Gujarat High Court
Ranjit Buildcon Limited vs State Of Gujarat on 19 August, 2023
Author: Ashutosh Shastri
Bench: Ashutosh Shastri
NEUTRAL CITATION
C/SCA/10039/2023 CAV ORDER DATED: 19/08/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 10039 of 2023
With
CIVIL APPLICATION (FOR STAY) NO. 1 of 2023
In
R/SPECIAL CIVIL APPLICATION NO. 10039 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 10045 of 2023
With
CIVIL APPLICATION (FOR STAY) NO. 1 of 2023
In
R/SPECIAL CIVIL APPLICATION NO. 10045 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 10048 of 2023
With
CIVIL APPLICATION (FOR STAY) NO. 1 of 2023
In
R/SPECIAL CIVIL APPLICATION NO. 10048 of 2023
==========================================================
RANJIT BUILDCON LIMITED
Versus
STATE OF GUJARAT
==========================================================
Appearance:
MR SHALIN MEHTA, SENIOR ADVOCATE with MR ABHISHEK M
MEHTA(3469) with MS SHAITALI DAVE for the Petitioner(s) No. 1,2
MR KEYUR GANDHI for GANDHI LAW ASSOCIATES(12275) for the
Respondent(s) No. 2
MR JAYNEEL PARIKH, AGP for RESPONDENT-STATE
==========================================================
CORAM:HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI
and
HONOURABLE MR. JUSTICE DIVYESH A. JOSHI
Date : 19/08/2023
COMMON CAV ORDER
(PER : HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI)
1. By way of this batch of petitions, petitioners have
challenged legality and validity of impugned action of
respondent authority in debarring the petitioners for a period of
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three years by passing impugned orders and since common
question of facts and law have arisen in these identical
petitions, learned advocates have jointly requested to deal with
the same conjointly and since submissions are identical in
nature, same have been made in Special Civil Application
No.10039 of 2023. Accordingly, considering the request, we
have taken up hearing conjointly by treating Special Civil
Application No.10039 of 2023 as a lead matter and basic facts
are taken from it.
2. Petitioner of lead petition is a company incorporated
under the provisions of Companies Act, 1956, engaged in the
business of construction of infrastructure projects like Dam,
Barrages, Weirs, Marine Structures, River Bridges, Road
Bridges, Flyover, Railway Bridge, Roads, mining and Irrigation,
Water Supply Projects in the State of Gujarat and across the
country. Petitioner is also engaged in the business of
construction of Metro Rail in Ahmedabad and Surat pursuant to
work orders having been awarded by Metro Rail Corporation
Ltd. It is the say of petitioner company that in his history of
functioning and carrying out business under various projects, it
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has never been blacklisted or debarred in any of the projects.
3. It is the assertion of petitioner that respondent No.2, i.e.
GWSSB has already awarded three tenders to the petitioner
company for designing and constructing of filter plant
conventional/ unconventional, RCR, ESR, RCC U/G Sump, Pump
House, providing Lowering & Laying of various types & dia of
pipeline, SITC Pumping machinery including electro mechanical
works and other ancillary works etc. and including O&M of
entire Regional Water Supply Scheme (RWSS) for five years
after completion of works. Details of such tenders are provided
in paragraph 5.3 of the petition, which read as under:-
i. Village Kanja RWSS, Tal. Vyara, District: Tapi (Tender
ID No.161506)
ii. Village Valod, RWSS, Tal. Vyara, District Tapi
(Tender ID No.161500) and
iii. Village Zankhari, RWSS, Tal. Vyara, District: Tapi
(Tender ID No.159641)
4. According to tender ID No.161506 and contract in respect
of village Kanja RWSS, Tal. Vyara, District Tapi, a letter of
intimation regarding award of tender was given by respondent
Board on 7.4.2015 and final value of contract was determined
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and particulars of such tender are reproduced hereunder:-
Date of starting of the contract 18.04.2015
Tender amount Rs.34,51,49,406/-
Stipulated completion 17.04.2017
Tender of completion of the 1st 30.03.2018
phase of the contract
Trial run period 31.12.2017 to
30.03.2018
Defect liability period 31.03.2018 to
30.03.2019
O&M period - 2nd phase of the 01.09.2018 to
contract 31.08.2023
5. Thereafter, vide communication dated 9.4.2015,
respondent Board intimated regarding carrying out necessary
formalities which was later on followed by rectification letter
dated 13.4.2015 insofar as it relates to submission of bank
guarantee, etc. and then, after following such process, an
agreement was executed, followed by a work order dated
18.4.2015. Said tender was awarded for construction of Filter
Plant and ancillary work was to be completed within a period of
2 years (24 months) from the date of intimation, which
according to petitioner was completed in stipulated time/
extended time period and later on, petitioner company was to
undertake second phase of tender, i.e. Operation and
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Maintenance (O&M) of said plant for a period of 5 years (60
months). In respect of this, respondent Board addressed a
communication on 12.9.2018 which is quoted by petitioner in
paragraph 5.11, which reads as under:-
"... work has been successfully completed by you and system is
ready for Operation and Maintenance. As per your tender
specification and contract agreement, the operation and
Maintenance Agreement for the O&M of designing and
Construction of Filter Plant conventional unconventional, RCCF
ESR, RCC U/G Sump, PH, Providing Lowering, Laying of various
types & dia pipelines, SITC pumping machinery including
electromechanical works & other ancillary works etc. complete
including O&M for 60 months after completion of the works for
Tapi bulk line based Kanja RWSS, District: Tapi (Tender ID:
101506) has been duly signed. Please find enclosed herewith
copy of the O & M agreement and Operation and Maintenance
will started from Date 01/09/2018 for five year: 60 Months."
6. Accordingly, O&M agreement No.B-2/3 year 2018-19 came
to be executed. Later on, on 2.11.2018, petitioner requested for
release of bank guarantee since construction of plant of first
phase was already completed on 31.3.2018 along with
performance guarantee and retention amount were thereafter
released subsequently. According to petitioner, even work
completion certificate was also issued by respondent Board on
31.12.2018.
