# M/s Kamal Kumar Shukla v. State of U.P. and Others

- **Citation:** (2019) 1 ILRA 1245
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-07-25
- **Case number:** Writ - C No. 24217 of 2019
- **Bench:** Bala Krishna Narayana, Prakash Padia
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-kamal-kumar-shukla-v-state-of-u-p-and-others-44444
- **Pages:** 7

## Headnote

A. Rules 58 and 60 of the U.P. Mines
Minerals (Concession) Rules, 1963:- No
inspection
of

the
spot
and-no
consideration of the application of the
petitioner - no show-cause notice or
opportunity
of
personal
hearingcancelling the lease of the petitionerforfeiting
the
security
amount
and
blacklisted the petitioner for a period of
two years in exercise of power conferred
under Rules 58 and 60 of the U.P. Mines
Minerals (Concession) Rules, 1963.

The fundamental purpose behind the serving
of show cause notice is to make the notice
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. (Para-15)
B. Article 14, Constitution of India -
speaks of equality before the law and
equal protection of the laws. Equality of
opportunity should apply to matters of
public contracts

 (Para-17)

Blacklisting has the affect of preventing a
person from the privilege and advantage of
name into relationship with the Government
for purpose of aim. The fundamentals of fair
play require that a person concerned should
be given an opportunity to represent his case.
There is a complete failure to follow due
process,

Writ Petition allowed.

CHRONOLOGICAL LIST OF CASES CITED:

1:- (2014) 9 SCC 105 , Gorkha Security
Services Vs. Government (NCT of Delhi) and
others

2:- (1975) 1 SCC 70, Erusian Equipment &
Chemicals Ltd. Vs. State of West Bengal

3:- (1989) 1SCC 229, Raghunath Thakur Vs.
State of Bihar
4:- (2012) 11 SCC 257, Patel Engg. Ltd. v.
Union of India

5:- (1990) 3 SCC 752, M/s Mahabir Auto Stores
&Ors. Vs. Indian Oil Corporation Ltd. (E-7)

## Text

1 All. M/s Kamal Kumar Shukla Vs. State of U.P. and Others
1245
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 25.07.2019

BEFORE
THE HON'BLE BALA KRISHNA NARAYANA, J.
THE HON'BLE PRAKASH PADIA, J.

Writ - C No. 24217 of 2019

M/s Kamal Kumar Shukla ...Petitioner
Versus
State of U.P. and Others ...Respondents

Counsel for the Petitioner:
Sri Suraj Singh, Sri Mukesh Prasad

Counsel for the Respondents:
C.S.C.

A. Rules 58 and 60 of the U.P. Mines
Minerals (Concession) Rules, 1963:- No
inspection
of

the
spot
and-no
consideration of the application of the
petitioner - no show-cause notice or
opportunity
of
personal
hearingcancelling the lease of the petitionerforfeiting
the
security
amount
and
blacklisted the petitioner for a period of
two years in exercise of power conferred
under Rules 58 and 60 of the U.P. Mines
Minerals (Concession) Rules, 1963.

The fundamental purpose behind the serving
of show cause notice is to make the notice
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. (Para-15)
B. Article 14, Constitution of India -
speaks of equality before the law and
equal protection of the laws. Equality of
opportunity should apply to matters of
public contracts

 (Para-17)

Blacklisting has the affect of preventing a
person from the privilege and advantage of
name into relationship with the Government
for purpose of aim. The fundamentals of fair
play require that a person concerned should
be given an opportunity to represent his case.
There is a complete failure to follow due
process,

Writ Petition allowed.

CHRONOLOGICAL LIST OF CASES CITED:

1:- (2014) 9 SCC 105 , Gorkha Security
Services Vs. Government (NCT of Delhi) and
others

2:- (1975) 1 SCC 70, Erusian Equipment &
Chemicals Ltd. Vs. State of West Bengal

3:- (1989) 1SCC 229, Raghunath Thakur Vs.
State of Bihar
4:- (2012) 11 SCC 257, Patel Engg. Ltd. v.
Union of India

5:- (1990) 3 SCC 752, M/s Mahabir Auto Stores
&Ors. Vs. Indian Oil Corporation Ltd. (E-7)

(Delivered by Hon'ble Prakash Padia, J.)

1. Heard Sri Mukesh Prasad, learned
Senior Advocate, assisted by Sri Suraj
Singh, learned counsel for the petitioner
and
Smt.
Archana
Singh,
learned
Additional
Chief
Standing
Counsel
representing respondents-State.

