M/S Royal Transport Contractor vs State Of Gujarat
2023 Latest Caselaw 348 Guj

     C/SCA/10967/2022                                    JUDGMENT DATED: 12/01/2023




             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

               R/SPECIAL CIVIL APPLICATION NO. 10967 of 2022

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                        M/S ROYAL TRANSPORT CONTRACTOR
                                      Versus
                                STATE OF GUJARAT
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Appearance:
MR.NISARG P RAVAL(7262) for the Petitioner(s) No. 1
MS. SHRUNJAL SHAH, AGP for the Respondent(s) No. 1
MR. JAL SOLI UNWALLA, SENIOR ADVOCATE WITH MR. BHARGAV V
PANDYA(7103) for the Respondent(s) No. 2
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 CORAM:HONOURABLE THE CHIEF JUSTICE MR. JUSTICE
       ARAVIND KUMAR
       and
       HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI

                                 Date : 12/01/2023

                                ORAL JUDGMENT

(PER : HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR)

1. Heard Shri Nisarg P. Raval, learned counsel

appearing for petitioner, Shri Jal Soli Unwalla, learned

Senior Counsel appearing for respondent No. 2 and Ms.

Shrunjal Shah, learned AGP appearing for respondent No.

2.

2. Respondent No. 2 invited a tender on 28.05.2020

for supply of essential commodities by transporters

C/SCA/10967/2022 JUDGMENT DATED: 12/01/2023

namely to supply the essential commodities to Fair Price

Shops at Panchmahal under doorstep delivery scheme.

Petitioner participated in the said bid process and was

declared as L-1 bidder, or in other words, the bid offered

by petitioner was accepted for Panchmahal District and

work order came to be issued on 07.08.2020. Pursuant to

same, agreement came to be entered into between

petitioner and respondent on the same date. On a

surprise check to the godown made by inspecting

authorities, resulting in said team finding deficit stock in

the godown which was huge quantity and as such a police

complaint came to be lodged resulting in FIR No.

11207061210114 being registered for the offence

punishable under 406, 420, 409, 120-B of IPC, read with

Section 3 and 7 of the Essential Commodities Act and

Section 13(1)(c) of the Prevention of Corruption Act. On

investigation being completed, chargesheet came to be

filed for the said offences before the Jurisdictional Court

and it has been registered as Criminal Case.

3. Since petitioner was the Transport Contractor and

C/SCA/10967/2022 JUDGMENT DATED: 12/01/2023

attributing the stock deficit to the petitioner, show-cause

notice came to be issued on 02.03.2021. It would be

necessary to note at this juncture itself the content of

said show-cause notice which reads : -

"This is to further state that the inspection was undertaken by the Mamlatdar, Shahera at Shahera Godown of Panchmahal District. During the said inspection, quantitative deficit of 13127 bag of wheat and 1298 bag of rice was found. In that connection, a police complaint, being FIR No. 11207061121011, has been lodged by the Mamlatdar, Shahera at Shahera Police Station on 20.02.2020. As per the Government Resolution, market price of said quantity of wheat and rice comes to Rs. 1.83 crore and the recovery amount thereof at double rate comes to Rs. 3.67 crore. Thus, the said irregularity is very serious in nature and due to fraud committed in quantity distributed under the Public Distribution System, huge financial loss is caused to the Government.

In view of the above fats, you are recognized contractor for the work of door step delivery in Panchmahal District and by providing truck / vehicles at Godown of Supply Corporation, you are doing work of distribution of quantity of goods from Godowns to the fair price shops.

In above facts, you are informed to show cause as to why you would not be held responsible for extraordinary deficit found in quantity of wheat and rice at Shahera Godown / Financial irregularities committed by you and therefore, why penultimate / recovery proceedings / police case would not be initiated / filed against you for financial loss caused to the Corporation and submit explanation thereof to this Branch within 3 days. If satisfactory explanation is not submitted by you within time limit, it would be

C/SCA/10967/2022 JUDGMENT DATED: 12/01/2023

deemed that you do not want to say anything in this regard and ex parte criminal proceedings including penultimate / recovery proceedings will be initiated against you, which may kindly be noted."