7. It is the case of petitioner that during the course of said
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second phase of O&M, if there was any temporary breakdown of
machinery or system, petitioner company used to provide water
through tankers so as to ensure that water supply is continued
to the villages. As against this, respondent Board used to
release bill amount due to the petitioner company in an
irregular manner even in respect of O&M of the plant. As a
result of this, a letter was addressed by petitioner on 24.9.2019
that about 16 months' dues remained unpaid. According to
petitioners, since company having successfully operated and
maintained this scheme, even form No.3A was also issued by
respondent Board on 10.2.2021, certifying work-wise details of
completed work by petitioner company. However on account of
some reasons beyond control of petitioners, water was not
reaching in some of the areas for which there was exchange of
correspondences between petitioner company and respondent
Board and by way of such communications, clarification and
reasons were projected by petitioner and it is the case of
petitioner that despite said fact being in knowledge of
respondent Board, instead of releasing payment, a notice was
issued on 5.1.2023 followed by another notice dated 6.1.2023,
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attributing, according to petitioner, baseless allegations in
respect of work related to O&M contract. Said notices were
effectively replied by petitioner by series of correspondences
which were stated in paragraph 5.18, but somehow respondent
Board was not making payment of O&M charges on monthly
basis which was otherwise a requirement of contract to be
observed by respondent Board as well and this inordinate delay
of payment was causing great financial hardship and it was
found difficult for petitioner to undertake activities and smooth
functioning of O&M of the plant. According to petitioner, on one
hand, Board was expecting the work to be undertaken and
forcing the petitioner company to continue O&M work, whereas
on the other hand, respondent Board was not making any
payment to the company.
8. It is the case of petitioner that first phase work was
already completed and certified on 31.3.2018 and then O&M
contract period starts from September 2018 and from initial
stage itself, there was delay in making payment of O&M charges
and by a tabular form, in paragraph 5.20, details have been
pointed out regarding delay and in addition thereto, petitioner
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has asserted that even O&M charges relating to month of May
2021 to April 2023 are still awaited and as such Board has not
made any payment right from May 2021 towards O&M charges
to a substantial extent which amounting to Rs.26,51,727/-. But,
instead of releasing payment, Board went on issuing notices and
later on, respondent Board addressed a communication on
4.3.2023, which was replied by petitioner on 15.3.2023, but
then again, letter was issued and then in the interregnum,
respondent Board proceeded to issue a termination order on
9.3.2023 terminating the O&M part of the contract and for
forfeiture of bank guarantee. Letters which were addressed by
respondent Board to the petitioner were replied specifically on
28.3.2023, followed by letters dated 10.4.2023 and 11.4.2023
and lastly, one representation was also addressed on 17.4.2023
to the concerned Hon'ble Minister to ventilate the grievance.
But then, Board proceeded to issue letter dated 8.5.2023
seeking recovery of an amount of Rs.6,71,88,017/-, which
according to respondent Board was in respect of work for
setting up of plant and pipelines, etc. relating to first phase of
tender which was already ended and completed on 30.3.2018.
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Even trial run period from 30.12.2017 to 30.3.2018 with defect
liability period from 31.3.2018 to 30.3.2019 was also
successfully over and completion certificate was also issued.
Petitioner company then also responded to the notices by a
consolidated letter dated 19.5.2023, but then vide
communication dated 29.3.2023, respondent Board intimated
the petitioner company about its initiative action for debarment
of petitioner company for a period of three years and to submit
clarification within a period of 10 days and for which a letter
dated 30.3.2023 followed by another letter dated 10.4.2023
came to be addressed. In respect of this communication,
petitioner also replied, but then, to the surprise of the
petitioner, without affording any opportunity to the petitioner
and before company could make submission at length, petitioner
received impugned order dated 16.5.2023 about decision to
debar the company for a period of three years from
participating in any contract or tender of respondent Board
along with other attached impugned order dated 16.5.2023 and
effect ultimately is that a serious prejudice would fall back upon
the petitioner which has constrained the petitioner company to
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challenge the action of respondent authority, more particularly
impugned orders date 12.5.2023 as well as 16.5.2023 and has
invoked the extraordinary jurisdiction of this Court for seeking
reliefs which are set out in paragraph 12 of the petition, which
we deem it proper to quote hereunder:-
(A) YOUR LORDSHIPS may be pleased to admit and allow the
present application.
(B) YOUR LORDSHIPS may be pleased to issue appropriate writ,
order or direction quashing and setting aside the impugned
order dated 12.05.2023 and 16.05.2023 (Annexure-A)
debarring the petitioner for a period of 3 years from the date
of the impugned order dated 16.05.2023.
(C) YOUR LORDSHIPS may be pleased to issue appropriate writ,
order or direction, directing the respondents to delete the
name of the petitioner company from the list of debarred
agencies.
(D) Pending hearing and Final Adjudication of the captioned
petition, YOUR LORDSHIPS be pleased to stay the
implementation and operation of the impugned order dated
12.05.2023 and 16.05.2023 (Annexure-A) and be further
pleased to direct the respondents to not take any other or
further coercive action against the petitioner company;
(E) YOUR LORDSHIPS may be pleased to grant an ad- interim
relief/s in terms of para 12(D) above;
(F) YOUR LORDSHIPS may be pleased to grant any other and
further as may be deemed just and proper in the interest of
Justice and fitness of things;
9. Insofar as Special Civil Application No.10048 of 2023 is
concerned, the petitioner has come out with almost similar
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challenge on the premise that the petitioner Company has
executed several projects to the satisfaction of its clients, be
private or Government agencies and has never been blacklisted
or debarred. Pursuant to the tender which was floated by
respondent No.2 Board, i.e. GWSSB, three tenders were
awarded in favour of the petitioner Company for designing and
constructing filter plant, conventional/ unconventional, R.C.R,
E.S.R, U/G Sump, Pump House, providing lowering and laying
various types of dia of pipe line, SITC pumping machinery,
including electro-mechanical works and other ancillary works
etc., completed including O&M of entire Regional Water
Supply Scheme for a period of five years after completion of
works as indicated in paragraph 5.3 of the memo of petition.
