Contract cancellation under public distribution laws justified by evidence of diversion and black market intent, despite claims of procedural irregularities.

JUDGMENT :

1. Heard Shri Sanjeev Singh, learned counsel for the petitioner and learned Standing Counsel.

2. Challenge in the writ petition to the order dated 06.01.2024, passed by the Regional Food Controller, Gorakhpur Region, Gorakhpur, the third respondent, whereby the contract awarded to the petitioner for transportation and handling has been cancelled. The security money deposited by the petitioner has been forfeited and the petitioners' firm has been black-listed for the period of 05 years.

3. The petitioner no. 1 is a firm which is a Handling/Transportation Contractor, Stage-I, which was engaged by the respondents by means of an agreement dated 01.09.2018 for transporting essential commodities and food- grains from the F.C.I. godown at Arjunha to Ramkola and Nebua Nauragia in District Kushinagar. It is stated that the contract was entered into between the petitioner no. 1- firm and the respondents for the year 2018-19, which extended up till 30.6.2020 in view of the Covid-19 pandemic. Previously, there were three godowns in Ramkola in the regular use of the Civil Supply Department which included a godown known as Ramraj Chaubey Godown (Smt. Vandana Shukla daughter of Ramraj Chaubey was authorised to realise the rent and utilise the godown by means of a power of attorney dated 6.11.2017).

4. Pursuant to a proposal, the godown of Smt. Geeta Devi having capacity of storing around 14,000 quintals/ bags of foodgrains/sugar, which godown also was situated on the main road, was approved for storage in place of the above referred three godowns which three godowns were at different places and their combined storage capacities were less than that of godown of Smt. Geeta Devi. Thereafter, the aforesaid godown of Smt. Geeta Devi was being used by the respondents for storage of the foodgrains/sugar with effect from 4.4.2019.

5. It appears that on 6.4.2020 an information was received that two of the trucks bearing nos. UP70C9870 and UP50AT1578 from FCI storage depot Arjunha, District Kushinagar were found standing away from the main road of Ramkola and in front of the house of the petitioner no. 4 for the purpose of black marketing of food-grains. Accordingly, an FIR was lodged under the provisions of Section 3 /7 of the Essential Commodities Act against the petitioners.

6. The two truck drivers informed during questioning that petitioner no. 4, Brahmachari Chaubey, the husband of petitioner no. 2, Smt. Gamlawati Devi, who is a partner of the petitioner no. 1, had directed them to park the two trucks in front of his house situated before Ramkola Bazar and that he would later tell the drivers where the two trucks would go. During the enquiry, the Marketing Inspector was questioned and his statement was recorded in which he stated that under the Public Distribution System and other projects, the storage of food-grains and their distribution was being done in and from the sole godown situated at Ramkola-Kasya Marg, the owner of which is Smt. Geeta Devi. He stated that he was informed that four trucks of wheat (other than the two aforesaid trucks) from the FCI Godown at Arjunha were received at the sole godown. He further stated that the Dispatch Officer at the FCI godown had informed him that six trucks of wheat were sent to his centre. The aforesaid four trucks were standing at his godown and two trucks had not come to the godown which had been seized during the enquiry. Accordingly, by means of letters/orders dated 17.4.2020 and 19.4.2020, the contract in favour of the petitioner was suspended with immediate effect and a show cause notice was issued to the petitioner no. 1 as to why an order of blacklisting be not passed against it. Since, no response was received from firm within 10 days, the contract was cancelled and the security amount was confiscated. Further the petitioner-firm was blacklisted for a period of 10 years by means of the order dated 2.5.2020.

7. Challenging that order dated 2.5.2020, the petitioner filed a writ petition be