4. On receipt of the show-cause notice, petitioner

replied to the same by reply dated 05.03.2021 denying

every allegation made against it. In the meanwhile, the

work of the petitioner was suspended and was proposed

to be allotted to a third party which triggered the

petitioner to file a Special Civil Application No. 4155 of

2021 challenging the decision / communication dated

22.02.2021. Said petition came to be disposed of on

19.04.2021 reserving liberty to the respondent to pass

fresh order after giving opportunity to the petitioner. On

matter being remitted, further opportunity was extended

to the petitioner by issuing further notice on 21.06.2021,

08.09.2021 and 20.09.2021 (collectively marked as

Annexure-F). This was also followed by further notices

dated 18.09.2021 and 03.11.2021 (collectively marked as

Annexure - G). It is thereafter impugned order dated

12.11.2021 came to be passed, whereunder it was

C/SCA/10967/2022 JUDGMENT DATED: 12/01/2023

ordered as follows ;

"(i) Forfeiting the security deposit;

(ii) Excluded the petitioner from participating in any work sought for by Gujarat State Civil Supplies Corporation Limited for a period of two years, in other words, the petitioner was black-listed for two years."

Hence, challenging the same, petitioner is

before this Court.

5. Though, learned counsel appearing for petitioner

has tried to persuade this Court by relying upon the reply

given to the show-cause notice and other documents

including FIR, chargesheet, chargesheet material to

contend that no motives have been attributed to

petitioner for deficit stock found in the godown and only

on the ground of vicarious liability, petitioner cannot be

visited with an order of black-listing and as such he has

sought for impugned order being quashed, we have

noticed that under the impugned order, though petitioner

C/SCA/10967/2022 JUDGMENT DATED: 12/01/2023

has been black-listed and the amount of security deposit

has been forfeited, this aspect surprisingly does not find a

place in the show-cause notice dated 02.03.2021 issued to

petitioner. To put it differently, the show-cause notice is

silent on the issue of petitioner being notified of the

probable and possible imposition of black-listing, penalty

for deficit stock found in godown, as provided under the

agreement dated 07.08.2020 or forfeiture of the security

deposit. When the impugned order speaks of black-listing

petitioner for a period of two years from 12.11.2021 to

11.11.2023 by disqualifying the petitioner from doing any

kind of work relating to doorstep delivery or

transportation of goods on behalf of Corporation, the

least that was expected of by the respondent Authority

was to notify the petitioner of proposed action. In the

absence of such proposed action being notified to

petitioner necessarily it will have to be held that action of

respondent is in violation of principles of natural justice.

6. The principle of natural justice protects a citizen

from arbitrary administrative actions whenever his/her

C/SCA/10967/2022 JUDGMENT DATED: 12/01/2023

right to person or property is jeopardized. One of the

objectives of giving a hearing in application of principles

of natural justice is to see that any illegal action or

decision does not take place. Any wrong order may

adversely affect a person and it is essentially for this

reason that a reasonable opportunity requires to be

granted before passing an administrative order. The

principles of audi alteram partem is the basic concept of

the principles of natural justice. However, if the

legislature specifically authorizes an administrative

action without hearing, then except in cases of

recognized exception, such action would be violative of

principles of fair hearing and it has to be read into

Articles 14 and 21 of the Constitution of India. The

Hon'ble Apex Court in the case of State of U.P. vs. Vijay

Kumar Tripathi, reported in 1995 Supp. (I) SCC 552

has held that though the rules permit award of censure

entry without notice and hearing, yet the principles of

natural justice should be read into such rules and no

censure entry can be awarded without any notice and

C/SCA/10967/2022 JUDGMENT DATED: 12/01/2023

hearing. The principles of audi alteram partem is sine qua

non of every civilized society. Corollary deduced from this

rule is qui aliquid statuerit parte inaudita altera, aequum

licet dixerit, haud aequum facerit (he who shall decide

anything without the other side having been heard,

although he may have said what is right, will not have

done what is right).

7. As has been frequently observed, the benefit of audi

alteram partem principle was even extended to Adam and

Eve, even by God before they were punished for

disobeying His command. This signifies that even if the

authority already knows everything and the person has

nothing more to tell, even then this rule of natural justice

is attracted, unless application of this rule would be a

mere empty formality. The exception to this rule is the

applicability of doctrine of useless formality theory which

has been reiterated by the Hon'ble Apex Court in the case

of Aligarh Muslim University and others vs. Mansoor

Ali Khan, reported in AIR 2000 SC 2783, vide

paragraphs 28, 32 and 34 as under :

C/SCA/10967/2022 JUDGMENT DATED: 12/01/2023

"28. On the above facts, the absence of a notice to show cause does not make any difference for the employee has already been told that if his further overstay is for continuing in the job in Libya, it is bound to be refused.

