Andhra Pradesh High Court - Amravati
Underwater Services Company Limited, vs Costal Marine Construction And ... on 18 October, 2022
Author: Prashant Kumar Mishra
Bench: Prashant Kumar Mishra
HIGH COURT OF ANDHRA PRADESH: AMARAVATI
HON'BLE MR. JUSTICE PRASHANT KUMAR MISHRA, CHIEF
JUSTICE
&
HON'BLE MR. JUSTICE D.V.S.S. SOMAYAJULU
WRIT APPEAL Nos.650 and 660 of 2022
W.A.No.650 of 2022-10-13
Hindustan Petroleum Corporation Ltd.,
Visakha Refinery,Post Bag 15,
Malkapuram Visakhapatnam 530 011,
Andhra Pradesh.
.. Appellant
Versus
Coastal Marine Construction & Engineering Ltd.,
(a company incorporated under the
cCompanies Act,1956) and having its office
at 402 Madhava Plot No.C4, E Block,
Bandra Kurla Complex,
Bandra East Mumbai - 4000512,
Rep., by its authorized signatory and another
.. Respondents
Counsel for the appellant : Sri K.S.Murthy for
Sri Sreekanth Reddy Ambati
Counsel for the respondents : Sri S.Sriram for
Sri Sai Sanjay Suraneni
2
COMMON JUDGMENT
Date: 18.10.2022 (per D.V.S.S.Somayajulu, J) These writ appeals are filed questioning the order dated 04.08.2022 in W.P.No.15139 of 2022.
2) This Court has heard Si K.S.Murthy, learned senior counsel appearing for the appellant in W.A.No.650 of 2022, Dr. Sujay Kantawala, learned counsel appearing for appellant in W.A.No.660 of 2022 and Sri S.Sri Ram, learned senior counsel on behalf of Sri Sai Sanjay Suraneni, learned counsel for the writ petitioner/respondent No.1 in both the appeals.
3) The services of the writ petitioner/contractor were engaged by the appellant/HPCL for the work of operation and maintenance for Single Point Mooring system at the Visakha refinery. Alleging that the action/inaction of the writ petitioner caused loss of human life and an oil spill etc., the writ petitioner was black listed for three years. In the technical parlance of the HPCL, it is known as "holiday listing". By virtue of this holiday listing, the writ petitioner was prevented from participating in tenders for a period of three years by the initial order. Later, in the course of 3 hearing by the appellate authority, this holiday listing period was reduced to one year. Challenging the said holiday listing orders of three years and one year respectively, the writ petition was filed. The same came to be allowed. Hence, the writ appeals.
4) Sri K.S.Murthy, learned senior counsel, points out that the order passed by the learned single Judge is not correct in holding that an ex parte order was passed. Learned senior counsel also points out that the learned single Judge also committed an error in holding that there are no 'reasons' given in the said order and that there is a failure of natural justice. It is also pointed out that learned single Judge committed an error in holding that clause 8.7 of the holiday listing guidelines was not followed and that the enquiry should have been completed within six months.
5) Learned senior counsel points out by relying upon the chronology of dates that the first show cause notice was issued to the writ petitioner on 26.02.2021. After considering the replies that were given by the writ petitioner, a final order dated 03.11.2021 was passed. Thereafter, an appeal was filed by the writ petitioner before the Executive Committee on 4 03.12.2021. After a personal hearing was given, final order was passed on 09.05.2022. Learned counsel laid great stress on the contents of the two orders dated 03.11.2021 and 09.05.2022. He submits that both the orders are reasoned orders and that the issues raised by the writ petitioner were considered and orders were passed. He also points out that the initial authority debarred the writ petitioner from future contracts for a period of three years, whereas the appellate authority reduced this period to one year. He also points out that both of these orders run into pages and have considered the issues raised.
6) Learned senior counsel also submits that clause 8.7 which is relied upon by the learned single Judge is not a mandatory clause and that the writ petitioner also did not raise a dispute that the enquiry was not completed within the stipulated time.
7) Relying upon N.G.Projects Limited v. Vinod Kumar Jain and others1, learned senior counsel submits that even if the action taken was wrong or contrary to law, the writ 1 (2022) 6 SCC 127 5 petitioner can sue for damages. Further, relying upon the State of Odisha and others v. Panda Infraproject Limited2, learned counsel argues that holiday listing or debarment is necessary for disciplining contractors who commit acts of omission and that the Court should not easily involve itself in such matters or exercise powers under 226 by quashing or setting aside the order.
