# Sudhir Kumar Singh v. State of U.P. & Ors

- **Citation:** (2020) 1 ILRA 1975
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-12-11
- **Case number:** Writ-C No. 25389 of 2019
- **Bench:** Ramesh Sinha, Ajit Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/sudhir-kumar-singh-v-state-of-u-p-ors-45105
- **Pages:** 18

## Headnote

A. Administrative law - principles of
natural justice - administrative exercise
of power - the authority exercising power
has to not only render due application of
mind but also to follow the procedure
which would not render the entire action
arbitrary - whatever is arbitrary, is hit by
Article 14 of the Constitution of India -
held - In the present case only the
procedure that was followed by the
respondents in taking impugned action
was not only quite ex parte but also
under the executive fiats of the Special
Secretary of the Government which was
quite uncalled for - Merely because the
orders have come from the higher
echelons
of
the
Government
functionaries, a Corporation which is an
autonomous
body
would
not
mechanically act in compliance thereof
and
then
administrative
authority,
therefore, is required to render due
application of mind. (Para 21)

Order impugned is basically based on the
enquiry report prepared by the Managing
Director himself and that the enquiry was
conducted in the ex parte manner and the
Managing
Director
failed
to
offer
any
opportunity of hearing to the petitioner before
passing the order impugned which has the
effect of terminating the agreement for no
justifiable reason to hold that the petitioner
was at fault at any point of time - Element of
bias therefore, under the circumstances at the
end of Managing Director, cannot be ruled out
- The order impugned, therefore, terminating
the agreement dated 26.7.2019 cannot be
sustained in law. (Para 35)

Held: - The petitioner was entitled to an
opportunity of hearing before the order was
passed and since the petitioner has not been
issued any show cause notice, order cannot
sustain in law. The enquiry report submitted by
the Managing Director as well as the order
passed by the Special Secretary quashed. (Para
27 & 36)

Writ Petition allowed. (E-7)

List of cases cited: -

## Text

_Characters 0–39,745 of 62,053. This is a partial read: ask again with offset=39745 for what follows._

1976 INDIAN LAW REPORTS ALLAHABAD SERIES
same. Therefore, the proceedings under
section 33(4) & (5) were rightly initiated.

25. In view of the aforesaid facts and
circumstances of the case, the impugned
order does not call for any interference by
this Court. The question, framed above, is
answered, accordingly, in favour of the
State and against the petitioner.

26. The writ petition fails and it is
hereby dismissed.

27. No order as to costs.
----------
(2020)1ILR 1975

ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 11.12.2019

BEFORE
THE HON'BLE RAMESH SINHA, J.
THE HON'BLE AJIT KUMAR, J.

Writ-C No. 25389 of 2019

Sudhir Kumar Singh ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Mr. Ravikant, Sri Imran Syed

Counsel for the Respondents:
C.S.C., Sri Rajendra Singh Chauhan, Sri
Sushil Kumar Rao, Sri Kunal Shah

A. Administrative law - principles of
natural justice - administrative exercise
of power - the authority exercising power
has to not only render due application of
mind but also to follow the procedure
which would not render the entire action
arbitrary - whatever is arbitrary, is hit by
Article 14 of the Constitution of India -
held - In the present case only the
procedure that was followed by the
respondents in taking impugned action
was not only quite ex parte but also
under the executive fiats of the Special
Secretary of the Government which was
quite uncalled for - Merely because the
orders have come from the higher
echelons
of
the
Government
functionaries, a Corporation which is an
autonomous
body
would
not
mechanically act in compliance thereof
and
then
administrative
authority,
therefore, is required to render due
application of mind. (Para 21)

Order impugned is basically based on the
enquiry report prepared by the Managing
Director himself and that the enquiry was
conducted in the ex parte manner and the
Managing
Director
failed
to
offer
any
opportunity of hearing to the petitioner before
passing the order impugned which has the
effect of terminating the agreement for no
justifiable reason to hold that the petitioner
was at fault at any point of time - Element of
bias therefore, under the circumstances at the
end of Managing Director, cannot be ruled out
- The order impugned, therefore, terminating
the agreement dated 26.7.2019 cannot be
sustained in law. (Para 35)

Held: - The petitioner was entitled to an
opportunity of hearing before the order was
passed and since the petitioner has not been
issued any show cause notice, order cannot
sustain in law. The enquiry report submitted by
the Managing Director as well as the order
passed by the Special Secretary quashed. (Para
27 & 36)

Writ Petition allowed. (E-7)

