Madhya Pradesh High Court
M/S Sai Construction vs The M.P. Housingh And Infrastructure ... on 10 January, 2020
Author: Chief Justice
Bench: Ajay Kumar Mittal, Vijay Kumar Shukla, Chief Justice
WP No. 17907/2016
1
THE HIGH COURT OF MADHYA PRADESH: JABALPUR
(DIVISION BENCH)
W.P. No. 17907/2016
PETITIONER : M/s Sai Construction
Versus
RESPONDENTS : M.P. Housing and Infrastructure
Development Board and Another
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Coram:
Hon'ble Shri Justice Ajay Kumar Mittal, Chief Justice
Hon'ble Shri Justice Vijay Kumar Shukla, Judge
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Appearance:
Shri Sanjay K. Agrawal, Senior Advocate with Ku. Ankita Khare,
Advocate for the petitioner.
Shri Ankur Shrivastava, Advocate for the respondents.
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ORDER (Oral)
{ 10.01.2020 } Per: Ajay Kumar Mittal, Chief Justice:
The present petition under Article 226 of the Constitution of India has been directed against an order dated 05.10.2016 passed by the respondent No.1 - M.P. Housing and Infrastructure Development Board whereby the petitioner has been blacklisted for grant of contract.
2. The facts giving rise to this writ petition, as enumerated in the writ petition, are that the petitioner is engaged in the work of civil construction and is registered as Class-C contractor with the Public Works Department. The respondent No.1 vide NIT Annexure P-2 invited tenders for construction of 20 MIG flats on first and second floor with allied works at Shardapuri WP No. 17907/2016 2 Colony, Maihar, District Satna. The petitioner submitted his offer and being lowest bidder, it was accepted vide order dated 08.09.2013 (Annexure P-3). A contract was executed between the petitioner and respondent in a prescribed format in pursuance to letter dated 07.09.2013 (Annexure P-4) and thereafter, an agreement was executed between the petitioner and respondent No.2 on 24.09.2013 (Annexure P-5) inter alia providing therein that the petitioner is required to complete the construction work within 12 months including the rainy season. Thereafter, a work order was issued to the petitioner on 25.09.2013 (Annexure P-6) stipulating therein that the period of completion will be reckoned from the date of issue of the work order.
3. The petitioner has asserted that the work was carried out as per the specifications and strictly in accordance with the terms and conditions of the agreement. The work was completed up to the satisfaction of the Board Authorities though there was some delay in completion of work. The period of completion of the work was extended up to 20.02.2015 by the competent Authority vide order dated 26.09.2015 (Annexure P-7) after imposition of penalty of Rs.5000/-. The work was supervised and inspected by the Engineers of the respondent Board and since the same was found as per the specifications, the final bill was also settled. The grievance of the petitioner is that all of a sudden vide impugned order dated 05.10.2016 (Annexure P-8) without affording any opportunity of hearing, the petitioner has been blacklisted from participating in the contracts of the respondent No.1 on the ground that one commercial cum residential building constructed at Shardapuri Colony, Maihar had collapsed on 20.06.2016 causing death of two persons and injury to six other persons.
WP No. 17907/20163
4. The respondent No.2 has filed its return and relying upon the letters dated 19.02.2015 (Annexure R-2/1) and 17.08.2016 (Annexure R-2/2) it is stated that not only the petitioner carried out the allotted work much after the period of completion stipulated in the contract agreement but even the quality of the work executed by him was not up to the standards prescribed for the same. Vide letter dated 17.08.2016, the petitioner was directed to repair the defects and maintain the quality of the work by removing other deficiencies in the work but he did not take notice of the same as a result, the said building collapsed on 20.06.2016 in which two persons were killed and six injured. The lapses on the part of the petitioner have not only caused financial loss but a serious dent to the image of the respondent Board. Thus, according to the respondents, the action taken to blacklist the petitioner is justified.
5. The petitioner has filed rejoinder wherein it is averred that nowhere the letter dated 19.02.2015 (Annexure R-2/1) speaks about any deficiency in the quality of construction material used by the petitioner. No document has been produced by the respondent to show that any letter pointing out defect in the quality of material used was issued to the petitioner. The default pointed out was for repairing the general leakage from the wall which was made good and thereafter, the competent Authority being satisfied with the work performed by the petitioner had settled the final bills, therefore, the respondent is now estopped from raising the objection that it is due to lack of quality in the material used, the incident had occurred. The petitioner has also mentioned that the Public Works Department vide order dated 24.03.2015 has issued instructions as to in which circumstances the order of blacklisting of a contractor can be passed. The said order dated 24.03.2015 WP No. 17907/2016 4 has also been filed by the petitioner along with an application for taking document on record vide I.A. No.132/2018. On this basis, a submission has been made that the ground taken by the respondents for blacklisting of the petitioner is out of the purview of the order dated 24.03.2015.
