Tripura High Court
Srei Infrastructure Finance ... vs State Of Tripura Represented By ... on 29 May, 2023
Page 1 of 6
HIGH COURT OF TRIPURA
_A_G_A_R_T_A_L_A_
WP(C) No.271 of 2023
SREI Infrastructure Finance Limited, represented by Mr. Rajneesh Sharma,
Administrator (A company under Corporate Insolvency Resolution Process
vide order dated October 8, 2021 passed by the Hon'ble National Company
Law Tribunal, Kolkata Bench), a company within the meaning of
Companies Act, 2013, having its registered office at "VISWAKARMA",
86C, Topsia Road (South), Kolkata - 700 046, West Bengal
...... Petitioner(s)
VERSUS
1. State of Tripura represented by Director, Urban Development,
Government of Tripura.
2. Er. Shyamal Bhaumik, Chief Engineer, Urban Development Department,
Government of Tripura.
...... Respondent(s)
For Petitioner(s) : Mr. Jishnu Saha, Advocate,
Mr. Rishiraj Nath, Advocate,
Mr. Rounak Das, Advocate.
For Respondent(s) : Mr. S.S. Dey, Advocate General,
Ms. A. Chakraborty, Advocate,
Ms. N.C. Saha, Advocate.
HON'BLE THE CHIEF JUSTICE MR. APARESH KUMAR SINGH
HON'BLE MR. JUSTICE T. AMARNATH GOUD
_O _R _D _E_ R_
29.05.2023
Heard Mr. Jishnu Saha, learned counsel assisted by Mr.
Rishiraj Nath and Mr. Rounak Das, learned counsel for the petitioner and
Mr. S.S Dey, learned Advocate General assisted by Ms. A. Chakraborty,
learned counsel for the respondents-State.
[2] By our order dated 15.05.2023, learned counsel for the State
was allowed time to file response positively so far as the question of
debarment is concerned. The order reads as under :
"The petitioner approached this Court against the termination of
the agreement dated 07.01.2019 vide letter No.7300-04 dated 06.03.2023
(Annexure-44) whereunder not only the agreement has been terminated
but the performance security, security deposit both have been forfeited to
the full extent and apart from that petitioner has been debarred from
participating in any tendering process for any work if further advertised
from Government of Tripura and blacklisted.
After hearing learned counsel for the petitioner and the State
we are of the prima facie view that the issue of termination of agreement
is not required to be gone into in writ jurisdiction as the petitioner has an
alternative remedy through arbitration or before the competent Civil
Court, more so, for the reason that the adjudication on the subject may
involve determination on disputed questions of fact and evidence as may
be required to be adduced by the rival parties. However, so far as the
debarment of the petitioner is concerned, learned counsel for the
petitioner has pointed out that it is without consideration of the reply to
the show-cause furnished by the petitioner and also shows complete non-
application of mind. The debarment and blacklisting is for indefinite
period of time which in effect ousts the petitioner from carrying on trade
and business as is guaranteed under Article 19(1)(g) of the Constitution
of India. It is also in teeth of the settled decisions of the Apex Court such
as M/s .Erusian Equipment & Chemicals Ltd. versus State of West
Bengaland another reported in (1975) 1 SCC 70 and Gorkha Security
ServicesversusGovernment (NCT of Delhi) and others reported in
(2014) 9 SCC 105.
Learned counsel for the State is allowed 10 days time to file
response positively so far as the question of debarment is concerned.
Let the matter appear on 29.05.2023."
[3] Learned Advocate General appears on behalf of the State and
submits on instructions that the writ petition can be disposed of at this stage
for the respondent-State/employer to take a fresh decision in accordance
with law as regards the issue of blacklisting is concerned.
[4] Learned counsel for the petitioner submits that the order of
blacklisting is vitiated on both counts. (i) That it was not preceded by any
proper show-cause notice as would be revealed by the two show-cause
notices at Annexure-37 and Annexure-39 dated 15.12.2023 and dated
23.12.2022. (ii) Both the show-cause notices actually refer to the proposed
termination of the contract; imposition of penalty in terms of the liquidated
damages clause; forfeiture of performance guarantee in full extent and
recovery of amount pay with interest but no reference to any proposed
blacklisting. The show-cause notice apparently did not contain any charges
as to why the employer proposes to impose the penalty of blacklisting upon
the petitioner. The order of blacklisting operates not only vis-a-vis the State
of Tripura but pan India in respect of any tender where the petitioner could
be an eligible participant. As such, it affects the right to carry on business
and occupation under Articles 19(1)(g) of the Constitution of India.