According to the petitioner, letter of intimation was issued on
7.4.2015 about contract worth Rs.30,56,86,269.47 and by
narrating the basic stipulations of tender in paragraph 5.6, it
has been submitted by the petitioner that entire process has
been completed by petitioner including the submission of bank
guarantee, rectification letter dated 13.4.2015 as desired and
after execution of agreement, the work order was also issued on
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18.4.2015.
10. It is the case of the petitioner that tender work which was
awarded for construction of filter plant and ancillary works was
to be completed within a period of two years from the date of
letter of intimation which work, according to petitioner, was
completed successfully in time and also in extended period and
thereafter, petitioner Company was required to undertake
second phase of tender i.e. O&M (Operation and Maintenance)
of the said plant for a period of five years (60 months).
Regarding this, petitioner was also informed by the respondent
- Board vide letter dated 12.9.2018 and an agreement relating
to that was also executed between the parties. A copy whereof
is also produced at Annexure-F. After the said formalities having
been over, on 2.11.2018, petitioner Company requested to
release bank guarantee in respect of completion of first phase
which was completed on 31.3.2018 and performance guarantee
and retention amount were thereafter released subsequently so
much so that the work completion certificate was also issued by
the respondent Board on 31.12.2018. Insofar it relates to first
phase is concerned, on account of temporary breakdown of
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machinery and system during the course of the contract,
petitioner had to provide water to several villages through
tankers so that villagers may not suffer. However, respondent
Board was not releasing the amount due and payable to the
petitioner in respect of such two phase in time which has
resultant into work being suffered and time and again petitioner
had to make a request for such release of payments. As
indicated in the lead petition, series of correspondences took
place and meeting is also convened, but still though there was a
strong inclination by the petitioner to smoothly process O&M
part of the contract, but on account of difficulties pointed out in
the correspondence as indicated in the memo of petition, it was
not possible for petitioner to proceed in regular manner and the
authority instead of reducing the grievance of the petitioner had
proceeded to issue a termination order dated 3.3.2023 of O&M
part of the contract and consequently forfeited the bank
guarantee. In response to such order, protest letters in the form
of representation/ reply were given on 16.3.2023 as well as
23.3.2023 which were followed by certain other
correspondences and last representation was dated 17.4.2023.
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A copy whereof was also given to concerned Hon'ble Minister.
Further, the respondent Board proceeded to issue a letter on
08.05.2023 seeking recovery of huge amount to the extent of
RS.2,57,05,496/-. The exchange of correspondence went on,
which led to issuance of consolidated letter dated 19.5.2023 and
later on 29.3.2023. The respondent Board informed the
petitioner - Company regarding initiative of action for
debarment of Company for a period of three years and
instructed to submit clarification within a period of ten days,
and same has also been complied, but ultimately, the Board has
issued impugned order on 12.5.2023 as well as 16.5.2023
debarring the petitioner for a period of three years from the
date of impugned order i.e. 16.5.2023 which has constrained the
petitioner to approach this Court by way of a petition under
Article 226 of the Constitution of India for the reliefs which are
set out in the paragraph 12. Learned advocate has submitted
that all the contentions and the submissions which are to be
made in the lead petition are identical and hence, requested to
dispose of the present petition on the line on which lead petition
is to be disposed of by common order.
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11. In respect of Special Civil Application No.10045 of 2023 is
concerned, identical is the situation with respect to the work
relating to O&M contract and in this petition also, by impugned
communications dated 12.5.2023 as well as 16.5.2023, the
petitioner Company is debarred for a period of three years from
the date of impugned order which has resulted into filing of the
petition for reliefs which are sought in paragraph 12. Since the
facts and the submissions are almost similar, except the work
order of different village, there appears to be no other change
and present petition is relating to tender No.ID-159641 and
contract is in respect of Village Jhankri, RWSS, Taluka Vyara.
Here also, the letter of intimation was on the very same date i.e.
7.4.2015, basic ingredients of the tender are also same in
nature and in respect of this first phase contract, which is said
to have been concluded, the grievance is relating to second
phase of the tender i.e. Operation & Maintenance of the said
plant for a period of five years (60 months). Instead of
overburdening the present order by mentioning detailed facts of
the present petition, since the facts and submissions are
identical in nature, as per the request made by learned
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advocates and not argued separately, present petition is also
dealt with by this common order and as such, not detailed out
minute circumstance since same are identical in nature.
12. Pursuant to notice having been issued vide order dated
16.6.2023 by Coordinate Bench of this Court, parties have
completed their pleadings and as such, requested to hear all the
three matters conjointly and accordingly upon request of
learned advocates representing the parties to the proceedings,
we deem it proper to hear the petitions.
13. Learned senior advocate Mr. Shalin Mehta appearing with
learned advocate Mr. Abhishek M. Mehta appearing for
petitioners has vehemently contended that while passing
impugned order, authorities have not considered their
explanation and reply which were very much on file and without
assigning any proper reason, a cryptic order is passed and as
such it not only suffers from vice of non-application of mind but
not supported by valid reasons as well, hence same is required
to be quashed and set aside.
14. It has further been submitted that no adequate
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opportunity to represent the case has been extended to the
petitioners and no personal hearing was afforded and as such
action on the part of respondent authority is violative of
principles of natural justice. Mr. Mehta has submitted that no-
doubt, prior to issuance of last communication and notice, twice
meetings could take place, but when actual debarment action
was sought to be initiated for a period of three years, as
indicated, no personal hearing was afforded and as such at a
proper stage, hearing which was to be afforded is not given,
which has resulted in gross violation of principles of natural
justice. It has further been submitted that it is a settled position
of law that decision making process must be well supported by
reasons and reasons cannot be supplemented by way of any
affidavit which attempt is tried to be made and as such action
and stand taken by the respondent authority is in conflict with
well-settled proposition of law and hence impugned action
deserves to be quashed and set aside.
