Afr M/S. Famous Security Services vs State Of Odisha And Others ..... Opp. ... on 13 October, 2020

[Cites 23, Cited by 1]

Orissa High Court

Afr M/S. Famous Security Services vs State Of Odisha And Others ..... Opp. ... on 13 October, 2020

Equivalent citations: AIR 2021 ORISSA 57, AIRONLINE 2020 ORI 168

Impugning unilateral cancellation of tender order no. 3232 dated 28.11.2019 and agreement dated 2 10.02.2020 by the Treasury Officer, District Treasury, Bargarh-opposite party no.3, vide letter dated 04.08.2020, the petitioner, a partnership firm, has approached this Court by way of this writ petition.

2. The factual matrix of the case, in hand, is that the Joint Director, Directorate of Treasuries and Inspection, Odisha, Bhubaneswar, vide letter dated 29.01.2019, directed the Treasury Officers of different districts to fill up vacant posts of peon in their Treasuries/Sub-Treasuries on outsourcing basis by following the provisions contained in Delegation of Financial Power Rules, 1978. Accordingly, Deputy Director, Directorate of Treasuries & Inspection Odisha, Bhubaneswar, vide letter no. 11890 dated 23.09.2019, instructed opposite party no.3 to call for tender on the recruitment of outsourced employees, as per Finance Department letter no. 37323/F dated 30.11.2018. Pursuant to such letter dated 23.09.2019, opposite party no.3, by issuing office order no. 3525 dated 28.11.2019, 3 invited sealed quotations from eligible agencies/farms having valid EPF Code, ESI in their name issued by RPFC, Odisha Circle, Service Tax registration Certificate, ESI Registration Certificate and Labour License issued by the competent authority for providing man power for WCS and Peons to work in Bargarh Treasury and Sub-Treasury under Bargarh.

2.1 The petitioner, having satisfied the eligibility criteria, submitted its tender documents. For finalization of tender process, a six-member committee was constituted including Chairman, Convener and four members. The committee evaluated the technical bids of the aspired participants in the meeting dated 27.12.2019 and out of 21 numbers of quotations, shortlisted 12 participants, including the petitioner. The list of such successful bidders in the technical bid was carried out for consideration of their financial bids. The committee in its meeting held on 13.01.2020, after evaluation of financial bids, shortlisted the petitioner as L1 bidder and accordingly decided to 4 award contract in its favour. Pursuant to such decision of the committee, on 07.02.2020 letter of intent was issued to the petitioner to assign the work of engagement of peons and watchman-cum-sweepers at the District Treasury Office and Sub-Treasury Offices at the quoted rate i.e. Rs.7748/- only and it was called upon to execute the agreement with stamp paper of Rs.100/- on or before 14.02.2020. On issuance of letter of intent dated 07.02.2020, the petitioner was issued with an work order on 10.02.2020 and agreement was also executed on the very same day between the Treasury Officer, Bargarh as the first party on one part and the petitioner as the second party on the other part for the period of one year to provide three numbers of peon and six numbers of watchman- cum-sweeper to the District Treasury, Bargarh and Sub- Treasuries located under the jurisdiction of District Treasury, Bargarh. After execution of agreement, the petitioner was directed to submit the performance security deposit amounting to Rs.93,690/- in favour of District 5 Treasury Office, Bargarh towards one month salary of its outsourcing employees, which the petitioner complied by way of fixed deposit on 28.02.2020.

2.2 After following the procedure, engagement of 9 outsourced peons and watchman-cum-sweeper was undertaken. The said fact was also intimated by the Treasury Office, Bargarh to opposite party no.2, vide letter dated 29.02.2020. Pursuant to such engagement, nine outsourced persons rendered their services for the months of March, April, May, June and July, 2020. In lieu of services provided by the personnel, the petitioner also raised the bills for each month on completion of each calendar month for the period from March, 2020 to July, 2020, but the said bills were not sanctioned, though the same were neither disputed nor denied by the opposite party authorities. Therefore, the petitioner pursued the authority to release the running bills, which are pending for last five months. But all on a sudden, the petitioner was issued with letter no. 1705 dated 04.08.2020, wherein 6 it was intimated that the tender order no. 3525 dated 28.11.2019 and agreement dated 10.02.2020 with the petitioner for engagement of nine numbers of outsourced worker to work in District Treasury, Bargarh and Sub- Treasuries under it stood cancelled w.e.f. 04.08.2020 and on the very next day i..e on 05.08.2020 the petitioner was intimated that opposite party no.3 has moved opposite party no.2, vide letter no. 1421 dated 05.08.2020, for placement of Rs.4,49,636,84 towards pending bill for the months from March, 2020 to July, 2020.

