M/S Praveen Kumar Jain vs State Of U.P. And 3 Others
2019 Latest Caselaw 5434 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

A.F.R.
 
Court No. - 4
 

 
Case :- WRIT - C No. - 53982 of 2017
 

 
Petitioner :- M/S Praveen Kumar Jain
 
Respondent :- State Of U.P. And 3 Others
 
Counsel for Petitioner :- Dinesh Kumar Singh,Sushil Kumar Shukla
 
Counsel for Respondent :- C.S.C.
 

 
Hon'ble Bala Krishna Narayana,J.

Hon'ble Prakash Padia,J.

(Per: Hon'ble Prakash Padia,J.)

1. Heard Sri D. K. Singh, learned counsel for the petitioner and learned Standing Counsel on behalf of respondents.

2. The petitioner has preferred the present writ petition challenging the order dated 24.10.2017 passed by the respondent no.4 namely Superintending Engineer Rural Engineering Department Meerut Division, Meerut with the further prayer to direct the respondent no.4 to execute the agreement of package no.5257 in favour of the petitioner adding the GST amount in the bid of petitioner.

3. The facts in brief as contained in the writ petition are that the petitioner is A class registered Government Contractor. The respondent no.4 published an advertisement on 12.6.2014 inviting tenders from registered Contractors for upgrading of Meerut-Karnal road being package number 5257 along-with other packages. The petitioner submitted his tender along-with other Contractors. In the bid submitted by the petitioner it was noted that if CGST and SGST is implemented, the same shall be included in the bid of the petitioner. The bid was opened on 23.08.2017 and the bid of the petitioner was duly accepted on 7.10.2017 but without adding the amount of GST and as such the petitioner submitted an application in this regard on 10.10.2017.

4. It is contended by Sri D. K. Singh, learned counsel for the petitioner that without considering the request of the petitioner, the respondent no.4 issued a letter dated 12.10.2017 to the effect that in case the petitioner does not produce the performance security till 16.10.2017 the action will be taken against him as per Clause No.30.3 of the ITB (General Condition of Contract). After the aforesaid letter was received by the petitioner, he wrote a letter dated 14.10.2017 again stating that he is not ready to sign the contract without adding the amount of GST. It is further contended that without considering the aforesaid objection of the petitioner respondent no.4 passed the order dated 24.10.2017 by which the claim of the petitioner was rejected and security amount submitted by the petitioner was forfeited. He further submitted that the order dated 24.10.2017 passed by the respondent no.4 is totally illegal and arbitrary. The amount of security would be forfeited only if the agreement has been executed by the Contractor and after the implementation of GST by the Government, it was a mandatory requirement to add the GST in the Contract. The amount of security would only be forfeited after the acceptance of the bid but since in the present case bid itself was not accepted the amount of security could not be forfeited. Further argument was made that the order dated 24.10.2017 was passed without giving any notice and opportunity to the petitioner. The order dated 24.10.2017 was passed without assigning any reasons.

5. In the counter affidavit filed by the respondents it is stated that e-tender was invited pursuance to the instructions as per Standard Bidding Document for Pradhan Mantri Gram Sadak Yojana (hereinafter referred as PMGSY) for construction of Meerut-Karnal Road, Rithali to Pali via Chur Kalandi, District Meerut.

6. It is stated in paragraph 6 of the counter affidavit that after going through the entire standard bidding documents for PMGSY, the petitioner applied for the tenders. It is further stated that in the bid amount GST was not added since when the bids were invited at that time the GST was not invoked. After the petitioner was declared successful bidder, he was duty bound to execute the bond but since the bond was not executed by the petitioner within time hence as per Clause 30.3 the action was taken against him. Clause 30.3 of the Standard Bidding Documents reads as follows :-

"Failure of successful bidder to comply with the requirement of delivery of Performance Security of two and a half percent of Contract Price plus additional security for unbalanced bids as per provisions of Clause 30.1 shall constitute sufficient ground for cancellation of award and forfeiture of the Bid Security. Such successful bidder who fails to comply with the above requirements is liable to be debarred from participating in bids under PMGSY for a period of one year."

7. It was further argued that under Clause 13.3. of the bid document it is clearly provided that all duties, taxes, royalties and other levies payable by the Contractor under the Contract, or for any other cause, shall be included in the rates, prices, and total bid price submitted by the Bidder.

