ORAL ORDER

(PER : HONOURABLE MR.JUSTICE A.Y. KOGJE)

1. This petition under Article 226 of the Constitution of India is filed challenging the decision of the respondent – Indian Oil Corporation Limited (hereinafter referred to in short as 'IOCL') in terminating the contract of the petitioner for house keeping facility management services for Gujarat S.O. Building at Indian Oil Bhavan, Behind Volks Wagon Showroom, S.G. Highway, Ahmedabad.

2. This petition is filed with the following prayers, inter-

alia :-

“(b) To hold and declare that the impugned action of the respondents in terminating the contract of the petitioner as being bad in law, illegal, arbitrary and against the principles of natural justice;

(c) To quash and set aside the impugned order dated 5-2-2018 which is at Annexure- F, terminating the contract of the petitioner and thereby direct the respondent IOC to permit the petitioner to continue with contract arrangement without any interruption;

3. The facts in brief are as under :-

a) The petitioner had bidded in a tender floated by IOCL for the purpose of house keeping facility management services at one of its premises. The petitioner being L-1 succeeded and was awarded the work contract by an acceptance letter dated 22/30.05.2017 for a period between 05.06.2017 between 04.06.2019.

b) The petitioner was issued a showcause notice dated 25.10.2017 for violation and circumventing the provisions of the Labour law regulations and other statutory requirements, which was construed as a breach of Contract. Violation of labour laws was in connection with non-payment of wages in time, non- payment of ESI and PF to the workers / employees of the petitioner engaged for such work with IOCL through the petitioner.

c) The petitioner offered an explanation by a communication dated 26.10.2017 stating that the petitioner was facing financial constraints thereby causing the delay in making payment of salaries and ESI contribution. Again by a letter dated 13.12.2017, IOCL issued yet another letter communicating to the petitioner that he continues to be in breach of contract by violation of the labour law regulations and hence, IOCL would be constrained to take appropriate action. The petitioner once again offered an explanation by a letter dated 18.12.2017 wherein it was contended that the delay caused is not intentional and the petitioner had made efforts to make regular payments to its employees engaged with IOCL and also cleared the arrears of the petitioner's contribution towards ESI and PF.

d) By an order dated 05.02.2018, IOCL terminated the contract and placed the petitioner in the holiday list for a period of three years.

4. Learned Advocate for the petitioner submitted that the action on part of the IOCL is arbitrary and in violation of the principles of natural justice. It is submitted that the petitioner had offered a valid explanation of financial crisis which had resulted into a delay in making payments to its workers and such delay was totally unintentional. Infact, the petitioner had rectified his mistake by making payment of the dues not only of the wages but also his part of the contribution towards EPF and ESIC. Learned Senior Counsel has drawn attention of this Court to the information stipulated in Paragraph B to indicate that the delay was not so gross so as to be considered as a serious breach of contract thereby terminating not only the contract but also putting the petitioner on the holiday list for a period of three years.

5. It is submitted that the decision has serious commercial and civil consequences and therefore, the petitioner ought to have been given a sufficient opportunity. It is further submitted that the decision is also disproportionate to the alleged breach of contract. It is submitted that for the purpose of putting the petitioner on the holiday list for mere delay in making payment is completely disproportionate and infact for such purpose, the respondent ought to have followed due procedure by communicat