Punjab-Haryana High Court
Surinder Singh vs Punjab State Power Corporation Ltd And ... on 3 April, 2017
Bench: S.J. Vazifdar, Anupinder Singh Grewal
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Civil Writ Petition No.9676 of 2016 (O&M)
DATE OF DECISION: 03.04.2017
Surinder Singh and another
.....Petitioners
versus
Punjab State Power Corporation Limited and another
.....Respondents
CORAM:- HON'BLE MR.JUSTICE S.J. VAZIFDAR, CHIEF JUSTICE
HON'BLE MR. JUSTICE ANUPINDER SINGH GREWAL
Present: Mr. D.S. Patwalia, Senior Advocate with
Mr. Bikramjit Singh Patwalia, Advocate for the
Petitioners
Mr. Jagdeep Singh Rana, Advocate for the respondents
..
S.J. VAZIFDAR, CHIEF JUSTICE:
The petitioners seek a writ of certiorari to quash an order dated 18.02.2016 forfeiting the permanent earnest money as well as the security amounts deposited by them in respect of two tenders submitted by them.
2. The petitioners' contention is based on the respondents' letter dated 05.02.2015 stating that the respondents had cancelled two contracts/purchase orders with respect to the balance quantities to be supplied thereunder, suspended business with the petitioners for a period of three years and confirmed that a security deposit of Rs.1,43,950/- against another purchase order, which was duly executed, was not to be forfeited. The petitioners contend that the respondents having taken this decision were not entitled subsequently to take any further action including by way of the impugned order.
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3. Mr. Deepinder Singh Patwalia, the learned senior counsel appearing on behalf of the petitioners, essentially relied upon a judgment of this Court dated 04.04.2016, to which one of us (S.J. Vazifdar, C.J.) was a party, in the case of Omax Engineering Works through its partner Ramesh Kumar vs. State of Haryana and others, CWP No.6309 of 2015, which dealt with the concept of double jeopardy and the concept of autrefois convict and autrefois acquit. We have come to the conclusion that the present case is distinguishable and the concepts dealt with therein are not applicable to the case before us.
4. In view of the narrow question involved in this case, it is sufficient to refer to the facts only briefly.
The petitioners were successful inter alia in respect of two tenders invited by the respondents for the manufacturing, testing, supply and delivery of equipments. Accordingly, two purchase orders bearing Nos.1826 and 1836 dated 28.07.2011 and 09.08.2011 were placed by the respondents upon the petitioners. Disputes arose between the parties. In the course of the correspondence, the respondents alleged that the petitioners had failed to supply the equipment within the time stipulated in the purchase orders. By a letter dated 21.06.2012, the respondents afforded the petitioners a last chance to deliver the equipment failing which they stated that action as per clause 15 - 'Negligence and Default' clause - of the purchase order would be initiated against the petitioners. The petitioners, by their reply of the same date, furnished reasons for the delay, such as, erratic power supply. The petitioners also alleged that there were delays on the respondents' part in inspecting the material and issuing dispatch instructions. The respondents, by a letter dated 2 of 12 ::: Downloaded on - 09-04-2017 08:23:26 ::: CWP-9676-2016 - 3 -
05.09.2012 stated that they were considering action under clause 15
- 'Negligence and default' clause of the purchase order. The petitioners, by their reply dated 24.09.2012, undertook to offer the material for inspection without prejudice to the outcome of the action initiated against them under clause 15 of the purchase order.
5. This brings us to the respondents' letter dated 05.02.2015. As Mr. Patwalia contended that the case is based entirely on this letter, it is necessary to set it out in its entirety:-
"Subject: P.O. No.HH-1826/QQ-1243/PO/C&S dt.
28.7.2011 & P.O. No.HH-1836/QQ-1240/ PO/C&S dt. 9.8.2011 for the supply of Multi Core LT XLPE & Flat twin Core PVC Cables respectively.
Dear Sir, Purchase Order No.HH-1826/QQ-1243/PO/C&S dt. 28.7.2011 & HH-1836/QQ-1240/PO/C&S dt. 9.8.2011 were placed upon your firm for the supply of Multi Core LT XLPE & Flat Twin Core PVC Cables respectively. Your firm failed to complete the supplies against the above P.O.s in spite of repeated reminders. So notice was served upon your firm under "Negligence & Default"
clause of purchase order but still you failed to complete the supplies as per provision of the above Purchase Orders. The matter was considered by the Whole Time Directors of PSPCL and it has been decided as under:-
1. Due to negligence and default on the part of your firm in the execution of PO No.HH- 1826 dt. 28.7.11 and HH-1836 dated 9.8.2011, these Purchase orders are hereby cancelled for the balance quantities.
