Afr vs State Of Odisha And Others
2023 Latest Caselaw 1976 Ori

                     ORISSA HIGH COURT: CUTTACK


                        W.P. (C) NO. 27575 OF 2022

          In the matter of an application under Articles 226 and
          227 of the Constitution of India.
                                 ---------------

AFR M/s Z Plus Surakhya Seva, Bhubaneswar ..... Petitioner

-Versus-

State of Odisha and others ..... Opp. Parties

For Petitioner : M/s. B.P. Pradhan and B.R. Sahu, Advocates

For Opp. Parties : Mr. T.K. Satapathy, [O.P. Nos. 2 & 3]

P R E S E N T:

THE HONOURABLE DR. JUSTICE B.R.SARANGI AND HONOURABLE MR. JUSTICE M.S. SAHOO

Date of hearing and judgment: 09.03.2023

DR. B.R. SARANGI, J. By means of this writ petition, the

petitioner, which is a registered partnership firm, seeks to

quash Annexure-6, the letter dated 28.09.2022 // 2 //

terminating the contract, and also to issue direction to

opposite party no.3 to renew the contract for another one

year.

2. The factual matrix of the case, in a nutshell, is

that opposite party no.3 had issued a notice on

26.08.2021 inviting sealed tenders from the registered

and experienced agencies/firms for providing manpower

services in BPUT, Rourkela. The period of contract for

providing aforesaid service was ideally for two years from

the date of effectiveness of the contract, which can be

extended for a period of one year depending upon the

performance of the service provider and at the discretion

of the authority. The authority had reserved the right to

terminate the contract at any point of time after giving 30

days notice to the service provider. Pursuant to such

tender call notice dated 26.08.2021, the petitioner and

other bidders submitted their bids.

// 3 //

2.1 After opening and evaluation of bids, the

petitioner was declared as L-1 and accordingly work order

for providing manpower services was issued to the

petitioner on 21.10.2021. The petitioner had also

deposited the additional performance security and

executed the contract/agreement on 06.12.2021. In the

agreement, it was indicated that the contract is valid for a

period of two years, i.e., from 01.11.2021 to 31.10.2023

(both days inclusive). The extension for the second year of

the contract was to be effected subject to satisfactory

performance in the first year of the contract, and that it

could be extended for a further period of one year

depending upon performance of the service provider and

at the discretion of the authority. In compliance of such

agreement, the petitioner started supplying manpower to

the BPUT w.e.f. 01.11.2021. While the petitioner was

discharging its duties and responsibilities, all on a

sudden, a letter was issued on 28.09.2022 terminating // 4 //

the contract of the petitioner on the ground of non-

satisfactory performance. Hence, this writ petition.

3. Mr. B.P. Pradhan, learned counsel appearing

for the petitioner contended that the order dated

28.09.2022 terminating the contract of the petitioner has

been passed by the authority without assigning any

reason and, as such, the same has been done without

giving 30 days prior notice to the petitioner as per the

agreed terms and conditions. It is further contended that

the reasons, which have been assigned in the counter

affidavit by the opposite parties, are not germane nor can

the same validate the order impugned, therefore, the order

impugned cannot be sustained in the eye of law and is

liable to be quashed.

4. Mr. T.K. Satapathy, learned counsel appearing

for the opposite parties no.2 and 3 vehemently contended

that since the performance of the petitioner was not

satisfactory, as per the condition stipulated in the // 5 //

agreement, action has been taken by terminating the

contract of the petitioner. It is further contended that the

petitioner has not deposited the statutory dues before the

authority concerned. Thereby, there are gross lapses on

the part of the petitioner in terms of the agreement. As a

consequence thereof, finding no other way out, after

completion of one year, the contract of the petitioner has

been terminated, thereby, no illegality or irregularity has

been committed by the authority so as to warrant

interference of this Court. Consequentially, dismissal of

the writ petition is sought for.

5. This Court heard Mr. B.P. Pradhan, learned

counsel appearing for the petitioner and Mr. T.K.

Satapathy, learned counsel appearing for the opposite

parties no.2 and 3-BPUT by hybrid mode and perused the

records. Pleadings having been exchanged between the

parties, with the consent of learned counsel for the parties

this writ petition is being disposed of finally at the stage of

admission.