8. In view of the aforesaid it was argued by the learned Standing Counsel appearing for the respondents that the order passed by the respondent no.4 dated 24.10.2017 is absolutely perfect and valid order and does not call for any interference by this Court specially under Article 226 of the Constitution of India.

9. Heard learned counsel for the parties and perused the record.

10. From perusal of the record it is clear that after the bid was accepted on 4.9.2017 and the same was loaded on the website, objections were invited within five days. It is clear from the record that the objection pertaining to GST was submitted by the petitioner for the first time on 15.9.2017. Since the terms and conditions of the contract were not duly complied with by the petitioner after submission of his bid, the bid was rightly cancelled by the respondents. In so far as the security amount is concerned, the same was rightly forfeited as per Clause 30.3 of the ITB.

11. In so far as the notice and opportunity is concerned, it is well settled that unless and until any prejudice is caused to the petitioner, notice and opportunity is not required to be given. Nothing has been stated in the entire writ petition nor any argument has been raised by the learned counsel for the petitioner that what prejudice has been caused to the petitioner in the absence of opportunity of hearing.

12. It is settled law that principles of natural justice have to be complied with. One of the principles of natural justice is audi alteram partem ("Hear the other side"). But it is equally well settled that the concept `natural justice' is not a fixed one. It has meant many things to many writers, lawyers, jurists and systems of law. It has many colours, shades, shapes and forms. Rules of natural justice are not embodied rules and they cannot be imprisoned within the strait-jacket of a rigid formula.

13. Seven decades before in the case of Russel v. Duke of Norfolk reported in (1949) 1 All ER 109 : 65 TLR 225 (CA), it was held that "There are, in my view, no words which are of universal application to every kind of inquiry and every kind of domestic tribunal. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject- matter that is being dealt with, and so forth".

14. In the case of Byrne v. Kinematograph Renters Society reported in (1958) 2 AllER 579 :: 1958 (1) WLR 762, it was held that "What, then, are the requirements of natural justice in a case of this kind? First, I think that the person accused should know the nature of the accusation made; secondly, that he should be given an opportunity to state his case; and thirdly, of course, that the tribunal should act in good faith. I do not think that there really is anything more".

15. Similar view was taken by the Supreme Court in the case of Union of India v. P.K. Roy reported in AIR 1968 SC 850 : 1968 (2) SCR 186. The revelant paragraph 11 of the aforesaid judgement is quoted below:-

"(11)........the extent and application of the doctrine of natural justice cannot be imprisoned within the strait jacket of a rigid formula. The application of the doctrine depends upon the nature of the jurisdiction conferred on the administrative authority, upon the character of the rights of the persons affected, the scheme and policy of the statute and other relevant circumstances disclosed in the particular case".

16. Apart from the same in the leading case of case of A.K. Kraipak v. Union of India reported in 1969 (2) SCC 262 it was held that :-

"20.What particular rule of natural justice should apply to a given case must depend to a great extent on the facts and circumstances of that case, the framework of the law under which the enquiry is held and the constitution of the Tribunal or body of persons appointed for that purpose. Whenever a complaint is made before a court that some principle of natural justice had been contravened the court has to decide whether the observance of that rule was necessary for a just decision on the facts of that case".

17. The Supreme Court in the case of Board of High School v. Kumari Chitra reported in 1970 (1) SCC 121 observed that the Board cancelled the examination of the petitioner who had actually appeared at the examination on the ground that there was shortage in attendance at lectures. Admittedly, no notice was given to the candidate before taking the action. On behalf of the Board it was stated that the facts were not in dispute and therefore, `no useful purpose would have been served' by giving a show cause notice to the petitioner. The Supreme Court was pleased to set aside the decision of the Board of holding that the Board was acting in a quasi-judicial capacity and, therefore, it ought to have observed the principles of natural justice.

18. In the case of Malloch v. Aberdeen Corporation reported in 1971 (2) AllER 1278 (HL), it was held that :-

"......It was argued that to have afforded a hearing to the appellant before dismissing him would have been a useless formality because whatever he might have said could have made no difference. If that could be clearly demonstrated it might be a good answer".