List of cases cited: -

1. JV v. Central Organization, 2018 (5) AWC
4772

2. Employees State Insurance Corporation and
Anr v. Jadain, (2006) 6 SCC 581

3. M/s. Ambe Couriers v. State of U.P. & 3 Ors.,
(Writ-C No. 45762 of 2014

4. U.P. State Warehousing Corporation vs. Sunil
,2013 (3) ADJ 745
1 All. Sudhir Kumar Singh Vs. State of U.P. & Ors.
1977
5. Sahara India (F) Lko v. Commissioner of
Income Tax & another, (2008) 14 SCC 151

6. Securities and Exchange Board of India v.
Akshay Infrastructure Pvt. Ltd., (2014) 11 SCC
112

7.
Dharampal
Satyapal
Ltd.
v.
Deputy
Commissioner, Central Excise, (2015) 8 SCC
519

8. United India Assurance Co. Ltd. v. Manubhai
Dharmshree Bhai and others, (2008) 10 SCC
404

9. Bharti Airtel v. Union of India, (2015) 12 SCC
1

10.
ECI-SPIC-SMO-MCML(JV)
vs
Central
Organisation

11. State of Punjab & Ors v. Raja Ram & Ors,
AIR 1981 SC 1694

12.
Ramana
Dayaram
Shetty
v.
The
International Authority of India,1979 (3) SCR
1014: (AIR 1979 SC 1628

13. U.P. State Warehousing v. Sunil Kumar
Srivastava and another, 2013(3) ADJ 745

14. Manohar Lal Sharma v. Narendra Damodar
Das Modi, (2019) 3 SCC 25

(Delivered by Hon'ble Ramesh Sinha, J.)

1. Heard Sri Imran Syed, learned
counsel for the petitioner and Sri Kunal
Shah, learned counsel for the respondents.
Perused the record.

2. In this petition invoking our extraordinary jurisdiction under Article 226 of
the Constitution of India the petitioners
have sought relief in the nature of a writ of
certiorari for quashing the order dated
26.07.2019
whereby
the
petitioner's
agreement pursuant to a notice invoking
tender dated 26.5.2018 has come to be
canceled.

3. Briefly stated facts of the case are
that petitioner who is a registered
contractor with the respondents-Ware
Housing Corporation applied against a
notice invoking tender dated 1.6.2018 for
the work to be carried out for Mirzapur,
Bhawanipur-1, Bhawanipur-2 and tendu
centres with respect to food grains of Food
Corporation of India. The petitioner
having offered the lowest rate to undertake
the work to be assigned pursuant to the
tender notice was selected in the L-1
category and after approval of the higher
authorities the agreement came to be
executed between the Corporation and the
petitioner on 13.7.2018 for work at
Bhawanipur-1,
Mirzapur
region.
No
sooner did the parties sign the agreement
the petitioner started working as per the
terms of the agreement. It appears that
while others were also selected for
different region for different work some
complaint got lodged by one Pramod
Kumar Singh with the Special Secretary,
Department of Co-operatives, Government
of U.P., Lucknow, Uttar Pradesh. The
Special Secretary wrote a letter to the
Managing Director of the Ware Housing
Corporation on 30.5.2019 to hold an
enquiry on two points: one related to a
firm namely, Iqbal Ahmad Ansari qua its
registration and renewal and it being
black-listed already; the other point was
with regard to the cancellation of tender
notice dated 16.4.2018 and 5.5.2018
without assigning any reason and then
floating a new tender notice dated
16.6.2018 and accepting higher prices for
the distribution of work. While this letter
was written by the Special Secretary to the
Managing Director, it appears that the
Special Secretary also wrote a letter
directly to the Commissioner of the
division to hold administrative enquiry of
the complaint made in the matter. The
1978 INDIAN LAW REPORTS ALLAHABAD SERIES
Commissioner of the Vindhyachal division
obtained some report from the Ware
Housing Corporation, Lucknow dated
13.7.2018 and proceeded to record a
finding to the effect that the notice inviting
tender was a sheer formality with some
ulterior motive and the officers of the
Ware Housing Corporation in a very
hurried manner approved the tender
application, inviting application only from
the contractor registered with U.P. State
Ware Housing Corporation, Vindhyachal;
and the officers who were involved in the
tender process forming a Committee were
wrongly appointed in the sense that a
contract employee was part of the tender
committee. So basically complaint was
that in the e-tender process only registered
contractors were invited which was
objectionable because had there been
invitation from the open market there
would have been more competition and the
tender applicants would have offered an
accurate price and that the work has been
allotted in the contract at a very higher
cost to say to much more that 100 % of the
earlier one. In its concluding part the
report contained a finding to the effect that
no
survey
was
conducted
for
the
assessment of the cost and that the
recommendation was made by the officers
concerned in a very hasty manner and that
the Chief Regional Manager did not act
very fairly in the matter. After the said
report was submitted it appears that the
Managing Director of the State Ware
Housing Corporation himself conducted an
enquiry in compliance of the order of the
Special Secretary dated 30.5.2019 and
submitted a report to the Chief Secretary
on 14.6.2019. The report has been placed
before this Court by learned counsel for
the petitioner which is taken on record and
the learned counsel appearing for the
respondent-Corporation does not dispute
the same. In the report in the ultimate
conclusion the Managing Director has led a
finding to the effect that the earlier notice
inviting tender dated 1.4.2018 was canceled on
the ground that the lowest cost was not feasible
and accordingly was not accepted and
thereafter a Committee was constituted and
that because of some incorrect application
moved by one Uday Construction pursuant to
the notice inviting tender dated 1.4.2018 and
for that reason it was canceled being a result of
concealment of forfeiture of the security
amount and that was not proper to cancel the
notice inviting tender for the other region on
same ground. It is on the basis of this enquiry
report which the Managing Director himself
got prepared and is addressed to the Chief
Secretary, Government of U.P., Lucknow that
the impugned order has come to be passed on
26.7.2019 canceling the entire tender process
which had already been undertaken and also
the consequential contract entered between the
petitioner and the respondent-corporation.
With the cancellation of the agreement under
the order impugned dated 26.7.2019 the
respondents have proceeded to float new
tender notice for the same work which the
petitioner was carrying out at the time of
passing of the impugned order.

