Karnataka High Court
M/S Krishi Infratech vs The Union Of India Represented By The ... on 16 May, 2023
Author: M. Nagaprasanna
Bench: M. Nagaprasanna
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 16TH DAY OF MAY, 2023
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
WRIT PETITION No.3197 OF 2023 (GM - TEN)
BETWEEN:
1 . M/S.KRISHI INFRATECH
NO.19, 4TH CROSS, 5TH BLOCK,
B.S.K 3RD STAGE, 3RD PHASE,
BENGALURU - 560 085.
REPRESENTED BY ITS PARTNER
M.SURYANARAYANA REDDY
THE PARTNERSHIP DEED REGISTERED
UNDER SECTION 58 (1) OF THE
INDIAN PARTNERSHIP ACT, 1932.
2 . M.SURYA NARAYANA REDDY
S/O LATE VENKATA SUBBA REDDY
AGED ABOUT 52 YEARS
NO.522, 8TH CROSS,
MCECHS LAYOUT,
DR.SHIVARAM KARANTH NAGAR,
BENGALURU - 560 077
AND ALSO AT NO.1025, 25TH CROSS,
MCECHS LAYOUT,
DR.SHIVARAM KARANTH NAGAR,
BENGALURU - 560 077.
... PETITIONERS
(BY SRI UDAYA HOLLA, SR.ADVOCATE FOR
SRI VASUDEVA NAIDU S., ADVOCATE)
2
AND:
1. THE UNION OF INDIA REPRESENTED BY
THE SECRETARY
MINISTRY OF RAILWAYS,
RAIL BHAWAN, RAISINA ROAD,
NEW DELHI - 110 001.
2. THE EXECUTIVE DIRECTOR
CIVIL ENGINEERING (G)
RAILWAY BOARD,
RAIL BHAWAN, RAISINA ROAD,
NEW DELHI - 110 001.
3. THE GENERAL MANAGER
SOUTH WESTERN RAILWAY,
GADAG ROAD, HUBLI - 580 020.
4. THE CHIEF ADMINISTRATIVE OFFICER
CONSTRUCTION
SOUTH WESTERN RAILWAY,
NO.18, MILLERS ROAD,
BENGALURU - 560 046.
5. THE DEPUTY CHIEF VIGILANCE OFFICER
SOUTH WESTERN RAILWAY,
HEAD QUARTERS OFFICE,
EAST BLOCK, VIGILANCE BRANCH,
GADAG ROAD, HUBLI - 580 020.
6. THE DEPUTY CHIEF ENGINEER/NORTH/CONSTRUCTION
SOUTH WESTERN RAILWAY,
NO.18, MILLERS ROAD,
BENGALURU - 560 046.
... RESPONDENTS
(BY SRI H.SHANTHI BHUSHAN, DSGI FOR C/R-1 TO C/R-6)
3
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED
ORDER BEARING NO.2021/CE-I/CBL/9/KRISHI INFRA TECH DATED
23/01/2023 MARKED AS ANNEXURE-B.
THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 17.04.2023, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER
The petitioners are before this Court calling in question order dated 23-01-2023 passed by the 1st respondent whereby the petitioners are banned from business with the Indian Railways.
2. For the sake of convenience petitioners would be referred to as the petitioner unless specifically referred to by their ranking and the respondents as Railways.
3. Facts in brief germane, are as follows:
The petitioner is a partnership firm engaged in the business of construction activity on contract basis for various Government organizations and claims to be in the business from 2011.
Concerning the Railways, the petitioner claims to have been the 4 recipient of several work orders and has executed all the works that were assigned by the Railways by following all norms and procedures and in compliance with necessary Rules and Regulations. The Railways on the ground that the petitioner had indulged in malpractices, executed sub-standard quality of works and had taken excess payment amounting to Rs.95,87,272/- which was in violation of certain clauses of the contract, proceedings were initiated against the petitioner and the result of the proceedings was banning the petitioner from business dealings with the Railways and also with their allied sister concerns for a period of five years. This comes to be challenged before this Court in Writ Petition No.20978 of 2022. Noticing the fact that the petitioner was not completely heard in the matter before banning from business and the order that banned the business with the petitioner did not contain reasons, this Court allowed the writ petition in part in terms of its order dated 01-12-2022 and remitted the matter back to the hands of the 2nd respondent to hear the petitioner and pass appropriate orders in accordance with law.5
4. It appears, after the aforesaid order was passed by this Court, proceedings were drawn on 23-01-2023 and an order is passed affirming the earlier order of banning of business with the Railways. It is this that again drives the petitioner to this Court in the subject petition.
5. Heard Sri Udaya Holla, learned senior counsel appearing for the petitioners and Sri H. Shanthi Bhushan, learned Deputy Solicitor General of India representing the respondents/Railways.
6. The learned senior counsel for the petitioner would vehemently contend that this Court had remitted the matter with specific directions. All those directions are flouted and the order is again completely unreasoned. There are no reasons indicated as to why the ban should be imposed and the reason for the reply of the petitioner being not satisfactory. He would again submit that there is blatant violation of the principles of natural justice inasmuch as the order is again bereft of reasons.
