Uttarakhand High Court
By Means Of This Writ Petition vs Indian on 18 June, 2021
Author: Manoj Kumar Tiwari
Bench: Manoj Kumar Tiwari
IN THE HIGH COURT OF UTTARAKHAND
AT NAINITAL
ON THE 18THDAY OF JUNE, 2021
BEFORE:
HON'BLE SHRI JUSTICE MANOJ KUMAR TIWARI
Writ Petition (M/S) No. 3614 of 2019
BETWEEN:
Satvat Infosol Private Limited
& another ...Petitioners
(By Mr. AdityaChatterjee, Advocate)
AND:
Oil and Natural Gas
Corporation Ltd. ...Respondents
(By Mr. PiyushGarg, Advocate)
JUDGMENT
1. By means of this writ petition, petitioner has sought following relief:-
(i) Issue a writ of certiorari and quash the Impugned Order passed by the Respondent, vide Ref. No. HQ/CAMM/CSR-
Scholarship/14-15, dated September 13, 2019 (Annexure No. 1 to the present petition)
(ii) Issue a writ of mandamus directing the Respondent to delete Petitioner No. 1's name from the list of blacklisted/banned companies posted on the Respondent's website.
2. Petitioner No. 1 is a Private Limited Company, while petitioner No. 2 is Director of Petitioner No. 1.
3. By means of this writ petition, petitioners are challenging the banning order dated 13.09.2019 passed by O.N.G.C., which has the effect of blacklisting Petitioner No. 1 along with its allied 2 concerns/ partners/associates/director for a period of two years w.e.f. 03.04.2019.
4. Oil and Natural Gas Corporation Ltd. is a State owned enterprise of Government of India, registered under Companies Act, 1956. It operates under administrative control of Ministry of Petroleum and Natural Gas, therefore, it is an instrumentality of State within the meaning of Article 12 of Constitution of India. Thus, it would be amenable to writ jurisdiction of this Court.
5. Petitioner No. 1 was awarded a contract by Oil and Natural Gas Corporation Ltd. (in short 'O.N.G.C.') for implementation of O.N.G.C. Scholarship Scheme by designing and processing through web portal with subsequent monitoring and renewal (OLA NO. 9030007250).An agreement was executed between petitioner No. 1 and O.N.G.C. on 21.04.2016.
6. The said contract however was terminated on 26.06.2018 on the ground of inappropriate execution of the contract by petitioner No. 1. Thereafter, on 13.09.2019, a banning order was passed against petitioner no. 1, whereby O.N.G.C. banned all business dealings with petitioner No. 1 along with its allied concerns, partners, associates or directors etc., for a period of two years.
7. Feeling aggrieved by the banning order, petitioners have approached this Court by means of present writ petition.
8. Mr. Piyush Garg, learned counsel appearing for the respondent has raised a preliminary objection that in view of the arbitration clause in the agreement 3 executed between the parties, the writ petition would not be maintainable and the petitioners should be relegated to avail the remedy of arbitration.
9. Learned counsel for the petitioners however submits that the banning order is challenged before this Court on the sole ground that it has been passed in abject disregard of Principles of Natural Justice. He further submits that in a case where there is failure of Principles of Natural Justice, then the aggrieved person can approach the High Court and the High Court can exercise its writ jurisdiction notwithstanding availability of alternative remedy, including arbitration. In support of this contention, learned counsel for the petitioners has placed reliance upon the law laid down by Hon'ble Supreme Court in the case of Harbanslal Sahnia & another Vs. Indian Oil Corporation Ltd. & others reported in 2003 (2) SCC 107. Para 7 of the said judgment is reproduced below:-
"7. So far as the view taken by the High Court that the remedy by way of recourse to arbitration clause was available to the appellants and therefore the writ petition filed by the appellants was liable to be dismissed, suffice it to observe that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies:
(i) where the writ petition seeks enforcement of any of the Fundamental Rights; (ii) where there is failure of principles of natural justice or, (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act and is challenged. The present case attracts applicability of first two contingencies.