2. The petitioner has preferred the
present writ petition challenging the order
passed
by
the
District
Magistrate
Prayagraj dated 21.06.2019, copy of
which is appended as Annexure 1 to the
writ petition. A further prayer was also
made to issue a mandamus directing the
1246 INDIAN LAW REPORTS ALLAHABAD SERIES
respondents to adjust the security amount
deposited by the petitioner and to refund
the balance amount with interest after
adjusting royalty on quantity of minerals
excavated by the petitioner.

3. Facts in brief as contained in the
writ petition are that as per New
Government Policy-2017, a Government
order for settlement of lease under
Chapter-IV by e-tender/e-auction dated
14.8.2017 was issued and the Uttar
Pradesh Miner Minerals (Concession) (43
amendment) Rules, 2017 (hereinafter
referred to as "the Amended Rules,
2017") framed thereunder. Mining leases
were to be granted as per the procedure
prescribed under the statutory Rules and
the Government Order dated 14.8.2017.
In pursuance of the same, a notice dated
7.9.2017 was issued by the District
Magistrate, Prayagraj for settlement of
mining leases of sand and morrum under
the Amended Rules, 2017 in the District
Prayagraj for several mining blocks by etendering.

4.

The
petitioner
after
completing
necessary
formalities,
submitted an application for the grant of
mining lease for mining area in village-
Garwa
Nala
(Khairagarh
Quila)
to
Bhatauti, river Tons measuring five
hectares for a quantity of 75,000/- cubic
meters/year. In this regard, the petitioner
has given a bid of Rs.212 per cubic
meters against the reserve price of Rs.65/-
which being the highest. The same was
duly accepted by the District Magistrate,
Prayagraj/respondent No.2 vide order
dated 02.01.2018 and thereafter, a letter
of intent dated 03.01.2018 was issued to
the petitioner. After issuance of aforesaid
letter of intent, he has deposited requisite
amount namley security money and first
installment of the annual lease amount.
Subsequently, a lease deed was executed
and registered in fvour of the petitoner on
19.02.2018 for a period of five years, i.e.,
from 19.02.2018 to 18.02.2023.

5. It is contended in paragraph 11 of
the Writ Petition that after demarcation,
when the petitioner entered in his mining
area, he found most of the area submerged
and only a small portion of the area about
1/4th was available for mining. In this
regard, he also approached the senior
mining officer Prayagraj and he informed
the petitioner that after rainy season, the
situation will improve and the entire
mining area will be available for mining.
Subsequently,
the
petitioner
also
deposited the second installment, i.e.,
Rs.39,75,000/- towards his lease amount
on 27.06.2018.

6. In this regard, the petitioner also
moved an application on 28.06.2018 before
the Senior Mine Officer Prayagraj to get the
spot inspection of the area allocated to the
petitioner to verify that area of the petitioner is
submerged and to cancel the lease deed and
refund the amount deposited by him. It is
further contended that after expiry of the rainy
season, the petitioner went to his mining area
to start mining operation but he found that the
situation is the same and only about 25% of
the mining area is available for mining. In this
background, the petitioner again submitted an
application dated 15.2.2019 addressed to the
Senior Mines Officer, Prayagraj with a request
to cancel the tender (lease of the petitioner),
copy of the letter dated 15.02.2019 is
appended as Annexure 6 to the writ petition.

7. It is further contended in paragraph
18 of the writ petition that surprisingly, instead
of taking any action on the application of the
petitioner and making the entire area available
to the petitioner for carrying out mining
1 All. M/s Kamal Kumar Shukla Vs. State of U.P. and Others
1247
operation, the Senior Mines Officer, Prayagraj
kept
on
issuing
demand
notices
on
12.09.2018, 30.11.2018, 20.02.2019 and
26.04.2019 demanding installments of lease
amount without addressing the issue of the
petitioner regarding non-availability of the
complete mining area allotted to the petitioner.

8. It is further contended that
respondent
No.2/District
Magistrate,
Prayagraj without inspecting the spot and
without considering the application of the
petitioner and giving any show-cause
notice or opportunity of personal hearing,
passed
the
impugned
order
dated
21.06.2019 cancelling the lease of the
petitioner forfeiting the security amount
and blacklisted the petitioner for a period
of two years in exercise of power
conferred under Rules 58 and 60 of the
U.P. Mines Minerals (Concession) Rules,
1963.