(emphasis supplied)

19. In the case of S.L. Kapoor v. Jagmohan reported in 1980 (4) SCC 379 it was held by the Supreme Court that :-

"24.......The non-observance of natural justice is itself prejudice to any man and proof of prejudice independently of proof of denial of natural justice is unnecessary. It 'll comes from a person who has denied justice that the person who has been denied justice is not prejudiced".

(emphasis supplied)

20. In the case of R.S. Dass v. Union of India reported in 1986 Supp SCC 617 :: 1987 (2) ATC 628 it was held that :-

" 25. It is well established that rules of natural justice are not rigid rules, they are flexible and their application depends upon the setting and the background of statutory provision, nature of the right which may be affected and the consequences which may entail, its application depends upon the facts and circumstances of each case".

21. The recent trend, however, is of `prejudice'. Even in those cases where procedural requirements have not been complied with, the action has not been held ipso facto illegal, unlawful or void unless it is shown that non-observance had prejudicially affected the applicant.

22. In the case of ECIL Vs. B. Karunakar reported in 1993 (4) SCC 727, the Supreme Court after considering the several cases was pleased to hold that "it was only if the Court/Tribunal finds that the furnishing of the report "would have made a difference" to the result in the case that it should set aside the order of punishment."

23. The law laid down by the Supreme Court in the aforesaid case was again reiterated and followed in subsequent cases by the Supreme Court specially in the case of State Bank of Patiala Vs. S. K. Sharma reported in 1996 (3) SCC 364 :: 1996 SCC (L & S) 717 and M. C. Mehta V. Union of India reported in 1999 (6) SCC 237.

24. In Aligarh Muslim University Vs. Mansoor Ali Khan reported in (2000) 7 SCC 529, the Apex Court held that though the rules of natural justice have been violated but the order impugned cannot be set aside as no prejudice has been caused. Referring to several cases, and after considering the theory of "useless" or "empty formality" and noting "admitted or undisputed" facts, the Court held that the only conclusion which could be drawn was that " had the petitioner been given notice", it "would not have made any difference" and, hence, no prejudice has been caused.

25. In the case of Ajit Kumar Nag v. Indian Oil Corporation Ltd. reported in 2005 (7) SCC 764 :: 2005 SCC (L & S) 1020, it was held by the Supreme Court that principles of natural justice are not rigid or immutable hence they cannot be imprisoned in the strait-jacket formula. It was held by the Supreme Court that :-

"We are aware of the normal rule that a person must have a fair trial and a fair appeal and he cannot be asked to be satisfied with an unfair trial and a fair appeal. We are also conscious of the general principle that pre- decisional hearing is better and should always be preferred to post- decisional hearing. We are further aware that it has been stated that apart from Laws of Men, Laws of God also observe the rule of audi alteram partem. It has been stated that the first hearing in human history was given in the Garden of Eden. God did not pass sentence upon Adam and Eve before giving an opportunity to show cause as to why they had eaten the forbidden fruit. [See R. v. University of Cambridge, (1723) 1 Str 557 : 93 ER 698] But we are also aware that the principles of natural justice are not rigid or immutable and hence they cannot be imprisoned in a straitjacket. They must yield to and change with exigencies of situations. They must be confined within their limits and cannot be allowed to run wild. It has been stated: " `To do a great right' after all, it is permissible sometimes `to do a little wrong'." [Per Mukharji, C.J. In Charan Lal Sahu v. Union of India, 1990 (1) SCC 613 (Bhopal Gas Disaster), SCC p. 705, para 124.] While interpreting legal provisions, a court of law cannot be unmindful of the hard realities of life. In our opinion, the approach of the Court in dealing with such cases should be pragmatic rather than pedantic, realistic rather than doctrinaire, functional rather than formal and practical rather than precedential".

(emphasis supplied)

26. In the case of P.D. Agrawal v. State Bank of India & Ors. reported in 2006 (8) SCC 776 :: 2007 (1) SCC (L & S) 43, this Court restated the principles of natural justice and indicated that they are flexible and in the recent times, they had undergone a `sea change'. If there is no prejudice to the employee, an action cannot be set aside merely on the ground that no hearing was afforded before taking a decision by the authority.

