M/S. Mohan Traders vs Raj. Rajya Sahkari Upbhokta Sangh ...
2021 Latest Caselaw 8692 Raj

     HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
                      JODHPUR
                  D.B. Spl. Appl. Writ No. 1420/2019

M/s. Mohan Traders, Through Its Proprietor Rajkumar Chitora
S/o Shri Pyar Chand Aged About 50 Years, R/o 144, Krishi Mandi
District Udaipur, Rajasthan.
                                                                       ----Appellant
                                    Versus
1.     Raj. Rajya Sahkari Upbhokta Sangh Ltd., Through Its
       Managing Director, 237, Second Floor, Nehru Sahkar
       Bhawan, Bhawani Singh Road, Jaipur.
2.     The Directors And Joint Secretary (Admn.), Department
       Of Social Justice And Empowerment, Ambedkar Bhawan,
       Civil Lines Crossing, Jaipur.
3.     Administrator       And       Registrar,       Cooperative         Societies,
       Rajasthan Rajya Sahkari Upbhokta Sangh Limited, Jaipur.
                                                                 ----Respondents


For Appellant(s)          :     Mr. N.M.Lodha, Senior Advocate with
                                Mr.V.D.Dadhich
For Respondent(s)         :     Mr. Dhanpat Choudhary



           HON'BLE MR. JUSTICE SANGEET LODHA
          HON'BLE MR. JUSTICE RAMESHWAR VYAS

                                 Judgment

1st April, 2021


PER HON'BLE MR. SANGEET LODHA,J.

1. This intra-court appeal is directed against order dated

30.10.19 of the learned Single Judge of this court, whereby the

writ petition preferred by the appellant questioning the legality of

order dated 17.10.19 passed by the Managing Director, Rajasthan

Rajya Sahakari Upbhokta Sangh Limited ('CONFED'), Jaipur,

whereby while withdrawing the certificate of satisfactory

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completion of the work, the appellant has been blacklisted and

debarred from entering into business with CONFED for a period of

three years.

2. The relevant facts in nutshell are that the appellant, a

proprietorship concern, engaged in sales and supply of grains,

pulses and other commodities was awarded the contract by the

CONFED for supply of specified branded items as per the bid

conditions all over Rajasthan in hostels/residential schools of

Social Justice & Empowered Department. The agreement was

executed between the appellant and CONFED on 13.7.16 which

was valid upto 15.7.17. The appellant was served with the notice

dated 25.7.17 alleging that the appellant had submitted the bills

of 13 challans for payment twice with intention to derive double

benefit. Yet another notice dated 1.6.17 was issued with the

similar allegation and explanation was sought. The appellant

submitted the explanation vide communication dated 11.7.17.

Thereafter, the term of the contract was extended upto 15.10.17.

On 2.1.19, a certificate of satisfaction completion of supply in

terms of the contract was issued to the appellant by the Managing

Director, CONFED. Later, on the basis of the inquiry conducted in

the back of the appellant, vide order dated 17.10.19 issued by the

Managing Director, CONFED, the certificate of completion of

satisfactory supply of the commodities issued as aforesaid was

withdrawn and the appellant was debarred from entering into

contract with the CONFED for a period of three years.

3. Aggrieved by the order dated 17.10.19, the writ petition

preferred by the appellant has been dismissed by the learned

Single Judge by the order impugned on the ground of availability

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of remedy of appeal, observing that the writ petition involve a

horde of disputed question of fact and therefore, the Court is not

inclined to exercise its extra ordinary jurisdiction under Article 226

of the Constitution of India.

4. Learned Senior counsel appearing for the appellant

contended that the learned Single Judge has seriously erred in

dismissing the appeal on the ground of availability of remedy of

appeal. Drawing the attention of the Court to the provisions of

Section 38 of Rajasthan Transparency in Public Procurement Act,

2012 (for short "RTPP Act"), learned Senior counsel submitted that

the appeal as provided under Section 38 of the RTPP Act is

available in respect of the dispute relating to initial bidding

process and not in respect of the dispute that may arise after

award of the contract in favour of the bidder or after completion of

such contract. Learned Senior counsel submitted that the 'Bidder'

is defined under Section 2 (ii) of the RTPP Act as 'any person

participating in a procurement process with a procuring entity'.

The role of the bidder comes to an end after expiry of the

procurement process which ends on award of the contract or

cancellation of the process. Learned Senior counsel submitted that

once the certificate for satisfactory completion of supply was

issued, there was no occasion for the respondents to initiate the

penal action. Learned Senior counsel submitted that after issuing

the notices seeking explanation, no notice was issued to the

appellant proposing blacklisting and straight away after lapse of

more than two years since issuance of the notice, the order

impugned was passed by the respondent authority and thus,

apparently, the order impugned passed without extending an

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opportunity of hearing to the appellant, is ex facie violative of

principles of natural justice and thus, the learned Single Judge has

seriously erred in dismissing the writ petition on the ground of

availability of remedy of appeal under the relevant statute.

