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TMI Blog2022 (9) TMI 1604X X X X Extracts X X X X X X X X Extracts X X X X ..... was observed that the notice directing show cause must state the charges only and not definite conclusions of alleged guilt otherwise the entire proceeding would stand vitiated by unfairness and bias. The scope of judicial review in matters relating to challenge to show-cause notice was subject matter of consideration in UNION OF INDIA VERSUS VICCO LABORATORIES [ 2007 (11) TMI 21 - SUPREME COURT ], and while holding that non-interference at the stage of issuance of show-cause notice is the normal rule, it was stated that where a show-cause notice is issued either without jurisdiction or in an abuse of process of law, the writ court would not hesitate to interfere even at the stage of issuance of show-cause notice. In Union of India and others Vs. Coastal Container Transporters Association and others [ 2019 (2) TMI 1497 - SUPREME COURT ], while examining the scope of powers under Article 226 with regard to quashment of a show-cause notice, it was held that the same would not be permissible unless there is lack of jurisdiction or violation of principles of natural justice. The power to blacklist a contractor was held to be inherent in the party allotting the contract and the freedom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pleadings have been exchanged between the parties in both the petitions. 4. At the very outset, it would be relevant to take notice of the fact that the writ petitioner in Writ C No. 18053 of 2022 (M/S Bcits Pvt. Ltd vs. Purvanchal Vidhyut Vitaran Nigam Ltd. And Another) had approached this Court earlier in Writ C No. 15363 of 2022 (M/s Bcits Pvt. Ltd. vs. Purvanchal Vidhyut Vitaran Nigam Ltd. And Another) seeking to challenge notice dated 18.5.2022 whereby the petitioner had been directed to show cause in respect of a proposed action of blacklisting/debarment. 5. The writ court allowed the writ petition by means of a judgement dated 26.5.2022 taking into consideration the fact that in the aforestated notice the authority concerned had already recorded its conclusion with regard to explanation furnished by the petitioner earlier and had found the same to be unsatisfactory. The Court held that since the respondent authority had already expressed its mind, the exercise which was to follow would be an empty formality. Accordingly, the notice was quashed leaving it open to the respondent corporation to issue a fresh notice in accordance with law, if so advised. 6. Against a similarly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eniently conceal the factum of issuance of earlier notices which had been suitably responded by the petitioners. The successive show cause notices issued for the self-same reasons go to show that the respondent authority is proceeding with premeditation to somehow punish the petitioners. 10.4 The tenor of the notices is indicative of the fact that the respondent authority has already made up its mind to pass an order of blacklisting against the petitioners and therefore, the entire exercise which is proposed to be undertaken in furtherance of the notice would be an empty formality and a futile exercise. To support his submission, learned Senior Counsel has placed reliance upon the decisions in Siemens Ltd. vs. State of Maharashtra Others (2006) 12 SCC 33 and Oryx Fisheries Pvt. Ltd vs. Union of India Others (2010) 13 SCC 427. 10.5 An attempt has also been made to draw attention of the Court to the merits of the case and the defence which is sought to be put up by the petitioner firms in response to the imputations made in the show cause notices. 11. The respondents have filed counter affidavits in both the petitions in which it has been categorically averred that the notices dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a writ petition against a show cause notice was subject matter of consideration in the case of Siemens Ltd. wherein it was held that ordinarily a writ court may not exercise its discretionary jurisdiction in entertaining a writ petition questioning a notice to show cause unless it is without jurisdiction; however, when a notice is issued with premeditation, writ petition would be maintainable. Referring to the earlier decisions in State of U.P. vs. Brahm Datt Sharma (1987) 2 SCC 179 Special Director vs. Mohd. Ghulam Ghouse (2004) 3 SCC 440, Union of India vs. Kunisetty Satyanarayana (2006) 12 SCC 28, K.I. Shephard vs. Union of India (1987) 4 SCC 431 and V.C., Banaras Hindu University vs. Shrikant (2006) 11 SCC 42, it was observed as follows:- 9. Although ordinarily a writ court may not exercise its discretionary jurisdiction in entertaining a writ petition questioning a notice to show cause unless the same inter alia appears to have been without jurisdiction as has been held by this Court in some decisions including State of U.P. v. Brahm Datt Sharma, Special Director v. Mohd. Ghulam Ghouse and Union of India v. Kunisetty Satyanarayana , but the question herein has to be considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w-cause proceeding is meant to give the person proceeded against a reasonable opportunity of making his objection against the proposed charges indicated in the notice. 25. Expressions like a reasonable opportunity of making objections or a reasonable opportunity of defence have come up for consideration before this Court in the context of several statutes. A Constitution Bench of this Court in Khem Chand v. Union of India AIR 1958 SC 300, of course in the context of service jurisprudence, reiterated certain principles which are applicable in the present case also. 26. S.R. Das, C.J. speaking for the unanimous Constitution Bench in Khem Chand held that the concept of reasonable opportunity includes various safeguards and one of them, in the words of the learned Chief Justice, is : (AIR p. 307, para 19) (a) An opportunity to deny his guilt and establish his innocence, which he can only do if he is told what the charges levelled against him are and the allegations on which such charges are based; 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 obvio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries (2007) 13 SCC 270, and while holding that non-interference at the stage of issuance of show-cause notice is the normal rule, it was stated that where a show-cause notice is issued either without jurisdiction or in an abuse of process of law, the writ court would not hesitate to interfere even at the stage of issuance of show-cause notice. The observations made in the judgment in this regard are as follows:- 31. Normally, the writ court should not interfere at the stage of issuance of show-cause notice by the authorities. In such a case, the parties get ample opportunity to put forth their contentions before the authorities concerned and to satisfy the authorities concerned about the absence of case for proceeding