Rajasthan High Court - Jodhpur
M/S. J V Enterprises vs Indian Oil Coproration Ltd on 30 January, 2019
Author: Ashok Kumar Gaur
Bench: Ashok Kumar Gaur
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR.
..
S.B. CIVIL WRIT PETITION NO. 726/2019.
M/s. J V Enterprises, through its Proprietor Vimal Bothra S/o. Jagdish Chandra Jain, Age- 45 Years, Having its Office at D-104, Shastri Nagar, Jodhpur.
----Petitioner Versus
1. Indian Oil Corporation Ltd. through its Managing Director, Rajasthan State Office, Ashok Chowk, Adarsh Nagar, Jaipur.
2. The General Manager, Indian Oil Corporation Limited, Rajasthan State Office, Ashok Chowk, Adarsh Nagar, Jaipur.
----Respondents For Petitioner(s) : Mr. Sanjeet Purohit.
Ms. Apoorva Mathur.
For Respondent(s) : Mr. Nishant Bora.
HON'BLE MR. JUSTICE ASHOK KUMAR GAUR
Order
30/01/2019
1. The present writ petition has been filed by the petitioner-firm challenging the order dated 18.12.2018 wherein, the respondent - Indian Oil Corporation (hereinafter called as "Corporation") has taken action of blacklisting of the entire fleet of the petitioner- firm for two years w.e.f. 18.12.2018 as per the Work Order dated 23.10.2015 for five tank-trucks (TT).
(2 of 23) [CW-726/2019]
2. The petitioner has made the following prayers in the writ petition:-
"P R A Y E R It is therefore, humbly prayed that the present petition for writ in the nature of Mandamus may kindly be allowed and by appropriate writ, order or direction:-
(i) the order dated 18.12.2018 (Annex.13) issued by the respondent no. 1 & 2 may kindly be quashed.
(ii) The order of penalty for blacklisting of entire crew, termination of the contract, debarring the crew member of entire fleet as well as forfeiture of security deposit may kindly be declared illegal and be quashed and set aside;
(iii) The respondent authorities may kindly be directed to permit the petitioner firm to continue with the tender work as granted by the work order dated 23.10.2015;
(iv) The respondent authorities may kindly be restrained from interfering with the smooth functioning of the tender work under the work order dated 23.10.2015 (Annex.2);
(v) Any other relief which this Hon'ble Court deems just and proper in favour of the petitioner, may kindly be granted and
(vi) cost of the writ petition allowed in favour of petitioner."
3. Brief facts pleaded in the writ petition are that in the year 2015, the respondent - Corporation had issued a notice inviting tenders for transportation of bulk Air Terminal Fuel (hereinafter called as "ATF") from Jodhpur terminal to various destinations.
4. The petitioner-firm had participated in the tender process and after declared successful, the contract was finalized in favour of the petitioner-firm. The petitioner-firm and respondent - Corporation entered into an agreement wherein total five (05) (3 of 23) [CW-726/2019] tank-trucks (TT) were to be placed at the disposal of the respondent-Corporation to undertake the contract work of transportation of ATF for a period of five (05) years from 2015- 2019.
5. The letter of intent was issued on 10.08.2015 which has been placed as Annexure-1 in the writ petition and the work order was also issued on 23.10.2015. The petitioner-firm had also submitted a Bank Guarantee dated 28.08.2015 for an amount of Rs.7,20,000/- which was valid upto 30.09.2020.
6. The petitioner has pleaded in writ petition that out of fleet of five tank-trucks, they also deployed a tank-truck (TT) having registration number RJ-19-GE-1804. The petitioner has pleaded that from time to time, the calibration certificate was issued and the said requirement was fulfilled as per the terms of the agreement.
7. The petitioner has pleaded in writ petition that on 16.08.2018, a letter was received from the respondent - Corporation wherein, it was intimated that Truck No. RJ-19-GE- 1804 when reached to the destination-Jaipur, the said truck was checked and in compartment No. 3, an additional fitting of pipeline was found connecting the same with the fuel tank of the truck. It was also stated in the said letter that in the fuel tank of the truck, the ATF was filled. The petitioner was called for a joint inspection on 17.08.2018 enabling the respondents to take further action in the matter.