// 6 //

6. The undisputed fact being that opposite party

no.3 issued a tender call notice on 26.08.2021 for

providing manpower services. In the said tender call notice

it was specifically mentioned that the period of contract

for providing the manpower service will be ideally for two

years from the date of effectiveness of the contract and, as

such, the contract can be extended for a further period of

one year depending upon the performance of the service

provider and at the discretion of the authority, and that

the authority reserves the right to terminate the contract

at any time after giving 30 days prior notice to the service

provider. Pursuant to such tender call notice, the

petitioner along with others applied for and the petitioner

being found L-1 was issued with the work order on

21.10.2021. The said work order also indicates that the

petitioner is required to deploy different categories of

personnel as per the requirement of the authority at

Rourkela from time to time w.e.f. 01.11.2021 for a period

of two years. As such, the petitioner was called upon to // 7 //

execute the agreement within 15 days. In compliance of

the same, the petitioner executed the agreement on

06.12.2021, clause-2 whereof, reads thus:-

"The contract is valid for a period of two years effective from 01.11.2021 to 31.10.2023 (both days inclusive). The extension for the 2nd year of the contract shall be effected subject to satisfactory performance in the 1st year of the contract. The contract may be extended for a further period of one year depending upon the performance of the service provider and at the discretion of the authority. The authority reserves the right to terminate the contract at any time after giving 30 days notice to the service provider."

7. A perusal of the aforementioned clause would

indicate that the contract was valid for a period of two

years effective from 01.11.2021 to 31.10.2023 (both days

inclusive). The extension of the contract for the 2nd year

was to be effected subject to satisfactory performance in

the first year of the contract and, as such, the contract

could be extended for a further period of one year

depending upon the performance of the service provider // 8 //

and at the discretion of the authority. Furthermore, the

authority had reserved the right to terminate the contract

at any time after giving 30 days notice to the service

provider. Thereby, even though the contract was valid for

a specified period, extension of contract was completely

within the discretion of the authority. However, if any

termination of contract is to be made, thirty days notice is

to be given to the service provider. This being the

requirement, as per the agreement executed between the

parties, the opposite party-authorities are to adhere to the

same. But nothing has been placed on record to indicate

that the petitioner has ever been given 30 days notice with

regard to termination of its contract, as per the terms and

conditions of the work order as well as the agreement

executed between the parties. More so, it is the specific

case of the opposite party-authorities that termination of

contract has been made on the ground of non-satisfactory

performance. But on perusal of the order impugned it

appears that the same does not satisfy the requirement of // 9 //

non-satisfactory performance of the contract. As such,

while passing the order impugned, no reasons have been

assigned by the authority, although some reasons have

been indicated in the counter affidavit filed by the opposite

parties no.2 and 3 with a view to validating the order

impugned.

8. It is of relevance to note that time and again

the apex Court as well as this Court have categorically

held that reasons being a necessary concomitant to

passing an order, the authority can thus discharge its

duty in a meaningful manner by furnishing the same

expressly.

9. In Travancore Rayons Ltd. V. The Union of

India, AIR 1971 SC 862, the apex Court observed that

the necessity to give sufficient reasons, which disclose

proper appreciation of the problem to be solved, and the

mental process by which the conclusion is reached in

cases where a non-judicial authority exercises judicial // 10 //

functions is obvious. When judicial power is exercised by

an authority normally performing executive or

administrative functions, the Court would require to be

satisfied that the decision has been reached after due

consideration of the merits of the dispute, uninfluenced

by extraneous considerations of policy or expediency. The

Court insists upon disclosure of reasons in support of the

order on two grounds: one that the party aggrieved in a

proceeding before the Court has the opportunity to

demonstrate that the reasons which persuaded the

Authority to reject his case were erroneous; the other,

that the obligation to record reasons operates as a

deterrent against possible arbitrary action by the

Executive Authority invested with the judicial power.

10. In S.N. Mukherjee v. Union of India, (1990) 4

SCC 594, the apex Court held that keeping in view the

expanding horizon of Principles of Natural Justice, the

requirement to record reasons can be regarded as one of

the Principles of Natural Justice, which governs exercise // 11 //

of power by administrative authorities. Except in cases

where the requirement has been dispensed with expressly

or by necessary implication, an administrative authority is

required to record reasons for its decision.

