IMPORTANT POINT
The principles of natural justice, including the right to a fair hearing and the prohibition of arbitrary actions, are essential in administrative decisions affecting contractual rights, and any punitive action must be proportionate to the alleged misconduct.

JUDGMENT :

(pronounced in open court by Hon’ble Shekhar B. Saraf, J.)

1. Heard Sri Anoop Trivedi, learned Senior Advocate assisted by Sri Devansh Mishra and Sri Vibhu Rai, learned counsel appearing for the petitioner and Sri Mahendra Pratap, learned counsel for the National Highway Authority of India (hereinafter referred to as the “NHAI”).

2. This is a writ petition under Article 226 of the Constitution of India wherein the petitioner is assailing the order dated March 31, 2024, passed by the Chief General Manager, Commercial Operations, National Highway Authority of India (being the Respondent No. 3). This order was passed pursuant to the show cause notice issued upon the petitioner dated May 24, 2024, to which the petitioner had given a reply on May 27, 2024.

3. By the impugned order, the petitioner’s contract with the NHAI for running the Kaithi Fee Plaza was terminated, and the petitioner was debarred from the list of pre-qualified bidders for a period of six months.

4. Sri Anoop Trivedi, learned Senior Advocate for the petitioner, has submitted that on a bare perusal of the impugned show cause notice, it is clear that the said show cause notice reeks of pre-meditation and is a fait accompli by itself. He further submits that a detailed reply was submitted by the petitioner explaining each and every point that has been raised in the show cause notice. However, he submits that the authorities have blatantly erred in law in not considering the said reply of the petitioner and have passed the impugned orders in gross violation of the principles of natural justice.

5. Sri Anoop Trivedi has brought to our notice certain clauses of the show cause notice and the reply given to the same by the petitioner which have not found any mention in the impugned order. Finally, the petitioner submitted that the quantum of damages/the termination and debarment that has been issued as a penalty upon the petitioner is against the principle of proportionality and also amounts to double jeopardy. This submission is based on the fact that the petitioner had already paid the penalty of Rs. 8,00,000/-for the technical breaches committed by it. He submits that after having paid the penalty, being shouldered with the entire burden of termination of contract and debarment for the period of six months, is a punishment that is way out of proportion. To buttress his arguments, Sri Anoop Trivedi relied on the Calcutta High Court judgment in Gp. Capt. Rajib Lochan Dey -v-Union of India reported in 2007 SCC OnLine Cal 308, which, in fact, dealt with the same Clause 35 that is used in the present contract. He further relied on the Supreme Court Judgment of Siemens Limited -v-State of Maharashtra and Others, reported in 2006 (12) SCC 33 and the case of Oryx Fisheries Private Limited -v-Union of India and Others, reported in (2010) 13 SCC 427 to emphasise on the point that a show cause notice should not be pre-meditated in nature and a writ petition would be maintainable against such a show cause notice.

6. Sri Anoop Trivedi, learned Senior Advocate for the petitioner, further relied on the Apex Court judgment in the case of M/s Kulja Industries Limited -v-Chief Gen. Manager W.T. Proj. BSNL & Ors. (Civil Appeal No. 8944 of 2013). He relied on the above judgment to give support to his argument that in cases of blacklisting, the threshold for such action would be high and only based on proper scrutiny. This judgment also lays down the principle that even though the right of the petitioner may be in the nature of contractual right, the manner, the method and the motive behind the decision of the authority, whether or not contractual in nature, is subject to judicial review on the touchstone of fairness, relevance, natural justice, nondiscrimination, equality and proportionality. This judgment further clarifies that the decision taken by the authority must abide by the principle of Audi alteram partem before the decision culminates to a decision of blacklisting of a per