3. Mr. Asok Mohanty, learned Senior Counsel appearing along with Mr. S. Mohanty, learned counsel for the petitioner argued with vehemence and contended that cancellation of contract by impugned order dated 04.08.2020 under Annexure-12 cannot sustain in the eye of law, in view of the fact that opportunity of hearing was not given to the petitioner and, thereby, there was non- compliance of principles of natural justice and, as such, no reasons have been assigned in the order impugned. It is 7 further contended that there was no violation of any of the terms and conditions of the agreement on the part of the petitioner, as envisaged under clauses-14, 18 and 19 and, as such, nothing has been referred to in the order of cancellation, thereby, the same cannot sustain in the eye of law. It is further contended that the terms and conditions, as enumerated in the agreement dated 10.02.2020, are the basis which governs and guides both the parties to act specifically in a particular manner. Clause-26 of the agreement specifically stipulates that payment has to be made on monthly basis and even though the petitioner submitted its bill since last five months, the same has not been paid and, as such, the authority is sitting tight over the matter. It is further contended that this Court has jurisdiction to entertain this writ petition due to violation of principles of natural justice as well as fundamental rights of the petitioner, particularly when the action taken by the authority is in gross violation of Articles 14 , 19 (1)(g) of the Constitution of India. 8

4. Mr. S. Palit, learned Addl. Government Advocate appearing for the State-opposite parties, laying emphasis and justifying the impugned order of cancellation dated 04.08.2020 under Annexure-12 issued by opposite party no.3, argued with vehemence contending that since the tender was floated without approval of the competent authority, there was no illegality or irregularity in passing the order impugned cancelling the tender. It is further contended that the process by which the quotations were called was not in-conformity with the guidelines of the Finance Department Office Memorandum (FDOM) No. 37323/F dated 30.11.2018. As per the provision contained in the aforesaid guidelines, engagement of manpower for routine jobs like cleaning and sweeping, security should be made through engagement of unskilled personnel by outsourcing agencies and due permission should have been taken from the Heads of Department (i.e. opposite party no.2). As the procedure for selection was not in accordance with the Finance Department memorandum, 9 as referred to above, and also the Delegation of Financial Power Rules, 1978, opposite party no.2 directed opposite party no.3 that the tender was not in conformity with the aforesaid memorandum dated 30.11.2018 and, thereby, the action taken by the authority in cancelling the tender is well justified. He further contended that opposite parties no.1 and 2 have filed a counter affidavit, whereas opposite party no.3 has filed a separate counter affidavit admitting the factum of inviting tender and selection of the petitioner to engage personnel by outsourcing and execution of agreement and also acceptance of performance security deposit. It is also stated in the said affidavit that opposite party no.2, vide letter no.7095 dated 26.06.2020, intimated to opposite party no.3 about the defects/ irregularities committed by him in the tender process on the grounds mentioned in the intimation to opposite party no.3. Therefore, opposite party no.3 was constrained to issue the order impugned cancelling the tender and, as such, no illegality or irregularity has been committed by 10 passing the order impugned. Consequentially, he seeks for dismissal of the writ petition.

5. This Court heard Mr. Asok Mohanty, learned Senior Counsel appearing along with Mr. S. Rout, learned counsel for the petitioner; and Mr. S. Palit, learned Addl. Government Advocate appearing for the State opposite parties on virtual mode. Though the petitioner has not filed rejoinder affidavit, on query being made by this Court, Mr. Asok Mohanty, learned Senior Counsel contended that on the basis of the counter affidavit filed by the opposite parties, he wants to argue the matter and does not want to file any rejoinder affidavit. Accordingly, with the consent of learned counsel for the parties, the matter is being disposed of finally at the stage of admission.

