Gujarat High Court
M/S Baroda Surgical (India) Pvt. ... vs State Of Gujarat on 6 July, 2020
Equivalent citations: AIRONLINE 2020 GUJ 565
Author: Ilesh J. Vora
Bench: Ilesh J. Vora
C/SCA/7832/2020 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 7832 of 2020
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE ILESH J. VORA
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1 Whether Reporters of Local Papers may be allowed to
see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law
as to the interpretation of the Constitution of India or any
order made thereunder ?
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M/S BARODA SURGICAL (INDIA) PVT. LTD.,THROUGH ITS CHAIRMAN
AND MANAGING DIRECTOR
Versus
STATE OF GUJARAT
================================================================
Appearance:
MR PRAKASH JANI, SENIOR ADVOCATE WITH MR KRISHAL H
PATEL(9644) for the Petitioner(s) No. 1,2
MR SAURIN A MEHTA(470) for the Petitioner(s) No. 1,2
MS MANISHA LAVKUMAR, GOVERNMENT PLEADER ASSISTATED BY
MS JYOTI BHATT for the Respondent No. 1
MR. TIRTHRAJ PANDYA(6685) for the Respondent No. 2
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CORAM: HONOURABLE MR. JUSTICE ILESH J. VORA
Date : 06/07/2020
ORAL JUDGMENT
1. Heard Mr. Prakash Jani, learned Senior Counsel assisted by Page 1 of 17 Downloaded on : Tue Jul 07 21:14:15 IST 2020 C/SCA/7832/2020 JUDGMENT Mr. Saurin Mehta, learned counsel for the petitioners and Ms. Manisha Lavkumar, learned Government Pleader assisted by Mr. Tirthraj Pandya, learned AGP for the respondent no. 2 and Ms. Jyoti Bhatt, learned AGP for respondent no. 1. At the joint request of learned counsel appearing for the parties, matter is taken up for final hearing and is being disposed of finally.
2. This petition under Article 226 of the Constitution of India has been filed with following prayers :
"para-10 : (A) YOUR LORDSHIPS may be pleased to admit and allow this petition.
(B) YOUR LORDSHIPS may be pleased to issue a Writ of Mandamus or a Writ in the nature of Mandamus, or any other appropriate writ, order or direction, quashing and setting aside the impugned Show Cause Notice bearing No. GMSCL/SDI/Show Cause/26030/2020-21 dated 22.06.2020;
(C) Pending hearing and final disposal of the Petition, YOUR LORDSHIPS may be pleased to stay the implementation, operation and execution of the impugned Show Cause Notice bearing No. GMSCL/SDI/Show Cause/26030/2020-21 dated 22.06.2020;
(D) YOUR LORDSHIPS may be pleased to grant ex-parte ad-interim relief in terms of Para Page 2 of 17 Downloaded on : Tue Jul 07 21:14:15 IST 2020 C/SCA/7832/2020 JUDGMENT 10(C).
(E) YOUR LORDSHIPS may be pleased to grant such other and further relief/s, as may be deemed fit by this Hon'ble Court, in the interest of justice."
3. The brief facts, relevant for the decision of petition are that, 3.1 The petitioner no. 1 is a Private Limited Company registered under the Indian Companies Act, 1956, engaged in the business of manufacturing and distribution of Surgical Dressing items such as Bandages, Gauze etc. since its incorporation i.e. 8th November, 1989. The petitioner no. 2 is the Chairman and Managing Director of the Company.
3.2 It is the case of the petitioners that they are suppliers to respondent No. 2, Gujarat Medical Services Corporation Limited (hereinafter referred as 'GMSCL'), which is procuring agency of Government of Gujarat, the respondent no. 1. The respondent no. 2 GMSCL is the procuring agency of Government of Gujarat which procures the drugs, surgical items etc. from different manufacturers and distributors for the supply of the same to the Government Hospitals throughout the State of Gujarat. The respondent no. 2 GMSCL is the Government of Gujarat undertaking corporated by the State of Gujarat.