32. Another important aspect of the matter is that no new reason has been projected in the Writ petition of Mr. Khan for his seeking further extension earlier while in Libya. The only reason stated is that he had obtained further extension in job. It is not a case where there is a plea in the Court that there were different grounds or reasons which he could have put in his explanation, if called for, such as ill health etc. Indeed, if the reasons could have been somewhat different, - as may perhaps be disclosed or proved in subsequent writ petition

- such as his own failing health, one can understand. But so far as leave for purposes of job continuance in Libya, is concerned, he has been fully put on advance notice that no further extension will be given. It must be held that no prejudice has been caused even though no notice is given under Rule 5(8)(i).

34. Thus, in our view, in the above peculiar circumstances, the only conclusion that can be drawn is that even if Mr. Mansoor Ali Khan had been given notice and he had mentioned this fact of job continuance in Libya as a reason, that would not have made any difference and would not have been treated as a satisfactory explanation under Rule 5(8)(i). Thus, on the admitted or undisputed facts, only one view was possible. The case would fall within the exception noted in S.L.Kapoor's case. We, therefore, hold that no prejudice has been caused to the officer for want of notice under Rule 5(8)(i). We hold against Mr. Mansoor Ali Khan under Point 5."

8. Keeping the aforesaid principles in mind, when we

C/SCA/10967/2022 JUDGMENT DATED: 12/01/2023

turn our attention to the facts on hand, it requires to be

noticed at the cost of repetition that show-cause notice

preceding the impugned order, does not indicate of

petitioner having been notified of the probable act of

black-listing or the forfeiture of the security deposit. On

the other hand, it travels mainly on the criminal

prosecution which has been launched against the Godown

Manager of the Corporation as well as the employee

(Driver) of the petitioner - Firm. Said show-cause notice

does not indicate that respondent even contemplated of

either forfeiting the security deposit or black-listing the

petitioner. The Hon'ble Apex Court in the case of

Vetindia Pharmaceuticals Limited vs. State of Uttar

Pradesh and another, reported in (2021) 1 SCC 804

has clearly held that it would be incumbent on the part of

an authority to state in show-cause notice that competent

authority intended to impose a penalty of black-listing so

as to provide adequate and meaningful opportunity to the

aggrieved person to show cause against the same. In the

absence of such procedure having been undertaken, it

C/SCA/10967/2022 JUDGMENT DATED: 12/01/2023

would call for exercise of jurisdiction by this Court under

Article 226 of the Constitution of India by way of judicial

review of administrative order. Keeping this in mind,

when the show-cause notice preceding the impugned

order is perused again, it would clearly indicate that it

does not even remotely indicate of the proposed action of

forfeiture of security deposit and imposition of black-

listing being there. On this short ground itself, petitioner

has to succeed. It does not stop at it, inasmuch as, the

issue involved in the present facts on hand would indicate

that respondent no. 2 has tried to rely very heavily on the

criminal prosecution launched against Driver of petitioner

to hold the petitioner as vicariously liable, as such, we are

of the considered view that matter requires to be

remitted back to respondent No. 2 for adjudication afresh

by notifying the petitioner of the proposed action. Hence,

following :

ORDER

(i) Special Civil Application is ALLOWED.

C/SCA/10967/2022 JUDGMENT DATED: 12/01/2023

(ii) The order dated 12.11.2021 is hereby

quashed and matter is remitted back to

respondent no. 2 to re-do the matter by

keeping in mind the observations made

hereinabove.

(iii) Petitioner would be at liberty to submit

additional material, if it chooses to do so,

which shall necessarily be considered by

respondent no. 2 by affording an opportunity

of personal hearing, if sought for.

(iv) Since this issue has been pending

before respondent no. 2 authority since quite

long, we deem it proper to fix the time

schedule for conclusion of entire exercise and

as such, call upon the petitioner to appear

before respondent no. 2 on 23.01.2023

without waiting for any notice from

respondent no. 2 and respondent no. 2 shall

conclude the proceedings within four weeks

C/SCA/10967/2022 JUDGMENT DATED: 12/01/2023

from the date of first appearance of the

petitioner.

(v) All contentions of both the parties are kept

open to be urged before the respondent no. 2

and no opinion is expressed on merits.

(vi) No order as to costs.

(ARAVIND KUMAR,CJ)

(ASHUTOSH SHASTRI, J) AMAR SINGH