7. On the other hand, the learned Deputy Solicitor General of India would put up vehement opposition to the submissions 6 contending that the writ petition is not maintainable, as there is a provision for review under Clause 1020 of the Indian Railways Vigilance Manual 2018 and the petitioner will have to avail the remedy of review; without prejudice to the said submission, the learned Deputy Solicitor General of India would also take this Court through the elaborate statement of objections filed along with plethora of documents, to demonstrate that banning order against the petitioner is justified in the teeth of the allegations against them; it is the case of the learned Deputy Solicitor General of India that the construction work of the petitioner has been so poor as there are cracks on the walls in the constructed area. The learned Deputy Solicitor General of India would further emphasize on the fact that an order of banning need not contain reasons, if the fact of banning emerges from the illegality in the conduct of work done by the petitioner. Even otherwise he would contend that the objections statement contains all the reasons that are absent in the impugned order and, therefore, would seek to support the order on the strength of the statement of objections and seeks dismissal of the petition.
78. I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the available material on record.
9. To consider the aforesaid issue in the case at hand, a little history of the lis needs to be noticed. The petitioner on an identical order being passed was before this Court in Writ Petition No. 20978 of 2022 calling in question the order dated 17-10-2022 which banned business with the petitioner for a period of five years. The order read as follows:
"New Delhi, dated:17.10.2022 No.2021/CE-1/CBL/9/Krishi Infratech The General Manager, All Indian Railways PCE, CAO(C), All Indian Railways PFAs, All Indian Railways CAOs PI.W/Patiala and COFMOW/New Delhi Chief Vigilance Officers, All Indian Railways Sub:- Banning of business dealings with M/s Krishi Infratech (Partnership firm), rd th No.19, Ground Floor, 3 Floor, 4 cross, 3rd phase, 5th block, BSK 3rd stage, Bangalore - 560 085 and its allied/sister firms.8
M/s. Krishi Infratech (partnership firm) were served with a Memorandum and Statement of charges/Misconduct for banning of business dealings with them for indulging malpractices, executed substandard quality of works by deviate4d fro the contractual agreement with malafide intention causing pecuniary loss to the Railways in connivance with Railway Officials.
2. Reply to the Memorandum submitted by M/s Krishi Infratech (Partnership firm) through South Western Railway has been considered in detail by the Competent Authority. Who has concluded that M/s Krishi Infratech (Partnership firm) has indulged in malpractices. Executed substandard quality of works in connivance with Railway Officials, violationg general conditions of contract.
3. It has therefore, been decided by Ministry of Railways (Railway board) to ban business dealing with M/s Krishi Infratech (Partnership firm), No.19, Ground Floor, 3rd floor, 4th cross, 3rd phase, 5th block, BSK 3rd stage, Bangalore - 560 085 and also with their allied/sister concerns/ and partners for a period of 05 (five) years commencing with immediate effect on Indian Railways and Production Units etc.,
4. Receipt of this letter may please be acknowledge".
This Court noticing the aforesaid order bearing no application of mind, allowed the petition in part by the following order:
"14. For the aforesaid reasons, I pass the following:9
ORDER
(i) Writ Petition is allowed in part and the order dated 17-10-2022 passed by the Railways stands quashed.
(ii) The matter is remitted back to the hands of the respondent No.2 to pass appropriate orders in accordance with law, bearing in mind the observations made in the course of this order as also the justification tendered by the petitioner, in replies to the notice on 08-09-2021, 16-05-
2022 and 17-06-2022.
(iii) The petitioner shall be afforded an opportunity of hearing on all the charges where it has been affordable opportunity of hearing.
(iv) Consequential action taken pursuant to the order dated 17-10-2022 shall remain subject to further orders that would be passed by the authorities shall pass appropriate orders within four weeks from the date of receipt of a copy of this order, if not earlier.
(v) All other contentions other than the one considered hereinabove shall remain open."
(Emphasis supplied) This Court remitted the matter back to the hands of the 2nd respondent to pass appropriate orders bearing in mind the 10 observations made in the course of the order and also directed that the petitioner should be afforded an opportunity of hearing, on all the charges where it has not been afforded such opportunity.
Claiming to be in compliance of the order passed by this Court, proceedings are drawn on 23-01-2023, resulting in the impugned order. The present order reads as follows:
"In pursuance of Hon'ble High Court of Karnataka order dated 01.12.2022 in connection with Wrti Petition No.20978/2022 filed by the firm M/s Krishi Infratech (Partnership firm) following is submitted.
I. Writ petition No. 20978/2022 has been filed by the firm M/s. Krishi Infratech (Partnership firm) praying to stay the operation and implementation of banning order dated 17.10.2022 and quashing the rejection of technical bid of the firm in tender dated 18.10.2022.
II. Hon'ble High Court of Karnataka in its order dated 21.10.2022 has stayed Ministry of Railway's letter dated 17.10.2022 and all actions taken thereto, till the next hearing and also permit the firm to participate in the subject matter or any ensuing tender which would however remain, subject to the result of the petition.11
III. On behalf of Railways, Ld. ASG of India, Hon'ble High Court of Karnataka filed detailed objections countering each and every contention of the firm supported with citation of judgement of Hon'ble Supreme Court in the case of State of Odisha and Others vs. Panda Infraproject Limited and prayed for rejection of the petition as the contentions raised by the firm M/s Krishi Infratech (Partnership firm) was untenable and the petition was not maintainable.