8. The petitioner-firm has pleaded that it has been involved in the business of road transportation of bulk petroleum products and LPG from last 20 years and contracts have been awarded by (4 of 23) [CW-726/2019] all the major companies of India like BPCL, IOCL, HPCL & ESSAR. The petitioner-firm submitted that immediately after coming to know about the illegal act of additional fitting being found, the petitioner-firm lodged an FIR against the driver of the truck on 18.08.2018.
9. The petitioner has pleaded that samples of the tank were taken for test on 17.08.2018 and the petitioner was called to participate in testing of samples on 20.08.2018 vide e-mail dated 18.08.2018. The petitioner has alleged that it was neither provided any report of samples to show that the ATF was filled up in the service tank of TT in question nor any such allegation was referred in the subsequent notice by the respondent - Corporation.
10. The petitioner-firm has further pleaded that another notice dated 24.08.2018 was received informing the petitioner that why proceedings under the ITDG Guidelines may not be initiated against the petitioner-firm and against tank-truck No. RJ-19-GE- 1804. The show-cause notice dated 24.08.2018 is reproduced as hereunder:-
^^bafM;u vkW;y dkWiksZj"s ku fyfeVsM tks/kiqj VfeZuy] lkykokl tks/kiqj & 342804 Qksu % 0291&2012558] 2113671 Indian Oil Corporation Limited Jodhpur Terminal, Salawas Jodhpur-342 804 Tel: 0291-2012558 ekdsZfVax fMfotu lanHkZ % JTM/TT-1804/2018-19/2 Marketing Division LihMiksLV Date : 24.08.2018 lsok esa ts oh ,aVjizkblsl (Enterprises) D-104] "kkL=h uxj tks/kiqj] jktLFkku fo'k; % VSd a Vªd & RJ19GE1804 ckcr+-
(5 of 23) [CW-726/2019]
egksn;
vkids Vsad Vªd la[;k RJ19GE1804] ¼tks fd bafM;u vkW;y dkiksZjs"ku tks/kiqj VfeZuy ls ifjogu gsrq vuqcaf/kr gS½ fnukad 11-08-2018 dks t;iqj AFS ds fy, 29 KL ATF Hkjk Fkk ¼pkyku uacj 0999708725 ½A fnukad 12-08-2018 dks xarO; LFkku ij igq¡pus ds i"pkr psfdax ds le;
daikVZ~esaV uacj 3 ds uhps ls xkM+h ds bZ/ku Vsad rd vuf/kd`r rjhds ls tqM+h vfrfjDr ikbi (Fitting) ikbZ x;h gSA vkids MªkbZoj] vkids representative ,oa IOCL ds vf/kdkfj;ksa ds le{k VSad Vªd dk t;iqj AFS esa 18-08-2018 dks tkap dh xbZ ftlesa vfrfjDr vuf/kd`r fitting gksuk lkfcr gqvk gSA mijksDr fo"k; esa ITDG 23-03-2016 ds rgr vkids o vkids VSad Vªd RJ19GE1804 ds fo:) dk;Zokgh D;ksa u dh tk,] d`i;k 7 fnu esa Li'V djsaA dksbZ mRrj u feyus dh fLFkfr ;k mRrj lgh u gksus dh fLFkfr esa dkiksZjs"ku dk;Zokgh djus ds fy, Lora= gksxhA l/kU;okn F/bafM;u vkWby dkiksZjs"ku fyfeVsM lgh@& Ørs@egkizca/kd iathd`r dk;kZy; % th&9] vyh ;koj tax ekxZ] ckUnzk ¼ iwoZ ½ eqEcbZ & 400 051 Regd. Office : G-9, Ali Yavar Jung Marg, Bandra (East) Mumbai-400 051 (India)"
11. The petitioner has pleaded that on the same day, it had requested the respondent-Corporation to provide a copy of the joint inspection held on 17.08.2018 to enable the petitioner to file its reply. The petitioner has further pleaded in the writ petition that the copy of the joint inspection report was provided to the petitioner on 06.09.2018, however, the copies of the documents referred to in the report were not given.
