M/S. Balaji Travels Thr. ... vs Western Coalfields Limited, ...
2022 Latest Caselaw 700 Bom

                                               1                     wp1900.21.odt


      IN THE HIGH COURT OF JUDICATURE AT BOMBAY
               NAGPUR BENCH AT NAGPUR
                  WRIT PETITION NO.1900 OF 2021

    M/s Balaji Travels,
    through its Proprietor Shri Sandeep Gupta,
    Aged about 48 years, Occ: Business,
    Resident of - Opp. Kastur Hotel,
    Rail Toli, Gondia,
    District Gondia, Maharashtra               ....PETITIONER

                               ...V E R S U S...
1. Western Coalfields Limited,
   Yekona Sub Area, Office of the Sub Area
   Manager, Majri Area, Department of E&M
   having registered office at Post Office Kuchana,
   Tahsil Bhadravati, District Chandrapur
   Through its Area General Manager.
2. Western Coalfields Limited,
     Majri Area, Office of the Area General
     Manager, Majri Area, Department of E&M
     having registered office at Post Office Kuchana,
     Tahsil Bhadravati, District Chandrapur
     Through its Area General Manager.                     ... RESPONDENTS
-----------------------------------------------------------------------------------
Shri Narayan C. Phadnis, Advocate for petitioner.
Smt. Sushma, Advocate for respondents.
-----------------------------------------------------------------------------------
                CORAM:- A.S. CHANDURKAR AND
                              PUSHPA V. GANEDIWALA, JJ.

DATED :- 19th JANUARY, 2022.

ORAL JUDGMENT : (PER : PUSHPA V. GANEDIWALA, J)

. Heard Shri Naryan Phadnis, learned counsel for

the petitioner and Smt. Sushma, learned counsel for the

respondents.

2 wp1900.21.odt

2. Rule. Rule made returnable forthwith. The matter

is heard finally with the consent of the learned counsel for

the parties.

3. The petitioner - M/s Shri Balaji Travels is a

proprietary concern engaged in the business of transportation

and hiring of buses. In pursuance of a tender floated by

respondents-WCL for hiring of one Mini-Bus for

transportation of manpower at Yekona Open Cast Mine, the

petitioner submitted its bid.

4. The petitioner has been awarded a work order

dated 14/17.10.2019 for a period of 341 days in two years.

Accordingly, the petitioner deployed bus of Tata Winger

having RTO registration No. MH35-AJ-0196. The vehicle

started running as per the contract in November-December -

2020. The vehicle started giving trouble and ultimately on

03.01.2021 it broke down. It is the case of the petitioner that

the petitioner deployed two different alternate vehicles as per 3 wp1900.21.odt

the terms and conditions of the work order. However, the

respondent no.2 rejected both the vehicles for no reason.

5. The respondents issued a show-cause notice on

15.01.2021 calling upon the petitioner as to why the work

order should not be cancelled and the petitioner should not

be black listed for one year with forfeiture of earnest money

amount. The petitioner was called upon to submit the reply

within 5 days. The petitioner submitted its reply on

21.01.2021 but the same was not considered as it was

received beyond the stipulated period of 5 days. Ultimately,

the respondents passed the impugned order dated

02.04.2021, which was forwarded to the petitioner on

23.04.2021 and was received by the petitioner

on 01.05.2021.

6. Learned counsel Shri Phadnis appearing for the

petitioner submitted that the impugned order dated

02.04.2021 is arbitrary, illegal and shockingly

disproportionate because the work order itself provides

penalty upon any failure by the petitioner. It is submitted that

without resorting to the same, the harsh decision of banning 4 wp1900.21.odt

has been taken by the respondents resulting into spoiling of

the entire business career of the petitioner and that too

without giving opportunity of hearing to the petitioner. It is

submitted that the impugned communication/order is

arbitrary, illegal and unwarranted and uncalled for, which is

contrary to respondents own terms and conditions and also in

breach of principles of natural justice.