6. Before delving into the merits of the case, this Court deems it appropriate to refer to some of the clauses of the agreement, which are relevant for the purpose of deciding this case.

"1. Under this Agreement that the contract will continue with effect from 10th Feb 2020 for a period of one year to provide peon and WCS for the Dist.Treasury and Sub-Treasury offices at Attabira, Bheden, Bhatli, Sohela, Padampur and Paikmal.

2. The agreement shall be curtailed or terminated by the authority owing to deficiency of service, sub-standard quality of manpower deployed, breach of contract etc. or change in requirements.

14. The Agreement is liable to be terminated because of non-performance, deviation of terms and conditions of contract, non-payment of remuneration of employed persons And non payment of statutory dues. The Office concerned will have no liability towards non-payment of remuneration to the persons employed by the Manpower Service Provider and the outstanding statutory dues of the service provider to statutory authorities. If any loss or damage is caused to the Office concerned by the persons deployed, the same Shall be recovered from the unpaid bills or adjusted from the Performance Security Deposit.

18. The contract can be terminated by the 1st party at any time without notice in the event of gross security risk or gross damage to the property of Treasury due to failure on part of the 2nd party in providing satisfactory service. The decision of the 1st party in this regard shall be final and binding on the 2nd party.

19. For any reason other than those mentioned in the clauses above, the contract can be terminated by either party by providing clear one month notice in writing.

26. The 1st party shall pay to the 2nd party nothing more than the mount as may be due under the contract terms. The payment will be made on monthly basis subject to deduction to 12 taxes at source wherever applicable as per the prevailing rates by A/c payee cheque or through Electronic Clearing system on submission of proper bills.

28. In case of any dispute arising out of this contract/award of work between the parties, the matter shall be referred to the court within Bargarh jurisdiction only. Arbitrator for the inquiry committee shall be appointed by the 1st party.

7. On the basis of undisputed facts, it is to be examined whether the authority is well justified in passing the order impugned under Annexure-12 dated 04.08.2020 in cancelling the tender. In the agreement dated 10.02.2020 under Annexure-7, it has been specifically mentioned that the contract will continue w.e.f. 10.02.2020 for a period of one year to provide peon and watchman-cum-sweeper for the District Treasury and Sub- Treasuries at Attabira, Bheden, Bhatli, Sohela, Padmpur and Paikmal. As per clause-2 of the agreement, the agreement shall be curtailed or terminated by the authority owing to deficiency of service, sub-standard quality of manpower deployed, breach of contract etc. or change in requirement. Therefore, clause-2 specifies the 13 grounds under which the agreement can be curtailed or terminated. Similarly, in clause-14 it has been elaborately specified that the agreement is liable to be terminated because of non-performance, deviation of terms and conditions of contract, non-payment of remuneration of employed persons and non-payment of statutory dues. As such, the office concerned would have no liability towards non-payment of remuneration to the persons employed by the manpower service provider and the outstanding statutory dues of the service provider to statutory authorities. It has been specifically mentioned that if any loss or damage is caused to the office concerned by the persons deployed, the same shall be recovered from the unpaid bills or adjusted from the Performance Security Deposit. Apart from the same, clause-18 of the agreement clearly stipulates that the contract can be terminated by the 1st party at any time without notice in the event of gross security risk or gross damage to the property of Treasury due to failure on the part of the 2nd party in 14 providing satisfactory service. The decision of the 1st party in this regard shall be final and binding on the 2nd party. As such, if all these conditions can be satisfied, for any reason other than those mentioned in clauses-2, 14 and 18, under clause-19 the contract can be terminated by either party by providing clear one month notice in writing. Under clause-26, obligation has been cast on the 1st party to pay the second party nothing more than the amount as may be due under contract terms and, as such, the payment will be made on monthly basis subject to deduction of taxes at source wherever applicable as per the prevailing rates by A/c payee cheque or through Electronic Clearing system on submission of proper bills.