12. The petitioner has pleaded in the writ petition that it has filed its reply to the show cause notice and sent the same through e- mail to DGM, IOCL on 07.09.2018. The petitioner-firm specifically took a plea in the said reply that additional fitting, as alleged in the show cause notice, would have been installed by the driver for his personal income but the petitioner-firm had immediately lodged FIR against such driver and the petitioner was having no knowledge of such fitting in the tank-truck in question.
13. The petitioner has pleaded in the writ petition that the respondent-Corporation issued the impugned order dated (6 of 23) [CW-726/2019] 18.12.2018 wherein it was stated that the petitioner had acknowledged that unauthorized fittings were there and as such, it clearly established complicity of the petitioner. The impugned order not only terminates the contract of the petitioner but all the tank-trucks (TTs) have also been blacklisted for a period of two years and security deposits have also been forfeited. The operative portion of the impugned order is reproduced as hereunder:-
"After considering the case the competent authority has approved blacklisting of your entire engaged fleet as per work order no. RSO/OPS/ATF/JDH/02/15-19/WO/JDH/6/6 dated 23.10.2015 for TT's on industry basis for a period of 2 years.
Hence accordingly in view of aforesaid narrated legal provisions especially by virtue of Clause 8.2.2.3, 8.2.2.8, 8.2.2.11 & 8.2.2.16 and additional clause on page 19 of 22 as above and totality of circumstances, your entire fleet plying with the Corporation under RSO as per work order no. RSO/OPS/ATF/JDH/02/ 15-19/WO/JDH /6/6 dated 23.10.2015 is hereby blacklisted w.e.f. 23.11.2018 for 2 years on industry basis along with TT crew of TT No. RJ19GE1804 in line with aforesaid narrated legal provisions. Accordingly forfeiture of Security deposit will be made.
The details of the TT which stands hereby blacklisted are as follows:
Name of M/s J V Enterprises (Vendor Code : 11038089) Transporter S.No. TT Reg. No. Cap (KL) Chassis No. Engine No. 1 RJ19GE1804 29 MB1NABYC9FPYN5409 FYPZ120477 2 RJ19GE1805 29 MB1NADYC4FPYL5754 FYPZ121045 3 RJ19GE1807 29 MB1NADYC6FPYL5755 FYPZ120944 4 RJ19GE1809 29 MB1NADYC5FPXN6067 FYPZ121304 5 RJ19GE1816 29 MB1NADYXFPYN5547 FYPZ120822 Period of Blacklisting 02 years w.e.f. 18.12.2018 TT Crew details Driver Jagdish Mali Cleaner Lakhe Khan, S/o Kadar Khan, Polak, Jaisalmer.
This is, however, issued without any prejudice to our other rights and contentions in the matter."
(7 of 23) [CW-726/2019]
14. The petitioner has pleaded in the writ petition that the action of the respondents is wholly arbitrary, illegal, unjustified and unreasonable. The petitioner-firm has pleaded that the various clauses which are provided in the guidelines, specifically provides for adulteration/malpractices/irregularities/penalties. The petitioner-firm has pleaded that the order of blacklisting the entire fleet has the effect of preventing the petitioner-firm from the privilege and advantage of entering into lawful relationship with the authority for the purpose of gains and the action of blacklisting must be preceded by a show cause notice setting up the precise case, for which the noticee is required to meet.
