Orissa High Court
Afr vs State Of Odisha And Others ..... Opp. ... on 9 March, 2023
Author: B.R.Sarangi
Bench: B.R.Sarangi
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.
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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.
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DR. B.R. SARANGI,
JUDGE
M.S. SAHOO, J. I agree.
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M.S. SAHOO,
JUDGE
Orissa High Court, Cuttack
The 9th March 2023, Ashok/GDS