Center For Development ... vs Ranchi Municipal Corporation
2023 Latest Caselaw 285 Jhar

                               1

      IN THE HIGH COURT OF JHARKHAND AT RANCHI
                 W.P.(C) No. 2124 of 2022

Center for Development Communication Trust, a trust registered under
Rajasthan Trust Act, 1959, through its Trustee Secretary, Mr. Vivek
Agrawal, Gopal Nagar, Jaipur             ...      ...     Petitioner
                               Versus
1. Ranchi Municipal Corporation, through its Municipal Commissioner,
   Ranchi
2. The Deputy Municipal Commissioner, Ranchi Municipal Corporation,
   Ranchi
                                          ...    ...      Respondents
CORAM: HON'BLE MR. JUSTICE RAJESH SHANKAR
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For the Petitioner     : Mr. M.S. Mittal, Sr. Advocate
                         Mr. Rahul Lamba, Advocate
For the Respondents    : Mr. Prashant Kumar Singh, Advocate
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Order No. 12                                Dated: 17.01.2023

The present writ petition has been filed for setting aside the termination notice as contained in letter no. 191 dated 27.04.2022 (Annexure-14 to the writ petition) issued by the respondent no. 1 - the Municipal Commissioner, Ranchi Municipal Corporation, Ranchi, whereby the petitioner was intimated that considering the „Event of Default‟ as per Clause 6.3 (b) of the concession agreement dated 15.01.2021 executed between them, the date of termination of the said agreement would be 30.04.2022. Further prayer has been made for quashing and setting aside letter no. 204 dated 30.04.2022 (Annexure-18 to the writ petition), whereby the agreement dated 15.01.2021 entered with the petitioner was terminated with effect from 30.04.2022 followed by its debarment and blacklisting. The petitioner has also prayed for issuance of direction upon the respondents to make payment of outstanding service fee of Rs.7,74,96,741/- as well as total amount of user charge directly deposited by the concerned persons in the bank account of the respondent no. 1 from January, 2021 to April, 2022 in favour of the petitioner.

2. The factual background of the case as stated in the writ petition is that the respondent no. 1 issued Notice Inviting E-Tender (2nd Call) vide Tender Notice No. 02/27 (SWM) dated 24.04.2020 for

selection of the service provider to carry out Municipal Solid Waste Management Services - door-to-door collection of solid waste and transportation of the same by using closed body vehicles with tipping arrangement including labourers. The petitioner participated in the said tender by submitting its bid which having been found most suitable, the work was awarded to it. Subsequently, an agreement was executed between the respondent no. 1 and the petitioner on 15.01.2021, whereby it was appointed as Service Provider for rendering various services in relation to Solid Waste Management for a period of five years. The respondent no. 2 - the Deputy Municipal Commissioner, Ranchi Municipal Corporation, Ranchi vide its letter no. 184/sanitation dated 21.04.2022 issued show cause notice to the petitioner through e-mail alleging non-performance of the contractual obligations in relation to the said agreement and provided three days‟ time to file reply to the same. The petitioner vide its letter dated 25.04.2022 (sent through email on the same date) requested the respondent no. 1 to provide three days‟ additional time to file reply to the said show cause notice, however, the respondent no. 1 did not respond to the said request and as such, the petitioner vide its letter dated 26.04.2022 addressed to the respondent no. 1 (sent through e-mail dated 27.04.2022 at 8.50 am) filed its reply to the said show cause notice denying all the allegations. However, the respondent no. 1 vide impugned letter no. 191 dated 27.04.2022 (served to the petitioner through e-mail dated 27.04.2022 at 3.01 pm) issued termination notice intimating that due to non-performance of obligations by it as well as considering the same as „Service Provider Event of Default‟ as per Clause 6.1.1 of the agreement, the agreement dated 15.01.2021 would stand terminated w.e.f 30.04.2022 in view of Clause 6.3 of the agreement. The respondent no. 2 also issued letter under reference no. 192/Sanitation dated 27.04.2022 to the petitioner making various allegations as well as directing it to continue operation of door-to-door waste collection till the effective date of termination of agreement and thereafter to hand over all 310 numbers of door-to-door collection vehicles to the respondents. The petitioner replied the said letter on 28.04.2022

requesting the respondent no. 1 to make payment of outstanding dues at the earliest. Subsequently, the respondent no. 1 issued letter no. 204 dated 30.04.2022, whereby the agreement dated 15.01.2021 was terminated with immediate effect followed by debarment and blacklisting of the petitioner.