15. By drawing attention to the relevant paragraphs of the
petition, precisely paragraphs, 5.18, 5.19 and 5.20, it has been
submitted that these assertions specifically made have not been
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disputed so far and this itself is a sufficient enough to indicate
how respondent Board has acted in an arbitrary manner and for
this purpose, even paragraph 9 of the reply affidavit was also
brought to our notice to substantiate this contention and then
Mr. Mehta has reiterated that at least, minimum requirement of
assigning proper reasons is well settled proposition which ought
not to have been given go-bye and therefore according to Mr.
Mehta, this is a fit case in which Court may intervene.
16. Learned senior advocate Mr. Mehta has submitted that
reasons are part and parcel of the principles of natural justice
as by now, it is settled and as such, when there is a clear
violation of principles of natural justice, irrespective of
alternative remedy of arbitration, writ jurisdiction is not
deprived to be invoked by petitioners and it is a settled position
of law that extraordinary jurisdiction can be exercised when
action is apparently violative of principles of natural justice. To
substantiate his all submissions, Mr. Mehta has made reference
to few decisions delivered by this Court as well as by Hon'ble
Apex Court which we deem it fit to quote hereunder:-
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(1) Judgment dated 18.10.2021 passed by Division Bench of
this Court in Special Civil Application No.9151 of 2020
(paragraphs 89 onwards)
(2) Decision of Hon'ble Apex Court reported in (2014) 9 SCC
105 (paragraphs 16 and 21)
(3) Decision of Hon'ble Apex Court reported in (2014) 14 SCC
731 (paragraphs 27 and 28.1 onwards)
And by referring to these decisions, a contention is raised that a
bare look at the impugned order and action clearly reflects
arbitrariness and decision making process is in conflict with
principles of natural justice as no reasons are assigned. The
Court may kindly exercise jurisdiction under Article 226 of the
Constitution of India and at least the authority may be directed
to assign proper reasons to arrive at a conclusion which
conclusion has far-reaching consequence upon present
petitioners, hence request is made to issue appropriate writ,
order or direction.
17. As against this, learned advocate Mr. Keyur Gandhi
appearing on behalf of contesting respondent Board has
vehemently submitted that this is a case in which petitioners
may not be allowed to invoke extraordinary jurisdiction. How
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principles of natural justice are violated, petitioners have not
been able to establish before the Court and prior to impugned
action, series of notices and communications have been issued
upon petitioners and adequate opportunity to represent the case
was also given to petitioners in personal meetings which took
place on 2nd September 2022 and 14th September 2022 and as
such it cannot be said in any form that there is any violation of
principles of natural justice, on the contrary authority has given
more than adequate opportunity to represent the case.
18. Learned advocate Mr. Gandhi has also raised a
preliminary objection regarding maintainability of petition not
only in view of the fact that there is an alternative remedy
available by way of an arbitration proceeding as contained in
the contract itself but also there is serious suppression of
material facts by petitioners while invoking extraordinary
equitable jurisdiction. To substantiate his contention of this
nature, Mr. Gandhi has drawn the attention of this Court to the
assertion made in affidavit-in-reply attached with series of
documents to indicate that there are several notices and
intimations given to petitioner to improve upon and follow the
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contractual obligations. According to learned advocate Mr.
Gandhi, O&M contract commenced from 1.9.2018 and work
related to it was found to be not satisfactory by the authority
and vide communications dated 1.6.2020, 5.6.2020, 8.2.2021,
7.1.2023 and similar such communications were sent to
petitioner to indicate that work is not being properly
undertaken and such communications are attached with the
petition compilation on page 547 onwards and so much so that
on 2.9.2022, review meeting also conducted in which the very
petitioner through its representative Mr. Ashok Patel did
appear, deliberated and assured that shortly, regular flow of
water will be provided to the villages and by pointing out
minutes of the meeting on page 564, a contention is raised that
it is not that petitioner is not aware about said infirmity which is
reflecting at his instance. Yet another minutes of meeting dated
14.9.2022 was also pointed out by referring to page 566 and
then successive communications have been brought to our
notice to contend that though enough opportunities have been
given, petitioner did not adhere to though specifically assured,
which ultimately led the authority rather compelled the
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authority to initiate action of debarment. It has further been
contended that in subsequent communications from August
2022, there are as many as three letters written to petitioner
indicating that if improvement will not take place, action of
debarment would be taken and even final notice on 5.1.2023
was also given to the petitioner, reflecting on page 579. Hence,
it has been contended that when petitioner has miserably failed
to observe the conditions of contract by not carrying out proper
work though informed and warned, ultimately authority was
compelled to take appropriate action and as such it is absolutely
incorrect on the part of petitioner to contend that there is
violation of any principle of natural justice.
19. Learned advocate Mr. Gandhi has submitted that violation
of principle of natural justice ipso facto may not be a ground to
set at naught the action unless serious prejudice is being
established and here, on the contrary, prejudice is not only to
the public exchequer but also the people at large. On account of
petitioner's inaction, suffering has taken place to large number
of people in surrounding several villages. So much so for quite
some time, number of villages as indicated in the
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communication were deprived of water facility and still
petitioner wants that authority should observe personal hearing
which was not even sought for. Mr. Gandhi has submitted that
all these particulars of communications and meetings have been
suppressed in the petition and had it been projected properly,
which are material information, probably, the Court would not
have entertained the petition at all and that being so, conduct
on the part of petitioner is sufficient enough to oust the
petitioner from equitable consideration.
20. Learned advocate Mr. Gandhi has further submitted that
question of personal hearing would not arise since same is not
contemplated in the contract itself and further same was not
sought for by the petitioner at any point of time. In addition to
it, it has been submitted that hearing and opportunity to
represent was specifically given on same irregularities in two
meetings, i.e. meeting dated 2.9.2022 as well as 14.9.2022,
wherein representatives of petitioner were very much present.
On the contrary, they had assured to improve upon, but same
was not done. Hence, the authority was thoroughly justified in
taking action against the petitioner.