6. Learned counsel for the petitioner submitted that the impugned order has been passed in flagrant violation of the principles of natural justice as no show cause notice was issued to the petitioner prior to passing of the order of blacklisting. It is further submitted that the order of blacklisting entails serious civil consequences and therefore, the petitioner ought to have been afforded a reasonable opportunity of being heard. The respondent having extended the period for completion of work by imposing penalty of Rs.5,000/- vide order dated 26.09.2015 (Annexure P-7) cannot be heard to say that the work was completed after five months from the stipulated date of completion of work. As per the NIT/work order and contract agreement, the petitioner was only to construct 20 MIG flats on second floor including internal W/S, S/F and internal E/F and construction of 10 towers on the third floor (over 20 shops) at the site in question. The construction site was inspected by the Engineers of the respondents from time to time and after inspection of the work only the final bills were settled. The petitioner constructed the flats over the already constructed shops. The shops were constructed by some other contractor and therefore, the petitioner cannot be held responsible for damage to the said complex.
7. On the other hand, learned counsel for the respondents has argued in support of the impugned order and it is vehemently contended that the fact that defaults and other deficiencies were pointed out to the petitioner in the construction work carried out by him and he was asked to remove those WP No. 17907/2016 5 deficiencies itself is sufficient to prove that construction material was lacking in quality as a result of which the building had collapsed and therefore, rightly the action was taken. The petitioner is reading between the lines of the order dated 24.03.2015 (Annexure D-1) and misinterpreting the same inasmuch as reasons have been recorded while passing the order of blacklisting.
8. We have heard learned counsel for the parties and find that in the facts and circumstances of the case, the impugned order does not deserve to stand.
9. The controversy in the present case boils down to the issue: as to whether any opportunity of hearing was provided to the petitioner before passing the impugned order. The respondent No.2 has relied upon the letters dated 19.02.2015 (Annexure R-2/1) and 17.08.2016 (Annexure R-2/2) which were issued to the petitioner. However, the letter dated 19.02.2015 is in respect of asking the petitioner to submit an application seeking approval for extension of time in completion of work and taking up the work at war level so as to complete the same at an early date. It has come on record that the time for completing the work was extended which was completed on 20.02.2015. Similarly, another letter dated 17.08.2016 was issued to the petitioner for repairing of leakage and removal of other deficiencies in the work so carried out by him but it is the case of the petitioner that the contract was awarded for construction of MIG flats of second floor and 10 towers on the third floor over 20 shops. The flats were raised over already constructed shops. As the shops were constructed by some other contractor, the petitioner cannot be associated with the damage of the entire structure. Apparently, both these letters do not give any iota of understanding that before putting the name of the petitioner in black list, any opportunity of WP No. 17907/2016 6 hearing was afforded to the petitioner. No document has been placed on record by the respondent Board to show that a show cause notice was issued to the petitioner prior to passing of the impugned order and thereafter, the decision has been taken. The blacklisting of a commercial Firm has serious civil consequences as it affects the reputation of the Firm. Therefore, before any such decision is taken the person concerned should be given an opportunity to represent his case before he is cast in the blacklist. The principles of natural justice also provide that the parties who are adversely affected by an order, should have a right of being heard against the same.
10. The Supreme Court in the case of Canara Bank v. V.K. Awasthy, (2005) 6 SCC 321, has held that the natural justice is another name of common sense justice. The rules of natural justice are not codified canons. But they are the principles ingrained into the conscience of man. The expressions 'natural justice' and 'legal justice' do not present a watertight classification. It is the substance of justice which is to be secured by both, and whenever legal justice fails to achieve this solemn purpose, natural justice is called in aid of legal justice. We may profitably quote the relevant extracts of the said decision, which read thus:-
"8. Natural justice is another name for common-sense justice. Rules of natural justice are not codified canons. But they are principles ingrained into the conscience of man. Natural justice is the administration of justice in a common-sense liberal way. Justice is based substantially on natural ideals and human values. The administration of justice is to be freed from the narrow and restricted considerations which are usually associated with a formulated law involving linguistic technicalities and grammatical niceties. It is the substance of justice which has to determine its form.
9. The expressions "natural justice'' and "legal justice'' do not present a water-tight classification. It is the substance of justice which WP No. 17907/2016 7 is to be secured by both, and whenever legal justice fails to achieve this solemn purpose, natural justice is called in aid of legal justice. Natural justice relieves legal justice from unnecessary technicality, grammatical pedantry or logical prevarication. It supplies the omissions of a formulated law. As Lord Buckmaster said, no form or procedure should ever be permitted to exclude the presentation of a litigants' defence.