3. Learned Senior Counsel for the petitioner submits that the respondent no. 2 arbitrarily provided only three days‟ to the petitioner to reply to the show cause notice dated 21.04.2022 which cannot be said to be a fair opportunity of hearing. The said conduct manifestly suggests that the issuance of show cause notice was a mere eye wash since the same was issued with premeditated mind. It is further submitted that the respondent no. 1 failed to consider the reply dated 26.04.2022 filed by the petitioner before terminating the said agreement and debarring/blacklisting it. Hence, the impugned orders have been passed in clear violation of the principles of natural justice and without due application of mind. The respondents did not perform their reciprocal promises/contractual obligations in terms with the said agreement which made it difficult for the petitioner to carry out the obligations on its part. The said agreement has been terminated by the respondent no. 1 alleging „Service Provider Event of Default‟, as provided in Clause 6.1.1 of the said agreement. As per Clause 6.3 of the said agreement, though the respondent no. 1 has the right to terminate the said agreement on the ground of „Service Provider Event of Default‟, however, Clause 6.1.1 specifically provides that the events mentioned in the said clause shall not constitute an event of default by the Service Provider where performance of the Service Provider (i.e., the petitioner herein) has been prevented due to non-performance of obligations by RMC (i.e., the respondent no. 1 herein). In the case in hand, there has been multiple non-performance of obligations on the part of the respondent no. 1 due to which the petitioner could not perform its assigned responsibilities.

4. Learned Senior Counsel for the petitioner further submits that the respondents have not specified any period of blacklisting of the petitioner and thus the same is for an indefinite period. Such

order of blacklisting is arbitrary and illegal. The respondent no. 1 did not make any payment of Service Fee despite the fact that the petitioner was continuously rendering its services under the said agreement which is a fundamental breach of contract. The respondent no. 1 has also not paid the entire amount of user charge received in its Bank Account till date and non-payment of the same prior to issuance of the show cause notice is a major non-performance of reciprocal obligation of the respondent no. 1. The respondents are required to immediately pay the said outstanding Service Fee and user charge to the petitioner since due to non-payment of the same, the petitioner is facing great difficulty in making payment to its workers and creditors as well as in discharging other obligations.

5. On the contrary, learned counsel for the respondents submits that the agreement was terminated on 30.04.2022 due to the default of the Service Provider i.e., the petitioner as it made several defaults such as failure in door-to-door collection of segregated municipal solid waste (wet and dry waste) regularly, failure in Radio-Frequency Identification (RFID) tagging for the purpose of real time monitoring of waste collection, non-submission of collection data regarding user charges, not conducting awareness programmes or Information, Education & Communication (IEC) activities on waste segregation, failure to fix GPS on all vehicles as GPS was fitted only on 189 vehicles out of 310, failure in Construction of Material Recovery Facilities (MRFs) and negligence in repair of breakdown vehicles which affected the waste collection efficiency. It is further submitted that the petitioner failed to improve „event of default‟ even after several communications made to it and also failed to submit monthly reports of covering the households and commercial establishments along with collection statement of user charge together with monthly bills.

6. Heard learned counsel for the parties and perused the materials available on record. The petitioner is primarily aggrieved with the order dated 30.04.2022 relating to termination of agreement dated 15.01.2021 as well as its debarment and blacklisting.

7. The main contention of learned Senior Counsel for the petitioner is that the impugned order of termination of agreement dated 15.01.2021 has been passed in violation of the principles of natural justice, as on the one hand, the petitioner was provided very short time to file reply to the show cause notice and on the other hand, the reply filed by it was not even considered while passing the said impugned order which manifestly suggests that the said action was taken by the respondents with pre-determined mind.

8. Learned Senior Counsel for the petitioner puts reliance on a judgment rendered by the Hon‟ble Supreme Court in the case of "Cantonment Board, Meerut & Anr. Vs. Afzal" reported in (2019) 6 SCC 150. In the said case, the High Court had quashed the notice issued to the respondent of the said case for stopping the alleged unauthorized constructions raised by him and the notice issued for demolition of the said constructions as well as the appellate order with liberty to the appellants to proceed afresh by holding that reply filed by the respondent-original petitioner was not considered and no reason was assigned for rejecting the objection. Further, the High Court observed that the original as well as the appellate authority had passed orders in a pre-determined manner without giving any opportunity of hearing, which were more or less identical and stereotyped. In appeal, Their Lordships affirmed the order of the High Court by holding that the notices were issued mechanically and in a casual manner.