4. Assailing the order impugned,
learned counsel for the petitioner has
argued following points:

a) The respondents were not
justified in unilaterally canceling the
written agreement with the petitioner after
it had been executed duly with the
approval of the higher authorities on
13.7.2019 and the stakes of the petitioner
were involved it having invested huge
money and incurred cost for carrying out
the work under the contract;

b) Neither the enquiry report
submitted by the Divisional Commissioner
1 All. Sudhir Kumar Singh Vs. State of U.P. & Ors.
1979
dated 29.6.2019 nor, that of the Managing
Director
dated
14.6.2019
was
ever
supplied to the petitioner at any point of
time asking for his explanation in respect
of the proposed action;

c) None of the enquiry reports
indict the petitioner in any manner for any
foul play in getting its tender application
accepted and approved by the officers of
the
Ware
House
Corporation
and
ultimately
the
agreement
with
the
petitioner. The petitioner being not guilty
of any charge of malafides, conspiracy or
otherwise also not guilty of violation of
any terms and conditions of the agreement,
whether the respondents were justified in
canceling the agreement.

d) The respondent-Authority did
not apply its independent mind to the
enquiry
report
and
moreover,
the
Managing
Director
having
himself
submitted the report of enquiry was not
justified in taking the decision as an
element of bias would vitiate the entire
action. The Authority has to apply its
independent mind and on the plea that no
one can be judge in his own case, the
respondent-Managing
Director
being
himself the Inquiry Authority, was not
justified in taking action on the basis of the
report submitted by him, and

e)
The
Ware
Housing
Corporation being an autonomous body, it
is none of the business of the Secretaries
of the Government to dictate terms for the
working of the Corporation and its
officials nor the respondent-Managing
Director is justified in taking action on the
dictates of the Special Secretary and
hence, he submits that the order is vitiated
in law and is liable to be quashed.

