Gujarat High Court
M/S A G Enterprises Ltd vs Gujarat State Civil Supplies ... on 12 January, 2021
Bench: R.M.Chhaya, R.P.Dholaria
C/SCA/7958/2018 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 7958 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE R.M.CHHAYA
and
HONOURABLE MR. JUSTICE R.P.DHOLARIA
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1 Whether Reporters of Local Papers may be allowed to
see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law
as to the interpretation of the Constitution of India or any
order made thereunder ?
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M/S A G ENTERPRISES LTD
Versus
GUJARAT STATE CIVIL SUPPLIES CORPORATION LTD
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Appearance:
MR AJAY MEHTA assisted by MS NIYATI V VAISHNAV(6168) for the
Petitioner(s) No. 1
MR NIRAL R MEHTA(3001) for the Respondent(s) No. 1
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CORAM: HONOURABLE MR. JUSTICE R.M.CHHAYA
and
HONOURABLE MR. JUSTICE R.P.DHOLARIA
Date : 12/01/2021
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE R.M.CHHAYA)
1. Rule. Mr. Niral Mehta, learned advocate waives
service of Rule on behalf of the respondent.
C/SCA/7958/2018 JUDGMENT
2. By way of this petition under Article 226 of
the Constitution of India, the petitioner has
challenged the order dated 7.5.2018 passed by
the respondent, whereby the petitioner's
contract came to be terminated and further the
petitioner was blacklisted/declared as
ineligible for future labour contracts. The
respondent authority, by the impugned order,
was pleased to forfeit the security deposit of
Rs.2,20,000/.
3. Following facts emerge from the record of the
petition:
That, the respondent floated a tender for
supply of labour of unloading of gunny bags at
its Anjar, Kachchh godown. The petitioner was
successful bidder and on 28.3.2018, the
petitioner and the respondent executed a
contract for a period from 1.4.2018 till
31.3.2019.
4. As per Clause 32.1 of the contract, as the
capacity of the godown was more than 1000
Metric Tons, the petitioner was supposed to
supply 10 labourers in compliance with the
requirement of the contract. The respondent
herein issued a notice on 4.4.2018, whereby it
was alleged by the respondent that the
petitioner has not supplied 15 labourers even
C/SCA/7958/2018 JUDGMENT
though the contract so provides. The said
notice was followed by another notices dated
5.4.2018 and 13.4.2018. Record indicates that
thereafter, again on 19.4.2018, a further
notice came to be issued by the respondent as
final notice on the said allegation that the
number of labourers have not been provided by
the petitioner. The petitioner did reply to
the said final notice on the very same day and
the petitioner pointed out that by 25.4.2018,
more labourers would be deployed. As the
record indicates, a joint meeting of all
labour contractors was held on 21.4.2018. The
respondent ultimately issued notice dated
5.5.2018 asking the petitioner to pay an
amount of Rs.500/ per labourer as shortfall
in number of labourers. It is the case of the
petitioner that 5th May was Saturday and 6th May
was Sunday and before the petitioner could
respond to the notice dated 5.5.2018, the
impugned order dated 7.5.2018 came to be
passed.
5. Heard Mr. Ajay Mehta, learned counsel assisted
by Ms. Niyati Vaishnav, learned advocate for
the petitioner and Mr. Niral Mehta, learned
advocate for the respondent.
6. Mr. Ajay Mehta, learned counsel for the
petitioner has taken this Court through the
C/SCA/7958/2018 JUDGMENT
factual matrix arising out of this petition
and has, interalia, submitted that the order
impugned dated 7.5.2018 is passed without any
opportunity of being heard and in violation of
the principles of natural justice. Mr. Mehta
contended that the notice was given on 5th May
which was Saturday and on the very next
working day i.e. Monday, before the petitioner
could reply or respond to the notice dated
7.5.2018, the respondent straightway passed a
drastic order of blacklisting the petitioner
permanently and forfeiture of security deposit
to the tune of Rs.2,20,000/ and even the
contract in question came to be terminated. On
the aforesaid short ground, it was therefore
contended that the impugned order deserves to
be quashed and set aside.
7. Mr. Ajay Mehta, learned counsel for the
petitioner has relied upon the judgment of the
Hon'ble Apex Court in the case of Patel
Engineering Limited Vs. Union of India & Anr.,
(2012) 11 SCC 257, Gorkha Security Services
Vs. Govt of NCT of Delhi & Ors., (2014) 9 SCC
105 and the judgment and order passed by of
this Court passed in Special Civil Application
no.11979 of 2016 dated 2.4.2018, and submitted
that as the impugned order and action of
blacklisting the petitioner in particular has
C/SCA/7958/2018 JUDGMENT
been taken without following the principles of
natural justice, the same is bad and arbitrary
and the same deserves to be quashed and set
aside and the petition deserves to be allowed.
