Underwater Services Company ... vs Costal Marine Construction And ...
2022 Latest Caselaw 7919 AP

    HIGH COURT OF ANDHRA PRADESH: AMARAVATI

 HON'BLE MR. JUSTICE PRASHANT KUMAR MISHRA, CHIEF
                      JUSTICE
                               &

         HON'BLE MR. JUSTICE D.V.S.S. SOMAYAJULU

            WRIT APPEAL Nos.650 and 660 of 2022



W.A.No.650 of 2022-10-13
Hindustan Petroleum Corporation Ltd.,
Visakha Refinery,Post Bag 15,
Malkapuram Visakhapatnam 530 011,
     Andhra Pradesh.
                                                      .. Appellant
Versus

Coastal Marine Construction & Engineering Ltd.,
(a company incorporated under the
cCompanies Act,1956) and having its office
at 402 Madhava Plot No.C4, E Block,
Bandra Kurla Complex,
Bandra East Mumbai - 4000512,
Rep., by its authorized signatory and another

                                                  .. Respondents

Counsel for the appellant : Sri K.S.Murthy for Sri Sreekanth Reddy Ambati

Counsel for the respondents : Sri S.Sriram for Sri Sai Sanjay Suraneni

COMMON JUDGMENT

Date: 18.10.2022 (per D.V.S.S.Somayajulu, J)

These writ appeals are filed questioning the order dated

04.08.2022 in W.P.No.15139 of 2022.

2) This Court has heard Si K.S.Murthy, learned senior

counsel appearing for the appellant in W.A.No.650 of 2022,

Dr. Sujay Kantawala, learned counsel appearing for appellant

in W.A.No.660 of 2022 and Sri S.Sri Ram, learned senior

counsel on behalf of Sri Sai Sanjay Suraneni, learned counsel

for the writ petitioner/respondent No.1 in both the appeals.

3) The services of the writ petitioner/contractor were

engaged by the appellant/HPCL for the work of operation and

maintenance for Single Point Mooring system at the Visakha

refinery. Alleging that the action/inaction of the writ

petitioner caused loss of human life and an oil spill etc., the

writ petitioner was black listed for three years. In the

technical parlance of the HPCL, it is known as "holiday

listing". By virtue of this holiday listing, the writ petitioner

was prevented from participating in tenders for a period of

three years by the initial order. Later, in the course of

hearing by the appellate authority, this holiday listing period

was reduced to one year. Challenging the said holiday listing

orders of three years and one year respectively, the writ

petition was filed. The same came to be allowed. Hence, the

writ appeals.

4) Sri K.S.Murthy, learned senior counsel, points out that

the order passed by the learned single Judge is not correct in

holding that an ex parte order was passed. Learned senior

counsel also points out that the learned single Judge also

committed an error in holding that there are no 'reasons'

given in the said order and that there is a failure of natural

justice. It is also pointed out that learned single Judge

committed an error in holding that clause 8.7 of the holiday

listing guidelines was not followed and that the enquiry

should have been completed within six months.

5) Learned senior counsel points out by relying upon the

chronology of dates that the first show cause notice was

issued to the writ petitioner on 26.02.2021. After considering

the replies that were given by the writ petitioner, a final order

dated 03.11.2021 was passed. Thereafter, an appeal was

filed by the writ petitioner before the Executive Committee on

03.12.2021. After a personal hearing was given, final order

was passed on 09.05.2022. Learned counsel laid great stress

on the contents of the two orders dated 03.11.2021 and

09.05.2022. He submits that both the orders are reasoned

orders and that the issues raised by the writ petitioner were

considered and orders were passed. He also points out that

the initial authority debarred the writ petitioner from future

contracts for a period of three years, whereas the appellate

authority reduced this period to one year. He also points out

that both of these orders run into pages and have considered

the issues raised.

6) Learned senior counsel also submits that clause 8.7

which is relied upon by the learned single Judge is not a

mandatory clause and that the writ petitioner also did not

raise a dispute that the enquiry was not completed within the

stipulated time.

7) Relying upon N.G.Projects Limited v. Vinod Kumar

Jain and others1, learned senior counsel submits that even

if the action taken was wrong or contrary to law, the writ

(2022) 6 SCC 127

petitioner can sue for damages. Further, relying upon the

State of Odisha and others v. Panda Infraproject

Limited2, learned counsel argues that holiday listing or

debarment is necessary for disciplining contractors who

commit acts of omission and that the Court should not easily

involve itself in such matters or exercise powers under 226 by

quashing or setting aside the order.