8. It is contended by Sri Mukesh
Prasad, learned Senior Counsel that the
order impugned passed by the respondent
No.2 is arbitrary, unjust, illegal and liable
to be set aside by this Court due to
following reasons :-

(i) No opportunity of personal
hearing was given to the petitioner before
passing the order impugned by which not
only the lease of the petitioner was
cancelled, security amount was forfeited
but he has also been blacklisted for two
years.

(ii) The show cause notice was
issued to the petitioner by Senior Mines
Officer but the order impugned has been
passed by the District Magistrate.

(iii) Nothing has been stated in
the
show
cause
notice
regarding
blacklisting of the petitioner but in the
impugned order, the petitioner was also
blacklisted
without
giving
any
opportunity of hearing as such the order
of blacklisting the petitioner is in
complete violation of principles of natural
justice.

9. On the other hand, it is contended
by
Smt..
Archana
Singh,
learned
Additional Chief Standing Counsel, that
since terms and conditions contained in
the lease deed were violated by the
petitioner, therefore, the action was
rightly taken by the respondent No.2. It is
further contended by her that the order
impugned in the present writ petition is
absolutely perfect and valid order does
not warrant any interference specially
under Article 226 of the Constitution of
India.

10. Heard learned counsel for the
parties and perused the record. With the
consent of learned counsel for the parties,
this writ petition is disposed of finally at
the admission stage itself.

11. The petitioner has assailed the
order
dated
21.06.2019
passed
by
respondent No.2/District Magistrate by
which reply submitted by the petitioner
was rejected and an order was passed
directing the petitioner to deposit a sum of
Rs.1,66,95,000/- towards installments of
lease amount apart from Rs.4,92,900/-
T.C.S. and Rs.24,64,500/- as contribution
to District Mineral Foundation Trust. It
was further ordered that otherwise the
same will be realized as per the provisions
of the Land Revenue Act. Apart of the
same, the petitioner was also blacklisted
for a period of two years.

12. From perusal of the record it is
clear that before passing the impugned
order no opportunity of hearing was given
1248 INDIAN LAW REPORTS ALLAHABAD SERIES
to the petitioner. It is also clear from perusal
of the record that notices were issued by the
Senior Mines Officer but the impugned order
was passed by the respondent No.2, i.e.
District Magistrate Prayagraj. Apart from the
same, it is also clear that although nothing is
contained in the show cause notice regarding
factum of blacklisting of the petitioner but
while passing the order impugned, the
petitioner was also blacklisted for a period of
two years.

13. The order impugned is in two
parts:-

(i)
recovery
against
the
petitioner

(ii) blacklisting of the petitioner
for two years.

14. Insofar as the first part is
concerned, it is clear from the record that
the notices were issued to the petitioner
by the Senior Mines Officer, Prayagraj
but the order was passed by District
Magistrate Prayagraj, in this view of the
matter, we are of the opinion that the
order passed by the District Magistrate
Prayagraj is in complete violation of
principles of natural justice.

15. Insofar as the blacklisting of the
petitioner is concerned, From perusal of the
impugned order, we find that the respondents
have proceeded on the basis of a show cause
notice. Nothing has been stated in the show
cause notice regarding blacklisting of the
petitioner. Learned Standing Counsel has not
been able to refute this fact on record. In our
opinion, the issue which was not raised even
in the show cause notice, therefore, could not
be made the basis for blacklisting of the
petitioner.

16. 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. In the case of Gorkha
Security Services Vs. Government (NCT
of Delhi) and others (2014) 9 SCC 105,
the Supreme Court was pleased to hold
that it is incumbent on the part of the
department to state in show cause notice
that the competent authority intended to
impose such a penalty of blacklisting, so
as to provide adequate and meaningful
opportunity to show cause against the
same.
Relevant
paragraph
namely
paragraph 27 of the aforesaid judgement
is quoted below:-

"27. We are, therefore, of the
opinion that it was incumbent on the part
of the Department to state in the show
cause notice that the competent authority
intended to impose such a penalty of
blacklisting, so as to provide adequate
and
meaningful
opportunity
to
the
appellant to show cause against the same.
However, we may also add that even if it
is not mentioned specifically but from the
reading of the show cause notice, it can
1 All. M/s Kamal Kumar Shukla Vs. State of U.P. and Others
1249
be clearly inferred that such an action
was proposed, that would fulfill this
requirement.
In
the
present
case,
however, reading of the show cause
notice does not suggest that noticee could
find out that such an action could also be
taken. We say so for the reasons that are
recorded hereinafter."

