M/S Kaka Advertising Agency, vs The State Of U.P. Thr Its Sec. ...
2015 Latest Caselaw 5307 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
 
 


 
A.F.R.
 
Court No. - 1
 

 
Case :- MISC. BENCH No. - 2771 of 2003
 

 
Petitioner :- M/S Kaka Advertising Agency,
 
Respondent :- The State Of U.P. Thr Its Sec. Information Civil Sec.
 
Counsel for Petitioner :- Apoorv Tiwari,Hemant Kumar Misra
 
Counsel for Respondent :- C.S.C.
 

 
Hon'ble Dinesh Maheshwari,J.

Hon'ble Devendra Kumar Upadhyaya,J.

[Per Dinesh Maheshwari, J.]

The petitioner, said to be an accredited agency with Indian Newspaper Society, Delhi, has filed this writ petition questioning the order dated 18.02.2003 (Annexure -11) whereby it has been held guilty of fraudulent conduct with the respondents; and has been removed from the panel of registered advertising agencies of the Information and Public Relations Department of the Government of Uttar Pradesh.

After having heard the learned Counsel for the parties and having perused the material placed on record, we have formed the opinion that the matter requires re-consideration by the authorities concerned. Thus, when the matter is proposed to be restored to the file of the department for re-consideration, dilatation on all the issues raised in this petition does not appear necessary. Only a brief reference to the relevant aspects and would suffice.

The petitioner had undertaken the work of publication of an advertisement of respondent No.2, which was to be published in the newspaper 'Dainik Jagaran' on the Republic Day of the year 2001 (i.e., 26.01.2001). The petitioner, alleging to have carried out the work as assigned, raised the bill for the advertisement in question and also made a demand for its other outstanding bills. However, by the order dated 06.03.2002, the respondent No.2 proceeded to order stoppage of work assignment to the petitioner until an enquiry, while observing that several cases of fraudulent dealing of the petitioner had come to the fore. Thereafter, by the orders issued on 15.03.2002, the respondent No.2 alleged that the petitioner had wrongly suggested publication of the advertisement in New Delhi Edition of the Newspaper Dainik Jagaran dated 26.01.2001 on page No.11 though in fact, some other advertisement of the Government of India was published on the said page; and therefore, payment of an amount of Rs.33,800/- was wrongfully obtained by the petitioner, which was liable to be recovered. With these findings and observations, the respondent No.2 also proceeded to blacklist the petitioner for any future dealing with the department.

Aggrieved by the action aforesaid, the petitioner filed a writ petition in this Court bearing No.1787 (MS) of 2002. However, on 12.04.2002, the department, realizing its mistake of not affording opportunity of showing cause to the petitioner, proceeded to withdraw the aforesaid orders dated 06.03.2002 and 15.03.2002 and further ordered that the decision would be taken in relation to the petitioner after issuance of notice and opportunity of hearing. The said writ petition, therefore, became infructuous.

Thereafter, on 19.04.2002, while reiterating the same allegations, the petitioner was put to notice and was called upon to show as to why it be not removed from the panel of registered advertising agencies. The petitioner responded to the said notice with the assertion that the referred advertisement was indeed published on 26.01.2001 in New Delhi Edition of the newspaper Dainik Jagaran; and furnished a copy of the newspaper alongwith a communication from the publisher about publication of the advertisement and receiving of payment from the petitioner. The respondent No.2, thereafter, proceeded to pass the impugned order dated 18.02.2003 wherein, while rejecting the explanation of the petitioner, it was observed that the advertisement was not published on page No.11 of the edition of newspaper dated 26.01.2001, as was claimed by the petitioner in the voucher; and that clearly established fraudulent dealing of the petitioner. Thus, the petitioner was ordered to be removed from the panel of registered advertising agencies.

Seeking to question the order aforesaid, the petitioner has filed this writ petition and it has specifically been averred in the petition that the advertisement was indeed published on the given date, but no such voucher/invoice was submitted that the same was published on page No.11. Thus, according to the petitioner, the impugned order remains entirely baseless and unsustainable. The averments as taken in this regard in paragraph - 37 of the petition read as under:-

"37. That the petitioner after publishing the advertisement on the basis of offer given by the opposite party no.2 for publishing the same in the Dainik Jagaran, Delhi Edition, had submitted voucher along with the relevant proof that the same had been published by him on the said date and he has not submitted any voucher/invoice that he has published the same at page-11 in the newspaper on 26.1.2001. As such, the said allegation which is the sole basis for passing the impugned order that the petitioner had played fraud is wholly incorrect and illegal and thus renders the impugned order as unsustainable in the eyes of law."