8) Learned counsel lastly submits that the rules of natural

justice are in fact followed as is visible from the show cause

notices and the replies which were given.

9) In reply to this, Sri Sri Ram, learned senior counsel

appearing for the writ petitioner (first respondent) in the

appeal argued the matter at length. He points out that the

order of the learned single Judge is correct. It is his

contention that the essential issues that are raised have not

been considered by the respondent authorities when they had

passed the order. He also relies upon para 31 of the

judgment reported in Gullapalli Nageswara Rao and

others v. Andhra Pradesh State Road Transport

(2022) 4 SCC 393

Corporation and another3 to argue that one person heard

the matter and another person has decided the issue and also

of bias and a preconceived mind. He points out that in the

order dated 09.05.2022 an Executive Committee was

appointed to give a hearing, but the order was in fact passed

by the Secretary. He also points out that Sri Ramakrishnan

Ramanathan is the Officer who issued the first notice dated

26.02.2021, wherein he had already come to a conclusion

that the root cause of the accident was the conduct of the writ

petitioner. It is pointed out that the same Officer also issued

second show cause notice dated 27.04.2021, wherein

conclusions were already reached. Therefore, he submits that

the show cause notice dated 27.04.2021 was an empty

formality. Lastly, he points out that the same Officer also

participated in the deliberations resulting in the final order

that was passed. He submits that there is a failure of rules of

natural justice and the same Officer who has also come to

certain clear conclusions participated in the subsequent

deliberations also. He submits that although the order is

signed by somebody else, the participation of the same Officer

AIR 1959 SC 308

vitiates the entire procedure. He also states that adequate

and proper reasons are not given and many of the issues

raised by the writ petitioner are in fact not answered in the

impugned orders. It is also submitted that the order of black

listing has serious civil consequences and therefore, the

orders should be passed in a fair and transparent manner.

Learned senior counsel also submits that time frame for such

matters stipulated in the holiday listing guidelines were not

followed. He points out that the process should have been

completed within six months and the initial process of black

listing or holiday listing should have been completed within

six months and the appeal should have been disposed within

45 days. Neither of these time lines were followed and hence

he argues the action is vitiated. He also points out that the

Enquiry Committee appointed by the HPCL has pointed out

that there are system failures on the part of HPCL also and

this is not considered in the impugned orders. Therefore, the

learned senior counsel argues that the order of the single

Judge does not suffer from any anomalies for this Court to

interfere.

10) This Court after hearing all the learned counsel notices

that certain facts are not in dispute. An accident did occur in

August, 2019 when the vessel KALLIOPI was discharging oil

at the Single Point Mooring. Thereafter, a vessel called

KOHINOOR was dispatched by the petitioner to control the oil

spill. In addition, another vessel M.V. COASTAL JAGUAR was

also deputed there. However, on the second day i.e. on

12.08.2019, a fire broke out on the second vessel COASTAL

JAGUAR resulting in the loss of four lives.

11) The first show cause notice was issued on 26.02.2021 to

the writ petitioner. The writ petitioner gave a reply dated

22.03.2021 to which a further notice dated 27.04.2021 was

issued. Thereafter, the writ petitioner gave a reply dated

29.05.2021. A final notice was issued by HPCL on

30.09.2021.

12) The first order of holiday listing was passed on

03.11.2021. A reading of this order dated 03.11.2021 which

is signed by the Chief General Manager, Material shows that

the notices and replies were considered. The conclusions are

found in paras 4 (a) to (e) of the said letter. In the last para it

was also clearly pointed by the Officer concerned that the

condition of the vessel M.V. COASTAL JAGUAR was not

perfectly seaworthy and that it did not have proper

clearances. The use of the vessel COASTAL JAGUAR was

insisted because the earlier vessel KOHINOOR was not

capable of handling the situation. The root cause of the fire

accident was said to be the action of the writ petitioner in

deploying an uncertified and unseaworthy vessel. This is

reiterated more than once and also in the penultimate para of

the order.

13) Thereafter, an appeal was filed on 03.12.2021 by the

writ petitioner-Contractor. Personal hearing was afforded to

the Contractor and the final order was passed on 09.05.2022.

A reading of this order makes it clear that the Contractor was

represented by a legal consultant who was assisted by three

other officials. The contentions raised by the Contractor/writ

petitioner were discussed in paras 1 to 11. Again it is

reiterated that the vessel M.V. COASTAL JAGUAR was not

seaworthy and should not have been used. It was also

noticed that the parting of the breakaway couplings occurred

on 11.08.2019, whereas fire accident occurred on 12.08.2019

when the vessel M.V. COASTAL JAGUAR was deputed. Other

reasons are also given. Ultimately, the holiday listing or the

black listing was reduced to one year with effect from

03.11.2021 from the earlier period of three years.

