IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Jagmohan Bansal, J.
M/s Kharar Rice Mills - Petitioner - Appellant
Versus
State of Punjab and Others - Respondents - Respondent
CWP-10250 of 2021 (O&M)
Decided On : 06-07-2023
Opportunity of Personal Hearing - Blacklisting - Punjab Custom Milling Policy, 2021 - [1985) 3 SCC 545, 1958 SCR 1080, (2008) 14 SCC 151, 2001 SCC OnLine P&H 1678] - The court discussed the principles of natural justice and the requirement of granting an opportunity of hearing before passing an order entailing civil consequences. The court emphasized that no order entailing civil or criminal consequences can be passed without granting an opportunity of hearing. The court also highlighted that the Adjudicating Authority cannot travel beyond the show cause notice, and passing an order of blacklisting without a proposal in the show cause notice is contrary to the rule of law and violative of Article 14 of the Constitution of India.
Fact of the Case:
The petitioner, engaged in the business of processing paddy into rice, was blacklisted for 3 years by the District Allotment Committee (DAC) for storing unauthorized paddy. The petitioner challenged the blacklisting order, contending that it was passed by an incompetent authority and that there was no proposal for blacklisting in the show cause notice.
Finding of the Court:
The court found that the order of blacklisting was passed by an incompetent authority and beyond the scope of the show cause notice, violating the principles of natural justice and the petitioner's right to carry on its business.
Issues: Competency of the authority passing the blacklisting order and the absence of a proposal for blacklisting in the show cause notice.
Ratio Decidendi: The Adjudicating Authority cannot travel beyond the show cause notice, and no order entailing civil or criminal consequences can be passed without granting an opportunity of hearing.
Final Decision: The court set aside the impugned blacklisting orders, allowing the writ petitions.
JAGMOHAN BANSAL, J.
1. By this common order, both writ petitions bearing Nos. CWP-10250-2021 and CWP-10379-2021 are disposed of as impugned orders are common and involve common questions. For the sake of convenience, facts are borrowed from CWP-10250-2021.
2. The petitioner, through instant writ petition under Article 226 of the Constitution of India is seeking setting aside of order dated 06.11.2020 (Annexure P-5) passed by District Allotment Committee (‘DAC’) whereby petitioner has been blacklisted for 3 years and order dated 05.04.2021 (Annexure P-13) passed by respondent No.1 whereby second appeal of the respondent has been allowed.
3. The brief facts of the case are that petitioner is engaged in the business of processing/converting paddy into rice. The business of the petitioner depends upon receipt of paddy from the Government Agencies. The respondent, from time to time, frames policy with respect to allotment of paddy to different rice mills through procurement agencies. For the Crop Year 2020-21, the petitioner was allotted particular quantity of paddy for conversion. The respondent-authorities on physical verification found that petitioner has stored unauthorized paddy. A show cause notice dated 03.11.2020 (Annexure P-3) came to be issued to the petitioner. In the show cause notice, there was no proposal for blacklisting the petitioner. The respondent filed its reply to aforesaid show cause notice. The show cause notice culminated into order dated 06.11.2020 (Annexure P-5) whereby not only allotment of paddy was cancelled but also the petitioner was blacklisted for 3 years. The order came to be passed by DAC. The petitioner preferred an appeal before Appellate Authority against cancellation. The petitioner did not assail blacklisting before Appellate Authority and preferred CWP No.19635-2020 before this Court qua blacklisting. The appeal of the petitioner came to be allowed during the pendency of writ petition before this Court. In view of setting aside of cancellation-cum-blacklisting order, this Court vide order dated 02.03.2021 disposed of aforesaid writ petition as infructuous. The respondent preferred an appeal against appellate order which came to be allowed vide impugned order dated 05.04.2021 (Annexure P-13).
4. Mr. Daman Dhir, learned counsel for the petitioner confines his prayer qua blacklisting of petitioner. He inter alia contends that order of blacklisting was passed by DAC whereas competent authority was Director, Department of Food, Civil Supplies and Consumer Affairs, Punjab. As the impugned order has been passed by an incompetent authority, it deserves to be set aside on the ground of jurisdiction. In alternative, he submits that in the show cause notice, there was no proposal for blacklisting, thus, DAC was incompetent to pass order qua blacklisting the petitioner.
5. Mr. Maninder Singh, DAG, Punjab, inter alia contends that as per Clause 24 (c) of the Punjab Custom Milling Policy, 2021, an appeal lies before Director, Food Civil Supplies & Consumer Affairs, Punjab (‘DFS’) against an order passed by DAC relating to any clause of the policy, thus, DAC was quite competent to pass an order of blacklisting. The petitioner has been blacklisted invoking Clause 16(b) of the said policy, thus, authority was quite competent to pass the impugned order. With respect to absence of averment in the show cause notice qua blacklisting, he submits that the action of blacklisting was consequential to cancellation of allotment, thus, there is no deficiency in the impugned order as well as show cause notice.
6. I have heard the arguments of learned counsels for the parties and perused the record with their able assistance.
7. A five Judge Constitution Bench of the Hon’ble Supreme Court in Olga Tellis and Others Versus Bombay Municipal Corporation; (1985) 3 SCC 545 has considered question of opportunity of personal hearing and held that no order can be passed without granting an opportunity of personal hearing. It has been fu
Commissioner of Central Excise Versus Gas Authority of India Limited; (2007) 15 SCC 91.
Sahara India (Firm) Lucknow Versus Commissioner of Income Tax
Khem Chand Versus Union of India; 1958 SCR 1080.
Olga Tellis and Others Versus Bombay Municipal Corporation; (1985) 3 SCC 545.
Natural justice principles require a fair hearing before any order with civil consequences is made, as established in several Supreme Court decisions.
The central legal point established in the judgment is the importance of adhering to the principle of natural justice, particularly in cases involving severe penalties such as blacklisting, and the n....
Violation of the principles of natural justice in blacklisting without providing an opportunity of hearing.
The necessity of issuing a show cause notice before passing an order of blacklisting, specifying the grounds and proposed action in the notice to provide the noticee with an adequate opportunity to r....
Blacklisting has the effect of denying a person or an entity the privileged opportunity of entering into government contracts. This privilege arises because it is the State who is the counter party i....
The principles of natural justice must be adhered to in administrative proceedings affecting civil rights; failure to provide a fair hearing invalidates the resulting orders.
Natural justice requires that prior notice be given before penalties such as blacklisting; however, if adequate opportunity and communication are established, decisions can stand.
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