15. The learned counsel Mr. Sanjeet Purohit appearing for the petitioner-firm has raised the following issues for consideration before this Court:-
(i) the impugned order dated 18.12.2018 of blacklisting the petitioner-firm is non-est in the eyes of law as no specific show cause notice was given informing the petitioner-firm that the Corporation intends to blacklist the firm. Learned counsel has argued that merely reference of taking action as per ITDG Guidelines, in the show cause notice dated 24.08.2018 is not compliance of principle of natural justice and the action of the respondent-Corporation is contrary to the settled proposition of law;
(ii) the impugned order has referred to violation of different clauses of ITDG Guidelines like, 8.2.2.3, 8.2.2.8, 8.2.2.11 and 8.2.2.16. Learned counsel submitted that if at all, the extra fitting was found in (8 of 23) [CW-726/2019] one tank-truck and in such eventuality, a particular tank-truck (TT) was to be blacklisted and not the entire fleet. Learned counsel argued that Clause 8.2.2.11 provides for the malpractice/irregularity with regard to tampering with standard fittings of TT including the sealing, security locks, security locking system, calibration. Learned counsel submitted that if at all, the respondent-Corporation was to take any action against the irregularity/malpractice, as per Clause 8.2.2.11, the alleged extra fitting in TT was like the tampering with the standard fittings and for such tampering, the action could not result into any other penalty except one TT was to blacklisted;
(iii) learned counsel submitted that the complicity of the petitioner carrier firm has been presumed by the respondent and the unauthorized fittings until affects quality and quantity, the respondent-Corporation cannot be permitted to invoke the deeming clause of complicity of the carrier. Learned counsel argued that the respondent-Corporation at no point of time had alleged in any of its show cause notice or confronted the petitioner-firm with the material that the unauthorized fitting, has affected the quality and quantity of ATF;
(iv) learned counsel argued that if there are specific irregularities/malpractices and violation is pointed out specifically of such guidelines, invoking the residuary clause of complicity of certain irregularities to be (9 of 23) [CW-726/2019] existent against the carrier, the same cannot be done by the respondent-Corporation without first reaching to the conclusion or proving the charge that such an act has resulted into affecting the quality and quantity due to unauthorized fitting/false/hidden compartment, alteration in standard fittings;
(v) learned counsel argued that the respondent-
Corporation had not measured the 'quantity' at any point of time from the tank-truck (TT) in question and as such, the conclusion in the impugned order that 'quantity' has been affected, is per se illegal;
(vi) learned counsel further argued that the 'quality' which is said to be affected and caused by the alleged irregularity, was never proved and the sample which was taken and the test report also conclusively did not prove that the 'quality' was affected.
16. The learned counsel for the petitioner has placed reliance on judgment of Supreme Court in the case of Gorkha Security Services Vs. Golvernment (NCT of Delhi) & Ors. reported in (2014) 9 SCC 105. Learned counsel contended on the basis of the said judgment that it was incumbent on the part of the respondent/department to state in the show cause notice that it intended to impose a penalty of blacklisting, so as to provide adequate and meaningful opportunity to show cause against the same. Learned counsel further submitted that a proper show cause notice is required to be given and in the instant case, since no proper show cause notice was given, the entire action of the respondents is vitiated.
(10 of 23) [CW-726/2019]
17. The learned counsel has also placed reliance on judgment of Supreme Court in the case of Raghunath Thakur Vs. State of Bihar & Ors. reported in (1989) 1 SCC 229. Learned counsel submitted that blacklisting of a person in respect of business has civil consequences for the future business and even if the Rules do not especially provide for giving a show cause notice, even in such eventuality, the party affected must be afforded an opportunity of hearing and making representation against the proposed order.
18. The respondents have filed reply to the writ petition. The Corporation has justified the action taken against the petitioner. The respondents have asserted that the inspection of the TT in question was carried out in presence of the petitioner's representative and he was sent the document as well.
19. The respondents have stated in para-10 of the reply that the petitioner himself had accepted that he was invited to witness testing of the sample which itself revealed that the petitioner was given due opportunity to know the results. The sample of the service tank has been tested for HSD and it was found failing which indicated that mixing had been done.
20. The respondents have asserted that before taking any decision, the petitioner was called for personal hearing on 03.10.2018 to present his case and the reply of the petitioner was not found satisfactory and the petitioner was informed about ITDG Clause 8.
21. The respondents have further pleaded in para 15 of the reply that it was the responsibility of the transporter to regularly check its TTs for any addition/alteration and provide Corporation that TT is fit in respect of loading.
(11 of 23) [CW-726/2019] 22. The respondents have further pleaded that a proper
opportunity of representing the case to the petitioner through second show cause notice was afforded and as such, the action taken by the respondent-Corporation cannot be with any predetermination as has been alleged by the petitioner.
23. The respondents have pleaded that the petitioner was given the opportunity to present his case and since the petitioner has accepted the fact that additional fitting was present in the TT in question and accordingly, the first show notice dated 16.08.2018 was given for conducting a joint inspection so that further proceedings under ITDG Guidelines could be commenced. The respondents have pleaded that the show cause notice clearly indicated the intention of the respondents that they want to initiate the proceedings under ITDG Guidelines.