Moreover, as noted, the petitioners' dealership, which is their bread and butter came to be terminated for an irrelevant and non-existent cause. In such circumstances, we 4 feel that the appellants should have been allowed relief by the High Court itself instead of driving them to the need of initiating arbitration proceedings."
10. Learned counsel for the petitioners has further relied upon another judgment rendered by Hon'ble Supreme Court in the case of Unitech Ltd. Vs.Telangana State Industrial Infrastructure Corporation & others reported in 2021 SCC Online SC
99. In the said judgment, it has been held that in determining as to whether the jurisdiction should be exercised in a contractual dispute, the Court, must undoubtedly, eschew disputed questions of fact which would depend upon an evidentiary determination requiring a trial, but equally, it is well-settled that the jurisdiction under Article 226 cannot be ousted only on the basis that the dispute pertains to the contractual arena.
11. Since the challenge thrown to the impugned banning order is on the sole ground that Principles of Natural Justice were violated and there is no dispute that banning order entails civil consequences to the petitioners, therefore, in view of the law laid down by Hon'ble Supreme Court in the aforesaid judgments, this Court does not find any substance in the preliminary objection raised on behalf of the respondent. The writ petition is maintainable as it falls within the three excepted categories enumerated in Harbanslal Sahnia's case.
12. Petitioners have challenged the banning order, inter alia on the following grounds:-
(I) Proper opportunity of hearing was not given to him;5
(II) The allegations levelled against petitioner in the show cause notice were vague and not precise;
(III) Reply to the show cause submitted
by the petitioner was not
considered;
(IV) Personal hearing was not given to
the petitioner despite requests; (V) Enquiry report relied upon in the impugned banning order was not supplied to the petitioner; and (VI) Banning order is a non-speaking order, inasmuch as, it does not disclose any reason for holding the petitioner guilty and also for not accepting the defence taken by the petitioner in his reply.
13. The aforesaid grounds touch one or the other facet of Audi Alteram Partem. Recording of reason is a facet of Principle of Audi Alteram Partem, as held by Hon'ble Supreme Court in various authoritative judicial pronouncements, which shall be discussed later.
14. Mr. Piyush Garg, learned counsel appearing for the respondent supports the impugned banning order and contends that there is no violation of Principles of Natural Justice, inasmuch as, petitioner was given show cause notice before passing the banning order and petitioner had also submitted his reply to the said notice. He further submits that the charges against the petitioner were clearly indicated in the show cause notice. He further submits that petitioner had participated in the inquiry and mere non-supply of inquiry report would not vitiate the 6 banning order and further that petitioner has not indicated what prejudice has been caused to him due to non-supply of inquiry report.
15. Show cause notice issued by the Enquiry Officer to the petitioner on 25.06.2019 is on record as Annexure No. 10 to the writ petition. Para5 of the show cause notice, enumerates the allegations against the petitioner. The reply given by petitioner to the show cause notice is on record as Annexure No. 11 to the writ petition. In his reply, petitioner refuted the allegations and submitted that he had completed the work for the first year as per the contract and handed over the names of shortlisted candidates along with all relevant documents, in the Head Office of O.N.G.C. in the month of March, 2017. Petitioner had further contended that he had developed software for submission of online application for scholarship, based on the eligibility criteria provided by O.N.G.C. and candidates had applied online and the officers of O.N.G.C. had visited the office premises of the petitioner more than five times for verification of the documents/applications. Thus, Petitioner No. 1 in his reply had denied all the allegations levelled against him in the show cause notice.
16. Perusal of the impugned banning order reveals that the reply submitted by Petitioner No. 1 to the show cause notice has not been considered. The defence taken by the Petitioner No. 1 in his reply has also not been discussed in the impugned order. The impugned order is silent as to whether the defence taken by Petitioner No. 1 was acceptable to the respondent and if not acceptable, then reasons therefor. As such the impugned order is a non-
7speaking order, which does not contain any reason in support of the decision taken to blacklist the petitioner.
