M/s. Shirdi Sai Baba Transport, v. State of Telangana, Rep. by its Ex-Officio Secretary-cum

Court: High Court for State of Telangana

Bench: T.MADHAVI DEVI

Judgment date: 2024-12-11

Case summary

High Court for State of Telangana judgment dated 2024-12-11. M/s. Shirdi Sai Baba Transport, v. State of Telangana, Rep. by its Ex-Officio Secretary-cum....

Judgment text

[321e ] IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE ELEVENTH DAY OF DECEMBER TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SMT JUSTICE T. MADHAVI DEVI WRIT PETITION NOs:23698 OF 2016 &23705 OF 2016 W. P. No. 23698 OF 2016 Between: M/s. Shirdi Sai Baba Transport, a Partnership Firm at D. No. 7-513, Bangarigadda, Miryalaguda - 5O8 207, Nallonda District Rep. by its lrlanaging Partner P. Chandra Reddy. .. ,PETITIONER AND 1 . State of Telangana, Rep. by its Ex-Officio Secretary-cum, Commissioner of Civil Supplies eivil Supplies Bhavan, Somajiguda, Hyderabad - 500 082. 2. The Telangana State Civil Supplies Corporation Limited, Telangana Unit, Civil Supplies Bhavan, Somajiguda, Hyderabad - 500 082, rep. by its Managing Director. 3. The Joint Collector & Ex-Officio Executive Director, Telangana State Civil Supplies Corporation Ltd. , Nalgonda - 508 001 , Nalgonda District 4.

The District Manager, Telangana State Civil Supplies Corporation Ltd. ' Nalgonda - 508 001, Nalgonda District ... RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to lssue an appropriate writ, order or direction more particularly one in the nature of Writ of Mandamus declaring the proceedings of the 3rd respondent bearing No. PDS. Movt. 5(1)/Stage-|U2015-16, dated 05. 03. 2016 as illegal, arbitrary and in violation of the principles of natural justice and for a consequential direction directing the Respondents to continue the transport contract agreement of the petitioner l. A. NO: 1 OF 2016(WPMP. NO: 29195 OF 2016) '1 Petition under Section 51 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased suspend the operation of the proceedings bearing No. PDS. Movt. 5(1)/Stage-lll2015-16, dated 05.

03 2016 ofthe 3rd respondent. W. P. No. 23705 OF 2016 Between: M/s. Shirdi Sai Baba Transport, a Partnership Firm at D. No. 7-513, Bangarigadda, Miryalaguda - 508 2O7, Nalgonda District, Rep. by its Managing Partner P. Chandra Reddy. .. ,PETITIONER AND 1 State of Telangana, Rep. by its Ex-Officio Secretary-cum Commissioner of Civil Supplies Civil Supplies Bhavan, Somajiguda, Hyderabad - 500 082. 2 The Telangana Slate Civil Supplies Corporation, Limited, Telangana Unit, Civil Supplies Bhavan, Somajiguda, Hyderabad - 500 082, rep. by its Managing Director. 3 The Joint Collector & Ex-Officio Executive, Director, Telangana State Civil Supplies Corporation Ltd. , Nalgonda - 508 001, Nalgonda District. 4 The District Manager, Telangana State Civil Supplies Corporation Ltd. , Nalgonda - 508 001 , Nalgonda District. ...

RESPONDENTS Petition under Article 226 of lhe Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate writ, order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the 3rd respondent in blacklisting the petitioner from participating in the tenders as illegal, arbitrary and in violation of the principles of natural justice and for a consequential direction directing the Respondents to drop all further proceedings against the petitioner in this regard. LA. NO: 1 OF 201 P. NO:29202OF 2016) Petition under Section 15'1 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to grant stay of alt further proceedings relating to the blacklisting of the petitioner from participating in the tenders to be floated by the 2nd respondent Corporation. Counsel for the Petitioner in W. Ps : SRI N.