5. Per contra, the argument of
learned
counsel
for
the
respondent
Corporation is that the decision taken by
the Managing Director in rescinding the
contract, cannot be faulted with as it is
based on a clear finding of facts with
regard to the wrongful action in canceling
the earlier notice inviting tender on the
ground that the prices offered were not
justified and yet all of a sudden tenders
were accepted at a very exorbitant prices,
inasmuch as, no survey having been
conducted, the fixation of cost/price of the
work was not proper. It is argued that
Regional Manager of the Warehousing
Corporation was found prima facie guilty
of entire affair and the departmental
inquiry has been initiated against him to
fix the liability. It is argued that it is a case
where huge public money is at stake and
the error has got arrested, may be, after the
execution of the agreement in the public
interest, it should be taken to be a solemn
act of the State owned Corporation and for
technical reasons like non issuance of
notice, show cause or for non compliance
of principles of natural justice the order
should not be set aside. He submits that
whenever public money is involved and it
is a matter of inviting applications for
work from the open market through Etendering
process,
transparency
and
fairness are the most important factors that
are to be taken care of and if anything
found to be vitiated for malafides on the
part of those who are in helm of affairs,
such action as has been taken in the
present case is quite imperative. He has
argued that the principles of natural justice
could not be put in a straight jacket
formula
to
apply
in
every
case
automatically. It is submitted that in
matters of contract, the principles that are
attracted in testing the administrative
decision making, will not be applicable.
He argues that the authority has neither
exercised any quasi judicial function in
passing the order nor, can be said to have
1980 INDIAN LAW REPORTS ALLAHABAD SERIES
acted in a malafide manner. He submits
that the findings have come to be recorded in
both the inquiry reports and the Managing
Director having rendered his due application of
mind in the matter, the order cannot be said to
be vitiated in law. He has relied upon several
judgments of Apex Court like in Rajasthan
Housing Board (2007) 1 SCC 477; ECISPIC
MCM (JV v. Central Organization 2018 (5)
AWC 4772; Employees State Insurance
Corporation and Anr v. Jadain (2006) 6 SCC
581, M/s. Ambe Couriers v. State of U.P. & 3
Ors (Writ-C No. 45762 of 2014, decided on
09.09.2014);,

6. Whereas, learned counsel for the
petitioner
has
relied
upon
various
authorities in support of the arguments
advanced and to quote: U.P. State
Warehousing Corporation vs. Sunil 2013
(3) ADJ 745; Sahara India (F) Lko v.
Commissioner of Income Tax & another
(2008) 14 SCC 151; Securities and
Exchange Board of India v. Akshay
Infrastructure Pvt. Ltd. (2014) 11 SCC
112; Dharampal Satyapal Ltd. v. Deputy
Commissioner, Central Excise (2015) 8
SCC 519; United India Assurance Co. Ltd.
v. Manubhai Dharmshree Bhai and others
(2008) 10 SCC 404; Bharti Airtel v. Union
of India (2015) 12 SCC 1.

7. Having heard learned counsels for
the parties and their arguments advanced
across the bar and having perused the
records, we find that following basic
questions arise for consideration by us:

(a) Whether the two enquiry
reports
are
procedurally
defective
inasmuch
as
the
findings
returned
thereunder based upon no material and
hence perverse;

(b)
Whether
the
respondent
Managing
Director
was
justified
in
canceling the written agreement with the
petitioner after a lapse of a year, without
putting him to notice;

(c)
Whether
being
an
autonomous body, Corporation could not
have been directed to take action in
particular manner and Managing Director
was not justified in cancelling the
agreement under an executive fiat of
Special Secretary; and

(d) Whether the order passed by
Managing Director is vitiated for bias as
he himself had been Inquiry Officer and
without inviting the petitioner to explain in
his defense he himself conducted the
inquiry and then on the basis of report
prepared by him, he proceeded to cancel
the agreement.

8. In so far as the first question is
concerned, Mr. Kunal Shah, learned
counsel for the respondent Corporation has
very fairly admitted that there was no
notice ever issued to the petitioner prior to
passing of the impugned order dated
26.07.2019.
It
is
admitted
to
the
Corporation that the agreement was duly
entered by the Corporation with approval
of the competent authority. The records
relating to the earlier notices inviting
tender dated 06.01.2018 and 31.03.2018
were well within the knowledge of the
respondents. The reasons assigned for the
cancellation of the same, if at all any, were
well
within
the
knowledge
of
the
Corporation. Floating of a new tender
notice dated 01.06.2018 was never put to
challenge by any person at any point of
time and those who had applied for the
tender had duly participated and it is the
petitioner who was selected for the Region
Bhawanipur-I. Lowest price bid offered by
the petitioner came to be considered by the
higher officials and those who had been
entrusted with the task to verify the
1 All. Sudhir Kumar Singh Vs. State of U.P. & Ors.
1981
records, approved the same. There is a survey
report also available on record dated
19.04.2018 in respect of various centres to
have necessary prima facie opinion of the
possible rates so that the rates could be fixed
after appropriate assessment while evaluating
the tender bid application insofar as the
present notice inviting tender is concerned.