24. The respondents have further pleaded that in the show cause notice dated 24.08.2018, it was categorically mentioned that the action under ITDG Guidelines was to be taken against the petitioner. The respondents have asserted that sufficient notice was given to the petitioner before passing the final order of blacklisting of the entire fleet as per the Guidelines.
25. The respondents have further tried to explain the conduct of the petitioner and the fact of whole process of draining out product from the tank was witnessed by the representative of the petitioner, where a pipe from tank was laid additionally from chamber No. 3 going to service tank via cabin facilitated with valve, which was operated to shift the product form chamber No. 3 to service tank during the decantation process of product from chamber No. 3.
(12 of 23) [CW-726/2019]
26. The respondents have further justified that the sample which was taken from the fuel tank of the petitioner's tank was sent for laboratory test and as per the test report, it was found matching with JetA1 fuel and hence, in the situation obtaining, it was confirmed that the fuel tank of the petitioner's truck was filled with ATF. The respondents have placed on record the test report dated 24.08.2018 filed along with reply as Annexure-R/2 and the conclusion that the quality of ATF was compromised. The respondents have further submitted that the ATF is transferred in a very secure air tight compartment because of its highly volatile nature and is used for highly sophisticated air-crafts, both by air force and domestic air carriers and even a slight variation in the quality of the ATF is fatal since the aircraft has many sophisticated parts. The respondents have submitted that stringent penalty is provided under ITDG Guidelines because of devastating effects that fuel compromised by quality, can ensue.
27. Learned counsel Mr. Nishant Bora appearing for the respondent-Corporation has argued that the impugned order does not suffer from any illegality/infirmity as proper notice and opportunity of hearing was given to the petitioner-firm before passing the impugned order dated 18.12.2018.
28. Learned counsel has argued that the petitioner-firm was duly informed from time to time about the 'quality' and 'quantity' not in conformity as per the terms of the contract. Learned counsel has argued that the clause which has been invoked by the respondent- Corporation has conferred power to take the action of even blacklisting if certain serious irregularities are found and if the unauthorized fitting was found in TTs of the petitioner which (13 of 23) [CW-726/2019] affected the 'quality' and 'quantity' of ATF, the action of the respondent-Corporation cannot be questioned by the petitioner.
29. Learned counsel has argued that the test report clearly establishes that the petitioner was guilty of violation of serious lapses and the Corporation had no option except to take the action as per ITDG Guidelines.
30. Mr. Sanjeet Purohit, the learned counsel appearing for the petitioner reiterated the facts by way of filing the rejoinder and however, a submission has been made that the petitioner-firm was never apprised about quantity and quality being affected except by way of making averments in the reply filed before this Court. Learned counsel submitted that the respondents have not controverted the specific grounds taken by the petitioner in the writ petition with regard to violation of principle of natural justice as well as the extreme penalty which has been given by the respondent-Corporation contrary to the ITDG Guidelines.
31. I have heard learned counsel for the parties and perused the material available on record.
32. The primary question for consideration before this Court is with regard to compliance of principle of natural justice in the instant case.
33. This Court finds that initially a letter dated 16.08.2018 was sent to the petitioner wherein two irregularities were pointed out i.e., (I) that while checking the TT, it was found in compartment No.3 that an additional pipe was going upto the fuel tank and (ii) the vehicle in question was found to be filled up with ATF fuel.
34. This Court further finds that the second letter/notice dated 24.08.2018 was again issued to the petitioner where it was (14 of 23) [CW-726/2019] indicated that additional pipe and fitting was found in TT and the same allegation was found to be correct in presence of representative of the petitioner and as such, the petitioner was to give reply as why action was not to be taken against the petitioner-firm as well as against the tank-truck No. RJ-19-GE- 1804.
35. This Court finds that the guidelines which have been issued by the respondent-Corporation are known as "Oil Industry Transport Discipline Guidelines" (version 4.0) made effective from 23.03.2016. The guidelines have been framed for the purpose of evolving uniform guidelines for transportation of bulk petroleum products by tank truck/tank lorry for delivery of products to retail outlets and direct customers and further for stock transfers from one location to another.