27. The Supreme Court in the case of Ranjit Singh v. Union of India reported in 2006 (4) SCC 153 :: 2006 SCC (L & S) 631 referring to the relevant case-law, was pleased to held that :-

"In view of the aforementioned decisions of this Court, it is now well settled that the principles of natural justice were required to be complied with by the disciplinary authority. He was also required to apply his mind to the materials on record. The enquiry officer arrived at findings which were in favour of the appellant. Such findings were required (sic sought) to be overturned by the disciplinary authority. It is in that view of the matter, the power sought to be exercised by the disciplinary authority, although not as that of an Appellate Authority, but is akin thereto. The inquiry report was in favour of the appellant but the disciplinary authority proposed to differ with such conclusions and, thus, apart from complying with the principles of natural justice it was obligatory on his part, in the absence of any show-cause filed by the appellant, to analyse the materials on record afresh. It was all the more necessary because even CBI, after a thorough investigation in the matter, did not find any case against the appellant and thus, filed a closure report. It is, therefore, not a case where the appellant was exonerated by a criminal court after a full-fledged trial by giving benefit of doubt. It was also not a case where the appellant could be held guilty in the disciplinary proceedings applying the standard of proof as preponderance of the probability as contrasted with the standard of proof in a criminal trial i.e. proof beyond all reasonable doubt. When a final form was filed in favour of the appellant, CBI even did not find a prima facie case against him. The disciplinary authority in the aforementioned peculiar situation was obligated to apply its mind on the materials brought on record by the parties in the light of the findings arrived at by the inquiry officer. It should not have relied only on the reasons disclosed by him in his show-cause notice which, it will bear repetition to state, was only tentative in nature. As the Appellate Authority in arriving at its finding, laid emphasis on the fact that the appellant has not filed any objection to the show-cause notice; ordinarily, this Court would not have exercised its power of judicial review in such a matter, but the case in hand appears to be an exceptional one as the appellant was exonerated by the inquiry officer. He filed a show-cause but, albeit after some time the said cause was available with the disciplinary authority before he issued the order of dismissal. Even if he had prepared the order of dismissal, he could have considered the show-cause as he did not leave his office by then. The expression "communication" in respect of an order of dismissal or removal from service would mean that the same is served upon the delinquent officer". (See State of Punjab v. Amar Singh Harika reported in AIR 1966 SC 1313).

28. The Apex Court in the case of Haryana Financial Corporation and another Vs. Kailash Chandra Ahuja reported in (2008) 9 SCC 31 has considered in great detail the consequence of non-observance of principles of natural justice. The Apex Court has held that the recent trend of judgment is that unless prejudice is shown, the impugned order or action cannot be struck down. It has been observed as under:-

"The recent trend, however, is of "prejudice". Even in those cases where procedural requirements have not been complied with, the action has not been held ipso facto illegal, unlawful or void unless it is shown that non-observance had prejudicially affected the applicant.

In Malloch Vs. Abendeen Corpn., Lord Reid said : (All ER p. 1283a-b)

"....it was argued to have afforded a hearing to the applicant before dismissing him would have been a useless formality because whatever he might have said could have made no difference. If that could be clearly demonstrated it might be a good answer".

(emphasis supplied)

Lord Guest agreed with the above statement, went further and stated: (All ER p.1291b-c)

"...A great many arguments might have been put forward but if none of them had any chance of success then I can see no good reason why the respondents should have given the appellant a hearing, nor can I see that he was prejudiced in any way".

29. The Supreme Court in the case of Dharampal Satyapal Limited Vs. Deputy Commissioner of Central Excise, Gauhati and Others reported in (2015) 8 SCC 519 held as under :-

"there was no legal duty to supply a hearing if a hearing would not change the ultimate conclusion reached by the decision-maker.' In Dharampal (Supra), the Supreme Court, while answering the question whether recovery proceedings could be initiated without a show-cause notice under Section 11-A of the Excise Act which was mandatory, held that a show cause notice was required to be issued before passing an order of recovery irrespective of the fact whether Section 11-A of the Excise Act was attracted in the case and it was not open for the authorities to dispense with the requirement of the rules of natural justice on the presumption that no prejudice was to be caused to the aggrieved persons by not issuing a show cause notice. At the same time, the Supreme Court observed, that the courts were empowered to consider as to whether any purpose would be served in remanding the case keeping in mind whether any prejudice was caused to the person against whom the action was taken. In the aforesaid case, the Supreme Court, while holding that there was an infraction of the rules of natural justice refused to interfere on behalf of the assessee and remand back the matter to the concerned authority to take fresh decision after issuing a show cause notice to the assessee as such an exercise, in the facts of that case, would have been futile and no prejudice was caused to the assessee because of no show cause notice having been issued to him.