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21. Apart from this, learned advocate Mr. Gandhi has
reiterated that all these issues can well be examined by
authority which is specifically provided in the contract itself
which was readily accepted by the petitioner and as such now
cannot turn around and on hyper-technicality invoke
extraordinary equitable jurisdiction. To substantiate his
contention, learned advocate Mr. Gandhi has also drawn our
attention to the contract which has been executed between the
parties and has submitted that respondent Board has clear
authority to initiate action and for that purpose, clause No.(3)
on page 165 is referred to by learned advocate Mr. Gandhi and
then has made a further reference to an arbitration clause
available to the petitioner to redress any such kind of grievance
which is reflecting on page 185. By drawing attention to this
clause, it has been submitted that when petitioner is not made
remedy-less, in a situation like this where serious of infirmities
are reflecting at the instance of petitioner, including conduct,
proper course would be to allow the petitioner to avail this
remedy of redressal through arbitration mechanism. Had there
been any blatant violation of principles of natural justice,
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probably, petitioner ought to have been allowed to invoke
extraordinary jurisdiction. But, this is not a fit case in which
petitioner may be allowed to invoke in aforesaid peculiar
background of facts. To strengthen his submission, learned
advocate Mr. Gandhi has made a reference to few decisions.
Though compilation is tendered on record, consisting of 7
decisions, but Mr. Gandhi has specifically made a reference to a
decision reported in (2012) 11 SCC 257 (paragraphs 9, 15, 30,
36, 32, 37 and 38) and decision reported in (2008) 9 SCC 31
(Paragraphs 31, 36 and 39) and thereby contended that Hon'ble
Court may not exercise equitable jurisdiction in a situation like
this, wherein petitioner was quite aware about the fact of
contemplation of debarment action against him, hence
requested to dismiss the petition.
22. Learned advocate Mr. Gandhi has further submitted that
in view of the aforesaid peculiar background of facts, judgments
which have been tried to be relied upon of Division Bench of this
Court would not be applied here, more particularly when same
are in different contextual facts, hence petition being merit-less
deserves to be dismissed and apart from that has substantially
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canvassed before us that proper course for petitioner is to avail
arbitration proceedings since Arbitral Tribunal is very much
contemplated and well accepted by petitioner in terms of the
contract.
23. As against this, in rejoinder, learned senior advocate Mr.
Mehta has submitted that in the contract itself, action of
debarment is not contemplated. At the best, it is a clause where
authority can seek liquidated damages or at the best put the
contract in abeyance for 3 years from the date fixed in all such
cases. So, by referring to clause (3), Mr. Mehta has submitted
that this debarment action is impermissible in terms of the
contract also. Mr. Mehta has placed reliance on paragraph 40 of
the decision delivered by the Division Bench of this Court in
case of Special Civil Application No.9151 of 2020 and has
submitted that despite arbitration clause is very much available,
Court can entertain petition since decision making process is
seriously in conflict with settled principle of law. By referring to
paragraph 51 from the decision delivered in Special Civil
Application No.1041 of 2018, it has been contended that case is
squarely covered and it is undisputed that no personal hearing
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was given after last notice, which is said to have been given by
respondent Board. So far as prejudice is concerned, it has been
submitted that there is absolute prejudice to the petitioner on
account of non-assignment of proper reasons and non-
compliance of principles of natural justice and for canvassing
such issue, learned senior advocate Mr. Mehta has made a
reference to paragraphs 32 and 33 of the decision reported in
(2014) 9 SCC 105.
24. In respect of issue which has been raised by learned
advocate for the respondent that petitioner has suppressed
material facts by not projecting to the earlier letters, but to
meet with the same, Mr. Mehta has submitted that all
documents need not be produced and material documents
centering around the controversy were very much produced by
petitioner and for that purpose, few pages have been referred to
and has contended that even final notice dated 5.1.2023 is also
attached by petitioner and as such simply because all letters
have not been produced, cannot treated as suppression of
material facts. On the contrary, show cause notice issued is not
indicating any fact about debarment of particular period. Had
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there been so, petitioner would have explained and met with the
same and since non-granting of opportunity has resulted into
deprivation of petitioner of making effective representation,
action is in flagrant violation of principles of natural justice. As a
result of this, contention is raised that respondent Board has not
observed well recognized principle of natural justice. Non-
assigning of reasons and its efficacy is already pointed out and
as such reiteration thereof is not required and as such Mr.
Mehta has submitted that action deserves to be quashed and set
aside only on the ground of violation of principles of natural
justice.
25. Having heard learned advocates appearing for the parties
and having gone through the material on record, few
circumstances deserve consideration before coming to ultimate
conclusion.