9. We have noticed that a private
complaint was lodged by one Pramod Kumar
Singh who was not the applicant against the
notice inviting tender but the same seemed to
have been entertained by the Special Secretary
and instead of simply forwarding the complaint
to the Managing Director, he not only directed
the Managing Director under his letter dated
30.05.2019 to hold inquiry on two points but at
the same time by way of abundant precaution, for
the reasons best known to him, he also ordered
the Divisional Commissioner of Mirzapur
Division to hold an administrative inquiry. The
Managing Director instead of applying his mind
independently, seems to have mechanically acted
on the order of Special Secretary and proceeded
to hold inquiry himself instead of appointing any
inquiry officer, while on the other hand the
Divisional Commissioner also conducted an
inquiry and and submitted a separate report dated
29.06.2019. It is after the report dated 14.6.2019
was submitted by the Managing Director to the
Special Secretary, the Special Secretary issued an
executive fiat vide letter dated 16.07.2018
directing for cancellation of the tenders already
floated and also to initiate disciplinary
proceedings against the erring officials and also
called for a compliance report.

10. Perusal of two reports and the
ultimate findings returned by the two officers
namely the Divisional Commissioner, the
following conclusion has been drawn:

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11. If one goes through the
conclusive findings returned by the two
inquiry officers, one inquiry officer
namely Managing Director records that
since relating to the rates the controversy
had arisen earlier and the notice inviting
tender was canceled on 01.04.2018, the
notice inviting tenders in respect of other
centers should not have been canceled. So
the conclusion drawn is that the earlier
notice inviting tender dated 01.04.2018
was
wrongly
canceled.
The
finding
returned therefore, is that earlier notice
inviting tender dated 01.04.2018 was
wrongly canceled. The natural corollary
therefore, drawn is, as it appears, that the
subsequent notice inviting tender was
liable to go but no where there is any
finding that there was any error with the
floating of new notice inviting tender nor,
any error in the new tender process
1982 INDIAN LAW REPORTS ALLAHABAD SERIES
pursuant
to
NIT
dated
01.06.2019,
undertaken by the respondent Corporation.
It is worth noticing that there is no
complaint regarding the cancellation of
earlier
notice
inviting
tender.
The
complaint was in respect of tender in
question only.

12. In so far as the other inquiry
report is concerned, the conclusion drawn
is to the effect only that no market survey
was carried out and therefore, the price
fixation was wrong and the concerned
official of the Warehousing Corporation
was therefore, guilty of the entire exercise
of tender undertaken and acceptance
thereof. It is also to be noticed at this stage
that in the inquiry report dated 29.06.2019
the Commissioner has proceeded to
consider the report of the Managing
Director dated 13.07.2018 which does not
discuss anything wrong with the new
tender process. There is no discussion in
the entire inquiry report as to how and
under what circumstances such a finding
has come to be returned, more so, the
survey report which was prepared by the
official
of
the
Corporation
dated
19.04.2018 had not been taken into
account.

13. Insofar as the second inquiry
report is concerned, it also does not reflect
as to what were the materials before the
Managing Director, to record a finding in
respect of the earlier tender except the
complaint. No independent inquiry has
been conducted by the Managing Director
except the fact that he has taken into
account certain data which he claims to be
the foundation to hold that earlier notice
inviting tender was wrongly cancelled.
The question is therefore, when the notice
inviting tender dated 01.06.2019 was in
issue, a finding ought to have been
returned that the process undertaken
pursuant to the notice inviting tender dated
01.06.2019 was vitiated for malafides, but
no such finding has come to be returned.

14. Now in the face of above factual
background and the findings returned by
the two Inquiry Officers, if we look to the
letter written by the Special Secretary to
the Managing Director, Warehousing
Corporation it reflects how executive has
dominated over the freedom of an
autonomous corporation commanding the
Corporation to act in such a manner as
official wants. He issues not only direction
to take an action but also to report back to
him. The letter dated 16.07.2018 of the
Special Secretary is reproduced hereunder:

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1 All. Sudhir Kumar Singh Vs. State of U.P. & Ors.
1983
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QeZ ds tks Vs.Mj fu;e fo:) fd;s x;s gS mUgsa fujLr
djrs gq;s lacaf/kr Hk.Mkjx`gksa ds ,p0 ,.M0 Vh0 dk;Z
gsrq iqu% bZ&Vs.Mfjax ds ek/;e ls Bsdsnkjksa dh fu;qfDr
fd;k tkuk tufgr esa gksxkA

vkids mDr i= fnukWd 14-06-2019 }kjk izsf"kr tkWp
vk[;k esa foU/;kapy e.My esa fnukWd 16-04-2018 dks
Vs.Mj gksus ds QyLo:i izkIr Vs.Mj 1⁄4fuEu nj1⁄2 fcuk
dkj.k crkrs gq;s fujLr fd;s tkus rFkk iqu% nks ekg ds
vUrjky esa Vs.Mj djkrs gq;s cgqr vf/kd njksa ij Vs.Mj
Lohd`r djus dh f'kdk;r dh i`f"V gqbZ gSA blesa {ks=h;
Lrj ds vf/kdkjh 1⁄4foU/;kapy e.My1⁄2 ,oa Lohd`rdrkZ
vf/kdkjh rFkk rRdkyhu izcU/k funs'kd vkSj eq[;ky; ds
lacaf/kr vf/kdkfj;ks dh Hkwfedk Hkh lafnX/k izrhr gksrh gSA