17. In the case of Erusian
Equipment & Chemicals Ltd. Vs. State of
West Bengal (1975) 1 SCC 70, it was
held
by
the
Supreme
Court
that
blacklisting has the affect of preventing a
person from the privilege and advantage
of name into relationship with the
Government for purpose of aim. It was
held by the Supreme Court in the
aforesaid case that the fundamentals of
fair play require that a person concerned
should be given an opportunity to
represent his case. Paragraphs 12 and 20
of the said judgment is quoted below :-

"12. Under Article 298 of the
Constitution the executive power of the
Union and the State shall extend to the
carrying on of any trade and to the
acquisition, holding and disposal of
property and the making of contracts for
any purpose. The State can carry on
executive function by making a law or
without making a law. The exercise of
such powers and functions in trade by the
State is subject to Part III of the
Constitution. Article 14 speaks of equality
before the law and equal protection of the
laws. Equality of opportunity should
apply to matters of public contracts. The
State has the right to trade. The State has
there the duty to observe equality. An
ordinary individual can choose not to
deal with any person. The Government
cannot choose to exclude persons by
discrimination. The order of blacklisting
has the effect of depriving a person of
equality of opportunity in the matter of
public contract. A person who is on the
approved list is unable to enter into
advantageous
relations
with
the
Government because of the order of
blacklisting. A person who has been
dealing with the Government in the matter
of sale and purchase of materials has a
legitimate interest or expectation. When
the State acts to the prejudice of a person
it has to be supported by legality.

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."

18. Again in the case of Raghunath
Thakur Vs. State of Bihar [(1989) 1 SCC
229]
the
aforesaid
principles
was
reiterated in the following manner: (SCC
p. 230, para 4).

"4. ........ But it is an implied
principle of the rule of law that any order
having civil consequence should be
passed only after following the principles
of natural justice. It has to be realised
that blacklisting any person in respect of
business ventures has civil consequence
for the future business of the person
concerned in any event. Even if the rules
do not express so, it is an elementary
principle of natural justice that parties
affected by any order should have right of
being heard and making representations
against the order. In that view of the
1250 INDIAN LAW REPORTS ALLAHABAD SERIES
matter, the last portion of the order
insofar as it directs blacklisting of the
appellant in respect of future contracts,
cannot be sustained in law.........."

20. Thus, there is no dispute
about the requirement of serving showcause notice. We may also hasten to add
that once the show-cause notice is given
and opportunity to reply to the showcause notice is afforded, it is not even
necessary to give an oral hearing. The
High Court has rightly repudiated the
appellant's attempt in finding foul with the
impugned order on this ground. Such a
contention was specifically repelled in
Patel Engg. [Patel Engg. Ltd. v. Union of
India, (2012) 11 SCC 257 : (2013) 1 SCC
(Civ) 445]."

19. In the case of M/s Mahabir Auto
Stores &Ors. Vs. Indian Oil Corporation
Ltd. (1990) 3 SCC 752 it was held by the
Supreme Court that arbitrariness and
discrimination in every matter is subject
to judicial review. Paragraph 11 of the
aforesaid judgement is quoted below :-