3.3 It is the case of the petitioners that in the year 2011-12, the respondent no. 2 had floated the tender bearing No. Page 3 of 17 Downloaded on : Tue Jul 07 21:14:15 IST 2020 C/SCA/7832/2020 JUDGMENT Tender Enquiry No. CMSO/D-467/RC/10-11 for supply of Bandage Cloth with ISI Mark IS:863:1988. The petitioner company participated in the bid and was declared as successful bidder for 60% quantity of total order and accordingly, rate contract was awarded on 26.08.2011.
3.4 It is the case of the petitioners that on 22.3.2012, the Senior Drug Inspector had collected the samples from Batch No. 49 of Bandage Cloth and same was sent to Food and Drug Laboratory, Vadodara for testing under the provisions of Drugs and Cosmetic Act, 1940 (hereinafter referred to as 'the Act' for short). The remaining samples were retained by the Senior Food Inspector, Gandhinagar. The Food and Drug Laboratory, Vadodara in its report dated 17.4.2012 concluded that sample from Batch No. 49 of Bandage Cloth was 'not of standard quality'. The petitioners herein had filed Criminal Misc. Application No. 254 of 2012 on 3.5.2012 before the Chief Judicial Magistrate First Class, Gandhinagar under Section 25 of the Act against the report of Vadodara Laboratory with a prayer that sample of Handloom Cotton bandage Cloth drawn by the Senior Drug Inspector, Gandhinagar be sent for reanalysis to the Central Drugs Laboratory, Calcutta. The court was pleased to sent the sample for reanalysis to the Central Drug Laboratory, Calcutta and after receiving the report, the same by Central Drug Laboratory, Calcutta in its report held that the sample from Batch no. 49 was not of standard quality as defined under the Act. The Food and Drug Laboratory, Calcutta sent another report dated 24.9.2012, wherein, the sample from Batch No.49 was shown of 'standard quality' Page 4 of 17 Downloaded on : Tue Jul 07 21:14:15 IST 2020 C/SCA/7832/2020 JUDGMENT 3.5 It is the case of the petitioners that 3 rd report dated 24.9.2012 was made available to them from the Chief Judicial Magistrate, Gandhinagar and same was forwarded by the petitioners to respondent no. 2 vide its letter dated 1.6.2013.
3.6 It is the case of the petitioners that respondent no.2 GMSCL served a impugned show cause notice dated 22.06.2020. As per the show cause notice, the respondent no. 2 called upon the petitioners to show cause why your firm should not be debarred / blacklisted for submission of fabricated / false test reports as mentioned.
3.7 In view of the aforesaid facts, being aggrieved by and feeling dissatisfied with the action of respondent no. 2, the petitioners have challenged the impugned show cause notice dated 22.6.2020 by way of present petition.
4. Mr. Prakash Jani, learned Senior Counsel for the petitioners has submitted that the impugned show cause notice is barred by delay, latches and acquiescence as the alleged act of submission of the test report had occurred in the year 2012 and the notice for the same was issued in the year 2020. Therefore, after 7 years the authority has decided to take action against the petitioners.
5. Mr. Prakash Jani, learned Senior Counsel for the petitioners further submits that the impugned show cause notice having been issued without any jurisdiction as nothing is stated in Page 5 of 17 Downloaded on : Tue Jul 07 21:14:15 IST 2020 C/SCA/7832/2020 JUDGMENT the notice to justify the authority to exercise its power.
6. Mr. Prakash Jani, learned Senior Counsel for the petitioners further submits that after submission of reports to the competent court, the Court did not have taken any cognizance for the veracity of the reports and respondent no. 2 has not challenged the same, which shows that the cause against the petitioners has reached its finality and after the said proceedings, the petitioners had been awarded work contracts from time to time. Thus, the notice has no cause of action as it was within the knowledge of respondent no. 2 about the veracity of reports. In view of this, the whole procedure initiated by the respondent no. 2 for issuance of show cause notice is without jurisdiction and manifestly arbitrary and therefore, violative of Articles 14 and 19(1)(g) of the Constitution of India.