SIVA REDDY Counsel for the Respondent No. 1 in both W. Ps : GP FOR CIVIL SUPPLIES c o u n se I ro r th e Re s po n o I " "" tt ? 31' l,t', lt t E; i'? E' JJ-13[1? IAi The Court made the following: COMMON ORDER ! . a THE HONOTiIIABLB SM'I. JUSTICE T. MADHAVI DEVI \4'RIT PETITION NO. 23698 ()F 2016 AND WRIT PETITION NO. 23705 OF 2016 COMMON ORDER In both these Writ Petitions, the petitioner is a contractor who entered into an agreement with the 2nd respondent Corporation for 'l'ransportation Stage-II of essential commodities by road from Huzumagal Mandal Level Stock (MLS) Point to various Fair Price Shops attached to the said MLS Point for the period commencing from 02. 04. 2015 to 3 I . 03. 20 I 6. Consequent to being the successful bidder in the tender, the contract was awarded to the petitioner vde orders dt. 02. 04. 2015 and the petitioner has commenced the contuact 'fhe accordingly. petitioner has paid an amount of Rs. 2,50,000/- towards security deposit and a bank guarantee of Rs.

3,50,000/- at the time of entering into the agreement I 2. While the petitioner was executing the contract, on 02. 03. 2016, the police intercepted the lony bearing registration No. Ap 16 Ty 8055 wi$r 510 bags of rice containing 256 quintals and found that the said t W. l'. Nos. 23698 & I stock was loaded at IMG godown, Huzurnagar and were proceeding Gardipally Mandal and on suspicion, the driver was asked the documents in support of the said stock, but he produced wrong truck chits and therefore, the police came to the conclusion that PDS being diverted iltegally and informed the same to the Tahsildar, turn, lodged a police complaint before the Huzumagar police No. 51 of 2016 was registered against four persons under Sections 4Og, 468, 471 and 420 IPC read with Section 7 of the Commodities Act, 1955.

The petitioner was arrayed as ,{4 case, while the Godown In-charge, the Manager of the petitioner Driver of the seized vehicle were arrayed as Al to A3 in the said In view of the above incident, the 3'd respondent issued proceedings bearing No. PDS. Movt. 5(l)/Stage-II/2015-16, dt. 05. 03. 2016 terminating the contract agreement of the petitioner dt. 02. 04. 2015 and forfeited security deposit amount of Rs. 2,50,000/- and the bank guarantee of Rs. 3,50,000/-. Challenging the same, the petitioner W. P. No. 23698 of 2016 alleging that the said proceedings are ex illegal and are in violation of principles of natural justice. It is that no show-cause notice was given to the petitioner as proposed action of termination ol the agreement should not \ W. P. Nos.

2l698 & 23705 of 2016 /') l The petitioner subm itted that the petitioner has not committed any irregularities nor has indulged in diversion of PDS rice and it was due to the act of the driver of the vehicle in failing to show the correct truck and chits to the police authorities that the entire episode had happened there is no illegality or irnpropriety on the part of the petitioner in respect of the alteged incident. Thus alleging, W. P-No. 23698 of 2016 has been filed I j 3. Thereafter. the respondents have issued liesh tender notification for the subsequent period irom October, 2021 to 30. 09. 2023 enclosing the list of blacklisted contractors and the name of the petitioner is also mentioned therein along with the proceedings dt. 05. 03. 2016. Challenging the satne, W. P. No. 23705 of20l6 has been filed. 4. ln both thesc Writ Petitions, no interim orders were granted by this Court. ln due course of tir. r.

re, counter affidavits have been filed in both the Writ Petitions on behalf of respondent No. 4 and also written instructions on tl-re latest position of the case. 5. Leamed counsel for the petitioner submitted that only on the lr ll ground that an FIR has been registered against the petitioner, the I respondents have tenninated the contract without issuing any notice to I \ I . t W. P. Nos. 23698 & 23705 of20l6 { the petitioner and therefore, it is in clear violation of principles of natural justice. IIe submitted that the respondents have referred to Conditions No. 9(ii), l3(ii), 13(v) and l3(vi) of the agreement, justifuing the termination of the contract and forfeiture of the security deposit and the bank guarantee vide proceedings dt. 05. 03. 2016. He further submitted that without passing any order of blacklisting, i. e. , without issuing any notice to the petitioner and thereafter without conducting any enquiry.