2. Security amount of Rs.1,43,950/- against PO No.1832 dt. 2.8.2011, which your firm has faithfully executed is not to be forfeited.
3. Business dealings of PSPCL with your firm are suspended for a period of three years from the date of issue of this letter.
This is for your information please.
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Yours faithfully,
Sd/- Purchase Officer/C&S
For EIC/MM,PSPCL, Patiala"
The reference in item 2 to the security amount of Rs.1,43,950/- in respect of purchase order No.1832 is not relevant as it pertains to another purchase order.
6. Mr. Patwalia contended that in view of this communication, which he contends is a decision or an order, the respondents were not entitled to take any further action in respect of said purchase order Nos.1826 and 1836.
7. The petitioners, by a letter dated 10.07.2015, requested the respondents to return the amounts of Rs.6,49,920/- and Rs.3,96,990/- deposited by them as security amount in respect of purchase order Nos.1826 and 1836, respectively. The respondents, by their reply dated 18.02.2016, which is impugned in this petition, alleged that the petitioners had failed to complete the supplies as per the purchase orders despite the notice under clause 15. The respondents stated that the matter had been considered by their Whole Time Directors and that it had been decided as under:-
"1. Due to Negligence & Default on the part of your firm, PEMD (Permanent Earnest Money Deposit) amounts of Rs.1 Lac and Rs.10 Lacs, lying with MM organization have been forfeited.
2. Security amount of Rs.6,12,410/- lying with MM organization against PO No.HH-1826/QQ-1243//PO/C&S dt. 28.07.2011 has been forfeited.
3. Security amount of Rs.3,96,990/- lying with MM organization against PO No.HH-1836/QQ-1240/PO/C&S dt. 09.08.2011 has been forfeited.
This is for your information please."
The permanent earnest money deposit referred to in point No.1 is a permanent earnest money deposit maintained by the petitioners with the respondents in respect of all their contracts 4 of 12 ::: Downloaded on - 09-04-2017 08:23:26 ::: CWP-9676-2016 - 5 -
with the respondents and not merely the purchase orders which are the subject matter of this petition.
8. Clause 15 in both the purchase orders reads as under:-
"15. NEGLIGENCE AND DEFAULT In case of negligence on the part of the supplier/contractor to execute the order/contract with due diligence and expedition and to comply with any reasonable orders given in writing by the Purchaser in connection with the Purchase Order/Contract, the Purchaser may give 21 days notice in writing to the supplier to make good the failure or neglect or contravention and if the supplier fails to comply with the notice within time considered to be reasonable by the Purchaser, the Purchaser may black list or suspend business dealing with the supplier for specific period, apart from forfeiture of security etc."
9. Mr. Patwalia submitted that the letter dated 05.02.2015 decided the disputes relating to the said purchase orders finally and conclusively. The petitioners accepted the decision. They did not challenge it. Accordingly, he submitted that the respondents were precluded thereafter from taking any further action against the petitioners. The impugned letter dated 10.07.2015 initiated further action against the petitioners by forfeiting the security amount deposited by the petitioners. He submitted that the impugned action is barred by the principles of double jeopardy, or cause of action estoppel.
10. Mr. Patwalia relied upon a judgment of the Division Bench of this Court in Omax Engineering Works vs. State of Haryana (supra). As we stated earlier, the case is entirely distinguishable. It is necessary to deal with the judgment in some detail.
In that case, the respondents, by a show cause notice dated 08.11.2013, addressed to the petitioners therein, 5 of 12 ::: Downloaded on - 09-04-2017 08:23:26 ::: CWP-9676-2016 - 6 -
stated that the Technical Committee had examined all the offers at several meetings as well as the documents submitted by the parties which included a certificate issued by the petitioners' Chartered Accountant to evidence the petitioners' turnover. The notice stated that upon investigation it was found that the Chartered Accountant's certificate was forged and that the petitioners were guilty of forgery and cheating. The notice called upon the petitioners to show cause why penal action, such as, forfeiture of earnest money deposited, debarring/blacklisting and lodging of criminal complaint be not initiated against them as per the terms and conditions of the agreement.
The petitioners contested the show cause notice which was finally dealt with by the order impugned in that case dated 12.08.2014. The order held the petitioners guilty and directed the forfeiture of the earnest money of Rs.2 lakhs. There was no order of blacklisting as proposed in the show cause notice. The proceedings relating to the show cause notice stood concluded as the petitioners did not challenge the same.