9. Learned Senior Counsel for the petitioner puts further reliance on a judgment rendered by the Hon‟ble Supreme Court in the case of "Oryx Fisheries (Private) Ltd. Vs. Union of India & Ors." reported in (2010) 13 SCC 427, wherein it has been held that the person who is subject to a show cause notice must get an impression that he will get an effective opportunity to rebut the allegations contained in the same and prove his innocence. If on a reasonable reading of a show-cause notice, a person of ordinary prudence gets the feeling that his reply to the same will be an empty formality and he will merely knock his head against an impenetrable wall of prejudged opinion, such a show-cause notice does not

commence a fair procedure especially when it is issued in a quasi- judicial proceeding under a statutory regulation which promises to give the person proceeded against a reasonable opportunity of defence. While issuing a show-cause notice, the authorities must take care to manifestly keep an open mind as they are to act fairly in adjudging the guilt or otherwise of the person proceeded against and specially when they have the power to take a punitive step against the person after giving him a show-cause notice. The principle that justice must not only be done but it must eminently appear to be done as well is equally applicable to quasi-judicial proceeding if such a proceeding has to inspire confidence in the mind of those who are subject to it. Their Lordships further looking to the facts of that case observed that the appellant gave a reply to the show-cause notice but in the order of the third respondent by which registration certificate of the appellant was cancelled, no reference of the reply was made except saying that it was not satisfactory. Having observed so their Lordships held that the alleged guilt of the appellant was prejudged at the stage of show cause notice itself and thus allowed the appeal with a liberty to the authorities that they can proceed from the stage of show cause notice afresh, but strictly in accordance with law and following fair procedure as indicated in the judgment.

10. In the case in hand, the show cause notice for the alleged default was issued to the petitioner on 21.04.2022, whereby three days‟ time was given to it to reply the same. The petitioner vide letter dated 25.04.2022, requested the respondent no. 1 for providing three days‟ additional time for replying the said show cause notice, however, subsequently it filed the reply through e-mail on 27.04.2022 at 8.50 am and on the same day, the impugned order was passed without considering the said reply of the petitioner. The respondents have given much stress to their contention that the petitioner committed various defaults in execution of the awarded work and the order of termination has been passed exercising the power under the agreement. This Court does not intend to decide the rival claims of the parties on merit under the writ jurisdiction, however, the aforesaid facts clearly suggest that the impugned order has been

passed in a mechanical manner and with a pre-determined mind. The Hon‟ble Supreme Court in the case of "Maharashtra Chess Assn. Vs. Union of India & Ors." reported in (2020) 13 SCC 285 has held that the jurisdiction of the High Court under Article 226 of the Constitution is equitable & discretionary and the power under that Article can be exercised by the High Court to reach injustice wherever it is found. It has further been held that the power of the High Court in exercise of its writ jurisdiction cannot be circumscribed by strict legal principles so as to hobble the High Court in fulfilling its mandate to uphold the rule of law. In the present case, since the order of termination has been passed in violation of the principles of natural justice, the same is liable to be set aside.

11. So far the order of blacklisting/debarment is concerned, the same has been passed along with the order of termination for which no specific show cause notice was issued to the petitioner. Moreover, the period of blacklisting has also not been fixed by the impugned order and, therefore, the same is for an indefinite period. The Hon‟ble Supreme Court in the case of "Kulja Industries Ltd. Vs. Chief General Manager, Western Telecom Project, Bharat Sanchar Nigam Limited & Ors." reported in (2014) 14 SCC 731 has held that the "debarment" is never permanent and the period of debarment would invariably depend upon the nature of the offence committed by the erring contractor. This Court also in the case of "Verma Enterprises through its Partner Rajesh Vishwakarma Vs. State of Jharkhand through its Principal Secretary, Department of Health & Anr." reported in 2022 SCC OnLine Jhar 1063 has quashed the order of blacklisting observing that the same does not mention the period of blacklisting and thus is for an indefinite period being contrary to the ratio laid down in the judgment rendered by the Hon'ble Supreme Court in the case of "Kulja Industries Ltd.". The order of blacklisting therefore also cannot be sustained in law is hereby quashed.

12. In view of the aforesaid legal and factual position, the impugned letter no. 191 dated 27.04.2022 and letter no. 204 dated 30.04.2022 are hereby quashed. The respondent no. 1 will, however,

be at liberty to issue fresh termination notice to the petitioner and pass reasoned order after providing due opportunity of hearing to its representative. So far as the prayer for payment of outstanding bill is concerned, it appears from the pleading of the parties that the amount so claimed is not an admitted one and thus the said claim of the petitioner cannot be decided under the writ jurisdiction. However, the petitioner will be at liberty to take other recourses available under law in this regard.

13. The writ petition is accordingly disposed of.

(Rajesh Shankar, J.) Manish/AFR