In this regard the relevant observations of the Supreme Court are reproduced below :-

" 11.2. Whether recovery proceedings can be initiated without show-cause notice under Section 11-A of the Excise Act, which is mandatory?

37. Therefore, we are inclined to hold that there was a requirement of issuance of show-cause notice by the Deputy Commissioner before passing the order of recovery, irrespective of the fact whether Section 11-A of the Act is attracted in the instant case or not.

39. We are not concerned with these aspects in the present case as the issue relates to giving of notice before taking action. While emphasizing that the principles of natural justice cannot be applied in straight-jacket formula, the aforesaid instances are given. We have highlighted the jurisprudential basis of adhering to the principles of natural justice which are grounded on the doctrine of procedural fairness, accuracy of outcome leading to general social goals, etc. Nevertheless, there may be situations wherein for some reason - perhaps because the evidence against the individual is thought to be utterly compelling - it is felt that a fair hearing 'would make no difference' - meaning that a hearing would not change the ultimate conclusion reached by the decision-maker - then no legal duty to supply a hearing arises. Such an approach was endorsed by Lord Wilberforce in Malloch v. Aberdeen Corporation, who said that:

'...A breach of procedure...cannot give (rise to) a remedy in the courts, unless behind it there is something of substance which has been lost by the failure. The court dos not act in vain'.

Relying on these comments, Brandon LJ opined in Cinnamond v. British Airports Authority that:

'...no one can complain of not being given an opportunity to make representations if such an opportunity would have availed him nothing'. In such situations, fair procedures appear to serve no purpose since 'right' result can be secured without according such treatment to the individual.

40. In this behalf, we need to notice one other exception which has been carved out to the aforesaid principle by the Courts. Even if it is found by the Court that there is a violation of principles of natural justice, the Courts have held that it may not be necessary to strike down the action and refer the matter back to the authorities to take fresh decision after complying with the procedural requirement in those cases where non-grant of hearing has not caused any prejudice to the person against whom the action is taken. Therefore, every violation of a facet of natural justice may not lead to the conclusion that order passed is always null and void. The validity of the order has to be decided on the touchstone of 'prejudice'. The ultimate test is always the same, viz., the test of prejudice or the test of fair hearing.

43. In view of the aforesaid enunciation of law, Mr Sorabjee may also be right in his submission that it was not open for the authority to dispense with the requirement of principles of natural justice on the presumption that no prejudice is going to be caused to the appellant since the judgment in R.C. Tobacco [(2005) 7 SCC 725] had closed all the windows for the appellant.

44. At the same time, it cannot be denied that as far as courts are concerned, they are empowered to consider as to whether any purpose would be served in remanding the case keeping in mind whether any prejudice is caused to the person against whom the action is taken. ....

45. Keeping in view the aforesaid principles in mind, even when we find that there is an infraction of principles of natural justice, we have to address a further question as to whether any purpose would be served in remitting the case to the authority to make fresh demand of amount recoverable, only after issuing notice to show cause to the appellant. In the facts of the present case, we find that such an exercise would be totally futile having regard to the law laid down by this Court in R.C. Tobacco [(2005) 7 SCC 725].

48. Therefore, on the facts of this case, we are of the opinion that non-issuance of notice before sending communication dated 23-6-2003 has not resulted in any prejudice to the appellant and it may not be feasible to direct the respondents to take fresh action after issuing notice as that would be a mere formality."

(Emphasis added)

30. In the instant case as well, no purpose will be served in remitting the matter back to the authority for decision afresh after providing opportunity of hearing to the petitioner, in as much as the defect is incurable; no amount of explanation can change the ultimate result, being a fait accompli. The petitioner can by no means negate the admitted fact.

31. In view of the same, we are of the considered view that the order passed by the respondent no.4 dated 24.10.2017 does not call for any interference by this Court under Article 226 of the Constitution of India.

32. The writ petition is devoid of merits and is accordingly dismissed.

33. No order as to costs.

Order Date :- 3.7.2019

Pramod Tripathi