Over a year later, the respondents served a second show cause notice raising the same allegations based on the same evidence and grounds. The petitioners contested the same. By the impugned order dated 31.03.2015, the petitioners and their partners were debarred from doing any business with the Government of Haryana for a period of three years. The same issue, namely, as to whether the petitioners had submitted a forged certificate purporting to be from their Chartered Accountant was dealt with in the second show cause notice, 6 of 12 ::: Downloaded on - 09-04-2017 08:23:26 ::: CWP-9676-2016 - 7 -
albeit in a different manner. The judgment noted that it was not the respondents' case that the authority that dealt with the first show cause notice was oblivious of the fact that the petitioners had been called upon to show cause why they ought not to be blacklisted and that it was not the respondents' case that the authority did not address himself on the issue of blacklisting. It is in these circumstances that the Division Bench held:-
"16. Mr. Bansal's reliance upon a judgment of the Supreme Court in Lt. Governor, Delhi and others vs. HC Narinder Singh, (2004) 13 SCC 342, is well founded, although that was a service matter. In that case, disciplinary action was initiated against the Head Constable for dereliction of his duties. The authorities imposed a penalty of reduction of pay by one stage without cumulative effect. Thereafter the appointing authority issued a second show cause notice proposing to remove his name from the promotion list. The Central Administrative Tribunal allowed the petitioners application by quashing the show cause notice on the ground that it would amount to double punishment based on the same cause of action. The Supreme Court dismissed the appeal observing that the second penalty based on the same cause of action would amount to double jeopardy. The Supreme Court held:-
"4. Reading of the show-cause notice suggests as if it is in continuation of the departmental proceedings. Lack of devotion to duty is mentioned as the reason for the proposed action which was the subject-matter of the earlier proceedings as well. The second proposed action based on the same cause of action proposing to deny promotion or reversion is contemplated under the impugned show-cause notice. Second penalty based on the same cause of action would amount to double jeopardy. The Tribunal was, therefore, right in law in annulling such an action. We are not expressing any opinion on the ambit or scope of any rule."
The petitioners' case before us is stronger for even the first show cause notice called upon the petitioners to show cause why they ought not to be black listed. The order on this show cause notice, however, did not impose the punishment of black listing. The second notice based on the same facts 7 of 12 ::: Downloaded on - 09-04-2017 08:23:26 ::: CWP-9676-2016 - 8 -
once again called upon the petitioners before us to show cause why they ought not to be black listed and the respondents proceeded to blacklist the petitioners.
...... ..... ..... ...... ...... ...... .......
21. In our view, in a case such as this, where the second show cause notice is identical in every respect to the first show cause notice and where the first show cause notice was taken to its logical conclusion and the decision taken therein has attained finality, a second show cause notice is impermissible on the principle embodied in the Latin maxim 'interest reipublicae ut sit finis litium' and on the principle of cause of action/estoppel. These principles in turn are based on an important aspect of public policy.
...... ..... ..... ...... ...... ...... .......
28. The contention that the second impugned order is nothing but an additional order in respect of the first show cause notice requires merely to be stated to be rejected. The proceedings relating to the first show cause notice did not indicate that the issue of black listing was not to be taken up or considered. Nor do the proceedings indicate any intention to deal with the issue of black listing separately and/or subsequently. The record reveals that the first show cause notice was dealt with, considered and disposed of in its entirety without reserving any part or aspect thereof for further and/or separate consideration."
11. The Division Bench cited with approval a judgment of the Supreme Court of England in R (on the application of Coke-Wallis) v. Institute of Chartered Accountants in English and Wales [2011 UK SC 1] where it was held:-
"27. Although the point was not conceded on behalf of the Institute, it was not submitted in the course of the argument that the principle did not apply to non statutory disciplinary proceedings of this kind. In any event, the principle does in my opinion apply to such proceedings. There is no doubt that it applies to what may be called ordinary civil proceedings. In Thrasyvoulou v Secretary of State for the Environment [1990] 2 AC 273, where an issue estoppel was held to arise out of a determination of a planning application, the principle was held to apply to public law proceedings. Lord Bridge (with whom the other members of the appellate committee agreed) stated the 8 of 12 ::: Downloaded on - 09-04-2017 08:23:26 ::: CWP-9676-2016 - 9 -
general principle and emphasised its fundamental importance in this way at p 289C-D:
"The doctrine of res judicata rests on the twin principles which cannot be better expressed than in terms of the two Latin maxims 'interest reipublicae ut sit finis litium' and 'nemo debet bis vexari pro una et eadem causa.' These principles are of such fundamental importance that they cannot be confined in their application to litigation in the private law field. They certainly have their place in criminal law. In principle they must apply equally to adjudications in the field of public law. In relation to adjudications subject to a comprehensive self-contained statutory code, the presumption, in my opinion, must be that where the statute has created a specific jurisdiction for the determination of any issue which establishes the existence of a legal right, the principle of res judicata applies to give finality to that determination unless an intention to exclude that principle can properly be inferred as a matter of construction of the relevant statutory provisions."