17. The impugned banning order is enclosed as Annexure No. 1 to the writ petition. Para Nos. 1 to 4 of the said order contain the background facts; while, para no. 5 indicates the decision making process. Para 5 of the impugned banning order is reproduced below for ready reference:-
"5. And Whereas, on enquiry and examination of the case and having given an impartial, prudent and careful consideration of the facts, ONGC has come to a conclusion that the contractor has failed to execute the contract in a satisfactory manner and services rendered were not meeting the Scope of work and other conditions given in the contract and the contractor has failed to fulfil the contractual obligations under the Contract (No: HQ/CAMM/61/CSR-
Scholarship/2014-15/9030007250"
18. From the banning order, it is apparent that the only reason assigned for banning the petitioner is that he has failed to execute the contract in a satisfactory manner and the services rendered by him were not meeting the scope of work and other condition given in the contract. However, there is no discussion regarding the reply submitted by petitioner and no reason has been given as to why the defence taken by the petitioner in his reply was disbelieved. The manner in which the impugned banning order has been passed does not meet the requirement of law. Every quasi-judicial authority is required to give reasons in support of its decisions.
19. The impugned banning order, which has the effect of blacklisting petitioner-company for a 8 period of two years, entails civil and evil consequences to the petitioner. Thus, such an order can be passed only in conformity with the Principles of Natural Justice.
20. Recording of reasons is a facet of Audi Alteram Partem, as held by Hon'ble Supreme Court in the case of The Siemens Engineering & Manufacturing Co. India Ltd. Vs The Union of India & another reported in (1976) 2 SCC 981. Para 6 of the said judgment is reproduced below:-
"6. Before we part with this appeal, we must express our regret at the manner in which the Assistant Collector, the Collector and the Government of India disposed of the proceedings before them. It is incontrovertible that the proceedings before the Assistant Collector arising from the notices demanding differential duty were quasi judicial proceedings and so also were the proceedings in revision before the Collector and the Government of India. Indeed, this was not disputed by the learned counsel appearing on behalf of the respondents. It is now settled law that where an authority makes an order in exercise of a quasi-judicial function it must record its reasons in support of the order it makes. Every quasi-judicial order must be supported by reasons. That has been laid down by a long line of decisions of this Court ending with N. M. Desai v. The Testeels Ltd. & Anr. But, unfortunately, the Assistant Collector did not choose to give any reasons in support of the order made by him con firming the demand for differential duty. This was in plain disregard of the requirement of law. The Collector in revision did give some sort of reason but it was hardly satisfactory. He did not deal in his order with the arguments advanced by the appellants in their representation dated 8th December, 1961 which were repeated in the subsequent representation dated 4th June, 1965. It is not suggested that the Collector should have made an elaborate 9 order discussing the arguments of the appellants in the manner of a court of law. But the order of the Collector could have been a little more explicit and articulate so as to lend assurance that the case of the appellants has been properly considered by him. If courts of law are to be replaced by administrative authorities and tribunals, as indeed, in some kinds of cases, with the proliferation of Administrative law, they may have to be so replaced, it is essential that administrative authorities and tribunals should accord fair and proper hearing to the persons sought to be affected by their orders and give sufficiently clear and explicit reasons in support of the orders made by them. Then alone administrative authorities and tribunals exercising quasi- judicial function will be able to justify their existence and carry credibility with the people by inspiring confidence in the adjudicatory process. The rule requiring reasons to be given in support of an order is, like the principle of audi alteram partem, a basic principle of natural justice which must inform every quasi-judicial process and this rule must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law. The Government of India also failed to give any reasons in support or its order rejecting the revision application. But we may presume that in rejecting the revision application, it adopted the same reason which prevailed with the Collector. The reason given by the Collector was, as already pointed out, hardly satisfactory and it would, therefore, have been better if the Government of India had given proper and adequate reasons dealing with the arguments advanced on behalf of the appellants while rejecting the revision application. We hope and trust that in future the Customs authorities will be more careful in adjudicating upon the proceedings which come before them and pass properly reasoned orders, so that those who are affected by such orders are assured that their case has received proper consideration at the hands of the Customs authorities and the validity of the adjudication made by the Customs authorities can also be 10 satisfactorily tested in a superior tribunal or court. In fact, it would be desirable that in cases arising under Customs and Excise laws an independent quasi-judicial tribunal, like the Income-tax Appellate Tribunal or the Foreign Exchange Regulation Appellate Board, is set up which would finally dispose of appeals and revision applications under these laws instead of leaving the determination of such appeals and revision applications to the Government of India. An independent quasi-judicial tribunal would definitely inspire greater confidence in the public mind."