against the person against whom the show-cause notices have been issued. Abstinence from interference at the stage of issuance of show-cause notice in order to relegate the parties to the proceedings before the authorities concerned is the normal rule. However, the said rule is not without exceptions. Where a show-cause notice is issued either without jurisdiction or in an abuse of process of law, certainly in that case, the writ court would not hesitate to interfere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a show cause notice to mention that action of blacklisting is proposed so as to provide adequate and meaningful opportunity to show cause against the same. Accordingly, it was observed that this would require the statement of imputations detailing out the alleged breaches and defaults so that the noticee gets an opportunity to rebut the same. The guidelines laid down as to the contents of show cause notice pursuant to which an order of blacklisting may be passed, in the aforesaid decision, are in the following terms:- 21. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf. Such notice should be adequate and the grounds necessitating action and the penalty/action proposed should be mentioned specifically and unambiguously. An order travelling beyond the bounds of notice is impermissible and without jurisdiction to that extent. This Court in Nasir Ahmad v. Custodian General, Evacuee Property [Nasir Ahmad v. Custodian General, Evacuee Property, (1980) 3 SCC 1] has held that it is essential for the notice to specify the particular grounds on the basis of which an action is proposed to be taken so as to enable the noticee to answer the case against him. If these conditions are not satisfied, the person cannot be said to have been granted any reasonable opportunity of being heard. 14. Specifically, in the context of blacklisting of a person or an entity by the State or a State Corporation, the requirement of a valid, particularised and unambiguous show-cause notice is particularly crucial due to the severe consequences of blacklisting and the stigmatisation that accrues to the person/entity being blacklisted. Here, it may be gainful to describe the concept of blacklisting and the graveness of the consequences occasioned by it. Blacklisting has the eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l justice. A body may be under a duty to give fair consideration to the facts and to consider the representations but not to disclose to those persons details of information in its possession. Sometimes duty to act fairly can also be sustained without providing opportunity for an oral hearing. It will depend upon the nature of the interest to be affected, the circumstances in which a power is exercised and the nature of sanctions involved therein. 20. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the blacklist. 25. The aforementioned proposition that no order of blacklisting could be passed without affording opportunity of hearing to the affected party was reiterated in the case of Raghunath Thakur Vs. State of Bihar Ors. (1989) 1 SCC 229 wherein it was stated as follows:- 4. Indisputably, no no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absolute and untrammelled by any constraints whatsoever. The freedom to contract or not to contract is unqualified in the case of private parties. But any such decision is subject to judicial review when the same is taken by the State or any of its instrumentalities. This implies that any such decision will be open to scrutiny not only on the touchstone of the principles of natural justice but also on the doctrine of proportionality. A fair hearing to the party being blacklisted thus becomes an essential precondition for a proper exercise of the power and a valid order of blacklisting made pursuant thereto. The order itself being reasonable, fair and proportionate to the gravity of the offence is similarly examinable by a writ court. 28. The aforesaid legal position has been recently considered in M/s Baba Traders Vs. State of U.P. and others 2019 (11) ADJ 516 (DB) and Amit Kumar Vs. State of U.P. and another 2020 (10) ADJ 264 (DB). 29. It would therefore be seen that an order of blacklisting has the effect of depriving a person equality of opportunity in the matter of public contract and in a case where the State acts to the prejudice of a person it has to be supported by legality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfant) [1967] 1 All E.R. 226, Lord Parker C.J., described natural justice as 'a duty to act fairly'. The rule of 'fair hearing' requires that the party which is likely to be visited with adverse consequences is given an opportunity to meet the case against it effectively. Right to 'fair hearing' or 'reasonable opportunity of hearing' casts a sacrosanct obligation on the adjudicatory authority to ensure fairness in procedure and action. It covers within its fold every stage through which an administrative adjudication passes starting from notice to final determination. 34. Procedural fairness requires that persons liable to be affected by a proposed administrative decision be given adequate notice of what is proposed so that they are not taken unfairly by surprise, and also that they are in a position to make representation against the proposed action; to appear at the hearing or the inquiry; and to effectively answer the charges which they have to meet. A proper hearing must always include an opportunity to know the opposing case. We may refer to the observations of Lord Denning in Kanda vs. Government of Malaya [1962] AC 322 , which are as follows:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aware of the grounds on which action is proposed and has an adequate opportunity to rebut the same. If the show cause notice does not specifically state the grounds on which it is being issued and the proposed action, the noticee would be taken by surprise and would not have adequate opportunity to rebut the allegations during the course of inquiry which is to follow. 39. We are of the view that the challenge to the show cause notices in the instant petitions is premature for the reason that the mere indication of the grounds and the penalty proposed, would not give rise to a cause of action, as it is open to the petitioners to present their case and rebut the imputations, whereupon it would be incumbent upon the respondent authority to proceed with the inquiry and pass an appropriate speaking and reasoned order after giving adequate opportunity to the petitioners and ensuring due compliance of the principles of natural justice. The outcome of the inquiry which is proposed in terms of the show cause notice would only be a matter of conjecture at this stage, inasmuch as it is equally possible that after considering the response of the petitioners and holding due inquiry, the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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