8. Above being the requirement of the conditions stipulated in the agreement itself, which is binding on the parties, and examining the order vide Annexure-12 dated 04.08.2020 cancelling the tender and agreement on the touchstone of the conditions stipulated therein, the impugned action does not satisfy any of the clauses of the 15 agreement, least to say either in clauses-2, 14, 18 or even for any other reasons under clause-19. As such, the order impugned has been passed without assigning any reason. If that be so, for any other reasons, as envisaged under clause-19, a clear one month notice has to be given to the petitioner. But the order reflects that the same was passed on 04.08.2020 and the cancellation was given effect to on the very same day, i.e., 04.08.2020. Thereby, one month notice was not given to the petitioner, which violates the agreement executed between the parties. To substantiate such action, the reason for cancellation of tender has been provided in the counter affidavit filed by opposite parties no.1 and 2 stating inter alia that the total process of quotation was not in conformity with the guidelines of the Finance Department Office Memorandum (FDOM) No. 37323/F dated 30.11.2018 and, more so, permission was to be accorded for engagement of unskilled personnel as per letter no. 13562 dated 31.10.2019 of the Deputy Director, Directorate of Treasuries & Inspection, Odisha, 16 Bhubaneswar. Since the tender was floated without approval of the competent authority, the same was cancelled. But the order impugned does not reflect such reason and, therefore, by way of filing counter affidavit, reasons cannot be supplemented or supplanted to the order impugned in the writ petition. As such, the subsequent explanation given in the counter affidavit filed by opposite parties no.1 and 2 cannot be taken into consideration in view of the judgment of this Court in M/s Shree Ganesh Construction v. State of Orissa, 2016 (II) OLR 237, which has been passed by following the judgment of the apex Court in Mohinder Singh Gill v The Chief Election Commissioner, New Delhi, AIR 1978 SC

851. In paragraphs-7 and 8 of the judgment in Shree Ganesh Construction mentioned supra, this Court observed as under:-

"7. In the counter affidavit filed, the reasons have been assigned, which are not available in the impugned order of cancellation filed before this Court in Annexure-4 dated 5.2.2016. More so, while cancelling the tender, the principles of natural justice have not been complied with. It is well settled 17 principle of law laid down by the Apex Court in Mohinder Singh Gill and another v. The Chief Election Commissioner, New Delhi and others, AIR 1978 SC 851 that :

"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 beginning may by the time it comes to Court on account of a challenge, get validated by additional grounds later brought out."

8. In Commissioner of Police, Bombay v.

Gordhandas Bhanji, AIR 1952 SC 16, the Apex Court held as follows :

"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. Orders are not like old wine becoming better as they grow older."

9. In TATA Cellular v. Union of India, AIR 1996 SC 11 : (1994) 6 SCC 651, the apex Court held that a tender is an offer. It is something which invites and is 18 communicated to notify acceptance. The requisites of a valid tender are:

1. It must be unconditional.

2. Must be made at the proper place.

3. Must conform to the terms of obligation.

4. Must be made at the proper time.

5. Must be made in the proper form.

6. The person by whom the tender is made must be able and willing to perform his obligations.

7. There must be reasonable opportunity for inspection.

8. Tender must be made to the proper person.

9. It must be of full amount.

10. The petitioner, having abided the requisites of valid tender, entered into an agreement and started its performance continuously from March, 2020 to July, 2020 and, as such, the cancellation order dated 04.08.2020 does not indicate the reasons for cancellation as envisaged under clause-2, 14 and 18, even clause-19 of the contract itself. Therefore, in respect of contractual rights and obligations of the parties, the State is not relieved of its obligations to comply with the provisions of Article-14 i.e. to act justly, fairly and reasonably. The State action should be governed by reason and should be free from 19 arbitrariness. It should be just and reasonable, whether the State action is at the entering stage of the contract or during its execution of the contract or even at the conclusion stage of contract. At all stages State is bound by Article 14.