IV. However, after Hearing the matter on both sides, Hon'ble High Court in its order dated 01.12.2022 has passed the following orders:
(i) Writ Petition is allowed in part and the order dated 17.10.2022 passed by the Railways stands quashed.
(ii) The matter regarding banning of business against the firm is remitted back to the hands of the Executive Director, Civil Engineering (G), Railway Board, Rail Bhawan, Raisina Road, New Delhi -110 001 to pass appropriate orders in accordance with law, bearing in mind the observations made in the course of this order is also the justification tendered by the petitioner, in replies to the notice on 08.09.2021, 16.05.2022 and 17.06.2022.
(iii) The petitioner shall also be afforded an opportunity of hearing on all the charges 12 where it has not been afforded opportunity of hearing.
(iv) Consequential action taken pursuant to the order dated 17.10.2022 shall remain subject to further orders that would be passed by the authorities in terms of these proceedings. The authorities shall pass appropriate orders within four weeks from the date of receipt of a copy of this order, if not earlier.
(v) All other contentions other than the one considered hereinabove shall remain open.
V. In view of Hon'ble High Court's order dated 01.12.2022, the compliance under points (ii),
(iii) and (iV) is as under:
(a) As regard the firm's representations dated 08.09.2021, 16.05.2022 and 17.06.2022, it is to submit that vide these letters, the firm had requested for an opportunity for personal hearing; the firm was given opportunity for personal hearing vide letter dated 26.07.2022 for all the charges levelled against them, which was held in Railway Board's office on 04.08.2022 wherein the firm, in person, had defended all the charges made against them.
However, the firm had again submitted a representation dated 01.08.2022 related to 13 only one charges, which was again examined in this office.
(b) Vide Ministry of Railways' letter dated 17.10.2022, the firm M/s. Krishi Infratech (Partnership firm) was banned of business dealings with the Railways in connection with following four Contract Agreements:
i) Contract Agreement No. CAO/CN/BNC/ 73816/A/170/IX/2014 dated 24.09.2014.
ii) Contract Agreement No. CAO/CN/BNC/ 73981/A/49/IX/2015 dated 16.09.2015.
iii) Contract Agreement No. CAO/CN/BNC/ 74195/A/117/III/2017 dated 02.03.2017.
iv) Contract Agreement No. CAO/CN/BNC/ 74004/A/65/XII/2015 dated 29.12.2015.
(c) The case was again examined in detail in Board's office and it was found that the firm had indulged malpractices, executed substandard quality of works, taken excess payment amounting to Rs.95,87,272/-
(Rs.60,20,731/- in contract agreement dated 16.09.2015 and Rs.35,66,541/-
in contact agreement dated 29.12.2015) in connivance with Railway Officials, violating general condition of contract resulting in endangering the safety of public at large. The charges levelled against the firm have been elaborated in the ANNEXURE. For this misconduct, it had 14 been decided to ban all business dealings with M/s Krishi Infratech (Partnership firm) and also with allied sister concerns/partners for a period of five years as per provision of 1030 of Indian Railways Vigilance manual and as per provision of sub-clause (VI) of Clause 11 of Indian Railways General Conditions of Contract.
(d) Hence, after consideration all the facts, the decision taken against the firm for banning of business with railways stand holds good."
(Emphasis supplied) The entire consideration lies in Clause (c) of paragraph V of the order. Clause (d) indicates that after consideration of all the facts, the decision taken, for banning the business with the Railways earlier 'stand holds good'. As an annexure to this order, about 60 pages are appended. On the number of pages appended, in the first blush, it would seem that there has been elaborate reasons rendered to pass the order. But alas, there is none. What all 60 pages indicate is three clauses - contract agreement;
representation of the contractor; South Western Railways 15 comments. Every page contains representation of the contractor and South Western Railways comments. This runs close to 60 pages. The decision is what is extracted hereinabove in terms of Clause (c) (supra).
10. Except clause (c) there is no consideration worth the name for a document to be in tune with law. There is not even a semblance of application of mind in the case at hand. This Court had clearly indicated that if the order would be unreasoned, it would be an unreasonable order. Notwithstanding the findings recorded by this Court, the Railways again have resorted to passing of the very same order making it appear that it is a detailed order.
It is not the pages of the order that matters in law but the content.
The content is not even present in the case at hand. Therefore, the order again suffers from the vice of non-application of mind and unreasonableness.
11. The learned Deputy Solicitor General of India in his vehement attempt to justify the action seeks to place reliance upon a judgment of the High Court of Delhi in the case of SAHNEY 16 KIRKWOOD PRIVATE LIMITED v. UNION OF INDIA1 to demonstrate that an order banning business need not contain elaborate reasons. The reliance that is placed is on paragraphs 17 to 23 and they read as follows:
"17. We have considered the submissions made by the learned Counsel for the petitioner. 'We have also gone through the record.' We find ourselves unable to be persuaded by the submissions made by learned Counsel for the petitioner.
18. At the outset, it is stated that learned Counsel for the petitioner has all along been contending that the order of black listing passed against the petitioner is bad in law. 'In our opinion, the impugned order which has been passed by the respondents cannot be said to be an order of black listing as is ex facie apparent from the order itself. The impugned order bans the petitioner to conduct any business with the respondent only for a period of 9 months and 21 days from the date of passing of the order.