7. Mr. Prakash Jani, learned Senior Counsel for the petitioners further submitted that for the product Bandage clothe Batch No. 49, which was declared as sub-standard by the Food & Drug Laboratory, Vadodara, the respondent no. 2 has recovered the amount of Rs.10,29,105/- as per relevant terms and conditions of the tender. In view of the aforesaid, Mr. Prakash Jani, learned counsel submitted that necessary actions were taken by respondent no. 2 and complied by the petitioners which shows that the dispute raised in the show cause notice had reached to its finality and no any action as contemplated under the show cause notice required to be taken. In this background, the impugned show cause notice is arbitrary and having been issued without any cause and jurisdiction, which is required to be quashed and set aside.
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8. Mr. Prakash Jani, learned Senior Counsel for the petitioners further submitted that the petitioners were participated for the tender floated by the respondent no.2 vide Tender Notice D- 09/2019-2020 and accordingly, the petitioners have submitted their offer on 30.11.2019 for the three items and they were declared as "L-1'' for the same. In view of these facts, the show cause notice pending the process of the tender having been issued at the behest of their rival party, to restrain the petitioners from participating in the tender process. Therefore, the issuance of the show cause notice at the belated stage deserves to be quashed and set aside.
9. Mr. Prakash Jani, learned Senior Counsel for the petitioners further submitted that as the third test report, as referred in the show cause notice having not been obtained by the petitioners nor they have sought from the Central Food & Drug Laboratory, Calcutta. Therefore, the allegations made in the show cause notice that the petitioners have submitted fabricated and false report to gain the undue benefits having alleged without any basis thereof.
10. Mr. Prakash Jani, learned Senior Counsel for the petitioners referring contents and allegations made in the show cause notice submitted that the authority has taken final conclusion about the fact that the petitioners have submitted fabricated and false test reports and also decided in the show cause notice that the conduct of the petitioner company is illegal, unethical and is against the terms and conditions of the tender and the same warrants to invoke appropriate penal action. In view of these facts, as alleged in the show cause Page 7 of 17 Downloaded on : Tue Jul 07 21:14:15 IST 2020 C/SCA/7832/2020 JUDGMENT notice, Mr. Prakash Jani, learned Senior Counsel for the petitioners further submitted that the language in the show cause notice is couched in such a manner that no fair and reasonable opportunity to defend is made available to the petitioners as the respondent no. 2 with predetermination and pre-judge held guilty for the alleged allegation made in the show cause notice and inviting the reply to the show cause notice will be an empty ceremony. In this background, Mr. Prakash Jani, learned Senior Counsel for the petitioners further submitted that the alleged show cause notice is ex- facie illegal, having been issued without following the principles of natural justice including the just, fair, reasonable opportunity to defend the allegations made in the show cause notice.
11. On the aforesaid premise, Mr. Prakash Jani, learned Senior Counsel for the petitioners mainly relied on the decision of Oryx Fisheries Pvt. Ltd. Vs. Union of India and others, reported in 2010(13) SCC 427, the relevant extract para-27 and 31 is reproduced hereinbelow:
"para- 27. It is no doubt true that at the stage of show cause, the person proceeded against must be told the charges against him so that he can take his defence and prove his innocence. It is obvious that at that stage the authority issuing the charge- sheet, cannot, instead of telling him the charges, confront him with definite conclusions of his alleged guilt. If that is done, as has been done in this instant case, the entire proceeding initiated by the show cause notice gets vitiated by unfairness and bias and the subsequent proceeding become an idle ceremony.
