M/S Rana G Power Co vs South Eastern Coalfields Limited
2022 Latest Caselaw 5547 Chatt

                               1


                                                           NAFR
       HIGH COURT OF CHHATTISGARH BILASPUR
                   WPC No. 1359 of 2022
   • M/s Rana G Power Co., House No. 2752/02,
     Samanbamdh Area, Behind Life Shepherd School, Ward
     No. 15, The Hujur Nagar, Rewa- 486001, Madhya
     Pradesh
     Through- its Authorized Representative, Mr. Satish Singh
     Tiwari S/o Lt. Shri Mahaveer Singh Tiwari, aged about 52
     years, residing at House No. 2752/02, Samanbamdh
     Area, Behind Life Shepherd School, Ward No. 15, The
     Hujur Nagar, Rewa- 486001, Madhya Pradesh.
                                                ---- Petitioner
                            Versus
1.   South Eastern Coalfields Limited Through its Chairman
     cum Managing Director, SECL Headquarters, Seepat
     Road Bilaspur, Chhattisgarh 495006.
2.   Area General Manager, Dipka Area, South Eastern
     Coalfields Limited Dist. Umaria, Madhya Pradesh.
3.   Ms. Baghel Infrastructure (P) Ltd. Bhagel and Co
     Aramachine CHOPAN, Dist. Sonebhadra, State Uttar
     Pradesh, 231205
                                            ---- Respondents
       (Cause-title taken from Case Information System)


For Petitioner         :     Mr. Aman Saxena, Advocate
For Respondents        :     Mr. Vaibhav Shukla and Ms. Astha Shukla,
                             Advocates
Date of hearing : 07.07.2022
Date of order   : 06.09.2022

     Hon'ble Shri Arup Kumar Goswami, Chief Justice
         Hon'ble Shri Parth Prateem Sahu, Judge

                           C A V Order

Per Parth Prateem Sahu, J

       Petitioner by way of filing this writ petition under Article 226

of the Constitution of India has challenged the letter of
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communication of the order dated 07.1.2022 (Annexure P/1) issued

by respondent No.2 by which Letter of Intent ('LOI') bearing No.

SECL / BSP/ CMC/ LOA/ e-NIT-463/JOH/2021-22/1182 dated

22.10.2021 was cancelled, petitioner firm was banned for a period of

24 months from participating in any future tender in South Eastern

Coalfields Limited ('SECL') and subsidiaries of Coal India Limited

('CIL') and penalty of Rs.52,67,06,535.95 (Rupees Fifty Two Crore

Sixty Seven Lakh Six Thousand Five Hundred Thirty Five and

Ninety Five paise only) was imposed.


2.      Facts

relevant for disposal of this writ petition, are that,

petitioner is a joint venture of Ranavir Projects & Goldmine Power

Infrastructure Industries engaged in civil constructions and other

works. Respondent No.1 issued e-Tender (Annexure P/3) vide

Tender Notice No.SECL/BSP/CMC/e-Tender/463 dated 15.07.2021

for "Hiring of HEMM for all kind of strata/overburden loading into

tippers, transportation and unloading excavated materials & silt,

dumping, scraping/removal of bands, preparation and maintenance

of haul road, water sprinkling and spreading of excavated material at

the site shown and as per directives of the management/engineer in

charge at Kanchan Open Cast Mine of Johilla Area" of sub-work (a)

21,05,566.000 cubic meter (soft/loose soil) including drain quantity;

sub-work (b) 3,68,89,630.000 cubic meter (Hard Strata); total total

quantity of over burden of 3,89,95,196.000 Cubic meter (including

drain quantity of both sub-works) for a period of 1095 days with

minimum excavation of 35612 cubic meter per day. Petitioner along

with other tenderers submitted their bids, in which petitioner became

successful being L-1 bidder. Petitioner was issued LOI on

22.10.2021. As per requirement of tender conditions, petitioner was

required to furnish Performance Security Deposit ('PSD') in

prescribed form, details of which is given under Instructions to

Bidders. The amount of PSD was quantified as Rs.2,63,35,327/-,

which is equal to 3% of the annualized value of contract amount.