Learned Senior counsel submitted that after issuance of the notice

in the year 2017, the term of the contract was extended and the

appellant was issued a certificate of completion of the work and

thus, solely on the basis of the inquiry report submitted by the

Purchase Committee unilaterally without extending an opportunity

of hearing to the appellant, is ex facie illegal and arbitrary.

5. On the other hand, learned counsel appearing for the

respondent submitted that the order passed by the competent

authority under Section 43 of the RTPP Act debarring any bidder

from participating in tender process is appealable under Section

38 of the RTPP Act and thus, taking into consideration the fact

that the petition involves seriously disputed questions of facts, the

learned Single Judge has committed no error in dismissing the

petition on the ground of availability of remedy of appeal. Learned

counsel submitted that vide notice dated 1.6.17, the action was

proposed against the appellant under Section 11 read with Section

46 of the RTPP Act and therefore, the contention sought to be

raised that order impugned has been passed without giving an

opportunity of hearing is absolutely baseless. However, learned

counsel fairly submitted that before passing the order on the

recommendation made by the Purchase Committee in its meeting

held on 16.10.19, no notice was issued to the appellant against

the proposed action. Learned counsel submitted that the

allegation of appellant withdrawing the double payment of 7 bills

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stands proved on the basis of the documentary evidence on record

and thus, the action of the respondent in blacklisting the appellant

after due notice, cannot be faulted with.

6. We have considered the rival submissions and perused the

material on record.

7. It is well settled that ordinarily when a dispute between the

parties requires adjudication of the disputed question of facts,

where parties are required to lead evidence which can be

determined by the domestic forum chosen by the parties, the writ

court would refuse to exercise the discretionary jurisdiction. But

then, the rule of exclusion of writ jurisdiction on account of

availability of alternative remedy is a rule of discretion and not

rule of compulsion and therefore, the availability of the alternative

remedy by itself, does not fetter the extra ordinary jurisdiction of

the court under Article 226 of the Constitution, which is plenary in

nature and is not limited by any other provisions of the

Constitution.

8. As laid down by the Constitution Bench of the Hon'ble

Supreme Court in the matter of 'A.V.Venkateswaran, Collector of

Customs, Bombay vs. Ramchand Sobhraj Wadhwani & Anr.", AIR

1961 SC 1506, the rule that party who applies for issue of a high

prerogative writs should before he approaches the court have

exhausted the remedies open to it under the law is not one which

bars the jurisdiction of the High Court to entertain the petition or

to deal with it, but it is rather, a rule which courts have laid down

for the exercise of their discretion.

9. Suffice it to say that the availability of alternative remedy

to the petitioner, does not operate as bar to the jurisdiction of the

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High Court under Article 226 of the Constitution of India and the

court can always exercise its discretion taking into consideration

facts and circumstances of the case.

10. Coming to the question regarding observance of principles of

natural justice and fair opportunity of hearing to the person

against whom the action of blacklisting is contemplated, it needs

to be emphasised that the rules of natural justice are assurance of

justice and fair play and therefore, any action which has evil and

civil consequences, should be taken only after following the

principles of natural justice. Further, the observance of principle of

natural justice is a rule and exclusion an exception and therefore,

unless exceptional circumstances exists, departure therefrom is

not permissible under the law.

11. Indisputably, the action in blacklisting of the awardee of the

contract on account of malpractices casts stigma and many civil

and evil consequences flow therefrom and therefore, such an

action could only be taken after following the principles of natural

justice.

12. In "M/s. Erusian Equipment & Chemicals Ltd. vs. State of

West Bengal & Anr", (1975) 1 SCC, 70, the Hon'ble Supreme

Court observed:

"20. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the blacklist." (emphasis supplied)

13. Similarly, in "Raghunath Thakur vs. State of Bihar & Ors.",

(1989) 1 SCC 229, the Hon'ble Supreme Court observed that

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blacklisting any person in respect of business ventures has civil

consequences for future business of the person concerned and

therefore, even if the rules do not express so, it is an elementary

principle of natural justice that parties affected by any order

should have right of being heard and making representation

against the order.

14. In Gorkha Security Services vs. Government of NCT of Delhi

& Ors.: (2014) 9 SCC, 105, the Hon'ble Supreme Court while

relying upon the decisions in M/s. Erusian Equipment & Chemicals

Ltd's case and Raghunath Thakur's case (supra), observed that

the action of the blacklisting must be preceded by show cause

notice setting up the precise case which noticee is required to

meet. The court observed that this would require the statement of

imputations detailing out the alleged breaches and defaults

committed so that he gets an opportunity to rebut the same.

Another requirement as pointed out by the Court is the nature of

action which is proposed to be taken for such breach inasmuch as,

it is incumbent upon the authority concerned to provide adequate

and meaningful opportunity to the person concerned. The court

further observed that when it comes to the action of blacklisting

which is termed as 'civil death', a harshest possible action, it

would be difficult to accept the proposition that without even

putting the noticee to such a contemplated action and giving him

a chance to show cause as to why such an action be not taken,

final order can be passed blacklisting such a person only on the

premise that this is one of the actions so stated in the provisions

of NIT.