36. The reading of the guidelines at Sl. No. 8 is with regard to adulteration/malpractices/irregularities/penalties. Clause 8.1 deals with penalties in case of adulteration, Clause 8.2.1 defines malpractices/irregularities and further Clause 8.2.2 deals with penalties upon detection of malpractice/irregularities. The relevant Clauses 8.2.2.3, 8.2.2.8, 8.2.2.11 and 8.2.2.16 are quoted as hereunder:-
Clause Type of Penalty against number of
No. malpractice/irreg instance
ularity First Second Third
8.2.2.3 Short delivery of TT shall be
product for blacklisted.
established
malpractice.
8.2.2.8 Established case of TT shall be
pilferage/non- blacklisted.
delivery of product.
8.2.2.11 Tampering with TT shall be
standard fittings of blacklisted.
(15 of 23) [CW-726/2019]
TT including the
sealing, security
locks, security
locking system,
calibration.
8.2.2.16 Any act of the As decided
carrier/carrier's by the
representative that company
may be harmful to
the good name/
image of the Oil
Company, it's
products or is
services
37. The said Guidelines further provides that in certain
irregularities, the complicity of the carrier is deemed to be existent and whole contract comprising of all the TTs can be terminated, security deposited can be forfeited and the concerned carrier and their all TTs can be blacklisted on industry basis. The Clause which is relevant for consideration in the instant case is quoted as hereunder:-
"However, in case, complicity of the transporter is established even in first instance of malpractice, the entire fleet will be blacklisted, contract terminated & carrier blacklisted along with forfeiture of SD.
The blacklisting of TTs shall be on Industry basis.
In the following irregularities, the complicity of the carrier shall be deemed to be existent and the whole contract comprising of all the TTs belonging to the concerned carrier shall be terminated, security deposit forfeited and the concerned carrier & their all TTs shall be blacklisted on Industry basis:
1. False/hidden compartment, unauthorized fittings or alteration in standard fittings affected Quality and Quantity."
38. This Court finds that reference of taking action as per the ITDG Guidelines in initial letter/notice dated 16.08.2018 and (16 of 23) [CW-726/2019] further letter/notice dated 24.08.2018, nowhere stated that the respondent-Corporation intends to take action of blacklisting.
39. This Court finds that reference of taking action as per the ITDG Guidelines will not be a sufficient notice and until specific allegation is levelled and proposed action is informed, the same cannot be said to be compliance of principle of natural justice.
40. This Court finds that the initial notice dated 16.08.2018 was in respect of two irregularities/allegation against the petitioner of fitting of additional pipe in the TT and further, the TT was filled up with ATF. The subsequent letter/notice dated 24.08.2018 had only indicated with respect to one allegation that the additional fitting in the truck and as such, the response of the petitioner was sought and action was proposed under ITDG Guidelines.
41. This Court finds that if the respondent-Corporation thought to proceed to take action as per complicity of the carrier- petitioner, the notice of such allegation and proposed action was required to be given to the petitioner. The respondent-Corporation by simply referring ITDG Guidelines cannot be absolved from its responsibility of giving a proper show cause notice that it had intended to take action of blacklisting.
42. This Court further finds that the respondent-Corporation while passing the impugned order has formed its opinion on the basis of violation as per Clauses 8.2.2.3, 8.2.2.8, 8.2.2.11 and 8.2.2.16 and additional Clause on page 19 of 22 as per the Guidelines. This Court finds that if the respondent-Corporation was invoking the the violation or irregularities as penalties provided in Clauses 8.2.2.3, 8.2.2.8, 8.2.2.11 and 8.2.2.16, the action ought to have been taken according to such Clauses.
(17 of 23) [CW-726/2019]
43. This Court finds substance in the submission of the learned counsel for the petitioner that if the additional fitting is one of the malpractice/irregularity and a specific penalty has been provided against such instance, the Corporation ought to have proceeded accordingly and could not have invoked the Clause 19 of the said Guidelines.
44. This Court finds that the power which is vested with the Corporation to take the action while imposing the penalty of blacklisting, in case of complicity of the transporter, the proper finding is required to be given with respect to the complicity of the transporter. This Court finds that the Policy itself provides that in case of complicity of the transporter is established, even in first instance of malpractice, the entire fleet can be blacklisted, contract can be terminated and the carrier can be blacklisted with the forfeiture of security deposit. The proper requirement for invoking such clause is that complicity of the transporter is required to be established. The exceptions which are carved out to the above Clause is in respect of deemed existent of the transporter if certain irregularities like false/hidden compartment, unauthorized fittings or alteration in standard fittings, affecting quality and quantity is found.