The period prescribed for furnishing PSD was 21 days from the date

of issuance of LOI. Petitioner on 20.11.2021 wrote letter to

respondent No.2 submitting bank draft towards Bank Guarantee

from the EMERIO BANQUE Ltd. (Bank) for approval of SECL. The

Bank was a foreign bank. Petitioner wrote letter on 22.11.2021 to

respondent No.2 for approval of submitting bank draft towards Bank

Guarantee of Rs.2,63,35,327/- from EURO EXIM BANK LTD., a

foreign bank and thereafter another letter for approval of submitting

bank guarantee of the aforementioned amount from EUROPA Bank

Public Limited Company, a foreign bank. Petitioner failed to submit

PSD as required in terms of tender document, which made the

respondent No.2 to issue letters reminding the petitioner to submit

PSD within the stipulated period. Petitioner failed to submit PSD in

the form of Bank Guarantee in terms of tender document. Show-

cause notice issued by respondent No.2 was replied by the

petitioner and thereafter, considering the reply submitted to show-

cause notice to be non-satisfactory, order of cancellation of LOI,

banning the petitioner for a period of 24 months and penalty of

Rs.52,67,06,535.95 was issued. This made the petitioner to

approach this Court by way of filing this writ petition seeking

following reliefs :

"10.1 Quash the entire impugned Order dated 07.1.2022 (Annexure P/1) on account of it being violative of principles of natural justice, arbitrary, contrary to article 14 rule of law and being illegal.

10.2 Direct the Respondent SECL to accept the bank guarantee of EUROPA BANK Public Limited as valid on account of ECL having already accepted the same, to treat equals as equal under article 14.

10.3. Quash the fresh e-tender proceedings dated 12.01.2022 (Annexure P/2) as the tender notice dated 15.07.2021 and the LOA granted to the Petitioner continues to be valid on account of quashing of Impugned Order and acceptance of aforesaid bank guarantee.

10.4.Any other relief/reliefs, which this Hon'ble Court may think fit and proper in the facts and circumstances of the case may also please be granted to the Petitioner.

10.5. Quash the LOA dated 25.03.2022

issued to respondent no.3 as LoA granted to the Petitioner continue to be valid on account of quashing of impugned order and acceptance of aforesaid bank guarantee."

3. Respondents submitted reply to the writ petition raising

preliminary objection of maintainability of writ petition on the ground

of availability of efficacious alternative remedy under clause 13 &

13A of the Conditions of Contract. Further raised objection of

involvement of disputed facts. The dispute is a commercial

contractual dispute. There is delay and laches on the part of

petitioner in filing writ petition as petitioner approached the Court

after lapse of about more than two months from the date of passing

of the orders under challenge. It is pleaded that petitioner failed to

comply with the terms and conditions of tender document, not

furnished PSD of Scheduled Bank as required, not signed the

Integrity Pact & Agreement and failed to commence the work.

Therefore, after issuance of show-cause notice, order terminating

the LOI, forfeiture of Earnest Money Deposit ('EMD'), banning of

petitioner from participating in future bids and penalty of 20% of

value of work in terms of clause 9.2(c) of General Terms and

Conditions was issued. It is also pleaded that draft copy of bank

guarantee issued from Europa Bank Public Limited Company and

Emerio Banque Ltd., Chennai (Foreign Banks) sent by email, was

not acceptable in view of clause 4.2 of General Terms and

Conditions and clause 24.1 of Instructions to Bidders because the

Bank of which Bank Guarantee was submitted, was not a Scheduled

Bank. New tender is finalized and LOA dated 25.3.2022 is also

issued in favour of L1 M/s Baghel Brothers (Annexure R-3) and new

contractor already commenced the work.

4. Mr. Aman Saxena, learned counsel for the petitioner would

submit that action taken by respondent No.2 by way of issuance of

impugned order (Annexure P/1) is per se illegal and arbitrary. After

issuance of LOI, petitioner submitted PSD through Bank draft issued

by EMERIO BANQUE to the tune of INR Rs.2,63,35,327.00, a

Foreign Bank located at Kalaignar Karunanidhi Nagar, Chennai.