19. There is a difference between the order of banning and the order of black listing. 'While as in the case of banning order there would be a period which would invariably be specified during which the party/person would suffer a disability or disqualification of conducting the business with the organization passing the order. In the case of black listing the organisation which has passed the order of black listing, prevents the party or the person from conducting the business for all times to come with it. It is totally untenable in law on part of the petitioner to urge that the impugned order is an order of black listing because it prevents the petitioner from conducting the business only for a period specified therein'. Therefore, the judgment in Erusian Equipment & Chemicals Ltd. v. State of West Bengal (supra) & Pritam Singh and Sons v. State of Punjab through Secretary (supra) are not applicable to the facts of the present case as they deal with the question of black listing.1
2008 SCC OnLine Delhi 784 17
20. Even otherwise the petitioner was given an opportunity of being heard before the impugned order was passed and thus the petitioner cannot complain that principles of natural justice which were the basis for the above judgment were violated.
21. At the time when the arguments were heard a substantial portion of the banning order had already come to an end. 'To be precise, the banning order was for a period of 9 months and 21 days and was passed on 1.11.2007. Since the substantial portion of the banning order has already come to an end by efflux of time, it may not be an appropriate case where the Court in exercise of its powers of judicial review ought to set aside the order especially when no legal infirmity has been shown in the impugned order.
22. The learned Counsel for the petitioner in support of his submission had placed reliance on Tata Cellular's case (supra) for supporting his contention that the order dated 1.11.2007 is not sustainable in the eyes of law. As a matter of fact, the judgment which has been relied upon by the petitioner, instead of supporting the case of the petitioner, supports the stand of the respondent. 'In Tata Cellular's case it has been clearly laid down by the Hon'ble Supreme Court that while exercising its power of judicial review in exercise of Article 226, the Court does not have to see the quality of decision.' The Court is called upon to only see as to how the decision is arrived at and unless and until it is shown that the decision is suffering from illegality, irrationality or procedural impropriety, the Court will not be called upon to interfere with the same. 'In the instant case also we do not find that these infractions of law having been communicated by the respondent which would warrant the interference by this Hon'ble Court'. Since the judgment in the case of DDA v. Uee Electricals Engg. (P) Ltd. (supra), is on the lines of Tata Cellular's case the same would also not be applicable to the facts of the case.
23. The petitioner has no doubt raised the question of delay in passing the orders, non-supply of documents, the decision having been taken by the authority other than the one which had given hearing or no express rules or procedure having been followed or that no reasons having been given in 18 the order itself, despite the first round of litigation. 'We have considered these alleged infractions of law by the respondent. So far as the reasons in passing the impugned order are concerned, no doubt a perusal of the impugned order shows that the order could have been worded in a better manner but by no stretch of imagination it can be said that there are no reasons'. The reason given for passing the banning order is that double payment was drawn/Therefore, the judgment in Vijay Singh Mehta's case does not come to rescue of the petitioner. In the said judgment no reasons for banning order were given which were sought to be resurrected by filing an affidavit which was not permissible keeping in view Mohinder Singh Gill's case.' The sum and substance of the reasons are given in the order itself are drawing of the public money on two different occasions in respect of same invoices."
The aforesaid case is distinguishable on the facts obtaining in the case at hand without much ado. At the time when arguments were heard by the High Court of Delhi substantial portion of banning order had already come to an end. The banning order was for a period of one year and close to 10 months had already passed by.
The Court observes that it may not be appropriate case where the Court would exercise judicial review in such a case. While doing so, the High Court observes that a perusal of the reasons assigned in the impugned order would indicate that it would have been worded better. Therefore, the said judgment would not enure to the benefit of the Railways.
1912. The respondents have filed elaborate objections and have appended plethora of documents seeking to demonstrate that the order passed against the petitioner is valid and those reasons have to be taken note of to reject the writ petition. I reject the said submission, as it is settled principle of law that orders passed by the Authorities either administrative or quasi judicial must bear reasons in the order itself and cannot be supported by affidavits when the matter reaches the Court in a challenge to the said order.
The Apex Court right from MOHINDHR SINGH GILL v. CHIEF ELECTION COMMISSIONER2 has clearly held that the order by itself should bear reasons and cannot be supported by affidavits while the matter is brought before the Court and the said judgment has been followed by the Apex Court even till recently. Therefore I deem it appropriate to notice the judgment in the aftermath of MOHINDHR SINGH GILL.
13. The Apex Court in a subsequent judgment in the case of STATE OF PUNJAB v. BANDEEP SINGH AND OTHERS3 has held as follows:
2(1978) 1 SCC 405 3 (2016) 1 SCC 724 20 "4. There can be no gainsaying that every decision of an administrative or executive nature must be a composite and self-sustaining one, in that it should contain all the reasons which prevailed on the official taking the decision to arrive at his conclusion. It is beyond cavil that any authority cannot be permitted to travel beyond the stand adopted and expressed by it in the impugned action. If precedent is required for this proposition it can be found in the celebrated decision titled Mohinder Singh Gill v. Chief Election Commr. [(1978) 1 SCC 405: (1978) 2 SCR 272] of which the following paragraph deserves extraction: (SCC p. 417, para 8) "8. The second equally relevant matter is 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. We may here draw attention to the observations of Bose, J. in Gordhandas Bhanji [Commr. of Police v. Gordhandas Bhanji, 1951 SCC 1088 : AIR 1952 SC 16 : 1952 SCR 135] : (AIR p. 18, para 9) '9. ... 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 actings 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."