the name of the petitioner has been mentioned as blacklisted contractor in the subsequent tender notifications. Therefore, according to him, the blacklisting ol the petitioner is also in violation of principles of natural justice and is thus bad in law. 6. Leamed Standing Counsel for the Corporation, however, obtained written instructions and also placed reliance upon the averments in the counter affidavit and submitted that the petitioner was involved in a criminal case as weli as has violated the conditions of the contract and therefore, the contract has rightly been cancelled. However, with regard to the blacklisting of the contractor, the written instructions mentioned that the office has not issued any order for blacklisting the contract. W. P. Nos. 2i698 & 23705 o12016 7. Having regard to the rival contentions and the material on record, this Court finds that under the contract agreement, Condition No.

9 refers to the responsibitity of the contractor for safety of the food grains, pulses, etc. , while in his custody; and to take all possible measures to maintain the quantity and quality of the food grains, pulses, etc. , till they are finally delivered at the destination as per the movement orders issued by the District Manager/ MLS Point Incharge; and Condition i i No. 13 refers to termination of the contract. The relevant Clauses of Condition No. 13 are reproduced as under: "(ii) In lhe event of the contractor being adjudged insolvent or going into liqui&ttion or winding up hk business or making arrangements with his / their creditors or. failing to obsene any of the provision o. f this contact or is convicled by the Court of Law in a criminal case or punished under the provisions of the Essential Commodities Act or State/Central Orders issued under the said Acl, or violation o. f any of the terms arul conditions as governing lhe contract, the Joint Collector & Ex.

Oflicio Executive Director of the Andhru Pradesh Stole C:ivil Supplies Corporation Limited shall be at liberty to termindte the conlract forthwith withoul prejudice to any other rights or remedies uruler the contract and lo get the work done lhe unexpired period of the contract at ihe risk and cost of the for contractor and to claim . /iom the contractor any resultant loss " sustained or cosls incurred. (r) Since thc Transport Conlractor or his representatives are responsible . for the quantity and quttlity of the stocl+s while in his ) ) w P. Nos. 23698 & 23705 of20l6 custody, the Contrdctor shall ensure delivery of slocks at destination as specirted by the MLS Point lncharge concerned in the event of or diversion of rruclcs with stocl<s or even misappropriation of failure stocks, the Joint Collector & Ex.

OlJicio Executive Directot shall hwe obsolule righl to terminate the contract without any notice and forfeit lhe Securiry Deposit and Bank Guarantee and even pending bills and the Contraclor will be blacklistetl along with his representatives The action of the Joinl collector & Ex. Officio Executive Directur, Andhra Pradesh State Civil Supplies Corporation Limited in this regard is and cannot be called into queslion. final 'the (vi) Joint Collector & Ex. )flicio Executive Director, A. P'State the right to terrlinate Civit Suppties Corporation Ltd. , shall have the remedies in conlrdct without prejudice to other rights and forthwith lhe et'enl of breach by the contractor of any of the terms and and to conditions of the contracl to lerminate the contract forthwith get the work done the unexpired period of the contract at the risk for and cosl of the contractors and / or the Security Deposit or any forfeit gives Bank part thereof' and also claim .

from the Bankers who Gurtranlee for the sum or sums due for any damages, losses, charges, expenses or costs thol may be sffired or incuted by the Corporation due b the conlractor's negligence or un-workrnan like performance of any of tlte services, under lhe contrac!. The Vice-Chairman and Managing Direcktr, A. P. Stttte Civil Supplies Corporation Limited shall also have the righl to claim lhe contractors or to invoke from Securily Deposit and Bank Guarantee to recover any dues from the " conlractor. On a literal reading of the above Conditions, it is seen that the contractor quality is responsible for the safe custody and also maintenance of and quantity of food grains given to him until the same are delivered at the W. P. Nos.