Clause 24.1(b) of Instructions to Bidders permits submission of Bank

Guarantee of Foreign Bank. Though as per clause 24, PSD is to be

submitted within 21 days from issuance of LOI, tender document

provides discretion of management for extending period by 14 days

on case to case basis, and therefore, delay, if any, in submitting

Bank Guarantee towards PSD is within the zone of discretion for

extension of time provided under tender document. Tender

document clearly prescribes for acceptance of Bank Guarantee of

Scheduled Bank or Foreign Bank located in India. Non acceptance

of the Bank Guarantee of EMERIO BANQUE Ltd. (Foreign Bank) or

other foreign banks, branch located in India, is arbitrary in view of

clause 24.1 (b) of Instructions to Bidders and 4.2 (b) of General

Terms and Conditions. Bank Guarantee of EMERIO BANQUE Ltd.

EURO EXIM BANK had been accepted by other Government

Departments and Organizations including National Highway

Authority of India and Directorate of Education Ministry, New Delhi. It

is submitted by him that another subsidiary of CIL i.e. Eastern

Coalfields Limited accepted the Bank Guarantee issued by

EUROPA Bank, and therefore, action taken by respondent -SECL is

discriminatory in not accepting the Bank Guarantee issued by

EMERIO BANQUE Ltd. Ltd. (Foreign Bank). He further contended

that in show-cause notice dated 30.11.2021, there is no specific

mention of proposed action of imposing penalty, but for cancellation

of LOI and banning for a minimum period of 24 months. After receipt

of show-cause notice dated 30.11.2021, petitioner immediately

submitted reply and had shown willingness to work and to submit

PSD. Order Annexure P/1 dated 07.1.2022 was passed without

application of mind and the same is a non-speaking order. It is

contended that respondent No.1 further erred in issuing fresh e-

Tender on 12.1.2022 and awarding it to respondent No.3.

Cancellation of LOI, banning and imposition of penalty is violative of

principles of natural justice. He pointed out that reading of clause 9.2

of General Terms and Conditions would show that penalty can be

imposed upon termination of contract or cancellation of contract,

whereas in the case at hand, there was no contract between the

parties. The show-cause notice was inadequate. In support of his

contention, he places reliance on the judgment passed by Hon'ble

Supreme Court in cases of Tata Cellular v. Union of India, reported

in (1994) 6 SCC 651 and Jagdish Mandal v. State of Orissa and

Others, reported in (2007) 14 SCC 517 and the orders passed by

this Court in Writ Petition (C) No.2856 of 2020 decided on

12.02.2021 (M/s. SBJ Projects (P) Ltd. v. South Eastern

Coalfields Limited & Another) and in Writ Petition (C) No.2577 of

2020, decided on 16.02.2021 (M/s Jai Ambey Roadlines v. South

Eastern Coalfields Limited & Another).

5. Per contra, Mr. Vaibhav Shukla, learned counsel for the

respondents would submit that, submission of learned counsel for

the petitioner that order impugned is passed in violation of principles

of natural justice and without application of mind is per se wrong. He

contended that the idea and understanding of petitioner that Bank

Guarantee of EMERIO BANQUE Ltd. being a Foreign Bank is in

accordance with terms and conditions of tender document, is also

not correct. In tender document under clause 4.2 of General Terms

and Conditions, there is a condition of furnishing 3% of annualized

value of contract amount or contract value whichever is lower within

a period of 21 days from issuance of LOA as PSD. It clearly

mentions the demand draft drawn on any of the Scheduled Banks.