[5] Learned counsel for the petitioner refers to paragraphs 21 and
22 of the judgment of the Apex Court in case of Gorkha Security Services
versus Government (NCT of Delhi) and others reported in (2014) 9 SCC
105 and submits that a proper show-cause notice should contain (i) the
material/grounds to be stated which according to the department
necessitates an action; (ii) particular penalty/action which is proposed to be
taken. It is submitted that in the present case both the ingredients of show-
cause notice is lacking. However, because of the debarment of the
petitioner and blacklisting, petitioner has already suffered to a great extent
by loosing the eligibility to participate in tender processes across the
country. As such, the impugned order of blacklisting contained in the letter
dated 06.03.2023 Annexure-44 issued by Chief Engineer, Urban
Development, Department be quashed. Learned counsel for the petitioner
has further sought to draw the attention of the Court to the insolvency
proceedings being conducted under the aegis of a resolution professional in
connection with CP (IB) No.295/KB/2021. As such, petitioner has genuine
reasons to explain its position as regards the termination of the agreement
by the respondent-State.
[6] Learned Advocate General submits that having regard to the
limited issue at hand it would be proper that the matter may be remitted to
the competent authority to take a fresh decision as regards the issue of
blacklisting.
[7] We have considered the submissions of learned counsel for the
parties and taken note of the limited gamut of facts in connection with the
impugned order of blacklisting contained in the letter dated 06.03.2023
[Annexure-44]. It appears from a bare perusal of the two show-cause
notices at Annexure-37 and Annexure-39 dated 15.12.2023 and dated
23.12.2022 that no notice in the eye of law had been issued upon the
petitioner proposing to blacklist him and also indicating the proposed
quantum of penalty of blacklisting. In this regard, it is apposite to quote the
ratio rendered by the Apex Court in case of Gorkha Security Services
versus Government (NCT of Delhi) and others reported in (2014) 9 SCC
105, paragraphs 21 and 22 of which are reproduced hereunder :
"21.The central issue, however, pertains to the requirement of stating the
action which is proposed to be taken. The fundamental purpose behind
the serving of show-cause notice is to make the notice understand the
precise case set up against him which he has to meet. This would require
the statement of imputations detailing out the alleged breaches and
defaults he has committed, so that he gets an opportunity to rebut the
same. Another requirement, according to us, is the nature of action which
is proposed to be taken for such a breach. That should also be stated so
that the noticee is able to point out that proposed action is not warranted
in the given case, even if the defaults/breaches complained of are not
satisfactorily explained. When it comes to blacklisting, this requirement
becomes all the more imperative, having regard to the fact that it is
harshest possible action.
22. The High Court has simply stated that the purpose of show-cause
notice is primarily to enable the noticee to meet the grounds on which the
action is proposed against him. No doubt, the High Court is justified to
this extent. However, it is equally important to mention as to what would
be the consequence if the noticee does not satisfactorily meet the grounds
on which an action is proposed. To put it otherwise, we are of the opinion
that in order to fulfill the requirements of principles of natural justice, a
show-cause notice should meet the following two requirements viz:
(i) The material/grounds to be stated which according to the department
necessitates an action;
(ii) Particular penalty/action which is proposed to be taken. It is this
second requirement which the High Court has failed to omit. We may
hasten to add that even if it is not specifically mentioned in the show-
cause notice but it can clearly and safely be discerned from the reading
thereof, that would be sufficient to meet this requirement."
[8] The position in law has been consistently followed thereafter
by the Apex Court as held in case of Vetindia Pharmaceuticals Limited
versus State of Uttar Pradesh and another reported in (2021) 1 SCC 804.
Perusal of the impugned order also shows that there is no reference of any
show-cause preceding the order of blacklisting neither any reference to
consideration of any reply thereto by the petitioner as there was no show-
cause notice for blacklisting. Therefore, order of blacklisting is not only
vitiated for lack of compliance of principles of natural justice but also
shows complete non-application of mind.
[9] As such, the impugned order of debarment and blacklisting as
contained in the letter dated 06.03.2023 is quashed. However, the
respondents are at liberty to take a fresh decision, in accordance with law,
after a proper show-cause notice within a stipulated time. Let it be made
clear that we have not made any comments on merits of the case.
[10] The writ petition is allowed in the manner and to the extent
indicated above.
Pending application(s), if any, also stands disposed of.
(T. AMARNATH GOUD), J (APARESH KUMAR SINGH), CJ
Dipesh
