reply furnished by the parties, it is expected of the authorities to
pass an appropriate order after considering the reply, and not
merely stating that the reply was perused which was not found to
be satisfactory. Why it was not found to be satisfactory ought to
have been disclosed, which has not been done in the present case.
Issuance of notice to show cause and requirement of furnishing
reply is not to be an empty formality. The purpose would not be
achieved if the reply is not considered while passing the order.
As we have already stated, the contract was in
operation at the time when the impugned order was passed, or else
the question of rescinding the contract would not have been there.
The extension granted by the opp. parties from time to time,
without imposing any cost or penalty on the petitioner, would itself
make it clear that the delay was not due to the fault of the
petitioner but because of the shortcoming or fault of the opp.
parties.
However, on merits, we find that the impugned order
is devoid of any reason and on this ground alone the order
deserves to be quashed. Merely completing the formality of giving
notice is not sufficient for complying with the principles of natural
justice, as once after the notice is issued and a detailed reply is
given by the party, the authority is duty bound to pass a reasoned
order only after considering the contents of the reply, and not by
whimsically stating that the reply furnished was not found to be
satisfactory.
THE HIGH COURT OF ORISSA : CUTTACK
W.P.(C) No.20466 of 2015
In the matter of an application under Articles 226 and 227 of the
Constitution of India.
M/s. East Coast Constructions
Industries Ltd, Odisha … Petitioner
-Versus
State
of Odisha and others … Opp.Parties
P R E S E N T:
THE HONOURABLE THE CHIEF JUSTICE MR. VINEET SARAN
AND
THE HONOURABLE DR. JUSTICE B.R. SARANGI
Decided on : 04.04.2016
Citation:AIR 2016(NOC) 456 Orissa
The petitioner, which is a construction company, had
entered into a contract with Orissa Water Supply and Sewerage
Board (OWSSB)-opp. parties nos.2 and 3, for performance of
contract works in respect of Design, Construction, Testing and
Commissioning Gravity Sewers in Sewage Districts I & II of
Bhubaneswar City, in connection with the work “Comprehensive
Sewerage System of Bhubaneswar City under 12th Finance
Commission Award”. Admittedly, the contract was initially for a
period of two years, which was to commence on 01.02.2008 and to
end on 31.01.2010. However, the same was extended from time to
time and, lastly, on 21.04.2014, it was extended for a period of five
months i.e. up to 21.09.2014. This extension, as well as the
previous extensions, were given after considering the fact that
certain facilities were required to be provided by the opp. parties,
which were not provided by them to the petitioner. The last
extension order dated 21.04.2014 would itself make it clear that
even though there was delay, no penalty was imposed at the time
of grant of extension, meaning thereby that the delay was not on
account of the petitioner.
2 Prior to expiry of the extended period, the petitioner
had applied for further extension on 14.08.2014, which application
remained pending, and the petitioner was permitted to continue -3-
with the work beyond the extended period of 21.09.2014. Then on
25.07.2015, a show cause notice was issued by the opp. party
no.3-Project Engineer to the petitioner, requiring it to show cause
as to why appropriate action to rescind the contract be not taken.
A detailed reply dated 13.08.2015 was submitted by the petitioner
within time, followed by another reply dated 20.08.2015 and then
by order dated 16.11.2015, the contract has been rescinded on the
ground of the petitioner having failed to achieve the target. By the
said order, the entire security deposit has been forfeited and 20%
of the value of the left over work was to be realized from the
petitioner. Initially, a petition was filed by the petitioner
challenging the notice of show cause dated 25.07.2015. However,
during pendency of this writ petition, the impugned order was
passed on 16.11.2015, which has been challenged by way of
amendment.
3. We have heard Shri S.K. Sarangi, learned counsel for
the petitioner, Shri B.P. Pradhan, learned Addl. Govt. Advocate for
State-opp. party no.1 and also Shri P.K. Bhuyan, learned counsel
for the contesting opp. parties nos. 2 and 3 (OWSSB) and perused
the record. Pleadings between the parties have been exchanged
and on consent of the learned counsel for the parties, we are
disposing of this petition at the admission stage.
4. Though this matter has a chequered history of
contract having been initially awarded in 2008, which was to be
completed within a period of two years, but what we notice is that
time and again extension had been granted to the petitioner, which
was lastly extended up to 21.09.2014. However, it is not disputed
by the learned counsel for the opp. parties, and is also clear from
the language of the show cause notice dated 25.07.2015, that the
petitioner continued to work even after 21.09.2014. Shri P.K.
Bhuyan, learned counsel for opp. parties nos. 2 and 3 has
admitted that the payment for the work done after 21.09.2014 was
also made to the petitioner. The notice of show cause dated
25.07.2015 also makes it clear that the performance of the
petitioner after 21.09.2014 was also taken into consideration, and
the petitioner was required to show cause as to why the contract
be not rescinded under the provisions of the agreement, meaning
thereby that the contract continued to be in operation. Two replies
had been filed by the petitioner within the stipulated time of thirty
days as provided in the show cause notice, which gave detailed
reasons for not being able to complete the work in time and also
seeking further extension of time. However, all that has been
stated in the impugned order dated 16.11.2015 with regard to the
show cause notice and the reply of the petitioner is that “a show
cause notice was served to them (petitioner) for reply, but the reply
furnished by them was far from satisfactory.”
5. Once a show cause notice was given and detailed
reply furnished by the parties, it is expected of the authorities to
pass an appropriate order after considering the reply, and not
merely stating that the reply was perused which was not found to
be satisfactory. Why it was not found to be satisfactory ought to
have been disclosed, which has not been done in the present case.
Issuance of notice to show cause and requirement of furnishing
reply is not to be an empty formality. The purpose would not be
achieved if the reply is not considered while passing the order.
6. As we have already stated, the contract was in
operation at the time when the impugned order was passed, or else
the question of rescinding the contract would not have been there.
The extension granted by the opp. parties from time to time,
without imposing any cost or penalty on the petitioner, would itself
make it clear that the delay was not due to the fault of the
petitioner but because of the shortcoming or fault of the opp.
parties.
7. However, on merits, we find that the impugned order
is devoid of any reason and on this ground alone the order
deserves to be quashed. Merely completing the formality of giving
notice is not sufficient for complying with the principles of natural
justice, as once after the notice is issued and a detailed reply is
given by the party, the authority is duty bound to pass a reasoned
order only after considering the contents of the reply, and not by
whimsically stating that the reply furnished was not found to be
satisfactory.
In view of the aforesaid, we are of the opinion that
this writ petition deserves to be allowed and, accordingly, it is
allowed. The order dated 16.11.2015 passed by the Project
Engineer-opp. party no.3 is quashed. The said opp. party shall,
however, have liberty to pass fresh order in accordance with law
after considering the two replies of the petitioner dated 13.08.2015
and 20.08.2015 filed in response to show cause notice dated
25.07.2015 and meeting the grounds taken in the said replies.
There shall be no order as to costs.
…….......………………
( VINEET SARAN )
CHIEF JUSTICE
……..……………………
( DR. B.R.SARANGI )
JUDGE
Orissa High Court, Cuttack
Dated 4th April, 2016/PCP
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