3& vr% eq>s ;g dgus dk funs'k gqvk gS
fd vki vius Lrj ls izdj.k Nkuchu djds tks
'kkldh; /ku dh foRrh; {kfr gqbZ gS] mldk vkadyu
djrs lafyIr /kujkf'k lacaf/kr Bsdsnkj rFkk lacaf/kr
vf/kdkjhx.k ls olwy djus dk;Zokgh dh tk;sA ftl
vf/kdkfj;ksa@ deZpkfj;ksa ds fo:) foHkkxh; dk;Zokgh
igys ls gh izpfyr gS] muds laca/k es bu vkjksiks dks
vfrfjDr vkjksi i= ds :i esa lfEefyr djrs gq;s
fuxZr djus dh dk;Zokgh dh tk;s rFkk izdj.k esa
nks"kh ik;s x;s ftu vf/kdkfj;ksa@ deZpkfj;ksa ds
fo:) dk;Zokgh izpfyr ugha gS] mudks fpfUgr djrs
gq;s foHkkxh; dk;Zokgh dh tk;sA

mfYyf[kr QeksZ ds tks Vs.Mj fu;e fo:)
fd;s x;s gS mUgsa fujLr djrs gq;s lacaf/kr Hk.Mkj
x`gksa ds gS.Mfyax ,.M VakUliksVZ dk;Z gsrq iqu%
bZ&Vs.Mfjax ek/;e ls Bsdsnkjksa dh fu;qfDr dh tk;sA

mDr dk;Zokgh 'kh?kzfr'kh?kz iw.kZ djkrs gq;s
d`r dk;Zokgh ls 'kklu dks voxr Hkh djkus dk
d"V djsaA

Hkonh;
g0 viBuh;
1⁄4eks0 tquhn1⁄2
fo'ks"k lfpo**

15. Now, looking to the contents and
language of this letter, we need to examine
the import of the letter written by the
Special
Secretary
to
the
Managing
Director
in
connection
with
the
controversy in hand, dated 16.7.2018. The
language
in
which
the
concluding
paragraph of the letter has been framed is
quite indicative of a Government order.
Paragraph 3 and the ultimate directions as
contained
in
the
letter
have
been
highlighted in the bold letters and
following is the english translation:

"Accordingly,
I
have
been
directed to ask you to calculate the loss of
public
money
and
to
undertake
accordingly the proceedings for recovery
from the concerned contractor. The
departmental enquiry that is pending
against the officials and employees of the
Corporation in this connection, the charges
that have been found to be proved in your
letter dated 14.6.2019 should be added as
an additional charge and against those
employees who have been found prima
facie guilty of the charges they should also
be proceeded with after they are identified.

The tender that have been
accepted of the aforesaid firm should be
canceled and for the purpose of carrying
out the work under the contract, fresh
notices inviting tender be issued.

The undersigned be informed
about the actions to be taken by you
promptly, as directed here-in-above."

16. We find from the perusal of the
letter of the Managing Director dated
14.6.2019 addressed to the Chief Secretary
that it is in the form of an enquiry,
admittedly ex parte one, as far as
petitioner is concerned and it is on the
basis of the findings returned in the
aforesaid administrative enquiry, that the
Special Secretary has proceeded to pass
the order on 16.7.2018, holding the tender
1984 INDIAN LAW REPORTS ALLAHABAD SERIES
process pursuant to the notice inviting
tender dated 1.6.2018, to be bad and
unsustainable
and
so
also
the
consequential agreements reached between
the Corporation and the private contractor.
As we have already discussed in the earlier
part of our order that even from the closest
scrutiny of the letter dated 14.6.2019 of
the Managing Director we have not been
able to trace out any finding to the effect
that there was any error in the tender
process undertaken pursuant to the notice
inviting tender dated 1.6.2018, we fail to
understand as to how the Special Secretary
has come to record the finding to the effect
that the tender procedure followed was
proved to be bad and so also the
consequential agreement. All that we
notice in the letter dated 16.7.2018 is that
the Special Secretary has expressed that
the conduct of the officials of the
Corporation in the totality was doubtful.
One must not forget that a doubt remains a
doubt unless it becomes a fact on the basis
of proof thereof through intrinsic evidence
and cogent and convincing finding to that
effect based on such intrinsic material.
This aspect of the matter is quite lacking
both in the enquiry of the Managing
Director dated 14.6.2019 and the letter
dated 16.7.2018 issued by the Special
Secretary. Since these two documents are
admitted to the parties and they have been
placed before the Court, we have taken
judicial notice of these two documents and
in our considered opinion these documents
are unsustainable and so also we find that
the finding returned in the order impugned
being based on the report of the Managing
Director dated 14.6.2019, the first issue is
answered in affirmative in favour of the
petitioner. One legal question we need to
answer at this stage also is, as to whether
the Managing Director was justified in
taking an action on the basis of his own
administrative enquiry and to pass order
on the findings returned by him in his
enquiry report can the order be turned as
vitiated for bias.