11. In Mahabir Auto Stores v. Indian Oil Corporation, AIR 1990 SC 1031 : (1990) 3 SCC 752 the apex Court took the view that the decision of the State/public authority can be impeached on the ground that the decision is arbitrary or violative of Article-14 of the Constitution on any of the grounds available in public law field. It was pointed out that if a governmental action even in the matters of entering and not entering into contracts fails to satisfy the tests of reasonableness, the same would be unreasonable and liable to be quashed by a writ Court for violation of Article 14 of the Constitution. In paragraph-

12 of the judgment, the apex Court held as follows:

"......... It appears to us that rule of reason and rule against arbitrariness and discrimination, rules of fair play and natural justice are part of the rule of law applicable in situation or action by 20 State instrumentality in dealing with citizens in a situation like the present one. Even though the rights of the citizens are in the natural of contractual rights, the manner, the method and motive of a decision of entering or not entering into a contract are subject to judicial review on the touchstone of relevance and reasonableness, fair play, natural justice, equality and non- discrimination in the type of the transactions and nature of the dealing as in the present case.

12. This Court in Prince International v. State of Orissa, AIR 1992 ORISSA 203 held that a writ Court can also be approached making a grievance about cancellation or suspension of a contract if the same be unreasonable and as such violative of Article 14 of the Constitution to be hit by the principles of natural justice.

13. The inevitable conclusion is that the Government cannot act arbitrarily at its sweet will and every activity of the Government must have a public element in it and it must therefore, be informed with reasons and guided by public interest and such activity will be liable to be tested for its validity on the touchstone of reasonableness and public interest and if it fails to satisfy the either test, it would be unconstitutional and 21 invalid. The Government cannot act arbitrarily even though the matter arises out of a contractual obligation.

14. Notwithstanding availability of alternative remedy in the agreement executed between the parties, the petitioner cannot be dislodged to approach this Court by invoking jurisdiction under Article 226 of the Constitution of India on the ground of alternative remedy.

15. In Whirlpool Corporation v. Registrar of Trade Marks, Mumbai (1998) 8 SCC 1: AIR 1999 SC 22, the apex Court held that in three clauses of cases, the alternative remedy is no bar to invoke writ jurisdiction. These are : (1) where the writ petition has been filed for the enforcement of the Fundamental Rights; (ii) where there has been a violation of the principles of natural justice; (iii) where the order or proceedings are wholly without jurisdiction of the Court or the vires of an Act is challenged.

16. It is common saying: "One tale is good till another is told". And hence comes the advice: "hear the other side". In every cause, each of the opposite parties thinks he has a right on his side and that wrong abides with his adversary.

17. The meaning of 'Audi alteram partem' is to hear the other side; hear both sides. Under the rule, a person who is to decide must give the parties an opportunity of being heard before him and fair opportunity to those who are parties in the controversy for contradicting or correcting anything prejudicial to their view.

In Union of India v. Tulsiram Patel, AIR 1985 SC 1416, the meaning of 'audi alteram partem' in its wider amplitude has been explained by the apex Court which are extracted hereunder:-

"....... audi alterim partem rule, in its fullest amplitude means that a person against whom an order to his prejudice may be passed should be informed of the allegations and charges against him, be given an opportunity of submitting his explanation thereto, have the right to know the evidence, both oral or documentary, by which the 23 matter is proposed to be decided against him, and to inspect the documents which are relied upon for the purpose of being used against him, to have the witnesses who are to give evidence against him examined in his presence and have the right to cross-examine them, and to lead his own evidence, both oral and documentary, in his defence......."

18. On perusal of the impugned order dated 04.08.2020, it does not reflect any violation of the conditions stipulated in clauses-2, 14 and 18 of the agreement and even clause-19, which stipulates that for any other reason there shall be termination of the contract by providing one month notice. As such, the order impugned has been passed on 04.08.2020 giving effect from that date only and thereby requirement of one month notice has not been complied, which clearly amounts to non-compliance of principles of natural justice.

