal & Anr. v. Sunil Kumar Singh Negi AIR 2008 SC 2026; U.P.S.R.T.C. v. Jagdish Prasad Gupta AIR 2009 SC 2328; Ram Phal v. State of Haryana & Ors. (2009) 3 SCC 258; State of Himachal Pradesh v. Sada Ram & Anr. (2009) 4 SCC 422; and The Secretary & Curator, Victoria Memorial Hall v. Howrah Ganatantrik Nagrik Samity & Ors., AIR 2010 SC 1285).

Otherwise also the order of blacklisting leads to civil consequences and it should have been passed in confirmity with the principle fo natural justice. Non consideration of reply to the show cause notice also amounts to denial of opportunity of hearing.

The Apex Court in the case of M/s Erusian Equipment and Chemicals Ltd. Vs. State of West Bengal & Anr., A.I.R. 1975 Supreme Court 266 held that:

"12. ---------- The Government cannot choose to exclude persons by discrimination. The order of black-listing 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 black-listing. 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.

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15. The blacklisting order does not pertain to any particular contract. The blacklisting order involves civil consequences. It caste a slur. It creates a barrier between the persons blacklisted and the Government in the matter of transactions. The blacklists are "instruments of coercion".

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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."

In the case of Raghunath Thakur Vs. State of Bihar & Ors., A.I.R 1989 SC 620, the Apex Court has taken the view that even if rules do not provide to offer an opportunity of hearing before passing an order of Blacklisting then also opportunity of hearing is necessary before passing the order which leads to civil consequences. In paragraph 4 of the judgement, it has been held that:

"4. Indisputably, no notice had been given to the appellant of the proposal of blacklisting the appellant. It was contended on behalf of the State Government that there was no requirement in the rule of giving any prior notice before blacklisting any person. In so far as the contention that there is no requirement specifically of giving any notice is concerned, the respondent is right. 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 in so far as it directs blacklisting of the appellant in respect of future contracts, cannot be sustained in law. In the premises, that portion of the order directing that the appellant be placed in the blacklist in respect of future contracts under the Collector is set aside."

In the case of M/s. Southern Painters (Supra), the Apex court has observed as under:

"9. The deletion of the appellant's name from the list of approved contractors on the ground that there were some vigilance report against it, could only be done consistent with and after the compliance of the principles of natural justice. That not having been done, it requires to be held that withholding of the tender form from the appellant was not justified. In our opinion, the High Court was not justified in dismissing the writ petition."

The same view has been reiterated by the Apex Court in the case of Gronsons Pharmaceuticals (P) Ltd. & Anr. Vs. State of Uttar Pradesh & Ors., A.I.R. 2001 SC 3707, and following above cited judgments, a Division Bench of this Court in (Smt Rajni Chauhan Vs. State of U.P. & Ors.), (2010 (6) AWC 5762) and (Society for Education and Welfare Awareness (Sewa) thru it secretary vs. Union of India thru Ministry of Human welfare (Manav Sansadhan) New Delhi and others) (2011 (6) ADJ 787) has also taken the same view.

Here in this case although show cause notice was given before passing the order of black-listing but while passing the order the contents of the reply has not been taken into consideration which in my opinion also amounts to denial of opportunity of hearing. The issuance of show cause notice is purposive one and it is not a mere formality therefore once the notice was given and a reply thereto was filed, the order, thereafter, must be passed after considering the reply in detail otherwise giving of notice would merely be an eye wash and not effective show cause. Therefore, order of blacklisting cannot be sustained in the eye of law and the same is hereby quashed with liberty to the respondent no. 4 to pass fresh order in accordance with law after considering the petitioner's reply and other attending circumstances within six weeks from the date of filing of such reply..

The writ petition is partly allowed subject to aforesaid observations.

Order Date :- 10.12.2015

dhirendra/-