The House of Lords thus stressed the importance of the res judicata principle in terms which in my opinion apply equally to cause of action estoppel and to issue estoppel.
29. In these circumstances I see no reason why the principles of cause of action estoppel should not apply to proceedings before a disciplinary tribunal set up under the bye-laws. The provisions of the Charter and Supplemental Charter are akin to statutory provisions and it seems to me that similar principles to those identified by Lord Bridge in Thrasyvoulou apply to them. It was not suggested in the course of the argument that there was anything in the Charter or Supplemental Charter to lead to the conclusion that the principles of cause of action estoppel should not apply to successive sets of disciplinary proceedings.
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34. In para 1.02 Spencer Bower and Handley makes it clear that there are a number of constituent elements in a case based on cause of action estoppel. They are that: "(i) the decision, whether domestic or foreign, was judicial in the relevant sense; (ii) it was in fact pronounced; (iii) the tribunal had jurisdiction over the parties and the subject matter; (iv) the decision was - (a) final; (b) on the merits; (v) it determined a question raised in the later litigation;
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and (vi) the parties are the same or their privies, or the earlier decision was in rem." It is not in dispute that all those elements are established except (iv) and (v). Even if any of the others were in dispute, I would hold that they are plainly satisfied. As to
(vi), it was not suggested that the first decision was in rem but it is plain that the parties to both sets of proceedings were the same."
12. We will proceed on the basis that the principles apply equally to cases such as the one before us, if the facts so warrant. In our opinion, however, in the facts of the present case, the petitioners cannot invoke these principles successfully.
13. There is a fundamental difference between the case before us and the case of Omax Engineering Works vs. State of Haryana and others (supra). In that case there was an earlier show cause notice which was finally adjudicated. The second show cause notice was based on the very same facts and evidence. The adjudication thereof involved a different perception of the same facts and evidence which was held to be impermissible. In fact, the action against the petitioners therein pursuant to the adjudication of the second show cause notice was proposed in the first show cause notice. The adjudication in respect of the first show cause notice did not impose the penalty that was proposed. The case before us is entirely different. There was no adjudication at all.
14. The letter dated 05.02.2015 was not a show cause notice. It was a decision taken by the respondents in respect of the contractual obligations between the parties. The parties to a contract often raise disputes and make claims.
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They are not estopped from modifying either their contentions or their claims in any manner whatsoever.
The doctrine and the principles referred to in the judgment posit first a decision, judicial, quasi-judicial and even administrative. Secondly, the decision even of a domestic forum must be rendered or taken in a proceeding which adjudicates the disputes. The doctrine and the principles do not apply to unilateral decisions which are, in effect, merely the assertions of one party against the other. A decision of a party cannot possibly be the basis on which these principles can be applied for there could and indeed would equally be assertions by the other party. Conflicting assertions or unilateral or personal decisions of parties do not take us anywhere near the doctrine till they are adjudicated upon. The unilateral/personal decisions of a party are not pronounced. They are merely stated or asserted.
This is evident from para 1.02 Spencer Bower and Handley referred to in paragraph 34 of the judgment in R (on the application of Coke-Wallis) v. Institute of Chartered Accountants in English and Wales (supra) which we set out earlier. A party's unilateral decision cannot meet any of the tests. It cannot be said to be pronounced or be said to be final in the sense in which those words are used. It cannot be said to be on the merits for the merits of all the parties are not decided upon.
15. The respondents' letter dated 05.02.2015 does not satisfy any of the essential ingredients of a decision. The decisions mentioned therein were only tentative. They were not adjudicated upon and were nothing more than the personal 11 of 12 ::: Downloaded on - 09-04-2017 08:23:26 ::: CWP-9676-2016 - 12 -
decisions of the respondents. The disputes between the parties are yet to be adjudicated upon. By the impugned letter dated 18.02.2016, the respondents raised additional claims and took additional steps. Even if it was in respect of the same allegations, it would make no difference for the letter dated 05.02.2015 was not a decision which attracted the principles enunciated in the judgments that we have referred to.
16. The writ petition is, therefore, disposed of with liberty to the petitioners to adopt appropriate proceedings. All other contentions of the petitioners regarding the impugned action on merits are kept open.
(S.J. VAZIFDAR) CHIEF JUSTICE (ANUPINDER SINGH GREWAL) JUDGE 03.04.2017 parkash NOTE:
Whether speaking/non-speaking: Speaking Whether reportable: YES 12 of 12 ::: Downloaded on - 09-04-2017 08:23:26 :::