10. The adherence to principles of natural justice as recognized by all civilised States is of supreme importance when a quasi-judicial body embarks on determining disputes between the parties, or any administrative action involving civil consequences is in issue. These principles are well settled. The first and foremost principle is what is commonly known as audi alteram partem rule. It says that no one should be condemned unheard. Notice is the first limb of this principle. It must be precise and unambiguous. It should apprise the party determinatively of the case he has to meet. Time given for the purpose should be adequate so as to enable him to make his representation. In the absence of a notice of the kind and such reasonable opportunity, the order passed becomes wholly vitiated. Thus, it is but essential that a party should be put on notice of the case before any adverse order is passed against him. This is one of the most important principles of natural justice. It is after all an approved rule of fair play. The concept has gained significance and shades with time. When the historic document was made at Runnymede in 1215, the first statutory recognition of this principle found its way into the "Magna Carta''. The classic exposition of Sir Edward Coke of natural justice requires to "vocate interrogate and adjudicate''. In the celebrated case of Cooper v. Wandsworth Board of Works, (1863) 143 ER 414 the principle was thus stated:
"[E]ven God himself did not pass sentence upon Adam, before he was called upon to make his defence, 'Adam' (says God), 'where art thou? Hast thou not eaten of the tree whereof I commanded thee that thou shouldest not eat?'"
Since then the principle has been chiselled, honed and refined, enriching its content. Judicial treatment has added light and luminosity to the concept, like polishing of a diamond.
11. Principles of natural justice are those rules which have been laid down by the courts as being the minimum protection of the rights of the individual against the arbitrary procedure that may be adopted by a judicial, quasi-judicial and administrative authority while making an WP No. 17907/2016 8 order affecting those rights. These rules are intended to prevent such authority from doing injustice."
11. The Supreme Court in the case of M/s Kranti Associates Pvt. Ltd. and another v. Sh. Masood Ahmed Khan and others, (2010) 9 SCC 496 has laid down that the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially. It is further held that insistence on recording of reasons is meant to serve the wider principle of justice so that justice must not only be done, it must also appear to be done as well. The Court held as under:-
"14. The expression "speaking order" was first coined by Lord Chancellor Earl Cairns in a rather strange context. The Lord Chancellor, while explaining the ambit of writ of certiorari, referred to orders with errors on the face of the record and pointed out that an order with errors on its face, is a speaking order. (See pp. 1878-97, Vol. 4 Appeal Cases 30 at 40 of the Report).
15. This Court always opined that the face of an order passed by a quasi-judicial authority or even an administrative authority affecting the rights of parties, must speak. It must not be like the 'inscrutable face of a sphinx'.
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47. Summarising the above discussion, this Court holds:
(a) In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially.
(b) A quasi-judicial authority must record reasons in support of its conclusions.
(c) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well.
(d) Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power.WP No. 17907/2016 9
(e) Reasons reassure that discretion has been exercised by the decision-maker on relevant grounds and by disregarding extraneous considerations.
(f) Reasons have virtually become as indispensable a component of a decision-making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies.
(g) Reasons facilitate the process of judicial review by superior courts.
(h) The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the lifeblood of judicial decision-making justifying the principle that reason is the soul of justice.
(i) Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants' faith in the justice delivery system.
(j) Insistence on reason is a requirement for both judicial accountability and transparency.
(k) If a Judge or a quasi-judicial authority is not candid enough about his/her decision-making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism.
(l) Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or 'rubber-stamp reasons' is not to be equated with a valid decision-making process.
(m) It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision-making not only makes the judges and decision-makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor (1987) 100 Harward Law Review 731-37).
(n) Since the requirement to record reasons emanates from the broad doctrine of fairness in decision-making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See Ruiz Torija v. Spain (1994) 19 EHRR 553, at 562 para 29 and Anya vs. University of Oxford, 2001 EWCA Civ WP No. 17907/2016 10 405 (CA), wherein the Court referred to Article 6 of the European Convention of Human Rights which requires, "adequate and intelligent reasons must be given for judicial decisions".
(o) In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "Due Process".
12. In view of the foregoing reasons, the impugned order of blacklisting does not satisfy the test of being a reasoned speaking order as the decision was taken without adherence to the principles of natural justice. Accordingly, the impugned order dated 05.10.2016 (Annexure P-8) is hereby quashed. However, the respondents are free to pass a fresh order in accordance with law after affording an opportunity of hearing to the petitioner. It is also made clear that we may not be understood to have expressed any opinion on the merits of the controversy involved in the case. Resultantly, the present petition stands allowed to the extent indicated above.
(AJAY KUMAR MITTAL) (VIJAY KUMAR SHUKLA)
Chief Justice Judge
S/
Digitally signed by SACHIN CHAUDHARY
Date: 2020.01.31 11:13:20 +05'30'