17. Doctrine of fair play and fairness
in action connote one thing and that is an
administrative
authority
has
to
demonstrate that the procedure that it has
followed is unquestionable if tested on the
rule of natural justice and then the ultimate
action is in accord with the principles as
enshrined
under
Article
14
of
the
Constitution of India. Had the Managing
Director while holding an enquiry heard
the petitioner also who was working
already under the agreement and then had
recorded a finding that the procedure
followed in the finalization of tender was
bad for arbitrariness or malafides on the
part of the officials of the respondent
Corporation, it could have been said that
the findings are not ex parte and,
therefore, if action has been taken in
pursuance thereof, this Court may not
interfere and the charge of bias may not be
sustainable. However in the present case
the Managing Director not only held an
enquiry himself without any participation
of a third party and then did not hold
exactly the petitioner guilty of any charge
of undue influence and no finding has
come to be returned that the procedure
followed in the finalization of tender in
question was bad for certain reasons, the
Managing Director virtually acted in an
arbitrary manner in accepting his own
report. The letter of the Special Secretary
is absolutely silent about any independent
finding of fact on the basis of the material,
if any, produced before him. He only
issued a direction to the Managing
Director to act upon his own enquiry
report. In such circumstances, therefore,
issuance of a show cause notice to the
1 All. Sudhir Kumar Singh Vs. State of U.P. & Ors.
1985
petitioner of the proposed action was quite
imperative as any opportunity of that kind
and
inviting
explanation
from
the
petitioner and consideration thereof, would
have definitely removed the element of
bias in the decision making process at the
end of the respondent- Managing Director
but since no such procedure was followed
and the manner in which the Managing
Director has conducted ex parte enquiry
and then proceeded to take action on the
basis of the report in which no definite
finding has come to be recorded regarding
undue advantage taken by the petitioner in
getting his tender accepted by the
authority, the impugned action is certainly
vitiated for bias.

18. Coming to the second question as
to whether the petitioner was entitled to
any opportunity of hearing or not, or as to
whether principles of natural justice would
be attracted in the present case or not, it is
required to be examined as to what kind of
action has been taken and what were the
considerations thereof. As we have already
discussed in earlier part of this order that it
was a simple complaint of a third party
that the entire proceedings had been
initiated and the complainant being not
one of the tender applicants and so no
stakes of the complainant was involved, he
seems to have been taken as a whistle
blower in the matter and it is on that basis
that taking the issue opposed to public
policy involving huge public money that
the respondents have proceeded to pass an
order. In this case it was not a case of a
kind where a tender application is said to
have been accepted for any action of mala
fides, and a result of some conspiracy at
the end of the petitioner and the officials
of the Corporation. If the officials had
canceled the earlier tender notice in their
wisdom and those tender notices and the
cancellation of those tender notice was
never questioned, merely because those
earlier tender notices were cancelled/
withdrawn,
a
necessary
presumption
cannot be raised that the third notice
inviting tender was for some extraneous
considerations. It is true that the prices this
time were taken to be very high as against
the earlier ones in the process of tender in
which the prices were quoted very low but
that does not itself become the ground to
cancel the entire tender process which had
not only been finalized but even the
agreement had been entered into and the
party under the contract was carrying out
the work making huge investment of
money. Had it been a case also of the kind
where the party to the contract had
violated the terms and conditions of the
contract, it could have been said that the
tender was liable to be canceled for
violation of terms and conditions of the
tender agreement. But in the instant case
no such finding has come to be returned.
The
reasons
for
which
the
tender
proceedings
that
had
already
been
concluded with the execution of the
agreement, has been canceled without
assigning any reason of wrong practice
adopted by the petitioner in obtaining the
agreement. Thus the petitioner cannot be
said to be at fault in the matter and,
therefore, in our considered opinion if the
petitioner was already working under the
agreement and no charge was there that he
violated the terms and conditions of the
agreement, the respondents were not
justified in canceling the agreement ex
parte.

