The Allahabad High Court quashed an order passed by the Managing Director of the Corporation whereby the earnest money deposit made by the petitioner in respect of the Tender has been ordered to be forfeited and the petitioner-firm has been barred from participating in the tenders of the Corporation for three years.
The Division Bench of Justice Devendra Kumar Upadhyaya and Justice Om Prakash Shukla passed this order, while hearing a petition filed by M/S Goverdhan Transformer Udyog Pvt Ltd through Deputy General Manager Ravi Pratap Singh.
By invoking the jurisdiction of the Court under Article 226 of the Constitution of India, a challenge has been made to an order dated 03.11.2022 passed by the Managing Director of the Corporation whereby the earnest money deposit made by the petitioner in respect of the Tender has been ordered to be forfeited and the petitioner- firm has been barred from participation in the tenders of the Corporation for three years.
Counsel for the petitioner states that the impugned order passed by the Managing Director of the Corporation is completely a nonspeaking and cryptic order, which does not reflect any consideration by the Authority who passed the same of the reply/explanation submitted by the petitioner- firm to the show cause notice issued to it.
In the aforesaid view, the submission is that non-supply of reasons by the authority concerned even in administrative action is fatal which prejudices the interest of the person against whom such an action is taken.
The submission is that passing a reasoned order is now a third arm of the principle of natural justice apart from the two well recognized components of the said principle, namely, (a) no-one should be condemned unheard and (b) no-one can be judge of his own cause.
On the other hand, Aparajita Bansal representing the Corporation has vehemently opposed the prayer made by the petitioner and has submitted that though the order dated 03.11.2022 passed by the Managing Director of the Corporation does not reflect the specific reasons, however, at various points of time successively the petitioner has been apprised of the defaults being committed by it to which the petitioner has even submitted its reply and all the material was available on record before the Managing Director.
The Court held that it cannot be said that the Managing Director while passing the order dated 03.11.2022 did not take into account the entire material including the explanation/reply submitted by the petitioner to the show cause notice.
The Court attention has also been drawn to a declaration which the petitioner had submitted while participating in the tender process, according to which the petitioner had agreed to the condition that if the petitioner withdraws his proposal, his earnest money deposit shall be forfeited by the Corporation and the Corporation may debar the tenderer for a minimum period of one year.
The Court observed that,
No doubt, the aforesaid condition in the form of declaration forms part of the tender condition and the petitioner is bound by it. However, if we examine the impugned order dated 03.11.2022 what we find is that the said order does not even make a mention of the reply/explanation submitted by the petitioner to the show cause notice, it rather only states that the petitioner -firm has been found to have failed to have made the supplies pursuant to the tender awarded to it and thereafter it proceeds to take two actions, namely, (i) cancellation of L.O.I and (ii) forfeiture of earnest money deposit along with debarment of the petitioner-firm for a period of three years.
It is a well settled principle of law that in case a decision debarring a tenderer in future tender is taken, the firm concerned is to be given a show cause notice, which should reflect the intended/proposed action as well. It is equally well settled that any such debarment order can be passed only after consideration of the reply/explanation, which may be submitted by the firm concerned to the show cause notice.
So far as the case is concerned, a show cause notice was issued on 07.10.2022 by the Corporation specifically requiring the petitioner to furnish its explanation as to why the petitioner firm may not be debarred/blacklisted. In reply to the said show cause notice dated 07.10.2022, the petitioner submitted its reply by means of the letter dated 21.10.2022 giving certain explanations. However, the Managing Director has passed the impugned order which does not reflect either the issues on the basis of which the show cause notice was issued to the petitioner or even the reply or explanation submitted by it to the said show cause notice, the Court said.
The Court further observed that,
Any correspondence between the petitioner-firm and the Corporation prior to issuance of the show cause notice dated 07.10.2022 will have no meaning so far as the passing of the order dated 03.11.2022 is concerned. It is the material/explanation submitted by the petitioner to the show cause notice dated 07.10.2022 which not only ought to have been considered by the Managing Director of the Corporation while passing the impugned order, but such consideration ought to be reflected in the order as well. Consideration of material or reply or explanation submitted by the petitioner by the Managing Director, would mean application of mind to the issues raised in the show cause notice and the reply submitted to such show cause notice. However, when we peruse the order dated 03.11.2022, what we find is that the aforesaid elements of a valid administrative order or action are missing in the impugned order.
The Supreme Court and other High Courts have developed the principles of natural justice now to the extent of observing that even the administrative actions/orders should be informed of reasons and such reasons should be reflected in the order passed so that the party against whom such an order is passed is in a position to analyse as to whether the order is justified or not.
There is yet another reason why every administrative authority is under legal obligation to give reasons for taking any administrative action or passing any administrative order and such reason is that in case such an administrative action/order is subjected to judicial scrutiny by the Courts, the Courts would be facilitated in its endeavor to judicially review such an administrative order/action.
For the reasons aforesaid, the Court disposed of the petitioner in terms of the following orders/directions:-
(1) The order dated 03.11.2022, passed by the Managing Director of the Corporation, is hereby quashed.
(2) The Managing Director of the Corporation will make a decision afresh in the matter in the light of the observations made by the Court in the foregoing paragraphs of this judgment within a period of 15 days from today.
(3) We further direct that the petitioner shall not be entitled to claim the amount of earnest money deposit which shall abide by the decision to be taken by the authority concerned afresh.
We also provide that in case the petitioner participates in any tender process henceforth, the same shall be subject to the final order which may now be passed by the Managing Director in relation to the debarment/blacklisting, in terms of the order.