19. The soul of natural justice is 'fair play in action' In HK (An Infant) in re, 1967 1 All ER 226 (DC), Lord Parker, CJ, preferred to describe natural justice as 'a duty to act fairly'.

In Fairmount Investments Ltd. v. Secy of State for Environment, 1976 2 All ER 865 (HL), Lord Russel of Killowen somewhat picturesquely described natural justice as 'a fair crack of the whip' In R. v. Secy. Of State for Home Affairs, ex p. Hosenball, Geoffrey Lane, LJ, 1977 3 All ER 452 (DC & CA), preferred the homely phrase 'common fairness' in defining natural justice.

Natural justice, another name of which is common sense justice, is the name of those principles which constitute the minimum requirement of justice and without adherence to which justice would be a travesty. Natural justice accordingly stands for that "fundamental quality of fairness which being adopted, justice not only be done but also appears to be done".

20. In Swadeshi Cotton Mills v. Union of India, AIR 1981 SC 818, the meaning of natural justice came up for consideration and the apex Court held as follows:- 25

"The phase is not capable of a static and precise definition. It cannot be imprisoned in the straight-jacket of cast-iron formula. Historically, "natural justice" has been used in a way, "which implies the existence of moral principles of self evident and unarguable truth", "natural justice" by Paul Jackson, 2nd Ed, page-1, In course of time, judges nurtured in the traditions of British jurisprudence, often invoked it in conjunction with a reference to "equity and good conscience".

Legal experts of earlier generations did not draw any distinction between "natural justice" and "natural law".

"Natural justice" was considered as "that part of natural law which relates to the administration of justice".

21. In Bhagwan v. Ramchand, AIR 1965 SC 1767, the apex Court held that the rule of law demands that the power to determine questions affecting rights of citizens would impose the limitation that the power should be exercised in conformity with the principles of natural justice.

22. In Mysore Urban Development Authority by its Commissioner v. Veer Kumar Jain, (2010) 5 SCC 791, the apex Court held in paragraphs 17, 18 and 19, being relevant are extracted hereunder:-

"17. We may refer to some of the decisions of this Court having a bearing on the issue. In S.L. Kapoor v. Jagmohan [(1980) 4 SCC 379] this Court rather rigidly and sternly observed: (SCC p. 395, para 24) "24. ... In our view the principles of natural justice know of no exclusionary rule dependent on whether it would have made any difference if natural justice had been observed. The non-observance of natural justice is itself prejudice to any man and proof of prejudice independently of proof of denial of 26 natural justice is unnecessary. It ill comes from a person who has denied justice that the person who has been denied justice is not prejudiced."

18. In State Bank of Patiala v. S.K. Sharma [(1996) 3 SCC 364 : 1996 SCC (L&S) 717] this Court stated that the aforesaid observation should be understood in the context of the facts of that case and in the light of the subsequent Constitution Bench judgment in ECIL v. B. Karunakar [(1993) 4 SCC 727 : 1993 SCC (L&S) 1184 :

(1993) 25 ATC 704] and C.B. Gautam v. Union of India [(1993) 1 SCC 78] . This Court observed: (S.K. Sharma case [(1996) 3 SCC 364 : 1996 SCC (L&S) 717] , SCC pp. 385 & 391, paras 28 & 33) "28. The decisions cited above make one thing clear viz. principles of natural justice cannot be reduced to any hard-and-fast formulae. As said in Russell v. Duke of Norfolk [(1949) 1 All ER 109 (CA)] way back in 1949, these principles cannot be put in a straitjacket. Their applicability depends upon the context and the facts and circumstances of each case. (See Mohinder Singh Gill v. Chief Election Commr. [(1978) 1 SCC 405] .) The objective is to ensure a fair hearing, a fair deal, to the person whose rights are going to be affected.

***

33. (6) While applying the rule of audi alteram partem (the primary principle of natural justice) the court/tribunal/authority must always bear in mind the ultimate and overriding objective underlying the said rule viz. to ensure a fair hearing and to ensure that there is no failure of justice. It is this objective which should guide them in applying the rule to varying situations that arise before them."