8. Per contra, Mr. Niral Mehta, learned advocate
for the respondent has relied upon the
affidavitinreply filed by the respondent and
has submitted that the work to be handled by
the respondentCorporation related to
distribution of food grains to the public at
large and the lethargic approach shown by the
petitioner disentitles it for any
discretionary relief by this Court. Mr. Mehta
further submitted that time and again, notices
were given to the petitioner and compliances
were made about the functioning of the
labourers deployed by the petitioner being
unsatisfactory and even though a specific
notice came to be given on 13.4.2018 whereby
the petitioner was asked to show cause as to
why the petitioner should not be blacklisted,
the petitioner did not given any heed to the
same and therefore, now the petitioner cannot
take shelter and contend before this Court
that the order dated 7.5.2018 is passed
without hearing the petitioner. On the
aforesaid grounds, it was contended that the
petition deserves to be dismissed.
C/SCA/7958/2018 JUDGMENT
9. No other or further submissions, grounds
and/or contentions are made by the learned
advocates appearing for the respective
parties.
10. This Court passed the following order on
11.5.2018:
"It is the case on behalf of the
petitioner that the impugned order
terminating the contract; black
listing the petitioner etc. has been
passed in haste and without giving
any proper sufficient opportunity to
the petitioner. It is the case on
behalf of the petitioner that the
petitioner was served with the show
cause notice on dated 05/05/2018 and
06/05/2018 was Sunday and thereafter
immediately without waiting for the
reply and /or without giving any
further sufficient opportunity, the
impugned order has been passed on
Monday i.e. 07/05/2018 and the
contract is given to the erstwhile
contractor. NOTICE for final
disposal returnable on 12/06/2018.
By way of adinterim relief, the
impugned order passed by the
respondent black listing the
petitioner and declaring him
ineligible for future /any other
contract only is ordered to be
stayed.
Direct service is permitted."
11. At the outset, it deserves to be noted that
the contract period was from 1.4.2018 to
C/SCA/7958/2018 JUDGMENT
31.3.2019 and as the contract period is
already over, the question of termination of
contract does not require to be dealt with by
this Court. The question which arises for
consideration of this Court is whether the
action of the respondent of blacklisting the
petitioner permanently and forfeiting the
security deposit of Rs.2,20,000/ that too,
without affording any opportunity of
explaining or hearing is proper or not. A bare
minimum issuance of a proper notice,
opportunity of explanation and opportunity of
hearing is a sine qua non before taking any
drastic step of blacklisting as the same would
amount to commercial death bell of the
petitioner. The respondent, even in the
affidavit filed before this Court, has not
been able to even remotely show that the
opportunity of being heard is given to the
petitioner.
12. The facts of this case clearly exhibit that
the notice was given on 5.5.2018, which was a
Saturday and the next day being 6th May was a
Sunday and the impugned order is passed on the
very next working day i.e. 7.5.2018 that too,
without hearing.
13. Considering the ratio laid down by the Hon'ble
Apex Court in the cases of Union of India &
C/SCA/7958/2018 JUDGMENT
Anr. Vs. Jesus Sales Corporation, (1996) 4 SCC
69, Patel Engineering Limited (supra) and
Gorkha Security Services (supra), before
passing order of blacklisting permanently, a
contractor is required to be given a proper
notice and a reasonable opportunity to reply
the same as well as personal hearing. Applying
the ratio laid down in the aforesaid judgments
to the case on hand, it is an admitted
position that the impugned order dated 7.5.218
is passed without following the bare necessity
of principles of natural justice and is a non
speaking nonreasoned order.
14. It is an admitted position that before passing
the impugned order dated 7.5.2018, no
opportunity of being heard is given to the
petitioner and even without waiting for the
reply or response from the petitioner, the
order dated 7.5.2018 is passed. As far as
termination of contract is concerned, as the
contract period is already over, the same does
not require any elucidation. However, the
order of blacklisting as well as forfeiture of
security deposit to the tune of Rs.2,20,000/
is exfacie, arbitrary and violative of the
principles of natural justice and therefore,
the impugned order deserves to be quashed and
set aside. The action of the respondent in
passing the impugned order of blacklisting has
C/SCA/7958/2018 JUDGMENT
caused prejudice to the petitioner.
15. Consequently, on the grounds and reasons
stated hereinabove, the impugned order dated
7.5.2018 passed by the respondent is hereby
quashed and set aside. The matter is remanded
back to the appropriate authority of the
respondent to pass appropriate orders in
accordance with law in regard to blacklisting
as well as forfeiture of the security deposit
on merits, after considering the reply that
may be filed by the petitioner within the
reasonable time given by the respondent
authority and after hearing the petitioner,
the appropriate authority of the respondent
shall pass a fresh speaking and reasoned
order.
16. Accordingly, the petition is disposed of. Rule
is made absolute to the aforesaid extent.
However, there shall be no order as to costs.
(R.M.CHHAYA, J)
(R.P.DHOLARIA, J)
MRP
