Delhi High Court
Ambuja Hotels & Real Estates ... vs Indian Railway Catering & Tourism ... on 16 April, 2009
Author: S.Ravindra Bhat
24.
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Decided on: 16.04.2009
+ W.P. (C) 726/2009, CM-1566/2009 (Stay)
AMBUJA HOTELS & REAL ESTATES P.LTD. ..... Petitioner
Through: Mr. Pradeep Ranjan Tiwari,
Advocate.
versus
INDIAN RAILWAY CATERING & TOURISM
CORPORATION LTD. ..... Respondent
Through: Mr. Saurav Agrawal and
Mr. Dinesh Kumar, Advocates for IRCTC.
% CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
1. Whether the Reporters of local papers
may be allowed to see the judgment?
2. To be referred to Reporter or not?
3. Whether the judgment should be
reported in the Digest?
S.RAVINDRA BHAT, J. (OPEN COURT)
% Issue Notice. Mr. Saurav Agrawal, learned counsel for the IRCTC
accepts notice and states that the matter can be decided finally.
2. The petitioner challenges the order dated 6.1.2009, whereby the
license awarded by the respondents (hereafter called IRCTC) on 13.1.2004
for the business of catering service in the "Farakka Express" was cancelled.
The order also debars the petitioner from participating in future tender
processes for a period of two years effective from that date.
2. It is contended by the petitioner that the order is unsustainable and
arbitrary as it is premised on assumptions. Learned counsel relied upon the
averments as well as the reply to the show cause notice issued by the
respondent, IRCTC on 26.11.2008. Counsel contended that each of the
allegations were effectively refuted - in the reply to show cause, - and that
the impugned order nevertheless was issued by IRCTC without holding
proper enquiry and on the basis of assumptions.
3. Learned Sr. counsel further contended that the show cause notice
issued by the respondents, proposing action against the petitioner, nowhere
sought the latter's response on the point that the concern would be debarred
from future tender processes in the event of an adverse determination, on
the show cause notice. This, according to him, is unsustainable in law.
Counsel relied upon the decision of the Supreme Court, reported as Erusian
Equipment & Chemicals -vs- State of West Bengal 1975 (1) SCC 70.
4. Learned counsel for the respondents contended that the disputes
cannot be the subject matter of writ proceedings as this does not pertain to
any pre-contract administrative decision but concerns the working out of the
contract duly awarded. It was also contended that Clause 8.1 of the Tender
Documents governing the contract clearly stipulates that in the event of
successful tenderer/contractor violating any term or condition, leading to
unsatisfactory service or poor quality of articles etc. not only the license
could be terminated but that the licensee would be debarred from
participating in future projects.
5. It is evident from the above that the petitioner is seeking intervention
of the Court under Article 226 in respect of what are essentially contractual
disputes. As held by the Supreme Court in the decision State of U.P. and Ors.
v. Maharaja Dharmander Prasad Singh and Ors. (1989 (2) SCC 505), National
Highways Authority of India v. Ganga Enterprises (2003 (7) SCC 410),
Verigamto Naveen v. Government of A.P. (2001 (8) SCC 344) , such disputes
cannot be adjudicated by the High Court under Article 226, as they involve a
disputed questions of fact requiring the parties to lead evidence. In such
cases, it would be appropriate for the aggrieved party to approach the Civil
Court or seek recourse to arbitration, if they have agreed to such
mechanism.
6. The observations above are not dispositive of the petition;
there is one area where the petitioner's grievance appears to be well
founded. The show cause notice issued to it nowhere reflects the IRCTC's
thinking that the petitioner's transgressions are such as to its being debarred
for any, much less a period of two years. In the circumstances, the
impugned order to the extent it debars the petitioner is unsustainable in law.
Before taking such action which virtually spells civil death on the concerned
party, principles of natural justice which include issuance of notice, grant of
reasonable and adequate opportunity by the concerned agency have to be
mandatorily followed. This is the law declared in Erusian Equipment (supra);
it has been unwaveringly followed and applied in applied in later judgments.
In Grosons Pharmaceuticals (P) Ltd. v. State of U.P., (2001) 8 SCC 604 it was
held that:
"It is true that an order blacklisting an approved contractor results in
civil consequences and in such a situation in the absence of statutory
rules, the only requirement of law while passing such an order was to
observe the principle of audi alteram partem which is one of the facets
of the principles of natural justice."
This view has again been reiterated in B.S.N. Joshi & Sons Ltd. v. Nair Coal
Services Ltd., (2006) 11 SCC 548.
7. The IRCTC relies on the Clause 8.1 which is in the following terms: -
"In the event of any breach of the said terms and conditions
of the Licence, the IRCTC shall be entitled to forfeit the
whole or the part of the Security Deposit/License
fee/Concession Fee besides terminating or revoking the
License and debarring the Licensee from participating in the
future projects of IRCTC."
8. The above condition no doubt stipulates that the licensee has to be
debarred from participating in future projects in the event of unsatisfactory
service, poor quality of articles etc. Nevertheless, in such circumstances
also there is authority (D. K. Yadav v. J. M. A. Industries Ltd. (1993) 3 SCC
259 and Uptron India Ltd., v. Shammi Bhan 1998 (6) SCC 538 to say that
show cause notice and principles of natural justice have to be followed, even
where the authority or agency prescribes "automatic" application of a norm,
as a consequence for the occurrence of some event. Therefore, IRCTC has to
perforce issue a show cause notice, in such cases, and, after granting
opportunity to the contractor, exercise its discretion whether to blacklist the
concern and if so to what extent. This procedure is part of the
non-derogable principle of fairness, mandated by Article 14 of the
Constitution of India.
9. In the circumstances, the impugned order dated 6.1.2009 to the extent
it debars the petitioner for two years from participating in future projects is
hereby quashed. Even under normal circumstances, the petitioner's license
originally awarded would have ended on 25.3.2009. In the circumstances,
no purpose would be served by the Court considering the merits of the case,
as setting aside of such termination order, would not lead the automatic
award of fresh license. It is open to the petitioner to participate in future
tender processes, or seek redressal in respect of cancellation, in accordance
with law.
10. The Writ Petition has to succeed. All rights and contentions of the
parties are hereby reserved. This order will also not preclude the petitioner
from challenging the termination order, through arbitration.
The Writ Petition is allowed, in the above terms. No costs.
S. RAVINDRA BHAT
(JUDGE)
APRIL 16, 2009
/vd/