The respondents have filed their counter affidavit and have maintained that blacklisting of the petitioner is perfectly legal, proper and justified. The respondents have also suggested in the counter affidavit that the advertisement in question was alleged to have been published at page No.11 of the newspaper concerned on 26.01.2001, but upon enquiry, it was found that no such advertisement was published at page No.11; and on the said page, a different advertisement of Government of India appeared. However, even while alleging that the petitioner-agency raised a fraudulent bill, the respondents chose not to annex a copy thereof with the counter affidavit. On the other hand, it is also noticed that so far the above-quoted core averments in paragraph - 37 of the petition are concerned, a cryptic and cursory reply is stated in paragraph - 15 of the counter affidavit with a general denial of the contents of paragraphs - 35 to 43 of the petition but without adverting to the specific assertion of the petitioner. This paragraph - 15 of the counter affidavit reads as under:-

"15. That the contents of paras 35 to 43 of the Writ Petition are denied in the manner stated being misleading based on misconception and interpretation and also incorrect. Detailed submissions in this regard have already been made in the preceding paragraphs which are reiterated and reaffirmed herewith."

It may be observed that in this writ petition, the petitioner had also moved an application for summoning the original voucher submitted by it in respect of the questioned advertisement dated 26.01.2001; and it appears that in the past, when this matter was examined by a Co-ordinate Bench of this Court, the Standing Counsel was directed to produce the record. The record was indeed brought before the Court on a few occasions, but the matter could not be argued finally. Though the record is not available with the Standing Counsel today, who has expressed willingness to produce the same, if so required, but, as indicated hereinabove, having heard the learned counsel and having perused the material placed on record, when we find that the matter requires re-consideration by the department, it does not appear necessary to enter into any factual enquiry at this stage and in this petition.

It has been strenuously argued on behalf of the petitioner that there was no mention in the work order that the advertisement be published on any specific page or at page No.11; and it was never claimed by the petitioner that the advertisement was published on page No.11. It is also submitted that the impugned order dated 18.02.2003 has been passed on the basis of a so-called report of Prabhari Nideshak, but a copy thereof was never supplied to the petitioner. Learned counsel for the petitioner has referred to and relied upon the decisions of the Hon'ble Supreme Court in Gorkha Security Services Vs Government (NCT of Delhi) and others [(2014) 9 SCC 105] and M/s Erusian Equipment & Chemicals Ltd. Vs State of West Bengal and another and other connected Appeal [(1975) 1 SCC 70] with the submissions that adequate and meaningful opportunity of show cause having not been given and the department having proceeded on irrelevant consideration, the impugned order deserves to be set aside.

Per contra, the learned Standing Counsel has duly supported the action impugned and submitted that when it had been a case of the petitioner having misled the department and having claimed the bill on incorrect statement of facts, the impugned action cannot be said to be unjustified, particularly when the impugned order has been passed after due show cause notice and after taking into consideration the explanation of the petitioner.

The question in the present case essentially is as to whether the impugned order dated 18.02.2003 could be said to have been passed on relevant considerations and after adequate and meaningful opportunity of showing cause to the petitioner?

It remains trite that the order of blacklisting or permanent debarring has the effect of depriving a person of equal opportunity of participation in public contracts; and when any person is sought to be permanently excluded from dealing with the State in its transactions, such an action has to be supported by legality. The requirement of adequate opportunity of showing cause against such a harshest possible action has been reiterated by the Hon'ble Supreme Court in the case of Gorkha Security Services (supra) in the following:-

"21. 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 blacklisting, this requirement becomes all the more imperative, having regard to the fact that it is harshest possible action."

"22. .... To put it otherwise, we are of the opinion that in order to fulfil the requirements of principles of natural justice, a show-cause notice should meet the following two requirements viz:

(i) The material/grounds to be stated which according to the department necessitates an action;

(ii) Particular penalty/action which is proposed to be taken. It is this second requirement which the High Court has failed to omit.

We may hasten to add that even if it is not specifically mentioned in the show-cause notice but it can clearly and safely be discerned from the reading thereof, that would be sufficient to meet this requirement."

Thus, an adequate and meaningful opportunity to the person concerned to show cause and to present his case before the authorities in a proposed action of blacklisting/debarring is a well established norm; and is not a matter of empty formality.

In the case of Erusian Equipment & Chemicals (supra), a three Judges' Bench of the Hon'ble Supreme Court has been pleased to observe and hold, inter alia, as under:-

"17. The Government is a Government of laws and not of men. It is true that neither the petitioner nor the respondent has any right to enter into a contract but they are entitled to equal treatment with others who offer tender or quotations for the purchase of the goods. This privilege arises because it is the Government which is trading with the public and the democratic form of Government demands equality and absence of arbitrariness and discrimination in such transactions. Hohfeld treats privileges as a form of liberty as opposed to a duty. The activities of the Government have a public element and, therefore, there should be fairness and equality. The State need not enter into any contract with any one but if it does so, it must do so fairly without discrimination and without unfair procedure. Reputation is a part of a person's character and personality. Blacklisting tarnishes one's reputation.

18. Exclusion of a member of the public from dealing with a State in sales transactions has the effect of preventing him from purchasing and doing a lawful trade in the goods in discriminating against him in favour of other people. The State can impose reasonable conditions regarding rejection and acceptance of bids or qualifications of bidders. Just as exclusion of the lowest tender will be arbitrary, similarly exclusion of a person who offers the highest price from participating at a public auction would also have the same aspect of arbitrariness.

