Empanelment withdrawal quashed for violating natural justice principles - professional liability requires proper enquiry and hearing opportunity

The HC quashed the respondent's order withdrawing petitioner's empanelment as Chartered Engineer for violating natural justice principles by denying opportunity of hearing. The court held that withdrawal without proper enquiry was arbitrary and affected petitioner's livelihood rights. Professional liability cannot be presumed based on client violations without adequate proof. The court directed respondent to conduct fair enquiry within four weeks, providing hearing opportunity to petitioner, and kept the impugned order in abeyance pending final determination.

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The core legal questions considered by the Court in this matter are:

1. Whether the respondent was justified in withdrawing the petitioner's empanelment as a Chartered Engineer without granting an opportunity of hearing, thereby violating principles of natural justice.

2. Whether the impugned order withdrawing the petitioner's empanelment was passed following due procedure established under law.

3. Whether the petitioner, as a Chartered Engineer, can be held liable for alleged violations committed by the importer/exporter for whom the petitioner acted.

4. The extent to which the impugned order affects the petitioner's right to livelihood and the consequent need for judicial intervention.

Issue 1: Violation of Principles of Natural Justice - Opportunity of Hearing

The legal framework governing administrative actions mandates adherence to the principles of natural justice, particularly the audi alteram partem rule, which requires that a person affected by an adverse order be given a fair opportunity to present their case before such order is passed. The Court noted that the impugned order dated 28.03.2025 withdrawing the petitioner's empanelment was passed without affording any hearing to the petitioner, despite the petitioner waiving the Show Cause Notice but not relinquishing their right to defend themselves.

The Court emphasized that the absence of an opportunity of hearing constitutes a procedural irregularity and renders the order arbitrary. The petitioner's right to be heard was crucial to unearth the truth behind the allegations and to ensure fairness in the administrative process. The Court rejected any contention that the waiver of the Show Cause Notice equated to waiver of the right to be heard on the substantive allegations.

In applying these principles, the Court held that the impugned order must be quashed and the petitioner must be given a proper hearing before any final adverse action is taken. This ensures compliance with natural justice and prevents arbitrary administrative action.

Issue 2: Compliance with Due Procedure

The respondent's action of withdrawing the petitioner's empanelment was challenged on the ground that the procedure prescribed under law was not followed. The Court observed that the impugned order was issued abruptly, without conducting a fair enquiry or providing the petitioner an opportunity to clarify or rebut the allegations.

The respondent's justification rested on the petitioner's alleged failure to detect undeclared second-hand scrap sets in the Bill of Entry, which was claimed to violate CBIC instructions dated 05.04.2024 and the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 (2nd Amendment). However, the Court found that these allegations required a detailed enquiry with participation from the petitioner to establish any fault conclusively.

The Court concluded that the impugned order was not preceded by adherence to due process, which necessitates a fair enquiry and opportunity to defend before imposing such a severe penalty as withdrawal of empanelment. The Court accordingly directed the respondent to complete the enquiry within four weeks, providing the petitioner an opportunity to be heard and to pass final orders thereafter.

Issue 3: Liability of the Chartered Engineer for Importer/Exporter's Fault

The petitioner contended that as a Chartered Engineer, they cannot be held liable for violations committed by the importer/exporter for whom they acted. The Court acknowledged this contention as valid in principle, recognizing that professional liability must be distinguished from the acts or omissions of clients unless there is clear evidence implicating the professional.

The Court observed that the petitioner had cooperated with the enquiry and had not admitted to any wrongdoing. The allegations against the petitioner were based on a perfunctory assumption of negligence without adequate proof. Therefore, the petitioner's liability could not be presumed without a fair and detailed enquiry.

This principle was critical in the Court's decision to quash the impugned order and mandate a proper enquiry, ensuring that the petitioner's professional reputation and livelihood are not unjustly jeopardized.

Issue 4: Impact on Right to Livelihood

The Court recognized that the withdrawal of empanelment as a Chartered Engineer directly affects the petitioner's right to livelihood, as their primary source of work is valuation services for import/export goods. The impugned order's immediate effect without due process had serious civil consequences for the petitioner.

Given the fundamental nature of the right to livelihood under constitutional jurisprudence, the Court stressed the necessity of protecting this right by ensuring procedural fairness before depriving the petitioner of their professional status. The Court held that the impugned order must be kept in abeyance pending completion of a fair enquiry to safeguard the petitioner's interests.

Significant Holdings

The Court's key legal reasoning was encapsulated in the following observations:

"The impugned decision certainly will result in serious civil consequences as the primary source of work for the petitioner is rendering Chartered Engineer's service in the valuation of import/export of goods. Therefore, the right of livelihood of the petitioner has been affected by the passing of the impugned communication."

"Unless and until the petitioner is given an opportunity of hearing with regard to the contentions made by them before this Court, the truth cannot be unearthed with regard to the allegations levelled by the respondent against the petitioner."

"The impugned communication has to be quashed to enable the petitioner to participate in the enquiry and to enable the respondent to unearth the truth after providing an opportunity of hearing to the petitioner with regard to the contentions that have been raised."

"Till final orders are passed, the impugned communication dated 28.03.2025 shall be kept in abeyance."

The Court established the core principles that administrative actions affecting professional status and livelihood must comply with natural justice, including the right to a fair hearing and adherence to due procedure. Liability of a professional cannot be presumed based on client's violations without a proper enquiry. The right to livelihood is a significant consideration requiring protection through judicial oversight.

In conclusion, the Court quashed the impugned order withdrawing the petitioner's empanelment, directed the respondent to conduct a fair enquiry within four weeks with an opportunity of hearing to the petitioner, and ordered that the impugned order be kept in abeyance pending final determination. This ensures procedural fairness, protection of livelihood rights, and a just resolution of the allegations.

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