8) Learned counsel lastly submits that the rules of natural justice are in fact followed as is visible from the show cause notices and the replies which were given.
9) In reply to this, Sri Sri Ram, learned senior counsel appearing for the writ petitioner (first respondent) in the appeal argued the matter at length. He points out that the order of the learned single Judge is correct. It is his contention that the essential issues that are raised have not been considered by the respondent authorities when they had passed the order. He also relies upon para 31 of the judgment reported in Gullapalli Nageswara Rao and others v. Andhra Pradesh State Road Transport 2 (2022) 4 SCC 393 6 Corporation and another3 to argue that one person heard the matter and another person has decided the issue and also of bias and a preconceived mind. He points out that in the order dated 09.05.2022 an Executive Committee was appointed to give a hearing, but the order was in fact passed by the Secretary. He also points out that Sri Ramakrishnan Ramanathan is the Officer who issued the first notice dated 26.02.2021, wherein he had already come to a conclusion that the root cause of the accident was the conduct of the writ petitioner. It is pointed out that the same Officer also issued second show cause notice dated 27.04.2021, wherein conclusions were already reached. Therefore, he submits that the show cause notice dated 27.04.2021 was an empty formality. Lastly, he points out that the same Officer also participated in the deliberations resulting in the final order that was passed. He submits that there is a failure of rules of natural justice and the same Officer who has also come to certain clear conclusions participated in the subsequent deliberations also. He submits that although the order is signed by somebody else, the participation of the same Officer 3 AIR 1959 SC 308 7 vitiates the entire procedure. He also states that adequate and proper reasons are not given and many of the issues raised by the writ petitioner are in fact not answered in the impugned orders. It is also submitted that the order of black listing has serious civil consequences and therefore, the orders should be passed in a fair and transparent manner. Learned senior counsel also submits that time frame for such matters stipulated in the holiday listing guidelines were not followed. He points out that the process should have been completed within six months and the initial process of black listing or holiday listing should have been completed within six months and the appeal should have been disposed within 45 days. Neither of these time lines were followed and hence he argues the action is vitiated. He also points out that the Enquiry Committee appointed by the HPCL has pointed out that there are system failures on the part of HPCL also and this is not considered in the impugned orders. Therefore, the learned senior counsel argues that the order of the single Judge does not suffer from any anomalies for this Court to interfere.
8
10) This Court after hearing all the learned counsel notices that certain facts are not in dispute. An accident did occur in August, 2019 when the vessel KALLIOPI was discharging oil at the Single Point Mooring. Thereafter, a vessel called KOHINOOR was dispatched by the petitioner to control the oil spill. In addition, another vessel M.V. COASTAL JAGUAR was also deputed there. However, on the second day i.e. on 12.08.2019, a fire broke out on the second vessel COASTAL JAGUAR resulting in the loss of four lives.
11) The first show cause notice was issued on 26.02.2021 to the writ petitioner. The writ petitioner gave a reply dated 22.03.2021 to which a further notice dated 27.04.2021 was issued. Thereafter, the writ petitioner gave a reply dated 29.05.2021. A final notice was issued by HPCL on 30.09.2021.
12) The first order of holiday listing was passed on 03.11.2021. A reading of this order dated 03.11.2021 which is signed by the Chief General Manager, Material shows that the notices and replies were considered. The conclusions are found in paras 4 (a) to (e) of the said letter. In the last para it was also clearly pointed by the Officer concerned that the 9 condition of the vessel M.V. COASTAL JAGUAR was not perfectly seaworthy and that it did not have proper clearances. The use of the vessel COASTAL JAGUAR was insisted because the earlier vessel KOHINOOR was not capable of handling the situation. The root cause of the fire accident was said to be the action of the writ petitioner in deploying an uncertified and unseaworthy vessel. This is reiterated more than once and also in the penultimate para of the order.
13) Thereafter, an appeal was filed on 03.12.2021 by the writ petitioner-Contractor. Personal hearing was afforded to the Contractor and the final order was passed on 09.05.2022. A reading of this order makes it clear that the Contractor was represented by a legal consultant who was assisted by three other officials. The contentions raised by the Contractor/writ petitioner were discussed in paras 1 to 11. Again it is reiterated that the vessel M.V. COASTAL JAGUAR was not seaworthy and should not have been used. It was also noticed that the parting of the breakaway couplings occurred on 11.08.2019, whereas fire accident occurred on 12.08.2019 when the vessel M.V. COASTAL JAGUAR was deputed. Other 10 reasons are also given. Ultimately, the holiday listing or the black listing was reduced to one year with effect from 03.11.2021 from the earlier period of three years.
