Madhya Pradesh High Court
M/S Ranjit Buildcon Limited vs The State Of Madhya Pradesh on 27 January, 2020
Equivalent citations: AIRONLINE 2020 MP 33
Author: Chief Justice
Bench: Ajay Kumar Mittal, Chief Justice
WP No.7831/2019
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THE HIGH COURT OF MADHYA PRADESH: JABALPUR
(DIVISION BENCH)
W.P. No.7831/2019
Petitioner : M/s Ranjit Buildcon Limited
Vs.
Respondents : State of Madhya Pradesh and others
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Coram:
Hon'ble Shri Justice Ajay Kumar Mittal, Chief Justice
Hon'ble Shri Justice Vijay Kumar Shukal, Judge
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Shri Naman Nagrath, Senior Advocate with Shri Jubeen Prasad
Advocate for the petitioner.
Shri Praveen Dubey, Dy. Advocate General for the respondents/State.
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ORDER (Oral)
{ 27.1.2020 } Per: Ajay Kumar Mittal, Chief Justice:
Challenge in the present writ petition filed under Article 226 of the Constitution of India is to an order dated 13.3.2019 (Annexure P-17) passed by Respondent No.3, Chief Engineer, Public Works Department, Bhopal (hereinafter referred to as "the PWD") whereby the petitioner Company has been blacklisted from participating directly or indirectly in any work with the MP PWD with immediate effect.
2. Briefly stated, the facts of the case, are that the Respondent No.3 vide Annexure P-1 dated 18.5.2018 had invited tenders for construction of an elevated corridor (Fly Over) from Damoh Naka to Ranital, Madan Mahal (Up to Medical Road) in Jabalpur city. The petitioner Company participated WP No.7831/2019
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in the tender process by submitting its bid, but the tender was not finalized. Thereafter, vide Anneuxre P-2 dated 10.8.2018 fresh offers were invited by the respondents Authorities for the same work. In pursuance thereof, the petitioner Company submitted its offer and after scrutiny and evaluation of the bid, a Letter of Acceptance dated 5.10.2018 (Annexure P-4) was issued in favour of the petitioner Company. As per the Letter of Acceptance, in terms of Clause 34.1 of Instructions to Bidders, the petitioner Company was directed to furnish performance security of Rs.34,04,71,074/- with a further condition that additional performance guarantee amount, which is to be deposited, will be informed separately. However, vide letter dated 10.10.2018 (Annexure P-5) the respondents were informed that the offer submitted by the petitioner Company was 10.54% above the rates of the tender and, therefore, the petitioner Company was not required to deposit additional performance guarantee amount. The respondents vide letter dated 31.1.2019 (Annexure P-6) demanded the petitioner to deposit the amount of Rs.26,49,32,640/- towards additional performance security. The petitioner Company raised its grievance against such demand vide letter dated 1.2.2019 (Annexure P-7). The respondents vide letter dated 5.2.2019 (Annexure P-9) again asked for depositing the performance security along with the additional performance security amount, as aforesaid.
3. To resolve this issue, a meeting was held on 14.2.2019 between the Directors of the petitioner Company and the Respondent No.2, in which the petitioner Company raised its grievance about the demand of additional performance security and it was decided that it would be appropriate to place the issue before the State Government, but till such time the petitioner has to WP No.7831/2019
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deposit the amount of additional performance security. Thereafter, the petitioner vide letter dated 15.2.2019 (Annexure P-11) brought to the notice of the respondents that in the minutes of the meeting held on 14.2.2019 some issues were not mentioned, though raised by the petitioner Company specially regarding the time limit fixed for furnishing performance security and additional performance security. The petitioner requested for including such issues in the minutes. Though the response was awaited from the respondents in this regard, the petitioner was again served with a letter dated 26.2.2019 (Annexure P-12) in which the demand of depositing the performance security and additional performance security, now within three days, was reiterated by the respondents with the default stipulation. Thereafter, vide letter dated 27.2.2019 (Annexure P-13), the petitioner again put his stand before the respondents regarding the aforesaid demand and simultaneously asked for some more time so that the dispute can be resolved amicably.