26. Though both sides have placed their submissions at length
even on merit, but after hearing one issue which is not possible
to be confronted by learned counsels is that orders under
challenge, i.e. order dated 12.5.2023 as well as 16.5.2023, are
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reflecting no reasons. A perusal of the impugned orders at
Annexure-A (collectively), no-doubt reflects in subject column
series of conversations, but then ultimately independent reasons
in the said decision making process are not forthcoming. The
decision making process time and again, as indicated by Hon'ble
the Apex Court in catena of decisions, should be backed by valid
and detailed reasons and reasons are now recognized as a part
of principles of natural justice and as such when going through
the entire material in consonance with the impugned orders, we
feel it necessary to quote that said impugned orders are not
backed by any reasons and what transpired in the mind of
decision making authority is also not forthcoming as is evident,
and as such at this stage, we remind ourselves to the well-
recognized principle of assignment of reasons in the decision
making process which is indicated by following decisions:-
(1) Hon'ble the Apex Court in the case of Union of India and
others v. Mudrika Singh reported in 2021 SCC OnLine 1173 has
held that recording of reasons is necessary rather it is violative
of principles of natural justice and observed in paragraph-39 as
under:
"39. Following the decision in Som Datt Datta (supra), the
Constitution Bench in S N Mukherjee (supra) considered the
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provisions of the Army Act and concluded that none of the
provisions, either expressly or by necessary implication, confer a
duty on the aforesaid authorities to furnish reasons. Justice S C
Agrawal, speaking on behalf of the Constitution Bench, analysed
the provisions of the Army Act 1950 on the anvil of the principles
of natural justice:
"36. Reasons, when recorded by an administrative authority in an
order passed by it while exercising quasi-judicial functions,
would no doubt facilitate the exercise of its jurisdiction by the
appellate or supervisory authority. But the other considerations,
referred to above, which have also weighed with this Court in
holding that an administrative authority must record reasons for
its decision, are of no less significance. These considerations
show that the recording of reasons by an administrative
authority serves a salutary purpose, namely, it excludes chances
of arbitrariness and ensures a degree of fairness in the process
of decision making. The said purpose would apply equally to all
decisions and its application cannot be confined to decisions
which are subject to appeal, revision or judicial review. In our
opinion, therefore, the requirement that reasons be recorded
should govern the decisions of an administrative authority
exercising quasi-judicial functions irrespective of the fact
whether the decision is subject to appeal, revision or judicial
review. It may, however, be added that it is not required that the
reasons should be as elaborate as in the decision of a court of
law. The extent and nature of the reasons would depend on
particular facts and circumstances. What is necessary is that the
reasons are clear and explicit so as to indicate that the authority
has given due consideration to the points in controversy. The
need for recording of reasons is greater in a case where the
order is passed at the original stage. The appellate or revisional
authority, if it affirms such an order, need not give separate
reasons if the appellate or revisional authority agrees with the
reasons contained in the order under challenge.
[...]
39. The object underlying the rules of natural justice ―is to prevent
miscarriage of justice‖ and secure ―fair play in action‖. As
pointed out earlier the requirement about recording of reasons
for its decision by an administrative authority exercising quasi-
judicial functions achieves this object by excluding chances of
arbitrariness and ensuring a degree of fairness in the process of
decision-making. Keeping in view the expanding horizon of the
principles of natural justice, we are of the opinion, that the
requirement to record reason can be regarded as one of the
principles of natural justice which govern exercise of power by
administrative authorities. The rules of natural justice are not
embodied rules..........."
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(2) Paragraphs 13 and 14 of the judgment rendered in the
case of Commissioner of Income Tax- v. Rashtradoot (HUF)
reported in (2019) 5 SCC 149 read as under:-
13. This Court has consistently laid emphasis that every
order/judgment, which decides the lis between the parties,
must contain the reason(s)/ground(s) for arriving at a
particular conclusion. Indeed, what is decisive for deciding
the case is not the conclusion alone but the
reason(s)/ground(s) assigned in support of such conclusion,
which results in reaching to such conclusion.
14. In order to decide as to whether the impugned order is legally
sustainable or not, the Appellate Court is entitled to know as
to what impelled the Court below to pass such order in favour
of one party and against the aggrieved party. We find that this
requirement is missing in the impugned order of this case and
hence the interference is called for. (See− State of
Maharashtra vs. Vithal Rao Pritirao Chawan, (1981) 4 SCC
129, Jawahar Lal Singh vs. Naresh Singh & Ors., (1987) 2
SCC 222, State of U.P. vs. Battan & Ors., (2001) 10 SCC 607,
Raj Kishore Jha vs. State of Bihar & Ors., (2003) 11 SCC 519
and State of Orissa vs. Dhaniram Luhar, (2004) 5 SCC 568).
(3) Paragraphs 9 and 10 of the decision in the case of State of
Orissa and others v. Chandra Nandi reported in (2019) 4 SCC
357 read as under:-
9. The need to remand the case to the High Court has
occasioned because from the perusal of the impugned order,
we find that it is an unreasoned order. In other words, the
High Court neither discussed the issues arising in the case,
nor dealt with any of the submissions urged by the parties and
nor assigned any reason as to why it has allowed the writ
petition and granted the reliefs to the writ petitioner which
were declined by the Tribunal.
10. This Court has consistently laid down that every judicial
or/and quasi−judicial order passed by the
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Court/Tribunal/Authority concerned, which decides the lis
between the parties, must be supported with the reasons in
support of its conclusion. The parties to the lis and so also the
appellate/revisionary Court while examining the correctness
of the order are entitled to know as to on which basis, a
particular conclusion is arrived at in the order. In the absence
of any discussion, the reasons and the findings on the
submissions urged, it is not possible to know as to what led
the Court/Tribunal/Authority for reaching to such conclusion.
(See − State of Maharashtra vs. Vithal Rao Pritirao Chawan,
(1981) 4 SCC 129, Jawahar Lal Singh vs. Naresh Singh &
Ors., (1987) 2 SCC 222, State of U.P. vs. Battan & Ors., (2001)
10 SCC 607, Raj Kishore Jha vs. State of Bihar & Ors., (2003)
11 SCC 519 and State of Orissa vs. Dhaniram Luhar, (2004) 5
SCC 568).
Keeping the aforesaid proposition of law in mind, it is prima
facie established by learned counsel appearing on behalf of
petitioners that since order is unreasoned, same deserves to be
quashed and we say so that it requires to be quashed on the
basis of aforesaid well recognized proposition of law.
27. Next issue about making a request for giving personal
hearing, we are not impressed by such submission of learned
advocate appearing on behalf of petitioners that neither terms
of the contract are envisaging any such opportunity of personal
hearing nor admittedly, same is requested so far by petitioners
at any point of time, more particularly during the personal visits
and conversations and series of correspondences and we found
that with respect to these infirmities for which action is
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initiated, opportunity of personal representation was already
given and which opportunity is already availed by petitioners
and as such question of grant of personal hearing in this
peculiar background of facts we are not inclined to consider. At
this stage, we may refer to certain observations made by
Hon'ble the Apex Court in paragraphs 13, 15 and 21 of a
judgment in the case of Oriental Bank of Commerce and
Another v. R.K. Uppal, reported in (2011) 8 SCC 695, wherein it
has been held that personal hearing cannot be a matter of right.