11. In Menaka Gandhi v. Union of India, AIR

1978 SC 597, the apex Court observed that the reasons, if

disclosed, being open to judicial scrutiny for ascertaining

their nexus with the order, the refusal to disclose the

reasons would equally be open to the scrutiny of the

court; or else, the wholesome power of a dispassionate

judicial examination of executive orders could with

impunity be set naught by an obdurate determination to

suppress the reasons.

12. In Union of India v. Mohan Lal Capoor, AIR

1974 SC 87, it has been held that reasons are the links

between the materials on which certain conclusions are

based and the actual conclusions. They disclose how the

mind is applied to the subject-matter for a decision // 12 //

whether it is purely administrative or quasi-judicial and

reveal a rational nexus between the facts considered and

conclusions reached. The reasons assure an inbuilt

support to the conclusion and decision 8 reached.

Recording of reasons is also an assurance that the

authority concerned applied its mind to the facts on

record. It is vital for the purpose of showing a person that

he is receiving justice.

Similar view has also been taken by the apex Court

in Uma Charan v. State of Madhya Pradesh, AIR 1981

SC 1915, as well as by this Court in Patitapaban Pala v.

Orissa Forest Development Corporation Ltd. &

another, 2017 (I) OLR 5 and in Banambar Parida v.

Orissa Forest Development Corporation Limited, 2017

(I) OLR 625.

13. At this juncture, it is worthwhile to note that

"Nihil quod est contra rationem est licitum" means as

follows:-

// 13 //

"nothing is permitted which is contrary to reason. It is the life of the law. Law is nothing but experience developed by reason and applied continually to further experience. What is inconsistent with and contrary to reason is not permitted in law and reason alone can make the laws obligatory and lasting."

Therefore, recording of reasons is also an assurance that

the authority concerned applied its mind to the facts on

record. It is pertinent to note that a decision is apt to be

better if the reasons for it are set out in writing because

the reasons are then more likely to have been properly

thought out. It is vital for the purpose of showing a

person that he is receiving justice.

In re Racal Communications Ltd., (1980) 2 All

ER 634 (HL) : (1980)3 WLR 181, it has been held that the

giving of reasons facilitates the detection of errors of law

by the Court.

In Padfield v. Minister of Agriculture,

Fisheries and Foodi, (1968) 1 All ER 694 : (1968)2 WLR

924 (HL), it has been held that a failure to give reasons // 14 //

may permit the Court to infer that the decision was

reached by the reasons of an error in law.

14. We may here draw attention to the observations

of Bose J. in Gordhandas Bhanji, AIR 1952 SC 16 (at

page. 18):

"Public orders publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the acting and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself."

15. The Constitution Bench of the apex Court in

Mohinder Singh Gill v. The Chief Election

Commissioner, New Delhi, AIR 1978 SC 851, held as

follows:-

" ...... when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the // 15 //

beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out.

Orders are not like old wine becoming better as they grow old."

As has been lucidly held by the apex Court as well as this

Court, the requirement to record reasons can be regarded

as one of the principles of natural justice. Any order

passed by an administrative authority without assigning

reasons can be construed to be non-compliance of the

principles of natural justice. Therefore, the order dated

28.09.2022 passed by opposite party no.3 under

Annexure-6, having not supported by any reasons, is

violative of the principles of natural justice and thus

cannot be sustained in the eye of law.

16. The reasons assigned in the counter affidavit

filed on behalf of the opposite parties no. 2 and 3 cannot

be taken into consideration, as the order of termination

dated 28.09.2022 does not indicate any such reason. Law

is well settled that while passing order the authority has // 16 //

to discharge its duty in a meaningful manner. Thus,

reasons so assigned in the counter affidavit, having not

contained in the order impugned, cannot validate the

order impugned. Therefore, this Court is of the considered

view that the impugned order of termination of contract

passed by opposite party no.3 vide Annexure-6 dated

28.09.2022 cannot be sustain in the eye of law and the

same is liable to be quashed and is hereby quashed.

17. In the result, the writ petition stands allowed.

However, there shall be no order as to costs.

..............................

                                         DR. B.R. SARANGI,
                                              JUDGE

M.S. SAHOO, J.      I agree.


                                         ..............................
                                           M.S. SAHOO,
                                             JUDGE


          Orissa High Court, Cuttack
          The 9th March 2023, Ashok/GDS