para- 31. It is of course true that the show cause notice cannot be read hyper-technically and it is Page 8 of 17 Downloaded on : Tue Jul 07 21:14:15 IST 2020 C/SCA/7832/2020 JUDGMENT well settled that it is to be read reasonably. But one thing is clear that while reading a show-cause notice the person who is subject to it must get an impression that he will get an effective opportunity to rebut the allegations contained in the show cause notice and prove his innocence. If on a reasonable reading of a show-cause notice a person of ordinary prudence gets the feeling that his reply to the show cause notice will be an empty ceremony and he will merely knock his head against the impenetrable wall of prejudged opinion, such a show cause notice does not commence a fair procedure especially when it is issued in a quasi- judicial proceeding under a statutory regulation which promises to give the person proceeded against a reasonable opportunity of defence."
12. In support of the above submissions, learned counsel for the petitioners has also placed reliance upon the following decisions :
(i) Pravinbhai Mohanbhai Raiyani Vs. State of Gujarat, reported in 2006 (Law Suit) GUJ-573;
(ii) Calcutta Discount Company Limited Vs. Income Tax Officer, Companies District (I) and another, reported in AIR 1961 SC 372;
(iii) The State of Gujarat and another Vs. Nareshbhai Parmar reported in 2012 Law Suit, Gujarat 167;
(iv) Siemens Limited Vs. State of Maharashtra, reported in 2006 (12) SCC 33;
13. On the above grounds, it is prayed by Mr. Prakash Jani, learned Senior Advocate that the impugned show Page 9 of 17 Downloaded on : Tue Jul 07 21:14:15 IST 2020 C/SCA/7832/2020 JUDGMENT cause notice dated 22.06.2020 is required to be quashed and set aside.
14. Per contra, Ms. Manisha Lavkumar, learned Government Pleader appearing for respondent no. 2 submitted that the show cause notice is legal and proper and there is prima-facie conclusion with regard to action which is proposed to be taken. Referring to the show cause notice, she further submitted that the petitioners have ample opportunity to submit their reply in detail, even they can ask to the documents whatever they want to rely with regard to tender and rate contract.
15. Ms. Manisha Lavkumar, learned Government Pleader appearing for respondent no. 2 submitted that prima-facie conclusion made in the show cause notice with a view to give an opportunity to rebut the same and noticee is able to point out that proposed action is not warranted in the given case. She further submits that the purpose for issuance of the show cause notice is for proper inquiry of the alleged test report as referred in the notice. She further submits that department would ready to supply the documents whatever they want for rebuttal of the allegations made in the notice, therefore, for proper inquiry, the department has point out the details which are in the nature of prima-facie conclusion.
16. In the aforesaid background, Ms. Manisha Lavkumar, learned Government Pleader appearing for respondent no. 2 has submitted that questioning the validity of the show cause notice at this stage, without filing reply by the petitioners, requires no interference by the court and in support this Page 10 of 17 Downloaded on : Tue Jul 07 21:14:15 IST 2020 C/SCA/7832/2020 JUDGMENT submission, she relied on the decision of Union of India Vs. Coastal Container Transporters Association, reported in 2019 (0) AIJEL-SC-6397, wherein, it was observed that the High Court has committed error in entertaining the writ petition under Article 226 of the Constitution of India, at the stage of show cause notice. On the basis of the above submission, it is prayed that the court may not entertain the petition.
17. Ms. Jyoti Bhatt, learned AGP submits that she is adopting the arguments of respondent no. 2 and further submits that the proceedings undertaken by the authority has been rightly initiated on the basis of evidence on record and this court may not interfere at the stage of show cause notice.
18. I have heard the learned counsel for the respective parties. Perused the averments made in the petition, contents of the impugned show cause notice and other documents on record.
19. In the context of submissions made by learned advocates for the respective parties, the question that arises for consideration is whether this court could exercise jurisdiction under Article 226 of the Constitution of India, in the present case where the challenges against the show cause notice dated 22.6.2020.