... ... ...
8. In the impugned judgment, the High Court has rightly concluded that no sustainable justification and rationalisation was recorded in writing at the relevant 21 time for ordering the re-auction of only the two subject properties. However, we should not be understood to have opined that the Government is bound in every case to accept the highest bid above the reserve price. Needless to say, the presence of cartelisation or "pooling" could be a reason for the cancellation of an auction process. In addition, a challenge on the ground that the property has fetched too low a bid when compared to the prevailing market price, would also be valid and permissible provided this approach has been uniformly adhered to. In the case at hand, however, while the latter was ostensibly the reason behind the decision for conducting a fresh auction, no evidence has been placed on the record to support this contention. The highest bids, marginally above the reserve price, have been accepted in the selfsame auction. The factual scenario before us is clearly within the mischief which was frowned upon in Mohinder Singh Gill [(1978) 1 SCC 405 : (1978) 2 SCR 272] . We, therefore, uphold the impugned judgment for all the reasons contained therein. The assailed action of the appellant is not substantiated in the noting, which ought at least to have been conveyed to the respondents.
9. The bid of the respondents is already over a decade old, which is the period the present appeal has been awaiting its turn in this Court. We must, therefore, balance the equities and interest of the adversaries before us. It has been submitted by the learned Senior Counsel for the respondents that although the appellant had addressed a letter to the respondents purporting to return the sums received from them, the cheque for this amount was not enclosed with the letter. The fact remains that these sums continue to be in the coffers of the appellant. It is also submitted by the learned Senior Counsel that the balance sale consideration had been tendered by the respondents to the appellant, who declined to accept it on the premise that their appeal was pending in this Court. The learned Senior Counsel suggested that in the endeavour to do justice to all the parties before this Court, we may direct the respondents to pay the price of the land at the prevailing circle rates, which suggestion has readily been accepted by the learned counsel for the appellant with alacrity."
(Emphasis supplied) 22 The judgment in MOHINDHR SINGH GILL, is again followed by the Apex Court in 63 MOONS TECHNOLOGIES LIMITED v.
UNION OF INDIA AND OTHERS4 wherein it is held as follows:
"100. Valiant attempts have been made by counsel in the High Court as well as counsel in this Court to support the order on grounds which are outside the order, stating that such grounds make it clear that in any case, the government order has been made in public interest. The celebrated passage in Mohinder Singh Gill [Mohinder Singh Gill v. Chief Election Commr., (1978) 1 SCC 405] states that : (SCC p. 417, para 8) "8. The second equally relevant matter is 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. We may here draw attention to the observations of Bose, J.
in Gordhandas Bhanji [Commr. of Police v. Gordhandas Bhanji, 1951 SCC 1088 : AIR 1952 SC 16 : 1952 SCR 135] : (SCR p. 140 : AIR p. 18, para 9) '9. ... 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 actings and conduct of those to whom they are 4 (2019) 18 SCC 401 23 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."
We are of the view that it is the Central Government that has to be "satisfied" that its order is in public interest and such "satisfaction" must, therefore, be of the Central Government itself and must, therefore, appear from the order itself. All these valiant attempts made to sustain such order must be rejected.
101. However, the learned Senior Advocates on behalf of the respondents have cited All India Railway Recruitment Board v. K. Shyam Kumar [All India Railway Recruitment Board v. K. Shyam Kumar, (2010) 6 SCC 614 : (2010) 2 SCC (L&S) 293] , which, according to them, renders the judgment in Mohinder Singh Gill [Mohinder Singh Gill v. Chief Election Commr., (1978) 1 SCC 405] inapplicable where larger public interest is involved. In this judgment, Mohinder Singh Gill [Mohinder Singh Gill v. Chief Election Commr., (1978) 1 SCC 405] was distinguished thus : (K. Shyam Kumar case [All India Railway Recruitment Board v. K. Shyam Kumar, (2010) 6 SCC 614 : (2010) 2 SCC (L&S) 293] , SCC p. 631, paras 44-45) "44. We are also of the view that the High Court has committed a grave error in taking the view [K. Shyam Kumar v. All Railway Recruitment Boards, 2005 SCC OnLine AP 201 : (2005) 4 ALD 411] that the order of the Board could be judged only on the basis of the reasons stated in the impugned order based on the report of Vigilance and not on the subsequent materials furnished by CBI. Possibly, the High Court had in mind the Constitution Bench judgment of this Court in Mohinder Singh Gill v. Chief Election Commr. [Mohinder Singh Gill v. Chief Election Commr., (1978) 1 SCC 405]
45. We are of the view that the decision-maker can always rely upon subsequent materials to support the decision already taken when larger public interest is involved. This Court in Madhyamic Shiksha Mandal, M.P. v. Abhilash Shiksha Prasar Samiti [Madhyamic Shiksha Mandal, M.P. v. Abhilash Shiksha Prasar Samiti, 24 (1998) 9 SCC 236] found no irregularity in placing reliance on a subsequent report to sustain the cancellation of the examination conducted where there were serious allegations of mass copying. The principle laid down in Mohinder Singh Gill case [Mohinder Singh Gill v. Chief Election Commr., (1978) 1 SCC 405] is not applicable where larger public interest is involved and in such situations, additional grounds can be looked into to examine the validity of an order. The finding recorded by the High Court that the report of CBI cannot be looked into to examine the validity of the order dated 4-6-2004, cannot be sustained."