45. This Court finds that even if the petitioner had admitted that there was an additional pipe or alteration in the standard fittings or unauthorized fitting, there had to be a proper finding with respect to quality and quantity being affected. This Court finds little substance in the submission of the respondents that the Corporation had reached to such conclusion while it had relied upon Test Report filed with the reply as Annex.R/2. The said (18 of 23) [CW-726/2019] Report cannot be taken as a proof to prove that the quality of the product transported by the petitioner was affected.
46. This Court further finds that to affect the 'quantity' by use of alteration in the standard fittings, the proper procedure ought to have been applied. The 'quantity' as such, is not found to be measured in the instant case and it is nowhere proved by the respondents that what was the required quantity which was transported by the petitioner and how much was the shortage of such quantity. In absence of such proof or some mechanism by which the 'quality' and 'quantity' could be affected, the conclusions drawn by the respondents cannot be held to be justified.
47. This Court finds that the Apex Court in the case of Gorkha Security Services Vs. Government (NCT of Delhi) & Ors. (supra) has laid down the law that without specific stipulation in the show cause notice, the penalty of the blacklisting cannot be imposed. The Apex Court has emphasized the need of giving a proper notice and in absence of such proper notice and fair indication of proposed action, the principle of natural justice is not found to be complied with. The Apex Court has laid down the necessity of giving a clear stipulation of failure to comply with the express terms of the contract or to point out breach of a particular term of the contract. The Apex Court has laid down the emphasis that where several penalties are provided in different clauses, the authority has to give in the notice, the specific action which intends to take. The relevant paragraphs of the said judgment are quoted as hereunder:-
"21. The central issue, however, pertains to the requirement of stating the action which is proposed to be (19 of 23) [CW-726/2019] taken. The fundamental purpose behind the serving of show-cause notice is to make the noticee understand the precise case set up against him which he has to meet. This would require the statement of imputations detailing out the alleged breaches and defaults he has committed, so that he gets an opportunity to rebut the same. Another requirement, according to us, is the nature of action which is proposed to be taken for such a breach. That should also be stated so that the noticee is able to point out that proposed action is not warranted in the given case, even if the defaults/breaches complained of are not satisfactorily explained. When it comes to blacklisting, this requirement becomes all the more imperative, having regard to the fact that it is harshest possible action.
22. The High Court has simply stated that the purpose of show-cause notice is primarily to enable the noticee to meet the grounds on which the action is proposed against him. No doubt, the High Court is justified to this consequence if the noticee does not satisfactorily meet the grounds on which an action is proposed. To put it otherwise, we are of the opinion that in order to fulfill the requirements of principles of natural justice, a show-cause notice should meet the following two requirements viz:
(i) The material/grounds to be stated which according to the department necessitates an action;
(ii) Particular penalty/action which is proposed to be taken. It is this second requirement which the High Court has failed to omit.
We may hasten to add that even if it is not specifically mentioned in the show-cause notice but it can clearly and safely be discerned from the reading thereof, that would be sufficient to meet this requirement.
24. It would be necessary to take note of the relevant portion of Clause 27 of the NIT under which umbrage is taken by the respondents to justify their action, and even appealed to the High Court. Clause 27(a) reads as under:-
'(a) ....... (sic) In case the contractor fails to commence/execute the work as stipulated in the agreement or unsatisfactory performance or does not meet the statutory requirements of the (20 of 23) [CW-726/2019] contract, Department reserves the right to impose the penalty as detailed below:
(i) 20% of cost of order/agreement per
week, up to two weeks' delays.
(ii) After two weeks' delay principal employer
reserves the right to cancel the contract and withhold the agreement and get this job carried out preferably from other contractor(s) registered with DGR and then from open market or with other agencies if DGR registered agencies are not in a position to provide such contractor(s). The difference if any will be recovered from the defaulter contractor and also shall be blacklisted for a period of 4 years from participating in such type of tender and his earnest money/security deposit may also be forfeited, if so warranted."