20. It is settled by series of decisions by Apex Court that ordinarily, no writ lies against the show cause notice as the jurisdiction is discretionary, should not ordinarily be Page 11 of 17 Downloaded on : Tue Jul 07 21:14:15 IST 2020 C/SCA/7832/2020 JUDGMENT exercised by quashing a show cause notice. However, in exceptional cases, the High Court can quash a show cause notice if it is found to be wholly without jurisdiction or for some other reason if it is wholly illegal or notice would in flagrant violation of principles of natural justice.
21. Looking to the facts of the present case, this Court deem it fit to refer the impugned show cause notice which is set out as under:
"To: Date: 22 Jun 2020 M/s Baroda Surgicals (I) Pvt. Ltd 242/19, GIDC, Waghodia - 391760 Sub.: Regarding submission of Fabricated / false CDL report Ref.: 1. CDL Report (not of standard)-2.1/2012-SS/CC-
73/280, Date 27/08/2012
2. CDL Report (standard)- 2.1/2012-SS/CC- 73(R)/280(R) Date-24/09/2012
3. Your letter dated 01/06/2013 With reference to subject cited above, it is brought to your notice that earlier random samples were taken for Testing under the provisions of Drugs and Cosmetics Act, 1940 which were tested by Food & Drug Laboratory, Vadodara, and were declared "Not of Standard" The details are as under :
No. Name of Drugs Batch Test Report No. & Date Reason No 1 Handloom 49 Q-2/101/2012 (CMSO) Threads per Cotton Bandage Date-17/04/2012 dm and Cloth (Non Width Sterilized) Being aggrieved and dissatisfied with the above referred test report of Food and Drug Laboratory, you had preferred a Criminal Misc. Application No. 254 of 2012 before the Chief Judicial Magistrate of Gandhinagar to Page 12 of 17 Downloaded on : Tue Jul 07 21:14:15 IST 2020 C/SCA/7832/2020 JUDGMENT send the samples in question for retesting at Central Drug Laboratory, Calcutta. Then after samples were sent for retesting at Central Drug Laboratory and Central Drug Laboratory, vide its test report No. 2-1/2012-SS/CC-
73/280, dated 27/08/2012 had declared the samples in question 'Not of Standard Quality'.
Then after, you had submitted another test report No. 2.1/2012-SS/CC-73(R)/280(R) dated 24/09/2012 claiming that Central Drug Laboratory, Calcutta has declared the samples in question to be of Standard Quality. Upon inquiry it is found that Test Report No.2.1/2012-SS/CC- 73(R)/280(R) dated 24/09/2012, is not issued by the Central Drug Laboratory, Calcutta. Thus prima-facie it appears that you have submitted a fabricated / false test report to gain undue benefits.
The conduct of your part is illegal, unethical and is against the terms and conditions of the Tender and Rate Contract, and same warrants to invoke appropriate penal actions against you.
Therefore, you are hereby called upon to show cause within 7 days from the date of receipt of this communication, as to why your firm should not be debarred / blacklisted for submission of Fabricated/False test report as mentioned herein above.
Failure to comply this notice within stipulated time, shall invite appropriate penal actions against you as contemplated hereinabove.
Sd/
Managing Director General Manager."
22. The main submission advanced by learned Senior Counsel Mr. Prakash Jani that the impugned notice having been issued without jurisdiction and does not satisfy the test as per the Apex Court verdict i.e. Oryx Fisheries (supra) and the authority has already decided the guilt of the petitioners with respect to submission of alleged test report dated 24.09.2012 as referred in the show cause notice. It is admitted facts that after obtaining necessary sample, as Page 13 of 17 Downloaded on : Tue Jul 07 21:14:15 IST 2020 C/SCA/7832/2020 JUDGMENT referred in the show cause notice, the Drug Laboratory, Vadodara as well as the Central Laboratory, Calcutta have opined that the sample was 'not as per the standard quality' prescribed under the Act. It is also admitted facts that the third report dated 24.09.2012 alleged to have been issued by Central Drug Laboratory, Calcutta, wherein, the sample was declared 'as per the standard quality'. The said report was submitted to the respondent authority by the petitioners vide their letter dated 01.06.2013. The Court has not taken any cognizance of the third report as matter has already been disposed. It is also admitted fact that the third report dated 24.09.2012 was never issued or dispatched by the Central Drug Laboratory, Calcutta and same was replied on the basis of RTI Application filed by the Law Officer of respondent no.2. It is case of the petitioners that they have not obtained the alleged report and did not have receive from the Central Laboratory, Calcutta.