102. It will be seen that there is no broad proposition that the case of Mohinder Singh Gill [Mohinder Singh Gill v. Chief Election Commr., (1978) 1 SCC 405] will not apply where larger public interest is involved. It is only subsequent materials i.e. materials in the form of facts that have taken place after the order in question is passed, that can be looked at in the larger public interest, in order to support an administrative order. To the same effect is the judgment in PRP Exports v. State of T.N. [PRP Exports v. State of T.N., (2014) 13 SCC 692] , SCC para 8. It is nobody's case that there are any materials or facts subsequent to the passing of the final order of the Central Government that have impacted the public interest, and which, therefore, need to be looked at. On facts, therefore, the two judgments cited on behalf of the respondents have no application. Thus, it is clear that no reasonable body of persons properly instructed in law could possibly hold, on the facts of this case, that compulsory amalgamation between FTIL and NSEL would be in public interest."
(Emphasis supplied) In the light of the judgments rendered by the Apex Court right from MOHINDER SINGH GILL to 63 MOONS TECHNOLOGIES LIMITED what would unmistakably emerge is,the order which does 25 not contain any reason would on the face of it be illegal, notwithstanding the fact that the order is sought to be justified by filing statement of objections which would contain all the justification which the order had to contain. Therefore, the reasons sought to be supplied by the learned Deputy Solicitor General of India through the statement of objections or the documents placed before this Court cannot justify the order which does not bear any reasons.
14. It is trite that an order banning business must contain reasons as it entails serious civil and economic consequences upon the person against whom the said order is passed. Reference being made to a Division Bench judgment of the High Court of Bombay in SARKU ENGINEERING SERVICES SDN BHD v. UNION OF INDIA AND ANOTHER5 in the circumstances would be apposite.
The Division Bench of Bombay High Court, in the said case, has held as follows:
"35. Apex Court was pleased to further observe in this decision that, "it is also well settled that even though the right of the writ petitioner is in the nature of a contractual right, the manner, the method and the motive behind the decision of the authority whether or not to 5 2016 SCC OnLine Bom 5233 26 enter into a contract is subject to judicial review on the touchstone of fairness, relevance, natural justice, non- discrimination, equality and proportionality. All these considerations that go to determine whether the action is sustainable in law have been sanctified by judicial pronouncements of this Court and are of seminal importance in a system that is committed to the rule of law."
36. Thus, the proper and fair opportunity of hearing and showing cause is the essential concomitant of the principle of natural justice, which is required to be followed, considering the drastic, damaging and far reaching impact, which an order of black-listing or banning has on the contractor. It is in the nature of a civil death as it affects his goodwill and reputation in the business.
37. The facts of the present case, however, reveal that no such opportunity of hearing was given to the Petitioner; it may be true that the show cause notice was issued to the Petitioner before taking impugned action; however, the Petitioner has replied to the said show cause notice by taking objection to the maintainability of such action in view of pendency of arbitration proceedings. In his reply to the show cause notice, which is produced at Exhibit "BB" on Page No. 91 of the paper-book, the Petitioner has categorically stated as follows:--
"At the outset, it is stated that the said SCN refers to matters sub judice that are to the knowledge of ONGC pending adjudication by an arbitral tribunal comprising a former Chief Justice of India and two retired Judges of the Supreme Court of India, namely, Justice N. Santosh Hegde, the Presiding Arbitrator, Chief Justice V.N. Khare and Justice S.N. Variava, proceedings in which ONGC is duly participating. This SCN is hence nothing but an attempt to pressurize a litigant (Sarku) and amounts to obstruction of justice. ONGC, by this SCN (which is issued more than three and half years after contract completion), is threatening to punish Sarku for asserting Sarku's legal rights in invoking arbitration where one of the main contentions of Sarku is that the delay, if any, in 27 the due performance of the subject contract was attributable to ONGC. You are hence called upon to withdraw the said SCN.
Please note that Sarku reserves all its legal rights in this regard. Specifically, this communication is being given without prejudice to Sarku's view that this SCN is wholly malafide, without jurisdiction, given for extraneous reasons, and may amount to contempt of legal proceedings .................
Responsibility for causing delay is a matter directly and substantially at issue between the parties to the arbitration to the knowledge of ONGC. As such, any attempt by ONGC to constitute a separate enquiry conducted by your good self to enquire into and decide on a parallel basis matters that are sub judice in the arbitration would amount to a blatant attempt to overreach the arbitral tribunal. We further deny that Sarku is liable to be blacklisted or incur punishment of blacklisting by reason of its performance in the subject contract, nor can such blacklisting be done on the basis of matters that are sub judice as has been explained above. Although ONGC is actively participating in the arbitration and is in possession of the entire arbitral record, for your convenience and to appreciate that the matters are sub judice we hereby enclose the following documents which are part of the record before the arbitral tribunal. .............