14) One of the main grounds urged by Sri K.S.Murthy learned senior counsel is that these are reasoned orders and that the rules of natural justice were followed.
15) The law on the subject is also very well settled. Rules of natural justice cannot be put in a straitjacket formula. The first and most essential rule of natural justice is 'audi alteram partem' or hearing a party before passing an order. This 'hearing' can be through a written show cause notice and reply and/or oral hearing. This depends on the rule position/contract conditions and/or the facts of each case. The following judgments are referred to:
i) Ajit Kumar Nag v. General Manager (P.J.), Indian Oil Corporation Ltd., Haldia and Ors.4
ii) Sahara India (Firm), Lucknow v. Commissioner of Income Tax, Central-I and Ors.5. 4
2005 (7) SCC 764 5 2008 (14) SCC 151 11 Since the law is well settled, the same is not being reproduced in extenso.
16) If the orders are viewed against the backdrop of this case law, it is clear that the issues raised were considered and thereafter conclusions were reached. It is to be borne in mind that the Officer who passed the first order dated 03.11.2021 or the members of Executive Committee, who passed the order dated 09.05.2022 are all technical people and are not trained judicial Officers. They have assigned reasons for the conclusions. Hence, the finding that the impugned orders suffer from lack of reasons or a failure of natural justice is not correct in the circumstances. This Court therefore holds that there is compliance with the rules of natural justice. Notices were given and the issues raised in the replies were considered. Sufficient reasons are visible and the order cannot be called an unreasoned order. Lastly, the finding that it is an ex parte order is also not correct. Opportunity was given and the reply to the show cause notices were considered. It is also mentioned in para 16 of the order dated 09.05.2022.
12
17) Another submission that needs to be answered is about the timeline's specified in clauses 8.7 and 10.3 of section 4 of the holiday listing guidelines. Clause 8.7 says that banning period should be completed within six months. Clause 10.3 states that the appeal should be completed within 45 days. Words like 'only'/completely etc., which would indicate that these clauses are mandatory are conspicuous by their absence. This Court finds that no penal consequences are also stipulated in either of these two clauses. These clauses do not state that if the process is not completed within the stipulated period, the action would lapse and would be deemed to have lapsed. This issue is also raised in the counter filed, wherein it is stated that these periods are not mandatory. This Court has to hold in view of language of these clauses; that they are merely directory and not mandatory. The failure to adhere to the timeline will not vitiate the entire process. This Court also notices that the writ petitioner participated in the procedures without any demur on these issues of timelines.
18) The last issue raised is about the presence of one Officer who has also participated in the deliberations of the appellate 13 authority after reaching certain conclusions earlier. This Court notices that from a reading of the order passed on 09.05.2022 that Sri Ramakrishnan Ramanathan was a member of the team which heard the writ petitioner. He was not the sole authority that heard the matter. In the rejoinder affidavit filed it was clarified that he was only posted there/sent there for the purpose of technical assistance. Even otherwise, this Court notices that neither the legal consultant nor the other Officers present on behalf of the writ petitioner raised an issue about the presence of Sri Ramakrishnan Ramanathan or his participation. The "prejudice" caused by this Officer's presence is not pleaded with certainty either. In the opinion of this Court, no prejudice is caused to the writ petitioner by the mere presence of this Officer.
19) Lastly, this Court notices that the 'Enquiry Committee' that has gone into the causes of the accident has also apportioned the blame to both the contractor (writ petitioner) and the appellant also. The deployment of M.V. COASTAL JAGUAR and using the vessel which was not ready for movement in the open sea without the requisite clearances is 14 commented upon. This report is disclosed as a material document. This accident led to death of four people. In line with the judgment in the case of Panda Infraproject Limited (2 supra), this Court has to notice the seriousness of the allegations and also the act of omission and commission on the part of the Contractor/writ petitioner. Considering the same, this Court holds that the impugned orders of holiday listing is correct.
20) In view of all of the above, the writ appeals are allowed setting aside the impugned order dated 04.08.2022. No order as to costs. As a sequel, the miscellaneous petitions if any shall stand dismissed.
PRASHANT KUMAR MISHRA, CJ D.V.S.S.SOMAYAJULU, J KLP