TaxTMI 
TaxTMI 
2022 (9) TMI 1604
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....he parties in both the petitions. 4. At the very outset, it would be relevant to take notice of the fact that the writ petitioner in Writ C No. 18053 of 2022 (M/S Bcits Pvt. Ltd vs. Purvanchal Vidhyut Vitaran Nigam Ltd. And Another) had approached this Court earlier in Writ C No. 15363 of 2022 (M/s Bcits Pvt. Ltd. vs. Purvanchal Vidhyut Vitaran Nigam Ltd. And Another) seeking to challenge notice dated 18.5.2022 whereby the petitioner had been directed to show cause in respect of a proposed action of blacklisting/debarment. 5. The writ court allowed the writ petition by means of a judgement dated 26.5.2022 taking into consideration the fact that in the aforestated notice the authority concerned had already recorded its conclusion with regard to explanation furnished by the petitioner earlier and had found the same to be unsatisfactory. The Court held that since the respondent authority had already expressed its mind, the exercise which was to follow would be an empty formality. Accordingly, the notice was quashed leaving it open to the respondent corporation to issue a fresh notice in accordance with law, if so advised. 6. Against a similarly worded notice bearing same date....
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....onceal the factum of issuance of earlier notices which had been suitably responded by the petitioners. The successive show cause notices issued for the self-same reasons go to show that the respondent authority is proceeding with premeditation to somehow punish the petitioners. 10.4 The tenor of the notices is indicative of the fact that the respondent authority has already made up its mind to pass an order of blacklisting against the petitioners and therefore, the entire exercise which is proposed to be undertaken in furtherance of the notice would be an empty formality and a futile exercise. To support his submission, learned Senior Counsel has placed reliance upon the decisions in Siemens Ltd. vs. State of Maharashtra & Others (2006) 12 SCC 33 and Oryx Fisheries Pvt. Ltd vs. Union of India & Others (2010) 13 SCC 427. 10.5 An attempt has also been made to draw attention of the Court to the merits of the case and the defence which is sought to be put up by the petitioner firms in response to the imputations made in the show cause notices. 11. The respondents have filed counter affidavits in both the petitions in which it has been categorically averred that the notices dat....
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....aintainability of a writ petition against a show cause notice was subject matter of consideration in the case of Siemens Ltd. wherein it was held that ordinarily a writ court may not exercise its discretionary jurisdiction in entertaining a writ petition questioning a notice to show cause unless it is without jurisdiction; however, when a notice is issued with premeditation, writ petition would be maintainable. Referring to the earlier decisions in State of U.P. vs. Brahm Datt Sharma (1987) 2 SCC 179 Special Director vs. Mohd. Ghulam Ghouse (2004) 3 SCC 440, Union of India vs. Kunisetty Satyanarayana (2006) 12 SCC 28, K.I. Shephard vs. Union of India (1987) 4 SCC 431 and V.C., Banaras Hindu University vs. Shrikant (2006) 11 SCC 42, it was observed as follows:- "9. Although ordinarily a writ court may not exercise its discretionary jurisdiction in entertaining a writ petition questioning a notice to show cause unless the same inter alia appears to have been without jurisdiction as has been held by this Court in some decisions including State of U.P. v. Brahm Datt Sharma, Special Director v. Mohd. Ghulam Ghouse and Union of India v. Kunisetty Satyanarayana, but the question ....
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....ower must act fairly and must act with an open mind while initiating a show-cause proceeding. A show-cause proceeding is meant to give the person proceeded against a reasonable opportunity of making his objection against the proposed charges indicated in the notice. 25. Expressions like "a reasonable opportunity of making objections" or "a reasonable opportunity of defence" have come up for consideration before this Court in the context of several statutes. A Constitution Bench of this Court in Khem Chand v. Union of India AIR 1958 SC 300, of course in the context of service jurisprudence, reiterated certain principles which are applicable in the present case also. 26. S.R. Das, C.J. speaking for the unanimous Constitution Bench in Khem Chand held that the concept of "reasonable opportunity" includes various safeguards and one of them, in the words of the learned Chief Justice, is : (AIR p. 307, para 19) "(a) An opportunity to deny his guilt and establish his innocence, which he can only do if he is told what the charges levelled against him are and the allegations on which such charges are based;" 27. It is no doubt true that at the stage of sho....
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.... those who are subject to it." 17. The scope of judicial review in matters relating to challenge to show-cause notice was subject matter of consideration in Union of India and another Vs. Vicco Laboratories (2007) 13 SCC 270, and while holding that non-interference at the stage of issuance of show-cause notice is the normal rule, it was stated that where a show-cause notice is issued either without jurisdiction or in an abuse of process of law, the writ court would not hesitate to interfere even at the stage of issuance of show-cause notice. The observations made in the judgment in this regard are as follows:- "31. Normally, the writ court should not interfere at the stage of issuance of show-cause notice by the authorities. In such a case, the parties get ample opportunity to put forth their contentions before the authorities concerned and to satisfy the authorities concerned about the absence of case for proceeding against the person against whom the show-cause notices have been issued. Abstinence from interference at the stage of issuance of show-cause notice in order to relegate the parties to the proceedings before the authorities concerned is the normal rule. Howe....