23. In the aforesaid facts, the show cause notice before taking action of debarring / blacklisting having been issued by the respondent no. 2 GMSCL.
24. It is apt to refer the case of Gorkha Security Services Vs. Government of NCT, Delhi (MANU/SC/0657/2014), wherein, the question of law pertaining to form and content of show cause notice before deciding as to whether noticee is to be blacklisted or not, having been raised and decided. Para-19 of the judgment, the Apex Court has settled the principles with respect to contents of show cause notice, which reads as under:
"Contents of Show Cause Notice Page 14 of 17 Downloaded on : Tue Jul 07 21:14:15 IST 2020 C/SCA/7832/2020 JUDGMENT
19) The Central issue, however, pertains to the requirement of stating the action which is proposed to be 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 black listing, this requirement becomes all the more imperative, having regard to the fact that it is harshest possible action.
20) 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 extent. However, it is equally important to mention as to what would be the 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 on 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 be clearly and safely be discerned from the reading thereof, that would be sufficient to meet this requirement. "
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25. In view of the aforesaid principles as propounded by the Apex Court and applying to the facts of present case and after careful reading of the show cause notice, it appears that it is only a prim-facie view which the authority has expressed at the stage of issuing the notice. The authority has made full details in the show cause notice so that the noticee can able to rebut the allegations made against him and defend the action of the authority. It is also admitted facts that after receiving the show cause notice, the petitioners have not filed any explanation and even did not care to appear before the authority and straightway approached to this Court. Therefore, considering the contents of the show cause notice, it is mandatory on the part of the authority to give all details in precis manner so that the petitioner gets an opportunity to rebut the same. Therefore, the action of authority by issuing the impugned show cause notice cannot be said to be issued with predetermination and prejudge, held guilty for the alleged allegation made in the show cause notice. In view of the peculiar circumstances of the case, the action of authority - respondent no. 2 cannot said to be a without jurisdiction and against the principles of natural justice.
26. Thus, the contention raised by learned Senior Counsel Mr. Prakash Jani that the impugned show cause notice having been issued without any jurisdiction and in contravention of principles of natural justice cannot be sustained.
27. The case relied by the petitioners is distinguishable on facts as well as law. In the case of Oryx (supra), the reply of Page 16 of 17 Downloaded on : Tue Jul 07 21:14:15 IST 2020 C/SCA/7832/2020 JUDGMENT show cause notice was being given by the company and the authority concerned, without giving any reason and personal hearing, have cancelled the Registration Certificate of the Appellate company, as in a quasi judicial proceedings, the authority failed to observe statutory regulation and there was a real danger of bias proved on record. In the present case, the show cause notice for the proposed action of blacklisting being issued, wherein, the authority have set up precise case expressing prima-facie conclusion with regard to alleged fabricated test report. It is no doubt true that there is some delay in initiation of the proceedings. However, the action at belated stage would not waive the right of authority, more particularly in the field of public health care.
28. In view of the discussions made hereinabove and reasons thereof, this court is the view that no case is made out by the petitioners for interference in exercise of writ jurisdiction under Article 226 of Constitution of India.
29. As a result, the petition deserves to be dismissed and accordingly, it is dismissed. There shall be no order as to costs. Notice is discharged.
(ILESH J. VORA,J) SURESH SOLANKI/pallav Page 17 of 17 Downloaded on : Tue Jul 07 21:14:15 IST 2020