(emphasis supplied)
25. It is clear from the reading of the aforesaid clause that when there is a failure on the part of the contractor to comply with the express terms of the contract and/or to commit breach of the said terms resulting into failure to commence/execute the work as stipulated in the agreement or giving the performance that does not meet the statutory requirements of the contract, the Department has a right to impose various kinds of penalties as provided in the aforesaid clause. These penalties are of the following nature:-
(i) Penalty in the form of 20% of cost of orders/agreement per week, up to delay of 2 weeks.
(ii) If the delay is beyond 2 weeks then:
(a) To cancel the contract and withhold the
agreement. In that event, Department has right to get the job carried out from other contractor at the cost of the defaulter contractor;
(b) To blacklist the defaulter contractor for a period of 4 years;
(c) To forfeit his earnest money/deposits, if so warranted.
(emphasis supplied)"
(21 of 23) [CW-726/2019]
48. The principle of giving or affording an opportunity of hearing to the affected party, in case where action of blacklisting is to be taken, the Apex Court has laid down the law in the case of Raghunath Thakur Vs. State of Bihar (supra) that blacklisting of any person in respect of business has a civil consequence for the future business and this elementary principle of natural justice is that party affected by order should have an opportunity of being heard and making representation against the order. The relevant para-4 of the said judgment is quoted as hereunder:-
"4. Indisputably, no notice had been given to the appellant of the proposal of blacklisting the appellant. It was contended on behalf of the State Government that there was no requirement in the rule of giving any prior notice before blacklisting any person. Insofar as the contention that there is no requirement specifically of giving any notice is concerned, the respondent is right. But it is an implied principle of the rule of law that any order having civil consequence should be passed only after following the principles of natural justice. It has to be realised that blacklisting any person in respect of business ventures has civil consequence for the future business of the person concerned in any event. Even if the rules do not express so, it is an elementary principle of natural justice that parties affected by any order should have right of being heard and making representations against the order. In that view of the matter, the last portion of the order insofar as it directs blacklisting of the appellant in respect of future contracts, cannot be sustained in law. In the premises, that portion of the order directing that the appellant be placed in the blacklist in respect of future contracts under the Collector is set aside. So far as the cancellation of the bid of the appellant is concerned, that is not affected. This order will, however, not prevent the State Government or the appropriate authorities from taking any future steps for blacklisting the appellant if the government is so entitled to do in accordance with law. i.e. (22 of 23) [CW-726/2019] after giving the appellant due notice and an opportunity of making representation. After hearing the appellant, the State Government will be at liberty to pass any order in accordance with law indicating the reasons therefor. We, however, make it quite clear that we are not expressing any opinion on the correctness of otherwise of the allegations made against the appellant. The appeal is thus disposed of."
49. This Court following the aforesaid law laid down by the Apex Court in the above referred two cases, finds that in the instant case, proper compliance of giving a proper show-cause notice has not been done by the respondents and as such, their order becomes vulnerable in the eyes of law.
50. This Court further finds that Oil Industry Transport Discipline Guidelines are required to be followed in proper manner and if the penalties are to be imposed as per Clause 8.2.2.3 where different penalties have been provided against malpractice/irregularities and such malpractice and irregularities are as per Clause 8.2.2.1, the penalty/action has to be taken as per specific malpractice/ irregularity which is said to be committed.
51. This Court further finds that in case the respondent- Corporation has to take action where complicity of the carrier has to be presumed or deemed to be in existent in certain contingencies, a proper notice and action has to be taken as per the said Guidelines.
52. This Court finds that order dated 18.12.2018 passed by the respondent-Corporation is not sustainable in the eyes of law and accordingly, the order dated 18.12.2018 is quashed and set aside.
(23 of 23) [CW-726/2019]
53. This Court is further of the opinion that the respondents can always proceed as per law after following the proper procedure which is provided and the present order which is passed is not found to be as per law. The respondents are at liberty in case they intend to take any action by following due process of law.
54. In view of the above, the instant writ petition stands allowed with the observations foregoing; and the impugned order dated 18.12.2018 is quashed and set aside.
(ASHOK KUMAR GAUR),J 21-Mohan/-
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