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15. Thus, in the backdrop of the settled position of law noticed

as above, it needs to be examined as to whether while passing the

order blacklisting the appellant, the respondents have followed the

principles of natural justice and extended fair opportunity of

hearing to the appellant.

16. Indisputably, in the instant case, in the first instance vide

notice dated 25.5.17 with reference to provisions of Section 11 of

the RTPP Act, the explanation of the appellant was sought

regarding submission of 13 challans for preparation of the bill

twice whereas, on the basis of the challans earlier filed, the bill

was already prepared by the Department. The said notice was

followed by notice dated 1.6.17 with reference to the provisions of

Section 11 & Section 46 of RTPP Act. The explanation was

submitted by the appellant vide communication dated 11.7.17

explaining that it was only an inadvertent error and there was no

intention to obtain the payment of the bills twice. It was clarified

that 'errors and omissions' are always accepted. After submission

of the reply by the appellant as aforesaid, vide communication

dated 9.8.17 the term of the contract awarded to the appellant

which was expiring on 15.7.17, was further extended upto

15.10.17. Thereafter, after completion of the contract, a certificate

of satisfactory completion of the work was issued to the appellant

by the Managing Director, CONFED and no further proceedings

pursuant to the notice issued as aforesaid was taken. A perusal of

the order impugned in the writ petition dated 17.10.19 has been

passed on the basis of the following allegations being found

proved against the appellant:

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"1- lR;fu"Bk dk mYya?ku & 8 ¼vkB½ vkiwfrZ pkykuksa dk nks ckj Hkqxrku izkIr dj vuqfpr rjhds ls ykHk izkIr djuk] 23 ¼rschl½ ewy pkyku dks ykHk izkIr djus dh ea'kk ls /kks[kkiwoZd iqu% nksckjk izLrqr djuk ,oa 17 ¼l=g½ pkyku ifjofrZr dj izLrqr dj nks"k fl) gksuk ik;k x;kA 2- fufonk ,oa vuqcU/k dh 'krksZa dk mYya?ku djuk & lkekftd U;k; ,oa vf/kdkfjrk foHkkx] jktLFkku ljdkj] t;iqj }kjk lkexzh ds Lohd`r ,oa fu/kkZfjr czk.M dh vkiwfrZ ugha dj mlds LFkku ij vU; czk.M dh vkiwfrZ dj foHkkx ds vkns'k Øekad 38845 fnukad 23-06-2016 dh ?kksj vogsyuk djus ds nks"kh ik;s x;sA 3- nksgjk Hkqxrku izkIr djuk & 7 ¼lkr½ pkykuksa dh jkf'k 8]99]432-06 dks nksgjk Hkqxrku dkWuQSM+ ds ek/;e ls izkIr dj xaHkhj foÙkh; vfu;ferrk djus ds nks"kh jgs gSA"

17. It is pertinent to note that in the notice issued, the

explanation of the appellant was sought only in respect of 13

challans submitted twice. There was no allegation that by way of

submission of the challans of the supply made twice, the appellant

unauthorisedly drawn the payment of Rs.8,99,432.06 twice. There

was no allegation either that the supply of the materials made was

not of the specification and brand agreed upon. As a matter of

fact, the aforesaid allegations are found to be proved solely on the

basis of the conclusion arrived at by the Purchase Committee of

CONFED in its meeting held on 16.10.19. It is not disputed before

this Court that before directing blacklisting of the appellant as

aforesaid, vide order dated 17.10.19, no notice was issued to the

appellant seeking explanation regarding the allegations alleged to

be found proved against him and thus, the order impugned is

apparently based on the inquiry made by the respondents in the

back of the appellant, the fact which is not disputed by the

counsel appearing for the respondents before this Court. Even the

reply to the notice earlier issued filed by the appellant has also not

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been taken note of by the respondents while passing the order

impugned.

18. In view of the discussion above, we are firmly of the opinion

that the order impugned passed by the respondent-Managing

Director, CONFED without affording a fair opportunity of hearing to

the appellant, is ex facie violative of elementary principle of

natural justice and therefore, not sustainable in the eyes of law.

19. In view of the conclusion arrived at as aforesaid, we need

not enter into the question raised on behalf of the appellant as to

whether against the order impugned, the appeal under Section 38

of the RTPP Act is maintainable or not.

20. In the result, the special appeal succeeds, it is hereby

allowed. The order impugned dated 30.10.19 passed by the

learned Single Judge is set aside. The writ petition preferred by

the appellant is allowed. The order impugned in the writ petition

dated 17.10.19 passed by the Managing Director, CONFED, is

quashed. It will be open for the respondents to pass the order

afresh after giving an opportunity of hearing to the appellant in

accordance with law. No order as to costs.

                                   (RAMESHWAR VYAS),J                                        (SANGEET LODHA),J
                                    89-Aditya/-









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