Along with form of Bank Guarantee for performance security, list of

Scheduled Commercial Banks is also enclosed including Public

Sector Banks, Private Sector Banks and Foreign Banks. In the list of

Scheduled Foreign Banks, name of EMERIO BANQUE Ltd. and

EUROPA BANK of which petitioner furnished draft copy of Bank

Guarantee sent by email, is not mentioned, and therefore, draft copy

of Bank Guarantee submitted by the petitioner after prescribed

period of 21 days was found to be non-acceptable. It is submitted by

him that when tender document bears specific terms and conditions

of submission of Bank Guarantee from any of the Scheduled Banks,

it is for the petitioner to fulfill the requirement in terms of the

conditions as mentioned in tender document. When petitioner failed

to furnish Bank Guarantee as required under tender document and

failed to execute agreement, letter was issued to the petitioner

before expiry of period of 21 days reminding for submission of PSD

on 28.10.2021, 9/10.11.2021, 15.11.2021 and 22.11.2021. By letters

dated 20.11.2021 and 26.11.2021 petitioner was advised to submit

bank guarantee of scheduled foreign bank. Respondents have

given ample time and intimation for submission of PSD and to start

the work. As the Bank Guarantee submitted was of non-Scheduled

Bank, respondents have rightly not accepted the same,

consequently, show-cause notice was issued. Petitioner submitted

reply to show-cause notice, which was found to be non-satisfactory

and only thereafter, order impugned (Annexure P/1) was passed.

There is no illegality or arbitrariness in the action of respondents.

Principles of natural justice has been followed, amount of penalty is

also quantified and calculated in accordance with terms and

conditions of tender document. He also submits that no relief can be

granted to the petitioner as the petitioner is having efficacious

alternative remedy as provided under clause 13 of tender document

of settlement of disputes and clause 13A for settling the dispute

through arbitration. In support of his contention, he places reliance

upon the judgment of Hon'ble Supreme Court in cases of State of

Gujarat and Others v. Meghji Pethraj Shah Charitable Trust and

Others, reported in (1994) 3 SCC 552, State of U.P. and Others v.

Bridge & Roof Company (India) Ltd., reported in (1996) 6 SCC 22,

Kerala State Electricity Board and Another v. Kurien E. Kalathil

and Others, reported in (2000) 6 SCC 293 and Kisan Sahkari

Chini Mills Limited and Others v. Vardan Linkers and Others,

reported in (2008) 12 SCC 500.

6. We have heard the learned counsel appearing for the

parties and have perused the materials on record.

7. The root cause of passing the order dated 7.1.2022

Annexure P/1, cancelling the Letter of Intent dated 22.10.2021;

banning the petitioner firm for a period of 24 months from

participating in any future tender in respondent SECL and imposing

penalty of Rs.52,67,06,535.95, is that the petitioner failed to submit

Bank Guarantee towards PSD within the period prescribed in tender

document of the Scheduled Bank or of Bank acceptable to the

respondent.

8. To appreciate the submission of learned counsel for

respective parties, we find it appropriate to extract relevant clauses

of tender document including Instructions to Bidders and General

Terms and Conditions. Clause 24 of Instructions to Bidders deals

with performance security / security deposit. Relevant portion of

clause 24.1(i) reads as follows :

"24. PERFORMANCE SECURITY / SECURITY DEPOSIT

24.1 Security Deposit shall consist of two parts:

x x x

x x x

(i) Performance Security should be 3% of annualized value of contract amount or contract value whichever is lower (For contract having period upto 5 years) or (ii) Performance Security should be 5% of annualized value of contract amount (for long terms contract i.e. for a period exceeding 5 years) and should be submitted within 21 days of issue of LOA by the successful bidder in any of the form given below:

A Bank Guarantee in the form given in the bid document from any scheduled Bank. The BG issued by outstation bank shall be operative at its local branch at ------or branch at-----

Govt. Securities, FDR (Scheduled Bank) or any other form of deposit Stipulated by the owner.

             Demand        Draft    drawn       in   favour   of
             ...................on   any        Scheduled   Bank
             payable at its Branch at ........

The Earnest Money/Bid Security deposited is to be returned to the contractor after submission of performance security. The Earnest Money/Bid Security deposited may be adjusted against the security deposit (Performance Security) at Bidder's choice.

If performance security is provided by the Successful bidder in the form of bank guarantee it shall be issued either-

(a) at Bidder's option by a Scheduled Bank

or

(b) by a foreign bank located in India and acceptable to the employer.

