2023 (4) TMI 1437 - HC - Indian Laws

Writ appeal dismissed as annexed document was only a show cause notice and not a final adjudication

The HC dismissed the writ appeal, agreeing with the Single Judge that the annexed document constituted only a show cause notice and sought the party's ... Dismissal of writ petition filed by the petitioner holding that Annexure is only a show cause notice and nothing has been finally adjudicated while issuing SCN - HELD THAT:- A careful perusal of the the notice would show that it is only a show cause notice and appellant's response has been sought to decide the issue and nothing has been adjudicated to say that the respondent has already taken final decision in the matter. In view of the specific finding recorded by the learned Single Judge only show cause notice has been issued which we also concur and in consequence of that we decline to interfere in the instant writ appeal and the instant writ appeal is accordingly dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether a show cause notice invoking contract clause 16.9 constitutes a final adjudication or merely an initiation of proceedings such that judicial interference is premature. 2. Whether an earlier quashing of an order of blacklisting precludes the authority from issuing a fresh show cause notice or initiating further inquiry in respect of the same contract. 3. Whether the writ court erred in dismissing the writ petition challenging the fresh show cause notice dated 14.12.2022. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Nature of the 14.12.2022 communication: final adjudication vs. show cause notice Legal framework: Administrative law principles distinguish between interlocutory/initiation communications (e.g., show cause notices) and final orders which adversely affect rights; jurisdictional and preclusion doctrines apply differently to each. Contractual clauses (here clause 16.9 read with 16.1, 16.3) confer power to recover losses/damages subject to procedural fairness. Precedent Treatment: The Court relied on the distinction between an inquiry-initiating show cause notice and a conclusive punitive order; prior judicial quashing of a final blacklisting order did not equate to a finding on merits of all underlying allegations. Interpretation and reasoning: The operative language of the 14.12.2022 notice merely lists alleged breaches (non-completion of allotted printing, suppression regarding bank guarantee) and asks for an explanation within two weeks, specifically proposing invocation of contractual provisions for recovery. The notice does not record any conclusive finding or imposition of penalty; rather it calls for the party's response before any final decision. The Court therefore reads the communication as an initiation of proceedings and not a final adjudicatory act. Ratio vs. Obiter: Ratio - A communication that merely alleges breaches and invites explanation is a show cause notice (not a final order), and thus ordinarily not amenable to immediate quashing unless shown to be mala fide or wholly without jurisdiction. Obiter - Observations on the sufficiency of the specific allegations in the notice to sustain future action are ancillary. Conclusion: The 14.12.2022 communication is a show cause notice initiating inquiry under contractual provisions and not a final adjudication; judicial interference at this stage was unwarranted absent proof of arbitrariness or illegality in issuing the notice. Issue 2 - Effect of earlier quashing of blacklisting on subsequent proceedings Legal framework: Principles of res judicata and finality limit re-litigation of issues actually and necessarily decided; however, an order quashing an administrative penalty does not automatically preclude authorities from proceeding afresh on the same or newly articulated grounds provided due process is followed. Precedent Treatment: The Court distinguished the prior writ outcome (quashing of blacklisting) from a determination on the substantive allegations. The earlier decision examined the blacklisting order's congruence with the then-existing show cause notice and found the blacklisting to have exceeded its scope; it did not adjudicate the truth of allegations. Interpretation and reasoning: The earlier writ challenge was confined to the legality of the blacklisting order and whether it traveled beyond the show cause notice dated 13.04.2020. Since the writ court did not hold that the underlying allegations were false or incapable of proof, the authority retains the power to conduct fresh inquiries and take action if supported by due process. The Court reasons that allowing the earlier quashing to create a perpetual bar to any administrative action on the same contract would be inappropriate; instead, authorities may issue a fresh show cause notice and consider responses before any final adverse action. Ratio vs. Obiter: Ratio - Quashing of a prior punitive order does not automatically preclude the authority from initiating fresh proceedings where procedural and substantive grounds may differ or have been more precisely articulated. Obiter - Comments on whether the particulars in the new notice will ultimately justify recovery or penalties are speculative. Conclusion: The earlier quashing of the blacklisting order does not preclude the respondent from issuing a fresh show cause notice or conducting an inquiry into alleged contractual breaches, provided the process is lawful and the party is given opportunity to be heard. Issue 3 - Whether dismissal of the writ petition challenging the fresh show cause notice was legally justified Legal framework: Writ jurisdiction to interfere with administrative action is exercised where there is a final order, absence of alternative remedy, or where the action is demonstrably mala fide, arbitrary, or beyond jurisdiction. Interim communications seeking explanation are generally not interfered with to preserve administrative fact-finding and decision-making. Precedent Treatment: The Court accepted the Writ Court's approach that the present petition impermissibly sought to challenge a preliminary notice rather than a final decision; precedential lines permit respondents to investigate and decide after considering replies. Interpretation and reasoning: The Single Judge analyzed the 14.12.2022 notice and the prior writ order, concluding that (a) the earlier challenge had been limited to blacklisting; (b) the fresh notice articulates specific allegations (including suppression concerning bank guarantees and failure to complete printing) and seeks an explanation; and (c) the respondents must consider any explanation before taking further action. Absent a showing that the show cause notice itself is arbitrary, mala fide, or ultra vires, interlocutory judicial intervention was inappropriate. The Court therefore declined to interfere with the Writ Court's dismissal, while preserving the appellant's right to file a reply as permitted by the Writ Court. Ratio vs. Obiter: Ratio - Dismissal of a writ petition challenging a show cause notice is appropriate where the notice is not a final order and where the impugned authority remains obliged to consider the party's reply before taking any adverse action. Obiter - Remarks about the merits of the allegations or likelihood of recovery on account of earnest money are non-decisional at this stage. Conclusion: The Writ Court correctly dismissed the petition challenging the 14.12.2022 show cause notice; the Court concurs that no interference was warranted and that the petitioner retains the statutory/contractual opportunity to file a reply, after which the authority must consider it before any final decision. Cross-references See Issue 1 for the Court's characterization of the 14.12.2022 communication as a show cause notice; see Issue 2 for the limits of the earlier quashing of blacklisting on future proceedings; see Issue 3 for application of writ jurisdiction principles to interlocutory administrative notices and the preservation of the right to be heard.