We would like to reiterate and make it clear that we have not commented on the merits of the allegations made in the SCN as the very issue of delay, being the basis of issuing the SCN, is sub judice before the arbitral tribunal and therefore reserve all our rights in this regard as well."
38. The perusal of the last para of the reply to the Show Cause Notice (Exhibit "BB"), therefore, makes it abundantly clear that the Petitioner has reserved all its legal rights in this regard in view of the matter being sub judice before the Arbitration Tribunal. Thus, it is clear that the Petitioner has not given reply to the allegations made in the show cause notice on merits, but reserved all its legal rights on that score. It, 28 therefore, automatically follows that when Respondent No. 2 decided to proceed with the impugned action on the basis of the said notice, despite the issue being pending for adjudication before the Arbitration Tribunal, which contention was raised by the Petitioner, but decided to be rejected by Respondent No. 2, then, it was incumbent on the part of the Respondent No. 2 to make the Petitioner aware of the said fact and to call upon the Petitioner to reply on merits also. That would have been the proper course of following the principles of natural justice i.e. giving an opportunity of showing the real cause and also a personal hearing to the Petitioner. Instead of doing so, Respondent No. 2 chose to proceed with the further action on the said show cause notice. Respondent No. 2 did not thereafter even called upon the Petitioner to appear in person and to show cause as to why the Petitioner should not be banned from future business dealings with Respondent No. 2 and after one and a half year, proceeded to pass the impugned order, which is having the drastic consequences on the business dealings of the Petitioner, affecting not only its reputation, but also affecting the Petitioner's right to carry on business. It is fairly well settled position of law, as laid down in series of decisions of the Apex Court, one of which relied upon by the learned Senior Counsel for the Petitioner, namely, that of Kulja Industries Limited (supra), that the touchstone for judicial review of administrative action is fairness, relevance, natural justice, non- discrimination, equality and proportionality. On this touchstone the impugned action of the Respondent No. 2 cannot be upheld. In the facts of the present case, it cannot be said that the Respondent No. 2 has acted in fairness and followed the principles of natural justice of giving an opportunity to the Petitioner to show cause as to why it should not be barred from future dealings with Respondent No. 2.
39. As to the decision of the Hon'ble Supreme Court, relied upon by learned Senior Counsel for Respondent No. 2, that of Union of India v. Jesus Sales Corporation7, it deals with totally different law, facts and circumstances. In that case, the issue before the Hon'ble Supreme Court was pertaining to third Proviso to Section 4-M(1) of the Imports and Exports (Control) Act, 1947. The order impugned before the Apex Court was the rejection of the Appellants' request to dispense with the requirement of pre-deposit of the amount of penalty unconditionally or with certain conditions. The condition of oral 29 hearing before passing such order was not precedent or laid down in the section or the proviso. In the light of the said facts, it was held that the appellate authority's order directing appellants to deposit 25% of the penalty was reasonable, though no opportunity of oral hearing was given to the Appellants. It is pertinent to note that even at the time of upholding the order of the appellate authority of not extending the opportunity of oral hearing to the Appellants before passing of the impugned order, the Apex Court was pleased to observe that the discretion, which the quasi-judicial authority is having, cannot be exercised in an unfettered manner. It has to be exercised objectively in a reasonable and rational manner, taking into consideration the relevant facts and circumstances. As to the opportunity of personal hearing, in the context of principles of natural justice, the Apex Court was pleased to observe as follows:--
"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 30 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 applications shall not be held to be invalid merely on the ground that no personal hearing had been afforded. This 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."
40. Thus, this authority, in the first place, pertains to the revenue and taxation matters and, secondly, even in such matters, the Hon'ble Supreme Court has held that the principles of natural justice cannot be given go-by. It will depend on the facts and circumstances of the particular case; whether the authority has taken into consideration all the facts and circumstances of the case. Hence, even if it is accepted that an opportunity of final hearing, or, personal hearing is not mandatory in each and every case, even then, the fact remains that the impugned order of the State instrumentality should speak of the reasons for dispensing with such opportunity of oral hearing, or, at-least, the order should speak of the reasons, which can be found to be borne out from the material on record and does not smack of any mala fides. It need not be pointed out that under different situations and conditions, the requirement of compliance of the principles of natural justice vary.
41. Here in the case, considering the reply given by the petitioner to show cause notice, reserving all its rights to advance submissions on merits, it was utmost essential to give 31 him an opportunity so that petitioner could have put up its case on merits. However, no such opportunity of hearing was given to the Petitioner. The Petitioner has proceeded on the assumption that its reply to show cause notice was sufficient, considering the contention raised therein that as the matter was sub judice before the Arbitration Tribunal, Respondent No. 2 should not proceed further with the action and that impression was very well borne out, as no further notice was issued by Respondent No. 2 calling upon the Petitioner to give the reply on merits, as Respondent No. 2 has decided to overrule its objection.