9. Clause 4.2 of General Terms and Conditions of contract reads as

follows :

"4.2 Performance Security (first part of security deposit) should be 3% of annualized value of contract amount or contract value whichever is lower (For contract having period up to 5 years) or 5% of annualized value of contract amount

(for long terms contracts i.e. for a period exceeding 5 years and should be submitted within 21 days of issue of LOA by the successful bidder in any of the form given below:

A Bank Guarantee in the form given in the bid document from any scheduled Bank. The BG issued by outstation bank shall be operative at its local branch at ......or branch at......."

10. Clauses as mentioned above talk about Bank Guarantee

from any Scheduled Bank at bidders option. It is not in dispute

that Scheduled Bank means Banks forming part of list maintained by

Reserve Bank of India, which includes list of Scheduled Commercial

Banks, i.e., list of Scheduled Public Sector Banks, list of Scheduled

Private Sector Banks, list of Scheduled Small Finance Banks, list of

Scheduled Payment Banks, list of Scheduled Regional Rural Banks

and list of Scheduled Foreign Banks in India. List of Scheduled

Banks is filed by petitioner as Annexure P/9 in another writ

petition filed by petitioner bearing WPS No.1914/2022 which was

dismissed vide order dated 17.8.2022. Both the writ petitions were

heard together.

11. Perusal of list of Scheduled Foreign Banks in India would

show that name of EMERIO BANQUE Ltd. and EUROPA BANK of

which petitioner has submitted draft copy of Bank Guarantee (after

prescribed period of 21 days), does not find place. After submission

of draft copy of Bank Guarantee by the petitioner through email,

respondent No.2 immediately intimated the petitioner vide email

dated 20.11.2021 (Annexure R-7) that draft copy of Bank Guarantee

submitted was not acceptable. Original copy of bank guarantee of

scheduled bank is acceptable as per terms. The petitioner was

intimated that he is required to submit Bank Guarantee towards PSD

within 26.11.2021 (extended period).

12. The submission of learned counsel for the petitioner that

clause 24 of Instructions to Bidders provides for an option for

submission of Bank Guarantee issued by Scheduled Banks or

Foreign Banks located in India and Bank Guarantee submitted by

the petitioner being of a Foreign Bank is in accordance with terms of

the tender document is not acceptable in view of the specific words

used under clause 24.1(i)(b).

13. Clause 24.1(i)(b) of Instructions to Bidders clarifies the

Foreign Banks located in India "to be acceptable to the employer".

The words used in aforementioned clause "to be acceptable to the

employer" is with some purpose and only with an intent that the

employer should be satisfied with the credential of the non-

scheduled Bank, of which tenderer has submitted the Bank

Guarantee.

14. It is further case of the petitioner that the respondents have

intimated the petitioner on 20.11.2021 that Bank, of which copy of

draft towards Bank Guarantee submitted through e-mail is not

acceptable. It is not the case of the petitioner that respondents have

not given sufficient time to produce required Bank Guarantee of

Scheduled Banks. In another writ petition bearing WPC

No.1914/2022 intimation of not accepting bank guarantee of non-

scheduled foreign bank was given by respondents on 7.10.2021.

Even after intimating the petitioner that the Bank Guarantee

submitted was not acceptable and further specifying the period for

submitting the Bank Guarantee as prescribed under Clause 24.1 of

the instructions to Bidders, the petitioner failed to submit required

Bank Guarantee. Respondent SECL is a separate company under

CIL, and therefore, even if, the submission of learned counsel for the

petitioner is taken to be correct that any other coal company had

accepted Bank Guarantee from non scheduled Foreign Bank

(EUROPA BANK) the same will not be binding upon the

respondents. Here, in the instant case, respondents issued tender

notification mentioning terms and conditions, and therefore, as per

clause 24.1 of Instructions to Bidders and clause 4.2 of General

Terms and Conditions, Bank Guarantee submitted of a Foreign Bank

must be to the acceptance of respondent/SECL.