19. Where the State is dealing with individuals in transactions of sales and purchase of goods, the two important factors are that an individual is entitled to trade with the Government and an individual is entitled to a fair and equal treatment with others. A duty to act fairly can be interpreted as meaning a duty to observe certain aspects of rules of natural justice. 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 its possession. Sometimes duty to act fairly can also be sustained without providing opportunity for an oral hearing. 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.

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.

21. With regard to the case of the petitioners, it is made clear that the authorities will give an opportunity to the petitioners to represent their case and the authorities will hear the petitioners as to whether their name should be put on the blacklist or not. This is made clear that the decision on this question will not have any effect on the proceedings pending in Calcutta High Court where the petitioner has challenged the adjudication proceedings under the Foreign Exchange Regulations Act. Any decision of the authorities on the blacklisting will have no effect on the correctness of any of the facts involved in those proceedings."

It may be noticed that the Apex Court has observed in the case of Gorkha Security Services (supra) that after giving show cause notice and opportunity to reply, it is not necessary to give an oral hearing; and in the case of Erusian Equipment & Chemicals (supra) that sometimes duty to act fairly could be sustained without providing opportunity of an oral hearing. However, in Erusian Equipment & Chemicals (supra), the three Judges' Bench of the Hon'ble Apex Court has further observed that it would depend on the nature of interest to be affected and the circumstances in which a power was exercised and the nature of sanctions involved; and therein, the authorities were directed to hear the petitioners on the question as to whether their names should be put on the blacklist or not.

Coming to the facts and scenario of the present case, it is apparent on the face of record that the basic allegation against the petitioner had not been that the advertisement in question was not published in the named newspaper, i.e., Dainik Jagaran in its relevant edition i.e., dated 26.01.2001. The allegation had been that the advertisement was not found published on page No.11 that carried some other advertisement of Government of India. The petitioner has placed on record a photostat of the newspaper concerned and prima facie, it appears that the advertisement of the respondents did appear in the relevant edition of the newspaper, but at a different place or in a supplement. However, the fact of the matter remains that the petitioner has consistently maintained that neither there was any order for publication of the advertisement at page No.11 nor any claim was made for any such publication at the particular page, i.e., page No.11. As noticed hereinabove, the specific averment taken in the petition in this regard has not met with a specific and cogent reply from the respondents. Thus, the core and fundamental fact remains a matter of obscurity if the petitioner claimed it to be an advertisement published at page - 11 as alleged.

Apart from the above and even if it be assumed for the sake of arguments that somewhere "page No.11" came to be mentioned by the petitioner, the respondents have not pondered over the question if it were a matter of any attempt on the part of the petitioner at deception or defrauding. The respondents also appear to have omitted to consider if any penalty lesser than permanent exclusion would be sufficient, if the petitioner is at all held guilty of incorrect billing, i.e., of incorrect mentioning of page number of the concerned publication.

The background aspects had also been that the petitioner was allegedly making a claim for other pending bills; and the petitioner was straightway debarred under the orders dated 06.03.2002 and 15.03.2002, which were later on withdrawn upon the department realising its mistake of not standing in conformity with the dictum of the Hon'ble Supreme Court.

In a comprehension of the facts and surrounding factors, we are clearly of the view that the impugned order dated 18.02.2003, even when passed after a show cause notice, cannot be said to be a considered decision fulfilling all the requirements of objectivity and fairness.

In the given set of facts and circumstances, instead of this Court adjudicating on other issues raised by the petitioner, it appears just and proper that the department itself re-examines the entire matter and takes an objective and considered decision on the show notice dated 19.04.2002. In the given scenario, we are also of the view that where all the facts have not been stated by the respondents in their counter affidavit; and where the petitioner is also claiming that the report of Prabhari Nideshak was not made available to it; and it is more than a decade old matter, the opportunity to the petitioner of making oral submissions would help removing communication gap between the parties and would serve the cause of justice.

Accordingly and in view of above, this petition is allowed to the extent and in the manner that the impugned order dated 18.02.2003 is set aside and the matter stands remitted for consideration afresh by the Director (Information), U.P.

In the interest of justice, it is also provided that it shall be permissible for the petitioner to submit an additional representation stating all its grounds and viewpoints with supporting documents, if any. It shall be required of the Director concerned to examine the record of the matter, to extend an opportunity of personal hearing to the petitioner and thereafter, to take a decision objectively and dispassionately in the matter. For the purpose of carrying out the requirements of this order, in the first place, the petitioner shall remain present in the office of the Director concerned on 05.01.2016. The Director shall also be expected to take the decision expeditiously, preferably within two months from the first date of appearance of the petitioner.

No costs.

Order Date :- 10.12.2015

lakshman

[D. K. Upadhyaya, J.] [Dinesh Maheshwari, J.]