7. The respondents in their affidavit-in-reply at the

first place submitted that the provision of opportunity of

hearing to the petitioner is nowhere mentioned in the terms

and conditions of the work order. It is further submitted that

on 22.11.2020 the vehicle went under major maintenance

and since no alternate vehicle was deployed, the service

remained unavailable for many days. It is the contention of

respondents that the petitioner has utterly failed to response

to their letter dated 08.01.2021 and therefore on 15.01.2021

a show-cause notice was issued to the petitioner, seeking

explanation for non-compliance of the terms and conditions

of the contract. The petitioner was asked to reply within 5

days of the receipt of the show-cause notice. It is further 5 wp1900.21.odt

submitted that on 21.01.2021, one representative of the

petitioner arrived at Yekona Mine with Force Travellor (seat

capacity 31+ 1) Mini bus with registration No. MH-35-K-

3826 and registration date 21.04.2014 with letter dated

21.01.2021 for permitting to deploy the alternate vehicle. It is

the grievance of the respondents that the said vehicle was

completely worn out and in shabby condition and had many

mechanical flaws, due to which it was unfit for running at

Mine. Learned counsel Smt. Sushma appearing for the

respondents submitted that WCL rejected the petitioner's

application for allowing unfit alternate vehicle by letter dated

23.01.2021. Learned counsel further submitted that even the

petitioner's request on 06.02.2021 to permit the petitioner to

deploy original vehicle was rejected by the management since

the petitioner had failed to reply show-cause notice within

stipulated period of 5 days. Learned counsel submitted that

in compliance with the terms and conditions of the contract,

the respondents have rightly cancelled work order and

banned the petitioner for one year.

6 wp1900.21.odt

8. We have considered the submissions advanced on

behalf of both sides.

9. At the outset, the learned counsel Shri. Phadnis

has not seriously contested the issue of cancellation of the

contract since the period during which the contract was to be

performed has already been lapsed. The main grievance of

the petitioner is that without considering the case of the

petitioner and without giving the petitioner an opportunity of

hearing, the petitioner has been banned/black listed for a

period of one year. Learned counsel Shri Phadnis invited our

attention to Clause 17(1) of General Terms and Conditions

with regard to banning of business and submitted that the

terms and condition of the contract itself provide for

observance of principles of natural justice before banning the

business dealing with any contracting entity. For ready

reference, Clause 17(1) of General Terms and Conditions

reads thus:

"17. Banning of Business WCL shall follow the following guidelines of effecting 'Banning of Business' with a contracting entity in respect of Works and Services Contracts.

7 wp1900.21.odt

1. Observance of Principles of Natural Justice before banning the business dealings with any contracting entity. xxxxx."

10. It is not disputed that communication of the

impugned order of cancellation of the contract and banning

the business dealing with the petitioner for one year, the

petitioner had at least sent reply/communications dated

16.01.2021, 21.01.2021, 23.01.2021, 06.02.2021 and

13.02.2021 to the respondents. In these communications, the

persistent stand of the petitioner is that the alternate vehicles

i.e. MH-35-K-3856 (vide letter dated 16.01.2021) and MH-

35-K-5146 (vide letter dated 23.01.2021) were arranged by

the petitioner and the permission was sought to deploy the

same, however, each time the same was rejected by the

respondents.

11. A perusal of the impugned communication/order

would reveal that the respondents have not considered at all

the contention of the petitioner in the aforesaid letters. The

respondents in the impugned communication/order referred

to all the letters sent by them and thereafter referred to the

NIT General Terms and Conditions for cancellation of 8 wp1900.21.odt

contract and forfeiture of security deposit. The response of

the petitioner was received to the respondents on the 6 th day

of the receipt of notice to the petitioner. Heavens would not

have fallen if the respondents have considered the response

of the petitioner to the show-cause notice. Had the

respondents passed the impugned communication/order

prior to receipt of the aforesaid letters from the petitioner, the

case would have been different. In that case, the petitioner

would not have any say. However, in the case in hands, it is

clearly seen that despite the availability of the response of the

petitioner to the show-cause notice dated 15.01.2021 issued

by the respondents, non-consideration of the same while

passing the impugned order of black-listing, is nothing but an

arbitrary exercise of power by the respondents without

observing the principles of natural justice, which is pre-

requisite for passing any banning/black listing order. The

contention of the respondents in their reply with regard

absence of any provision for observing principles of natural

justice in the terms and conditions of the contract is utterly

incorrect.