15. In case of Jagdish Mandal (supra), relied upon by learned

counsel for the petitioner, consideration before Hon'ble Supreme

Court was whether the decision of non-acceptance of the EMD of

the lowest tenderer with evidently low rate and awarding the work to

L-2 bidder is proper. In the said judgment, Hon'ble Court held thus :

"33. ................ If the committee found that the tender of fifth respondent should be rejected on that ground, the said decision cannot be termed as unreasonable or arbitrary. The committee has applied its mind and rejected the tender by assigning a reason which is neither irrational nor arbitrary. Neither the High Court nor this Court can sit in appeal over such technical assessment. There is no infirmity in the decision making process or the decision."

16. In case of Tata Cellular (supra), Hon'ble Supreme court has

laid down the principles, on which power of judicial review can be

exercised. It was held thus :

"77. The duty of the court is to confine itself to the question of legality. Its concern should be:

1. Whether a decision-making authority exceeded its powers?

2. Committed an error of law,

3. committed a breach of the rules of natural justice,

4. reached a decision which no reasonable tribunal would have reached or,

5. abused its powers.

Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfillment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under:

(i) Illegality : This means the decision- maker must understand correctly the law that regulates his decision-making power and must give effect to it.

(ii) Irrationality, namely, Wednesday unreasonableness.

(iii) Procedural impropriety.

The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. v. Secretary of State for the Home Department, ex Brind, (1991) 1 AC 696, Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, "consider whether something has gone wrong of a nature and degree which

requires its intervention."

17. In the case at hand, there is specific clause under

Instructions to Bidders specifying that Bank Guarantee shall be

submitted in the form of Bank Draft by a Foreign bank located in

India and acceptable to the employer. The Foreign Bank of which

copy of draft towards Bank Guarantee forwarded through email is

not Scheduled Foreign Bank. Non acceptability of the Bank

Guarantee to the employer was known to the petitioner. In view of

above, we do not find any arbitrariness in the decision making

process of the respondent.

18. We are of the view that there is no arbitrariness on the part

of respondents in holding that petitioner failed to comply with terms

and conditions of tender document after issuance of LOI.

19. Next question for consideration before this Court is whether

proceedings initiated by respondents are in accordance with law

following principles of natural justice. Issuance of show-cause notice

to the petitioner dated 30.11.2021 is not in dispute as copy of show-

cause notice is filed along with writ petition as Annexure P/13, to

which petitioner also submitted its reply vide Annexure P-14 dated

13.12.2021 through e-mail.

20. Perusal of show-cause notice would show that petitioner

was asked to submit a written explanation within a period of fifteen

days mentioning clauses of the General Terms and Conditions.

Relevant portion of show-cause notice is extracted below for ready

reference :

"....As you have neither furnished the Performance Security Deposit nor commenced the work till date even after communications made with you as referred, the management is entitled for Banning of Business with your for minimum 12 months from participating in future bidding, forfeiture of EMD and also termination/cancellation of LOI/ contract.

In view of the above this notice/show cause notice is hereby served to you to explain why not the mentioned subject work awarded to you shall be cancelled/ terminated and business with you shall be banned for minimum 12 months as per the conditions of the contract as stated above. You are advised to present your stand/defense in writing or in person within a period of 15 days to this office, failing which it shall be presumed that you have nothing to state in your defense and the management will be constrained to proceed further in accordance with the conditions of the contract.

Please treat this letter as FINAL NOTICE."

21. Perusal of aforementioned contents of show-cause notice

would reflect that in show-cause notice, there is specific mention of

action to be taken against bidder who failed to submit the PSD

within the stipulated time to cancel the work awarded (LOA),

banning for a minimum period of 12 months and forfeiture of EMD.

As there is specific mention of consequential action to be taken

against the petitioner of cancellation of award of work and also of

banning the petitioner it can not be said that said actions were

without providing opportunity of hearing to the petitioner. As such

principles of natural justice were followed towards those actions.

22. In tender matters, it is to be seen whether the decision taken

by authorities exceeded its power, reached a decision which no

reasonable tribunal or authority could have reached; whether

principle of natural justice is followed or not. In the facts of the case

as discussed in preceding paragraphs, we do not find any good

ground to interfere with the order of cancellation of LOI, forfeiture of

EMD and banning of petitioner for a period of 24 months.