"It is well settled that every
action of the State or an instrumentality of
the State in exercise of its executive
power, must be informed by reason. In
appropriate cases, actions uninformed by
reason may be questioned as arbitrary in
proceedings under Article 226 or Article
32 of the Constitution. Reliance in this
connection may be placed on the
observations of this Court in M/s Radha
Krishna Agarwal &Ors. v. State of Bihar
&Ors., [1977] 3 SCC 457.1t appears to
us, at the outset, that in the facts and
circumstances of the case, the respondentcompany IOC is an organ of the State or
an instrumentality of the State as
contemplated under Article 12 of the
Constitution. The State acts in its
executive power under Article 298 of the
Constitution in entering or not entering in
contracts with individual par- ties. Article
14
of
the
Constitution
would
be
applicable to those exercises of power.
Therefore, the action of State organ under
Article 14 can be checked. M/s Radha
Krishna Agarwal v. State of Bihar,
(supra) at p. 462, but Article 14 of the
Constitution cannot and has not been
construed as a charter for judicial review
of State action after the contract has been
entered into, to call upon the State to
account for its actions in its manifold
activities by stating reasons for such
actions. In a situation of this nature
certain activities of the respondent
company which constituted State under
Article 12 of the Constitution may be in
certain circumstances subject to Article 14 of
the Constitu- tion in entering or not entering
into contracts and must be reasonable and
taken only upon lawful and relevant
consideration, it depends upon facts and
circumstances of a particular transaction
whether heating is necessary and reasons
have to be stated. In case any right conferred
on the citizens which is sought to be
interfered, such action is subject to Article 14
of the Constitution, and must be reasonable
and can be taken only upon lawful and
relevant grounds of public interest. Where
there is arbitrariness in State action of this
type of entering or not entering into
contracts, Article 14 springs up and judicial
review strikes such an action down. Every
action of the(1975) 1 SCC 70. State
executive authority must be subject to rule of
law and must be informed by reason. So,
whatever be the activity of the public
authority, in such monopoly or semimonopoly dealings, it should meet the test of
Article 14 of the Constitution. If a
Governmental action even in the matters of
entering or not entering into contracts, fails
1 All. M/s Modi Rubber Ltd. Vs. State of U.P. And Others
1251
to satisfy the test of reasonableness, the same
would be unrea- sonable. In this connection
reference may be made to E.P. Royappa v.
State of Tamil Nadu &Anr., [1974] 4 SCC 3;
Maneka Gandhi v. Union of India &Anr.,
[1976] 1 SCC 248; Ajay Hasia &Ors. v.
Khalid Mujib Sehravardi &Ors., [1981] 1
SCC 722; R.D. Shetry v. InternationalAirport
Authority of India &Ors., [1979] 3 SCC 1 and
also Dwarkadas Marlaria and sons v. Board
of Trustees of the Port of Bombay, [1989] 3
SCC 293. It appears to us that rule of reason
and
rule
against
arbitrariness
and
discrimination, rules of fair play and natural
justice are part of the rule of law applicable in
situation or action by State instrumentality in
dealing with citizens in a situation like the
present one. Even though the rights of the
citizens are in the nature of contractual rights,
the manner, the method and motive of a
decision of entering or not entering into a
contract, are subject to judicial review on the
touchstone of relevance and reasonableness,
fair play, natural justice, equality and nondiscrimination in the type of the transactions
and nature of the dealing as in the present
case."

20. Since in the facts of the present
case, there is a complete failure to follow
due process, we find ourselves unable to
sustain the order dated 21.06 .2019 passed
by the respondent No.2.

21. We accordingly allow the writ
petition and quash the the order dated
21.06.2019. We further clarify that in case
the respondents do choose to initiate fresh
proceedings against the petitioner, we
leave it open to them to do so subject to
the observation that the proceedings if
initiated
shall
be
undertaken
in
accordance with law and the observations
appearing herein above.
----------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 29.07.2019

BEFORE
THE HON'BLE MRS. SUNITA AGARWAL, J.

Writ-C No. 26661 of 2007 connected with Writ
C No. 25993 of 2007

M/s Modi Rubber Ltd. ...Petitioner
Versus
State of U.P. And Others ...Respondents

Counsel for the Petitioner:
Sri Vijay Sinha, Sri Anurag Khanna, Sri
Syed Fahim, Sri Syeed Fahim Ahmed, Sri
V.B. Singh.

Counsel for the Respondents:
C.S.C., Sri C.K. Rai, Sri F. Rai, Ghazala
Bano Quadri, Sri Rajendra Kumar Pandey,
Sri
Samir
Sharma,
Sri
Swatashwa
Agarwal, Sri Y.K. Sinha

A.
Whether
the
Additional
Labour
Commissioner/Prescribed
Authority
under the Timely Payment of Wages Act,
1978 had exceeded in its jurisdiction in
issuing the recovery certificates while
exercising power under Section 3 of the
said Act ?

B. Whether there was an illegal strike or
valid closure of the factory and the
denial on the part of the employer to pay
wages to the workmen since 7.8.2001
was "default" on its part of the employer
within the meaning of the Act, 1978 or
there was a valid dispute with regard to
entitlement of the workmen to wages
which
required
adjudication
by
an
industrial adjudicator ?

C.
Whether
the
settlement
dated
14.1.2002
was
binding
on
all
the
workmen or the union ?

The
enquiry
conducted
by
the
Labour
Commissioner to record reasons while arriving