IMPORTANT POINT
The court emphasized the importance of adhering to contractual procedures and the validity of penalties for non-performance, reinforcing the authority's right to terminate contracts under specified conditions.

JUDGMENT :

1. The petitioners entered into a contract with the Eastern Coalfields Limited. The petitioners have challenged the order dated November 22 2023. By the said order, the contract was terminated. The petitioner no. 1 was banned from the business for a period of two years and penalty was imposed.

2. Mr. Basu, learned advocate appearing on behalf of the petitioners, has assailed the order on the following grounds: -

(a) The order was arbitrary.

(b) The order was issued by the Engineer-in-Charge/Agent CL Jambad OC(H) Patch who did not take the hearing. The order was also not authored by the said authority. It was merely a communication on behalf of the management.

(c) The authority, i.e., the Engineer-in-Charge who issued the show cause notice was under an obligation to hear the petitioners and pass necessary orders.

(d) Non-compliance of such procedure was in violation of the principles of natural justice.

(e) The order talks about the unsatisfactory performance of the work, without any details. Such allegation appears to be vague. The factum of breach of the terms and conditions of the contract and how the petitioners had failed to fulfil the provisions of Clause 9 of the contract, were matters of evidence. No such evidence was discussed in the order. The authority should have clearly indicated each and every breach and failure on the part of the petitioners to execute the work and how such breach had resulted in loss to the tendering authority.

(f) Clause 6.2 was invoked without there being any indication of the same in the show cause notice.

(g) The civil suit was filed on a separate cause of action and the order impugned was not a subject matter in the said suit. Thus, the writ petition is maintainable.

3. Reliance is placed on the following decisions: -

(1) Gullapalli Nageswara Rao & ors. Vs. Andhra Pradesh State Road Transport Corporation & anr., reported in AIR 1959 SC 208.

(2) M.P. Power Management Company Limited, Jabalpur vs. Sky Power Southeast Solar India Private Limited & Ors., reported in (2023) 2 SCC 703.

(3) Isolators and Isolators vs. Madhya Pradesh Madhya Kshetra Vidyut Vitran Company Limited & anr., reported in (2023) 8 SCC 607.

4. Gullapalli Nageswara Rao (supra) is relied upon in order to substantiate the claim that divided responsibility would be destructive to the very concept of judicial hearing. Such a procedure defeated the object of personal hearing. Personal hearing enabled the authority concerned to watch the demeanor of the witnesses, and clear up his doubts during the course of arguments. If one person hears and another person decides, then personal hearing becomes an empty formality.

5. M. P. Power Management Company Limited, Jabalpur (supra) is relied upon in support of the contention that relegating the petitioner to arbitration in view of the dispute resolution clause, would not be proper. It is submitted that in this case, the procedure followed by the tendering authority in terminating the contract, invoking the clause of forfeiture of security deposit, banning the petitioners, invocation of bank guarantee etc. were contrary to the principles of fairness and reasonableness and the writ court must interfere in order to prevent miscarriage of justice. Arbitrariness in the action of the said authorities permit the petitioners to approach the constitutional court for necessary relief.

6. Isolators and Isolators (supra) has been relied upon in support of the contention that when a particular penalty is imposed without the same being referred to in the show cause notice, the said imposition of penalty in the ultimate order cannot not be sustained in law as the noticee did not get an opportunity to answer to such proposed penalty.

7. Mr. Ghosh, learned advocate appearing on behalf of the tendering authority, submits that the petitioners filed a suit on the self-same cause of action and failed to get an order of injunction. The petitioners withdrew the suit without any liberty to file afresh on the self-sa