9 wp1900.21.odt

12. Shri Phadnis, learned counsel for the petitioner

has rightly pointed out the basic judgment of the Hon'ble

Apex Court in M/s Erusian Equipment & Chemicals Ltd. Vs.

State of West Bengal and another reported in (1975) 1 SCC

70, which was followed in subsequent decisions, wherein

Their Lordships have held that the black listing orders involve

civil consequences and it casts a slur. It is further observed

that the black listing order creates a barrier between persons

blacklisted and the Government in the matter of transactions

and the black lists are "instruments of coercion".

The ratio as settled in the case of M/s Erusian

Equipment (supra) has further been followed in Raghunath

Thakur Vs. State of Bihar and others reported in (1989) 1

SCC 229 and in Kulja Industries Limtied Vs. Chief General

Manager, Western Telecom Project Bharat Sanchar Nigam

Limited and others reported in (2014) 14 SCC 731, wherein

it is held that if State or its instrumentality takes decision on

blacklisting then such decision is subject to judicial review on

grounds of principles of natural justice, doctrine of

proportionality, arbitrariness and discrimination.

10 wp1900.21.odt

13. The contention of Smt. Shushma, learned counsel,

for the respondents is that the alternative remedy is available

as the agreement provides for arbitration clause and the

petitioner must be relegated to the alternate remedy. To this,

Shri Phadnis, learned counsel has rightly pointed out the

decision of this Court in Writ Petition No.3857 of 2021 (M/s

Aai Tuljabhawani Transport Vs. Union of India and another),

wherein this Court has relied on the judgment of the Hon'ble

Apex Court in Harbanslal Sahnia and another Vs. Indian Oil

Corporation Ltd. and others reported in (2003) 2 SCC 107,

wherein it is held that in an appropriate case, in spite of

availability of the alternative remedy, the High Court may still

exercise its writ jurisdiction in at least three contingencies:

such as, where the relief claimed is for enforcement of any of

the Fundamental Rights; or where there is a failure to follow

the principles of natural justice, or where the orders or

proceedings which are impugned in the petition are wholly

without jurisdiction or where the vires of an Act are

challenged.

11 wp1900.21.odt

14. Smt. Sushma, learned counsel further harped on

the point that the alternate vehicle which was provided was

not fit to deploy at the mine and petitioner has repeatedly

failed to respond to the letters issued by the respondents

complaining of break-down of the contract vehicle and the

difficulties, which the respondents were being faced.

15. In any case what is more important in this case is

to perceive as to whether the principles of natural justice has

been observed by the respondents before taking such harsh

step of banning the business dealings. In this case, as

demonstrated above, the respondents have clearly failed to

consider in the impugned communication/order, the stand of

the petitioner in the letters dated 16.01.2021, 21.01.2021,

23.01.2021 and 06.02.2021. As such, considering Clause 17.1

in the NIT General Terms and Conditions and considering the

effect of banning/black listing on any business entity as

observed by the Hon'ble Apex Court in the case M/s Erusian

Equipment (supra), in our considered opinion, it is necessary

to quash and set aside the impugned banning order dated

02.04.2021 with liberty to the respondents, if they desires, to 12 wp1900.21.odt

pass afresh order after giving an opportunity of hearing to the

petitioner.

16. The petition accordingly is partly allowed. The

impugned order to the extent of banning the business dealing

of the petitioner with the respondents for one year is hereby

quashed and set aside. The petitioner, however, is at liberty to

challenge the cancellation of contract and forfeiture of

security deposit by taking appropriate course of law, if the

petitioner so desires.

Rule accordingly. No order as to costs.

              JUDGE                              JUDGE

Wagh




                                                        Digitally signed bySUMIT CHETAN
                                                        AGRAWAL
                                                        Signing Date:20.01.2022 16:02