14) One of the main grounds urged by Sri K.S.Murthy

learned senior counsel is that these are reasoned orders and

that the rules of natural justice were followed.

15) The law on the subject is also very well settled. Rules of

natural justice cannot be put in a straitjacket formula. The

first and most essential rule of natural justice is 'audi alteram

partem' or hearing a party before passing an order. This

'hearing' can be through a written show cause notice and

reply and/or oral hearing. This depends on the rule

position/contract conditions and/or the facts of each case.

The following judgments are referred to:

i) Ajit Kumar Nag v. General Manager (P.J.),

Indian Oil Corporation Ltd., Haldia and Ors.4

ii) Sahara India (Firm), Lucknow v. Commissioner

of Income Tax, Central-I and Ors.5.

2005 (7) SCC 764

2008 (14) SCC 151

Since the law is well settled, the same is not being

reproduced in extenso.

16) If the orders are viewed against the backdrop of this

case law, it is clear that the issues raised were considered and

thereafter conclusions were reached. It is to be borne in mind

that the Officer who passed the first order dated 03.11.2021

or the members of Executive Committee, who passed the

order dated 09.05.2022 are all technical people and are not

trained judicial Officers. They have assigned reasons for the

conclusions. Hence, the finding that the impugned orders

suffer from lack of reasons or a failure of natural justice is not

correct in the circumstances. This Court therefore holds that

there is compliance with the rules of natural justice. Notices

were given and the issues raised in the replies were

considered. Sufficient reasons are visible and the order

cannot be called an unreasoned order. Lastly, the finding

that it is an ex parte order is also not correct. Opportunity

was given and the reply to the show cause notices were

considered. It is also mentioned in para 16 of the order dated

09.05.2022.

17) Another submission that needs to be answered is about

the timeline's specified in clauses 8.7 and 10.3 of section 4 of

the holiday listing guidelines. Clause 8.7 says that banning

period should be completed within six months. Clause 10.3

states that the appeal should be completed within 45 days.

Words like 'only'/completely etc., which would indicate that

these clauses are mandatory are conspicuous by their

absence. This Court finds that no penal consequences are

also stipulated in either of these two clauses. These clauses

do not state that if the process is not completed within the

stipulated period, the action would lapse and would be

deemed to have lapsed. This issue is also raised in the

counter filed, wherein it is stated that these periods are not

mandatory. This Court has to hold in view of language of

these clauses; that they are merely directory and not

mandatory. The failure to adhere to the timeline will not

vitiate the entire process. This Court also notices that the

writ petitioner participated in the procedures without any

demur on these issues of timelines.

18) The last issue raised is about the presence of one Officer

who has also participated in the deliberations of the appellate

authority after reaching certain conclusions earlier. This

Court notices that from a reading of the order passed on

09.05.2022 that Sri Ramakrishnan Ramanathan was a

member of the team which heard the writ petitioner. He was

not the sole authority that heard the matter. In the rejoinder

affidavit filed it was clarified that he was only posted

there/sent there for the purpose of technical assistance.

Even otherwise, this Court notices that neither the legal

consultant nor the other Officers present on behalf of the writ

petitioner raised an issue about the presence of Sri

Ramakrishnan Ramanathan or his participation. The

"prejudice" caused by this Officer's presence is not pleaded

with certainty either. In the opinion of this Court, no

prejudice is caused to the writ petitioner by the mere

presence of this Officer.

19) Lastly, this Court notices that the 'Enquiry Committee'

that has gone into the causes of the accident has also

apportioned the blame to both the contractor (writ petitioner)

and the appellant also. The deployment of M.V. COASTAL

JAGUAR and using the vessel which was not ready for

movement in the open sea without the requisite clearances is

commented upon. This report is disclosed as a material

document. This accident led to death of four people. In line

with the judgment in the case of Panda Infraproject Limited

(2 supra), this Court has to notice the seriousness of the

allegations and also the act of omission and commission on

the part of the Contractor/writ petitioner. Considering the

same, this Court holds that the impugned orders of holiday

listing is correct.

20) In view of all of the above, the writ appeals are allowed

setting aside the impugned order dated 04.08.2022. No order

as to costs. As a sequel, the miscellaneous petitions if any

shall stand dismissed.

PRASHANT KUMAR MISHRA, CJ D.V.S.S.SOMAYAJULU, J

KLP