19. There are three stages in which
the entire tender proceeding is undertaken:

1. The issuance of notice inviting
tender;
1986 INDIAN LAW REPORTS ALLAHABAD SERIES

2.
Opening
Technical
and
financial bid; and

3. Approval of the financial bid
and agreement pursuant thereto.

20. There is no finding returned that
at the stage of submission of the
application against the notice inviting
tender, the petitioner was not eligible or
that at the time of the opening of the
technical bid and financial bid the
petitioner got wrongfully qualified and
that the financial bid of the petitioner was
wrongly approved and that the agreement
entered between the petitioner and the
Corporation was void being against the
law.

21. If in all the above three stages the
petitioner cannot be held to be guilty in
any manner for manipulating the things
and obtaining the tender by hatching any
conspiracy in connivance with the officials
of the Corporation, cancellation of the
agreement suddenly by the Managing
Director holding that the entire Notice
Inviting
Tender
was
bad,
certainly
required a notice and opportunity of
hearing to be afforded to the petitioner
prior to passing of such an order. It is a
settled
principle
of
law
that
in
administrative exercise of power, the
authority exercising power has to not only
render due application of mind but also to
follow the procedure which would not
render the entire action arbitrary. It is
settled legal principle that whatever is
arbitrary, is hit by Article 14 of the
Constitution of India and in the present
case we find that only the procedure that
was followed by the respondents in taking
impugned action was not only quite ex
parte but also under the executive fiats of
the Special Secretary of the Government
which was quite uncalled for. Merely
because the orders have come from the
higher
echelons of
the
Government
functionaries, a Corporation which is an
autonomous body would not mechanically
act in compliance thereof and then
administrative
authority,
therefore,
is
required to render due application of mind.
The words and expression due application
of mind means what a reasonable person
holding a responsible position would
consider an appropriate step to be taken in
a situation where a process has already
undergone and a consequential actions
have been taken, to question the process
already undergone and to annul the action
already undertaken as a consequence
thereof. Thus any action by a responsible
administrative officer calls for not only
reasonable approach in conducting a
proceeding but also giving opportunity to
the person whose interest and rights are
going to be prejudiced by the proposed
action. The rights and obligations that flow
from a contract pure and simple, no doubt
calls for an action in common law and no
writ will ordinarily be issued to protect the
interest of either of the parties but where a
party has been put to prejudice not for any
obligations not being discharged under the
agreement at his end but for certain
administrative reasons, then it cannot be
said to be an action flowing from a
contract pure and simple and, therefore,
even in such matters the rule of principles
of natural justice will be attracted. The
cases cited by the learned counsel for the
contesting respondents are distinguishable
on facts.

22. In the case of Rajasthan Housing
Board vs. G.S. Investments and another
(Supra) the auction notice had been
published on 19.2.2002, the auction was
conducted on 20.2.2002 and the bid
offered was much below the market rate.
1 All. Sudhir Kumar Singh Vs. State of U.P. & Ors.
1987
On 22.2.2002, the records were summoned
by the State Government and on 20.3.2002
the action was taken against the erring
officials of the Rajasthan Housing Board
by the Government. So factually in that
case situation was different because the
auction proceedings held never came to be
finalized and no auction bid was finally
approved by the authority, under such
circumstances no right as such had accrued
in favor of the auction bidder and under
the circumstances the Court was justified
while refusing to interfere in the matter.

23. In the Case of ECI-SPIC-SMOMCML(JV) vs Central Organisation for
Railway Electrification and another, the
Court refused to interfere with the order of
the competent authority in the matter
because there was a breach of the terms
and conditions of the agreement on the
part of the petitioner and resultantly the
Chief Project Director issued the order of
termination with the approval of the
General Manager. That was a case indeed
where the violation of terms of agreement
had taken place and the authorities were
well within their rights to rescind the
contract. So factually this case was also
distinguishable and Court rightly refused
to interfere with the order terminating the
contract. Insofar as the case of Employees
State Insurance Corporation and others vs.
Jardine
Henderson
Staff
Association
(Supra) is concerned, in the said case, the
Court had observed vide paragraph-61 that
both law as well as the facts in the said
case were in favor of the respondents and
the High Court had correctly appreciated
the tremendous hardship that would be
caused by the respondents staff association
in case if the arrears were sought to be
paid and no body stood to gain either the
employer or the employee.