4. It is stated that awaiting response from the respondents Authorities and feeling aggrieved by such demand, the petitioner approached this Court by preferring W.P. No.5016/2019 and the same is pending consideration before the Court. In the meanwhile, the petitioner again approached the respondents to reconsider the demand so made, but at the same time, the respondents Authorities had invited fresh offer for the same project vide NIT dated 6.3.2019 (Annexure P-15). It is thereafter, the respondents Authorities issued the impugned order dated 13.3.2019 whereby the petitioner Company has been put in the blacklist. Being aggrieved by the said order of blacklisting, the present petition has been filed by the petitioner. WP No.7831/2019
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5. Learned senior counsel appearing for the petitioner Company submitted that vide letter dated 27.2.2019 a request was made to the respondents Authorities to reconsider the demand of performance guarantee and additional performance guarantee, but no response has been received so far in that regard. It was argued that non-execution of the agreement and the demand of furnishing the additional security, without giving any response on the aforesaid letter of the petitioner Company, is illegal and in violation of the terms of the tender. Learned counsel drew our attention towards the impugned order to contend that a perusal of the same goes to show that the order of blacklisting is for indefinite period, which ought not to have been done. Further, prior to passing of the impugned order, no show cause notice or opportunity of hearing was provided to the petitioner Company. On these premises, it was argued that the impugned order not only suffers from the vice of non-application of mind but it also violates the principles of natural justice as the petitioner has not been afforded adequate opportunity of hearing before passing the impugned order. According to the learned senior counsel, if the impugned order of blacklisting is not set aside, it will cause serious prejudice to the petitioner Company and therefore, the present petition may be allowed.
6. On the other hand, learned Dy. Advocate General appearing for the respondents-State contended that the order of blacklisting has been passed due to failure of the petitioner Company in executing the agreement within the time limit as was mentioned in the Letter of Acceptance. It was urged that the respondents Authorities by way of repeated demand letters had given ample opportunities to the petitioner Company to furnish performance WP No.7831/2019
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security as well as additional performance security, but the petitioner Company failed to furnish the same. Further, the petitioner was having the remedy of filing an appeal before the Engineer-in-Chief within 90 days from the date of passing of impugned order. Contending thus, it was prayed that no interference is called for in the impugned order of blacklisting as the same was passed after giving adequate opportunities to the petitioner and the said decision has been taken in public interest.
7. When a commercial Firm is put in the blacklist, it entails serious civil consequences for the Firm and at the same time it affects the reputation of the Firm, which is a drastic step to be taken against a person. In such a situation, the State is expected to proceed with care and responsibility before blacklisting any Firm. It is a trite law that the parties who are adversely affected by an order, should have a right of being heard against the same and in such circumstances, the principles of natural justice must be adhered to.
8. The Apex Court in the case of Canara Bank v. V.K. Awasthy, (2005) 6 SCC 321, has held that the natural justice is another name of common sense justice. The Rules of natural justice are not codified canons. But they are principles ingrained into the conscience of man. The expressions 'natural justice' and 'legal justice' do not present a watertight classification. It is the substance of justice which is to be secured by both, and whenever legal justice fails to achieve this solemn purpose, natural justice is called in aid of legal justice. The relevant extracts of the said decision read as under:-
"8. Natural justice is another name for common-sense justice. Rules of natural justice are not codified canons. But they are principles ingrained into the conscience of man. Natural justice is the administration of WP No.7831/2019
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justice in a common-sense liberal way. Justice is based substantially on natural ideals and human values. The administration of justice is to be freed from the narrow and restricted considerations which are usually associated with a formulated law involving linguistic technicalities and grammatical niceties. It is the substance of justice which has to determine its form.
9. The expressions "natural justice'' and "legal justice'' do not present a water-tight classification. It is the substance of justice which is to be secured by both, and whenever legal justice fails to achieve this solemn purpose, natural justice is called in aid of legal justice. Natural justice relieves legal justice from unnecessary technicality, grammatical pedantry or logical prevarication. It supplies the omissions of a formulated law. As Lord Buckmaster said, no form or procedure should ever be permitted to exclude the presentation of a litigants' defence.
10. The adherence to principles of natural justice as recognized by all civilised States is of supreme importance when a quasi-judicial body embarks on determining disputes between the parties, or any administrative action involving civil consequences is in issue. These principles are well settled. The first and foremost principle is what is commonly known as audi alteram partem rule. It says that no one should be condemned unheard. Notice is the first limb of this principle. It must be precise and unambiguous. It should apprise the party determinatively of the case he has to meet. Time given for the purpose should be adequate so as to enable him to make his representation. In the absence of a notice of the kind and such reasonable opportunity, the order passed becomes wholly vitiated. Thus, it is but essential that a party should be put on notice of the case before any adverse order is passed against him. This is one of the most important principles of natural justice. It is after all an approved rule of fair play. The concept has gained significance and shades with time. When the historic document was made at Runnymede in 1215, the first statutory recognition of this principle found its way into the "Magna Carta''. The classic exposition of Sir Edward Coke of natural justice requires to "vocate interrogate and adjudicate''. In the celebrated case of Cooper v. Wandsworth Board of Works, (1863) 143 ER 414 the principle was thus stated:
"[E]ven God himself did not pass sentence upon Adam, before he was called upon to make his defence, 'Adam' (says WP No.7831/2019
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God), 'where art thou? Hast thou not eaten of the tree whereof I commanded thee that thou shouldest not eat?'"