Paragraphs are reproduced hereunder:-
"13. This is what this Court said (at page 464) in Mahendra Kumar
Singhal:
"2. Heard counsel on both sides. The respondent was visited with
the punishment of dismissal from service. He filed a
departmental appeal which came to be dismissed, whereupon he
moved the High Court by way of a writ petition. The High Court
quashed the order of the appellate authority on the ground that
no personal hearing was given before the appeal was dismissed.
The matter was, therefore, remitted to the appellate authority to
dispose of the appeal after hearing the delinquent personally. It
is against the said order that the present appeal is filed.
3. No rule has been brought to our attention which requires the
appellate authority to grant a personal hearing. The rule of
natural justice does not necessarily in all cases confer a right of
audience at the appellate stage. That is what this Court observed
in F.N. Roy v. Collector of Customs, Calcutta [1957 SCR 1151 =
AIR 1957 SC 648]. We, therefore, think that the impugned order
is not valid. Our attention was, however, drawn to the decision in
Mohinder Singh Gill v. Chief Election Commissioner, New Delhi
[(1978) 1 SCC 405] wherein observation is made in regard to the
right of hearing. But that was not a case of a departmental
inquiry, it was one emanating from Article 324 of the
Constitution. In our view, therefore, those observations are not
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pertinent to the facts of this case."
15. This Court held (at pages 74-75) as under :
"5. The High Court has primarily considered the question as to
whether denying an opportunity to the appellant to be heard
before his prayer to dispense with the deposit of the penalty is
rejected, violates and contravenes the principles of natural
justice. In that connection, several judgments of this Court have
been referred to. It need not be pointed out that under different
situations and conditions the requirement of compliance of the
principle of natural justice vary. The courts cannot insist that
under all circumstances and under different statutory provisions
personal hearings have to be afforded to the persons concerned.
If this principle of affording personal hearing is extended
whenever statutory authorities are vested with the power to
exercise discretion in connection with statutory appeals, it shall
lead to chaotic conditions. Many statutory appeals and
applications are disposed of by the competent authorities who
have been vested with powers to dispose of the same. Such
authorities which shall be deemed to be quasi-judicial authorities
are expected to apply their judicial mind over the grievances
made by the appellants or applicants concerned, but it cannot be
held that before dismissing such appeals or applications in all
events the quasi-judicial authorities must hear the appellants or
the applicants, as the case may be. When principles of natural
justice require an opportunity to be heard before an adverse
order is passed on any appeal or application, it does not in all
circumstances mean a personal hearing. The requirement is
complied with by affording an opportunity to the person
concerned to present his case before such quasi-judicial
authority who is expected to apply his judicial mind to the issues
involved. Of course, if in his own discretion if he requires the
appellant or the applicant to be heard because of special facts
and circumstances of the case, then certainly it is always open to
such authority to decide the appeal or the application only after
affording a personal hearing. But any order passed after taking
into consideration the points raised in the appeal or the
application shall not be held to be invalid merely on the ground
that no personal hearing had been afforded. This is all the more
important in the context of taxation and revenue matters. When
an authority has determined a tax liability or has imposed a
penalty, then the requirement that before the appeal is heard
such tax or penalty should be deposited cannot be held to be
unreasonable as already pointed out above. In the case of Shyam
Kishore v. Municipal Corpn. of Delhi [(1993) 1 SCC 22] it has
been held by this Court that such requirement cannot be held to
be harsh or violative of Article 14 of the Constitution so as to
declare the requirement of pre-deposit itself as unconstitutional.
In this background, it can be said that normal rule is that before
filing the appeal or before the appeal is heard, the person
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concerned should deposit the amount which he has been
directed to deposit as a tax or penalty. The non-deposit of such
amount itself is an exception which has been incorporated in
different statutes including the one with which we are
concerned. Second proviso to sub-section (1) of Section 4-M says
in clear and unambiguous words that an appeal against an order
imposing a penalty shall not be entertained unless the amount of
the penalty has been deposited by the appellant. Thereafter the
third proviso vests a discretion in such appellate authority to
dispense with such deposit unconditionally or subject to such
conditions as it may impose in its discretion taking into
consideration the undue hardship which it is likely to cause to
the appellant. As such it can be said that the statutory
requirement is that before an appeal is entertained, the amount
of penalty has to be deposited by the appellant; an order
dispensing with such deposit shall amount to an exception to the
said requirement of deposit. In this background, it is difficult to
hold that if the appellate authority has rejected the prayer of the
appellant to dispense with the deposit unconditionally or has
dispensed with such deposit subject to some conditions without
hearing the appellant, on perusal of the petition filed on behalf of
the appellant for the said purpose, the order itself is vitiated and
is liable to be quashed being violative of the principles of natural
justice.
21. The Single Judge of the High Court referred to decisions of this
Court in Mahendra Kumar Singhal3, Jesus Sales Corporation4
and Ganesh Santa Ram Sirur5 and also the decision of Full
Bench of Punjab and Haryana High Court in Ram Niwas Bansal2.
The Single Judge also referred to few decisions of other High
Courts and followed the proposition propounded by this 7 2006
LAB. I.C. 1384 Court in Mahendra Kumar Singhal3 viz; that in
the absence of the specific requirement by the relevant rules,
there is no right to a personal hearing at the appellate stage and
the rules of natural justice do not require that in all cases a right
of audience should be provided at the appellate stage."
28. The record indicates that time and again, petitioners had
been given an instruction and by way of several letters,
petitioners had been informed to rectify and to complete the
work as same was seriously depriving such villages of benefits
for which work had been given. These notices and
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correspondences have been furnished to the petitioners
undisputedly and so much so that on account of these issues,
twice meetings had also taken place. In addition to several
correspondences, meeting was convened on 2.9.2022, reflecting
on page 564, i.e. review meeting which was scheduled at 11
O'clock at office, in which one of the representatives of
petitioners namely Mr. Ashok Patel remained personally present
and was very much posted with facts that as many as 29 villages
of Tapi district are badly affected on account of non-supply of
water. There are 23 villages of Jhankhari Juth which have been
badly affected and there are further 20 villages of Valod Juth
which were also adversely affected and as such, it is not the
case that petitioners were unaware about this damage which
has taken place on account of their infirmity and possible action
against them.