23698 & 23705 of 2016 destination point and where the contractor is adj udged insolvent or has been convicted by Court ofLaw in a criminal case or punished under the provisions of the Essential Commodities Act, the Corporation shall be at liberty to terminate the contract forthwith without prejudice to the rights and remedies of any other contract. Clause (vi) of Condition No. l3 also empowers the Joint C'ollector and Ex-Officio Executive Director, A. P. State Civil Supplies Corporation Limited to terminate the contract forthwith without prejudice to other rights and remedies in the event of breach by the contractor of any of the terms and conditions of the contract and to forfeit the security deposit or any part thereof and also the bank guarantee due, for any damages, losses, charges, expenses or costs that may be suflered or incurred by the Corporation due to the contractor's negligence in the performance of any of the services rendered under the contract. Further, Condition No.

26 refers to arbitration in case of disputes arising out of the agreement. Thus, this Court finds that there is no violation ofany of the above conditions by the petitioner. Except for the FIR being registered against the petitioner, the petitioner has not been convicted by any of the Courts in criminal proceedings or under the Essential Commodities Act. The respondents have also not issued any show-cause notice to the petitioner on the FIR \ \\ I W. P. Nos. 23698 & 23705 of 2016 being registered against the petitioner and also as to whether there was any violation of the conditions of the contract, but have straight away cancelled the contract. Though the contract was at the fag-end of its I conclusion, the respondents ought to have issued notice to the petitioner before terminating the contract since it involved or included the forfeiture of the security deposit and also the bank guarantee.

After going through the facts and circumstances of the case and also the terms and conditions of the contract, this Court is satisfied that there is no i violation as of any of the terms and conditions by the petitioner. Further, I there is clear violation of principles of natural justice in issuing the termination order. Though in the written instructions, the respondents contend that no orders have been issued for blacktisting the petitioner, the petitioner's name has been shown in the list of blacklisted contractors while issuing other tenders. Therefore, such an action of the respondents is unsustainable and is unjustified. 8. In view of the same, the impugned order dt. 05. 03. 2016 and also inclusion of the petitioner's name in the list of blacklisted contractors is liable to be set aside and it is accordingly set aside.

The respondents are directed to pay the security deposit as well as the bank guarantee due to the forfeited on account of the termination of the contract Tetitioner 't. W. P. Nos. 23698 & 23705 of20l6 1 I within a period of two months from the date of receipt of a copy of this order and also remove the name of the petitioner liom the list of blacklisted contractors irnmediatelv. 9. Both these Writ Petitions are accordingly allowed. No order as to costs 10. Pending miscellaneous petitions, if any, in these Writ Petitions shall stand closecl. SD/. A. S^RINIVAS REDDY I I ASSISTANT REGISNAR //TRUE COPY// sEcIoN #,". * To, l. TheEx-officiosecretary-cum,CommissionerofCivilSulT. liesCivilSupplies ' - 500 082' aliirin, Sirle orieiandana, Somajiguda, Hvderabad Corporatiol^L^i11tgd' 2. The Managing Director, Telangana State Civil. Supplies - Hvderabad - 500 082' i;tft;ffuiir birii-SlpplieiBhavan, somajisuda, Director, Telangina State Civil 3.

The Joint Collector & Ex-Officio Executive -iijpriti"i-C"rporation Ltd. , Nalgonda - 508 001 , Nalgonda District Civil Supplies Corporation Ltd'' 4. The District Manager, Telangana State Nalgonda - 508 001, Nalgonda District Advocate' 5. One CC to SRI N. SIVA REDDY, IOPUC] High Court for the State of 6. Two CCs to GP FOR CIVIL SUPPLIES, Telangana. [OUT] 7. Two CD Copies. BSI(/BSK w HIGH COURT TMD,J DATED:'l111212024 I i1 r. STAi L t lul{ 2 B UEI C) iJ -b i * E. 1r' 11 ^*. ' COMMON ORDER WP. No. 23698 of 2016 & WP. No. 23705 of 2016 ALLOWING BOTH THE WRIT PETITIONS WITHOUT COSTS cEA(eb \0 Y. ^^u -/-\4"', e:6' l

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