Since then the principle has been chiselled, honed and refined, enriching its content. Judicial treatment has added light and luminosity to the concept, like polishing of a diamond.
11. Principles of natural justice are those rules which have been laid down by the courts as being the minimum protection of the rights of the individual against the arbitrary procedure that may be adopted by a judicial, quasi-judicial and administrative authority while making an order affecting those rights. These rules are intended to prevent such authority from doing injustice."
9. This aspect of the matter has also been considered by the Supreme Court in the case of M/s Kranti Associates Pvt. Ltd. and another v. Sh. Masood Ahmed Khan and others, (2010) 9 SCC 496 wherein it is laid down that judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially. It is further held that insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done, it must also appear to be done as well. The relevant extracts from the said judgment are reproduced as under:-
"14. The expression "speaking order" was first coined by Lord Chancellor Earl Cairns in a rather strange context. The Lord Chancellor, while explaining the ambit of writ of certiorari, referred to orders with errors on the face of the record and pointed out that an order with errors on its face, is a speaking order. (See pp. 1878-97, Vol. 4 Appeal Cases 30 at 40 of the Report).
15. This Court always opined that the face of an order passed by a quasi-judicial authority or even an administrative authority affecting the rights of parties, must speak. It must not be like the 'inscrutable face of a sphinx'.
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47. Summarising the above discussion, this Court holds:WP No.7831/2019
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(a) In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially.
(b) A quasi-judicial authority must record reasons in support of its conclusions.
(c) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well.
(d) Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power.
(e) Reasons reassure that discretion has been exercised by the decision-maker on relevant grounds and by disregarding extraneous considerations.
(f) Reasons have virtually become as indispensable a component of a decision-making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies.
(g) Reasons facilitate the process of judicial review by superior courts.
(h) The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the lifeblood of judicial decision-making justifying the principle that reason is the soul of justice.
(i) Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants' faith in the justice delivery system.
(j) Insistence on reason is a requirement for both judicial accountability and transparency.
(k) If a Judge or a quasi-judicial authority is not candid enough about his/her decision-making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism.WP No.7831/2019
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(l) Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or 'rubber-stamp reasons' is not to be equated with a valid decision-making process.
(m) It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision-making not only makes the judges and decision-makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor (1987) 100 Harward Law Review 731-37).
(n) Since the requirement to record reasons emanates from the broad doctrine of fairness in decision-making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See Ruiz Torija v. Spain (1994) 19 EHRR 553, at 562 para 29 and Anya vs. University of Oxford, 2001 EWCA Civ 405 (CA), wherein the Court referred to Article 6 of the European Convention of Human Rights which requires, "adequate and intelligent reasons must be given for judicial decisions".
(o) In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "Due Process".
10. The similar view has been reiterated by this Court in the case of M/s Aicons Engineering Pvt. Ltd. vs. State of M.P. & others) decided on 5.11.2019 in W.P. No.22807/2019 wherein this Court took note of the above pronunciation of law by the Supreme Court in the cases of Canara Bank (supra) and M/s Kranti Associates Pvt. Ltd. (supra).
11. Apparently, in the present case, no show cause notice was issued to the petitioner with regard to blacklisting in respect of which the impugned order has been passed. Further, it does not satisfy the test of being a reasoned speaking order.
WP No.7831/2019
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12. In view of the foregoing reasons, the present petition is allowed and the order dated 13.3.2019 (Annexure P-17) is hereby quashed. However, liberty is granted to the respondents to pass a fresh speaking order in accordance with law after affording an opportunity of hearing to the petitioner. Needless to say, anything observed hereinbefore, shall not be construed as expression of opinion on the merits of the controversy.
(Ajay Kumar Mittal) (Vijay Kumar Shukla)
Chief Justice Judge
Anchal
Digitally signed by
ANCHAL KHARE
Date: 2020.02.01
13:10:06 +05'30'