29. Further meeting was also scheduled on 14.9.2022,
reflecting on page 566, wherein in the said review meeting, not
only one representative but there are as many as three
representatives of petitioners i.e. M/s. Ranjit Buildcon Ltd.,
Ahmedabad did remain present undisputedly and were quite
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aware about the fact that on account of their inaction for one
reason or the other, villages have been badly affected and at
this stage, it is also to be noticed that knowing ground reality,
petitioners have assured to restore the work and supply water
as fast as possible. So, when all these circumstances are
brought to our notice, it cannot be said in our opinion that
petitioners were not extended any opportunity of hearing or
personal representation in any form, especially when possible
action of debarment was alredy put to notice and for which
personally they have represented and as such, in a situation like
this, request for personal hearing we are not inclined to
consider and this we say so on account of the proposition that
principles of natural justice cannot be treated as an unruly
horse in any form. So, when more than 15 such communications
were addressed by the respondent Board to the petitioners
about their infirmities and possible action against them and
petitioners have been given twice opportunity of personal
representation, as indicated above, decision making process
cannot be said to be violative on account of non-granting of any
personal hearing. We are inclined to interfere with only on
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account of one solitary circumstance that ultimate decision
making process is not reflecting any reason and as such in a
situation like this, it would be cumbersome for the Court to
examine and analyze as to what was ultimately passing in the
mind of the authority to take final decision. Hence, on this
solitary ground only, we are of the opinion that matter is
required to be relegated to the authority for proper assignment
of reasons.
30. Since twice personal meeting had taken place,
representatives of petitioners were also very much present and
projected their stand and it is thereafter impugned action was
taken and therefore, in a situation like this, extending an
opportunity of personal hearing would be of no consequence
and as held by series of decisions, principle of natural justice
cannot be extended to that extent whereby opportunity would
be repeatedly given. Hon'ble the Apex Court in a case of The
Chairman, Board of Mining Examination and Chief Inspector of
Mines and Another v. Ramjee, reported in (1977) 2 SCC 256
has held that natural justice is not an unruly horse, no lurking
land mine, nor a judicial cure-all. Observations contained in
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paragraph-13 of the said decision we deem it fit to quote
hereunder:-
"13. The last violation regarded as a lethal objection is that Board
did not enquire of the respondent, independently of the one
done by the Regional Inspector. Assuming it to be necessary,
here the respondent has, in the form of an appeal against the
report of the Regional Inspector, sent his explanation to the
Chairman of the Board. He has thus been heard and
compliance with Reg. 26, in the circumstances, is complete.
Natural justice. is no unruly horse, no lurking land mine, nor a
judicial cure-all. If fairness is shown by the decision-maker to
the man proceeded against, the form, features and the
fundamentals of such essential processual propriety being
conditioned by the facts and circumstances of each situation,
no breach of natural justice can be complained of. 'Unnatural
expansion of natural justice, without reference to the
administrative realities and other factors of a given case, can
be exasperating. We can neither be finical nor fanatical but
should be flexible yet firm in this jurisdiction. No man shall be
hit below the belt--that is the conscience of the matter.
Keeping in view the fact that said principle has been also
considered in a later judgment as well in the case of Dharampal
Satyapal Limited v. Deputy Commissioner of Central Excise,
Gauhati and others, reported in (2015) 8 SCC 519, we are of the
clear opinion that petitioners are not entitled to personal
hearing in the peculiar background of facts as indicated above,
especially when twice in personal meetings held on 2.9.2022
and 14.9.2022, opportunity was given to the petitioners
specifically and availed also. We are of setting aside the order
only on the ground of non-assignment of reasons without
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expressing any opinion on any other issues and as such, for this
limited purpose, we deem it proper to allow the petitions in
part.
31. At this stage, since we are remanding the matter back to
the authority for this limited purpose of assigning reasons, we
express no opinion on merit on any other contentions and we
express no observation or view what weighed with the authority
to take impugned action against the petitioners. It is
independently open for the authority to assign proper reasons
for arriving at a particular conclusion afresh while passing the
order on the basis of material already on record. As we have
clarified that since personal representation was already given
on contemplated action, authority need not give fresh
opportunity of personal hearing. Any observation of us may not
unduly influence the authority in taking a fresh decision for
assigning proper reasons and hence we desist ourselves to
express opinion on any other contentions which have been
raised before us at this stage. Hence, on this limited issue,
keeping in view the aforesaid issue, we may pass following
order which would meet the ends of justice:-
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ORDER
(1) Impugned communications/ orders dated 12.5.2023 as well as 16.5.2023 are hereby quashed and set aside with a consequential direction upon respondent authority, i.e. Gujarat Water Supply & Sewage Board Board (respondent No.2 herein) to pass a fresh order keeping in mind the material which is already available on record and to assign proper reasons to an ultimate conclusion.
(2) We clarify that since we have not expressed any opinion on merit either on contentions or any decision related to it, it is independently left it open to the authority to pass a fresh reasoned order on the basis of the material which is already available on record.
(3) Aforesaid exercise shall be undertaken by respondent Board within a period TWO WEEKS from date of receipt of writ of this Court.
32. With aforesaid observations and directions, present petitions stand PARTLY ALLOWED at this stage, with no order as to costs.
Page 41 of 42 Downloaded on : Sun Sep 17 01:44:32 IST 2023NEUTRAL CITATION C/SCA/10039/2023 CAV ORDER DATED: 19/08/2023 undefined
33. Since main petitions are disposed of, pending respective Civil Applications for stay also stand DISPOSED OF.
Writ to be sent forthwith.
Sd/-
(ASHUTOSH SHASTRI, J) Sd/-
(DIVYESH A. JOSHI,J) OMKAR Page 42 of 42 Downloaded on : Sun Sep 17 01:44:32 IST 2023