2020 Supreme(SC) 602

SUPREME COURT OF INDIA
R.F. NARIMAN, NAVIN SINHA, K.M. JOSEPH, JJ.
STATE OF U.P. – APPELLANT
VERSUS
SUDHIR KUMAR SINGH AND ORS. – RESPONDENTS
CIVIL APPEAL NO. 3498 OF 2020 (ARISING OUT OF SLP (C) NO. 5136 OF 2020) WITH CIVIL APPEAL NO. 3499 OF 2020 (ARISING OUT OF SLP (C) NO. 7351 OF 2020) AND CIVIL APPEAL NO. 3500 OF 2020 (ARISING OUT OF SLP (C) NO. 7364 OF 2020)
Decided on : 16-10-2020

IMPORTANT POINTS
(1) Writ petition under Article 226 of Constitution is maintainable at instance of an aggrieved party to enforce a contractual obligation of State or its instrumentality when State acts in an arbitrary manner.
(2) Natural justice is a flexible tool in hands of Judiciary to reach out in fit cases to remedy injustice. Breach of audi alteram partem rule cannot by itself, without more, lead to conclusion that prejudice is thereby caused.

Headnote:

(A) Constitution of India – Article 226 – Writ Petition – Maintainability – Writ petition under Article 226 of Constitution is maintainable at instance of an aggrieved party to enforce a contractual obligation of State or its instrumentality when State acts in an arbitrary manner – Writ petition under Article 226, being a public law remedy, a public law element should be present on facts before Article 226 can be invoked – Every case in which a citizen/person knocks at doors of writ court for breach of his or its fundamental rights is a matter which contains a public law element, as opposed to a case which is concerned only with breach of contract and damages flowing therefrom – Whenever a plea of breach of natural justice is made against State, the said plea, if found sustainable, sounds in constitutional law as arbitrary State action, which attracts provisions of Article 14 of Constitution of India. (Paras 19, 22 and 23)

(B) Natural Justice – Rule of audi alteram partem – Only exception to this rule is where, on admitted or indisputable facts only one conclusion is possible and under law only one penalty is permissible – In such cases, Court may not issue its writ to compel observance of natural justice, not because it is not necessary to observe natural justice, but because Courts do not issue writs which are futile – Prejudice that is caused, apart from natural justice itself being denied, cannot be said to be present in a case in which there are admitted facts – It is Court or Tribunal which must determine whether or not prejudice has been caused, and not authority on an ex parte appraisal of facts – There is no absolute rule and prejudice must be shown depending on facts of each case – Prejudice must not merely be apprehension of a litigant, but should be a definite inference of likelihood of prejudice flowing from refusal to follow natural justice. (Paras 28, 29, 33, 36 and 37)

(C) Natural Justice – Breach of – Consequences – Natural justice is a flexible tool in hands of Judiciary to reach out in fit cases to remedy injustice – Breach of audi alteram partem rule cannot by itself, without more, lead to conclusion that prejudice is thereby caused – Where procedural and/or substantive provisions of law embody principles of natural justice, their infraction per se does not lead to invalidity of orders passed – Here again, prejudice must be caused to litigant, except in case of a mandatory provision of law which is conceived not only in individual interest, but also in public interest – No prejudice is caused to person complaining of breach of natural justice where such person does not dispute case against him or it – This can happen by reason of estoppel, acquiescence, waiver and by way of non-challenge or non-denial or admission of facts, in cases in which Court finds on facts that no real prejudice can be said to have been caused to person complaining of breach of natural justice – In cases where facts can be stated to be admitted or indisputable, and only one conclusion is possible, Court does not pass futile orders of setting aside or remand when there is, in fact, no prejudice caused – This conclusion must be drawn by Court on an appraisal of facts of a case and not by authority who denies natural justice to a person – “Prejudice” exception must be more than a mere apprehension or even a reasonable suspicion of a litigant – It should exist as a matter of fact, or be based upon a definite inference of likelihood of prejudice flowing from non-observance of natural justice. (Para 39)

(D) Government Contract – Tender – Cancellation and Retender – Respondent No.1 has been completely in dark so far as cancellation of award of tender in his favour is concerned, audi alteram partem rule having been breached in its entirety – Impugned judgment of High Court upheld on the ground that natural justice has indeed been breached in facts of present case. . (Paras 40, 41 and 42)

Facts of the case:

E-tender notice was issued on 06.01.2018 by the U.P. State Warehousing Corporation for unloading/loading of food grains/fertilizer bags from/into railway wagons, trucks etc., stacking the food grains/fertilizers in bags, bagging, weighment, standardisation, cleaning of food grains/fertilizers etc. and transporting of food grains/fertilizers etc. from Railway Station to Corporation godowns or vice versa or transporting them from any place to any other place for Vindhyachal (Mirzapur) Region. Ten days later i.e. on 16.01.2018, said tender was cancelled by the Corporation due to “administrative reasons”. On 01.04.2018, an e-tender was again published in the same terms. Impugned judgment went ahead and not only set aside such cancellation vide the letter dated 26.07.2019, but also went ahead and set aside Managing Director’s report dated 14.06.2019, and the Special Secretary’s order of 16.07.2019, which required the taking of disciplinary action and recovery of financial loss from those who are responsible.

Findings of Court:

It is the Court or Tribunal which must determine whether or not prejudice has been caused, and not the authority on an ex parte appraisal of the facts.

Result : Appeals disposed of with observations.