42. It is also pertinent to note that Respondent No. 2 has, in this case, proceeded on the basis of the report of the Enquiry Committee. The appointment of such Enquiry Officer was totally an internal matter of the administration of Respondent No. 2. As stated by the Petitioner, no notice of appointment of such Enquiry Officer or of the proceedings conducted before him was given to the Petitioner. Surprisingly, the copy of such Enquiry Report was also not furnished to the Petitioner. Thus, when the same issue of delay in performance of the contract was subject to adjudication before the Arbitration Tribunal, Respondent No. 2 unilaterally proceeded with the appointment of the Enquiry Committee and on acceptance of the report submitted by the Enquiry Officer ex-parte, without notice to the Petitioner, without serving a copy of the Enquiry Report to the Petitioner, proceeded to take impugned action of banning the Petitioner from future dealings with Respondent No. 2. Such action, therefore, clearly smacks of arbitrariness and mala fides, being in violation of the principles of natural justice and hence in breach of Article 14 of the Constitution.
43. The impugned order is also vulnerable to the attack on the ground that it is devoid of any "reasons" for the authority to come to the conclusion of banning the Petitioner for perpetuity in future business dealings with Respondent No. 2. Its perusal reveals that, the order also does not give reasons to reject the objection raised by the Petitioner to the maintainability of such action on the ground that the matter was sub judice before the Arbitration Tribunal. Except for referring to the Enquiry Report, it speaks of no 'reasons' to arrive at its conclusion. The Hon'ble Supreme Court has, in the case 32 of S.N. Mukherjee v. Union of India8, after referring to its various earlier decisions, emphasized on the requirement of recording reasons in the order of quasi-judicial authority as follows:--
"23. ...............................................................................
34. The decisions of this Court referred to above indicate that with regard to the requirement to record reasons the approach of this Court is more in line with that of the American Courts. An important consideration which has weighed with the Court for holding that an administrative authority exercising quasi-judicial functions must record the reasons for its decision, is that such a decision is subject to the appellate jurisdiction of this Court under Article 136 of the Constitution as well as the supervisory jurisdiction of the High Courts under Article 227 of the Constitution and that the reasons, if recorded, would enable this Court or the High Courts to effectively exercise the appellate or supervisory power. But this is not the sole consideration. The other considerations which have also weighed with the Court in taking this view are that the requirement of recording reasons would (i) guarantee consideration by the authority; (ii) introduce clarity in the decisions; and (iii) minimise chances of arbitrariness in decision-making. In this regard, a distinction has been drawn between ordinary Courts of law and tribunals and authorities exercising judicial functions on the ground that a Judge is trained to look at things objectively uninfluenced by considerations of policy or expediency whereas an executive officer generally looks at things from the standpoint of policy and expediency.
35. 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 33 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.
44. Thereafter, in para 38, the Hon'ble Supreme Court was pleased to observe that, "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."
45. This decision of the Hon'ble Supreme Court, rendered in the context of court martial proceedings under the Army Act, 1950, has been consistently followed by the courts in other contexts as well and in particular in the context of orders blacklisting contractors.
3446. Thus, "reasons" constitute the soul of any quasi-judicial order. It is a sine-qua-non for upholding the validity of such order. In the instant case, perusal of the impugned order passed by Respondent No. 2 is sufficient to reveal that no such reasons were recorded, at least they are not discernible from the order. The said order also does not reflect the application of mind. Order is depending solely on the report of the Enquiry Officer, copy of which was not given to the Petitioner. In the last para it states that, "having carefully considered the findings of the Enquiry Officer and having considered all the facts and circumstances of the case, the Respondent No. 2 has decided to stop all future dealings with the Petitioner". Which are these facts and circumstances considered by the authority are also not elaborated. As rightly submitted by learned Senior Counsel for the Petitioner, this order is more or less in the nature of only "summation" of the Enquiry Report. Such "summation" cannot be called as "reasons" in support of the order. It can, at best, be termed as "conclusion". Apart from this conclusion, which is arrived at on the basis of the Enquiry Report, there is nothing in the order to indicate any supportive reasons. Needless to state that, such order cannot stand the judicial scrutiny. It is trite that when an authority has omitted to give reasons in the impugned order, such deficiency cannot be supplied when the validity of the order is challenged."
(Emphasis supplied) The Division Bench of Bombay High Court was considering an order of banning of business dealings against the petitioner therein by the Union of India. The Division Bench holds that the reasons constitute the soul of any quasi judicial order and it is sine qua non for upholding the validity of such order.
3515. A perusal at the order impugned in the case at hand would unmistakably indicate that it bears no reasons. The earlier order is elaborated by a paragraph and is held that, it holds good.
This would not suffice the necessity of law, either be it banning of business or blacklisting, such orders entail civil death of a tenderer/contractor. Blacklisting of contractor will bear such mark of blacklisting, throughout his life. Therefore, such orders should bear reasons. The orders cannot demonstrate "an inscrutable face of the sphinx". In the light of the preceding analysis, the order impugned is rendered unsustainable, yet again.
16. For the aforesaid reasons, I pass the following:
ORDER
(i) Writ Petition is allowed in part and the order dated 23-01-2023 passed by the 1st respondent stands quashed.
(ii) The matter is remitted back to the hands of the Railways with a direction to pass appropriate orders in 36 accordance with law, bearing in mind the observations made in the course of the order stricto sensu.
Sd/-
JUDGE bkp CT:MJ