21. Hon'ble Supreme Court in the case of S.N. Mukherjee Vs. Union Of India reported in 1990 (4) SCC 594 has held as under:-
"35. 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 11 of policy or expediency whereas an executive officer generally looks at things from the standpoint of policy and expediency.
36. 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 considerations show that the re- cording 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.
37. Having considered the rationale for the requirement to record the reasons for the decision of an administrative authority 12 exercising quasi-judicial functions we may now examine the legal basis for imposing this obligation. While considering this aspect the Donoughmore Committee observed that it may well be argued that there is a third principle of natural justice, namely, that a party is entitled to know the reason for the decision, be it judicial or quasi-judicial. The committee expressed the opinion that "there are some cases where the refusal to give grounds for a decision may be plainly unfair; and this may be so, even when the decision is final and no further proceedings are open to the disappointed party by way of appeal or otherwise" and that "where further proceedings are open to a disappointed party, it is contrary to natural justice that the silence of the Minister or the Ministerial Tribunal should deprive them of the opportunity." (P 80) Prof. H.W.R. Wade has also ex- pressed the view that "natural justice may provide the best rubric for it, since the giving of reasons is required by the ordinary man's sense of justice." (See Wade, Administrative Law, 6th Edn. P.
548). In Siemens Engineering Co. case (Supra) this Court has taken the same view when it observed that "the rule requiring reasons to be given in support of an order is, like the principles of audi alteram partem, a basic principle of natural justice which must inform every quasi-judicial process." This decision proceeds on the basis that the two well-known principles of natural justice, namely (i) that no man should be a Judge in his own cause and (ii) that no person should be judged without a hearing, are not exhaustive and that in addition to these two principles there may be rules which seek to ensure fairness in the process of decision-making and can be regarded as part of the principles of natural justice. This view is in consonance with the law laid down by this Court in A.K. Kraipak and Others v. Union of India and Others, [1970] 1 SCR 457, wherein it has been held:
"The concept of natural justice has undergone a great deal of change in recent years. In the past it was 13 thought that it included just two rules namely (i) no one shall be a Judge in his own cause (nemo dabet esse judex propria causa) and (ii) no decision shall be given against a party without affording him a reasonable hearing (audi alteram partem). Very soon thereafter a third rule was envisaged and that is that quasi-judicial enquiries must be held in good faith, without bias and not arbitrarily or unreasonably. But in the course of years many more subsidiary rules came to be added to the rules of natural justice."
22. In view of the legal position, as discussed above, the impugned order is liable to be set aside. Accordingly, the writ petition is allowed and the banning order dated 13.09.2019, impugned in the writ petition, is hereby quashed.
23. This Court has not gone into merits of the case and the order dated 13.09.2019 has been quashed on the sole ground that it is a non-speaking order which does not disclose any reason for blacklisting the petitioners. Thus, this order will not have any bearing to the proceedings to be initiated before the Arbitrator against termination of contract.
(MANOJ KUMAR TIWARI, J.) Aswal