19. Ensuring that there is no failure of justice is as important as ensuring that there is a fair hearing before an adverse order is made. This Court in Roshan Deen v. Preeti Lal [(2002) 1 SCC 100 : 2002 SCC (L&S) 97] held: (SCC p. 106, para 12) "12. ... Time and again this Court has reminded that the power conferred on the High Court under Articles 226 and 227 of the Constitution is to advance justice and not to thwart it (vide State of U.P. v. District Judge, Unnao [(1984) 2 SCC 673] ). The very purpose of such constitutional powers being conferred on the High Courts is that no man should be subjected to injustice by violating the law. The lookout of the High Court is, therefore, not merely to pick out any error of law through an academic angle but to see whether injustice has resulted on account of any erroneous interpretation of law. If justice became the by-product of an erroneous view of law 27 the High Court is not expected to erase such justice in the name of correcting the error of law."

23. In Jayendra Vishnu Thakur v. State of Maharashtra and another, (2009) 7 SCC 104, the apex Court in paragraph-57 held as follows:-

"57. Mr Naphade would submit that the appellant did not suffer any prejudice. We do not agree. Infringement of such a valuable right itself causes prejudice. In S.L. Kapoor v. Jagmohan[(1980) 4 SCC 379] this Court clearly held: (SCC p. 395, para 24)

"24. ... In our view the principles of natural justice know of no exclusionary rule dependent on whether it would have made any difference if natural justice had been observed. The non-observance of natural justice is itself prejudice to any man and proof of prejudice independently of proof of denial of natural justice is unnecessary. It ill comes from a person who has denied justice that the person who has been denied justice is not prejudiced."

24. The order impugned in Annexure-12 dated 04.08.2020 does not show any reason for cancellation of contract and agreement.

Franz Schubert said-

"Reason is nothing but analysis of belief."

In Black's Law Dictionary, reason has been defined as a-

"faculty of the mind by which it distinguishes truth from falsehood, good from evil, and which enables 28 the possessor to deduce inferences from facts or from propositions."

It means the faculty of rational thought rather than some abstract relationship between propositions and by this faculty, it is meant the capacity to make correct inferences from propositions, to size up facts for what they are and what they imply, and to identify the best means to some end, and, in general, to distinguish what we should believe from what we merely do believe.

Therefore, reasons being a necessary concomitant to passing an order allowing the authority to discharge its duty in a meaningful manner either furnishing the same expressly or by necessary reference.

25. "Nihil quod est contra rationem est licitum"

means as follows:

"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), 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 Food (1968) 1 All E.R. 694, it has been held that a failure to give reasons may permit the Court to infer that the decision was reached by the reasons of an error in law.

26. 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 30 based and the actual conclusions. They disclose how the mind is applied to the subject-matter for a decision 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 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 in Uma Charan v. State of Madhya Pradesh, AIR 1981 SC 1915.

27. In Travancore Rayons Ltd. v. The Union of India, AIR 1971 SC 862 it is observed by the apex Court 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 31 functions is obvious. When judicial power is exercised by an authority normally performing executive or administrative functions, the Supreme 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.

28. Considering the factual and legal aspects, as discussed above, this Court comes to a definite conclusion that the order impugned dated 04.08.2020 under Annexure-12 has been passed without complying the principles of natural justice and as such without 32 assigning any reason, which tantamount to violating Articles 14 and 19(1)(g) of the Constitution of India. Therefore, the order dated 04.08.2020 under Annexure-12 cannot sustain in the eye of law and is liable to be quash and is hereby quashed. Consequentially, opposite party no.3 is directed to allow the petitioner immediately to perform its remaining period of contract till 09.02.2021 or allow it to continue ptill the period is expired, subject to conditions stipulated in the agreement itself and pay the dues regularly in terms of clause-26 thereof.

29. In view of the above, the writ petition is allowed. However, there shall be no order as to costs.

(DR. B.R. SARANGI)                            (MOHAMMAD RAFIQ)
     JUDGE                                     CHIEF JUSTICE



G.D.Samal, APS/
A.K.J. Mohapatra, P.A.
A.K. Rana,Sr.Steno.

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