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....content of a show cause notice that is required to be served before deciding as to whether the noticee is to be blacklisted or not was subject matter of consideration and it was held that it is a mandatory requirement to give such a show cause notice to mention that action of blacklisting is proposed so as to provide adequate and meaningful opportunity to show cause against the same. Accordingly, it was observed that this would require the statement of imputations detailing out the alleged breaches and defaults so that the noticee gets an opportunity to rebut the same. The guidelines laid down as to the contents of show cause notice pursuant to which an order of blacklisting may be passed, in the aforesaid decision, are in the following terms:- "21. 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. An....
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.... interests are being affected should be given a reasonable opportunity to defend himself. The basic principle of natural justice is that before adjudication starts, the authority concerned should give to the affected party a notice of the case against him so that he can defend himself. Such notice should be adequate and the grounds necessitating action and the penalty/action proposed should be mentioned specifically and unambiguously. An order travelling beyond the bounds of notice is impermissible and without jurisdiction to that extent. This Court in Nasir Ahmad v. Custodian General, Evacuee Property [Nasir Ahmad v. Custodian General, Evacuee Property, (1980) 3 SCC 1] has held that it is essential for the notice to specify the particular grounds on the basis of which an action is proposed to be taken so as to enable the noticee to answer the case against him. If these conditions are not satisfied, the person cannot be said to have been granted any reasonable opportunity of being heard. 14. Specifically, in the context of blacklisting of a person or an entity by the State or a State Corporation, the requirement of a valid, particularised and unambiguous show-cause notice ....
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....19. Where the State is dealing with individuals in transactions of sales and purchase of goods, the two important factors are that an individual is entitled to trade with the Government and an individual is entitled to a fair and equal treatment with others. A duty to act fairly can be interpreted as meaning a duty to observe certain aspects of rules of natural justice. A body may be under a duty to give fair consideration to the facts and to consider the representations but not to disclose to those persons details of information in its possession. Sometimes duty to act fairly can also be sustained without providing opportunity for an oral hearing. It will depend upon the nature of the interest to be affected, the circumstances in which a power is exercised and the nature of sanctions involved therein. 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....
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....t in the party allotting the contract. There is no need for any such power being specifically conferred by statute or reserved by contractor. That is because "blacklisting" simply signifies a business decision by which the party affected by the breach decides not to enter into any contractual relationship with the party committing the breach. Between two private parties the right to take any such decision is absolute and untrammelled by any constraints whatsoever. The freedom to contract or not to contract is unqualified in the case of private parties. But any such decision is subject to judicial review when the same is taken by the State or any of its instrumentalities. This implies that any such decision will be open to scrutiny not only on the touchstone of the principles of natural justice but also on the doctrine of proportionality. A fair hearing to the party being blacklisted thus becomes an essential precondition for a proper exercise of the power and a valid order of blacklisting made pursuant thereto. The order itself being reasonable, fair and proportionate to the gravity of the offence is similarly examinable by a writ court." 28. The aforesaid legal position has bee....
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....win requirements of stating in unambiguous terms the grounds which according to the department necessitates an action, and also the penalty which is proposed to be taken in case the noticee is unable to furnish an adequate response to the grounds stated in the notice. 33. The principle of audi alteram partem has been held to be a sina qua non and a basic tenet underlying the principles of natural justice. In Re K. (H.) (an infant) [1967] 1 All E.R. 226, Lord Parker C.J., described natural justice as 'a duty to act fairly'. The rule of 'fair hearing' requires that the party which is likely to be visited with adverse consequences is given an opportunity to meet the case against it effectively. Right to 'fair hearing' or 'reasonable opportunity of hearing' casts a sacrosanct obligation on the adjudicatory authority to ensure fairness in procedure and action. It covers within its fold every stage through which an administrative adjudication passes - starting from notice to final determination. 34. Procedural fairness requires that persons liable to be affected by a proposed administrative decision be given adequate notice of what is proposed so tha....
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....decision whether to drop the show cause notice or to pass an order with regard to blacklisting. 38. It is legally well settled that mere issuance of show cause notice does not amount to an adverse order, which may be held to affect the rights of the parties. The necessity for issuing a show cause notice and the requirement of specifying the grounds on which the action is proposed is in fact a necessary prerequisite, so as to ensure that the noticee is aware of the grounds on which action is proposed and has an adequate opportunity to rebut the same. If the show cause notice does not specifically state the grounds on which it is being issued and the proposed action, the noticee would be taken by surprise and would not have adequate opportunity to rebut the allegations during the course of inquiry which is to follow. 39. We are of the view that the challenge to the show cause notices in the instant petitions is premature for the reason that the mere indication of the grounds and the penalty proposed, would not give rise to a cause of action, as it is open to the petitioners to present their case and rebut the imputations, whereupon it would be incumbent upon the respondent auth....