23. So far as the action taken against the petitioner in the

impugned order of penalty under clause 9.2(ii) of General Terms and

Conditions is concerned, there is no notice to the petitioner for

taking such action against him. Respondents have placed on record

show-cause notice dated 30.11.2021. Show-cause notice does not

mention proposed action to be taken against petitioner with regard

to penalty. There was no proper and specific notice for the said

action to be taken against petitioner and, hence, the order impugned

(Annexure P/1) so far as it relates to imposition of penalty of

Rs.52,67,06,535.95 (Rupees Fifty Two Crore Sixty Seven Lakh Six

Thousand Five Hundred Thirty Five and Paise Ninety Five only), is

beyond the contents of show-cause notice issued to the petitioner.

24. It is settled law that no action can be taken against anyone

by surprise. Absence of specific mention of proposed action to be

taken against the petitioner of imposing penalty and its recovery,

deprived him of pleading defense in reply to the show cause notice

on the said action. The action of respondents of imposing penalty

and its recovery though forming part of terms and conditions of

tender document, but without notice, is in violation of principles of

natural justice. Hence, in the opinion of this Court, it is not

sustainable.

25. In case of UMC Technologies Private LImited (supra),

Hon'ble Supreme Court has held thus :

"13. ......The basic principle of natural justice is that before adjudication starts, the authority concerned should give to the affected party a notice of the case against him so that he can defend himself. Such notice should be adequate and the grounds necessitating action and the penalty/action proposed should be mentioned specifically and unambiguously.

An order travelling beyond the bounds of notice is impermissible and without jurisdiction to that extent. This Court in Nasir Ahmad v. Assistant Custodian General, Evacuee Property, U.P., Lucknow and Another, (1980) 3 SCC 1, has held that it is essential for the notice to specify the particular grounds on the basis

of which an action is proposed to be taken so as to enable the noticee to answer the case against him. If these conditions are not satisfied, the person cannot be said to have been granted any reasonable opportunity of being heard."

26. The case law relied upon by the respondent in State of

Gujarat & Ors. Vs. Meghji Pethraj Shah Charitable Trust (supra)

is distinguishable on facts. It was a case of granting admission in

professional college by Trust under some arrangement deed

between the Trust and the Chief Minister of the State and the

admission was found to be contrary to the law. Case law of Bridge

& Roof Company (India) Ltd. (supra) was a dispute of deduction

of sales tax from the payment due to the contractor. Hence, it is on

different sets of fact. In case law of Kurien E. Kalathil and other

(supra), the dispute was with regard to interpretation of the terms

and conditions of contract. In case law Vardan Linkers & Others

(supra) relied by counsel for the respondent, dispute was of

cancelling the order by Secretary. Hon'ble Supreme Court, while

discussing the issue, was of the view that unless the writ Court

found the Secretary's order to be arbitrary or unreasonable it should

have desisted from interfering with it. In the case at hand, the order

of penalty is without specific show cause notice.

27. As discussed above, respondents have imposed huge

amount of penalty without issuing show-cause notice, in violation of

principles of natural justice. Considering dictum of Hon'ble Supreme

Court in cases of Gorkha Security Services (supra) and UMC

Technologies Private Limited (supra), we are of the view that

order Annexure P/1 to the extent of imposing penalty of

Rs.52,67,06,535.95 (Rupees Fifty Two Crore Sixty Seven Lakh Six

Thousand Five Hundred Thirty Five and Paise Ninety Five only) is

not sustainable and it is hereby quashed. This is without prejudice to

the rights and liberties of the respondents to proceed with further

steps in this regard by issuing a proper notice calling for explanation

and to pass order afresh after affording an opportunity of hearing to

the petitioner in this regard. The other part of the order Annexure P/1

is not interfered with.

28. The writ petition is allowed in part to the extent as indicated

above.

                      Sd/-                                 Sd/-/-      /-
              (Arup Kumar Goswami)                  (Parth Prateem Sahu)
                  Chief Justice                           Judge

roshan/-