Principles Of Natural Justice Not Mere Formality: Jharkhand High Court Quashes Blacklisting Order For Non-Compliance With Procedure

The Jharkhand High Court has ruled that the principles of natural justice cannot be treated as mere formalities. The Court emphasised that when an adverse decision is being made, the concerned authority must inform the affected party about the proposed action to be taken against them. Failure to follow this procedure would amount to non-compliance with the principles of natural justice.

The division bench comprising Acting Chief Justice Sujit Narayan Prasad and Justice Arun Kumar Rai observed, “This Court, on appreciation of the rival submissions advanced on behalf of parties, is of the view that what is being contended on behalf of petitioner is having substance reason being that the principles of natural justice cannot be said to be mere formality and when an adverse decision is being taken then it is incumbent upon the authority concerned to apprise the party concerned who is to suffer from the adverse decision i.e., regarding the proposed action which is to be taken against that party. If such parameter has not been followed then it will be said that there is non- compliance of principles of natural justice.”

As per the factual matrix of the case, a tender notice was issued for the supply of specific medicines, in which M/s Pama Pharmaceuticals - the Petitioner participated and was declared successful.

Thereafter the Petitioner was directed to supply the list of required medicines. Post the delivery, a few of the medicines were considered non-compliant with the specifications and were found to be spoiled, after which the Respondent requested for clarifications and replacements. The Petitioner, thereafter took immediate steps and replaced the medicines which were found to be spoiled.

However, the petitioner informed the respondent- authority that the role of the petitioner was only to supply medicines procured from renowned manufacturers, who are neither blacklisted nor rejected by the respondent. But a subsequent notice was issued to the petitioner alleging that some of the supplied medicines were of below standard. Even though the Petitioner responded to the show cause notice, the Respondent was blacklisted/debarred for a period of one year. As a result of which the Petitioner filed a petition under Article 226 of the Constitution of India.

The Petitioner argued that the show cause notice failed to mention any punishment to be imposed and that the impugned order was passed in violation of the principles of natural justice due to the lack of such information. Furthermore, the Petitioner contended that the respondent authority, without taking into consideration the reply submitted by the petitioner passed the impugned order.

Alternatively, the Respondent, contended that the Petitioner was given ample opportunity to respond. It was also asserted that the show cause notice had been issued, and the Petitioner had duly replied to it.

The Court in its judgement placed reliance on Apex Court's judgement in the case of Maneka Gandhi vs. Union of India and Anr., (1978) 1 SCC 248, emphasising that natural justice is the cardinal principle, which cannot be said to be a mere formality rather it requires consideration by the court of law, as has been held by the.

Adverting to the factual aspect of the case, the Court noted that although a show cause notice had been issued, it did not pertain to the order of blacklisting. Instead, the notice only referred to potential action against the petitioner for non-compliance with the agreement's terms and conditions.

The Court observed, “It is evident from the said show cause notice that there is no reference that as to why the petitioner be not black- listed or debarred from supplying the medicines. However, the response was submitted by the petitioner, wherein the ground has been taken of committing no irregularity.”

Therefore, the Court was of the view that “merely due to the reason that show cause notice has been issued the principles of natural justice cannot be said to be followed, as in the facts and circumstances of the present case, the requirement as per the law is that before debarring the writ petitioner specific show cause notice was required to be issued as to why he be not debarred due to commission of irregularity as has been found to be committed.”

Consequently, the Court held that the absence of such specifics in the show cause notice rendered the order of debarment for one year invalid, leading to its quashing.

The order issued by the Deputy Administrator of the Ranchi Municipal Corporation, debarring the petitioner for one year, was set aside. The Court directed the Administrator to issue a fresh show cause notice within one week, including specific allegations. The petitioner committed to submitting a response within two weeks.

The Court further instructed the Administrator to make a final decision within two weeks of receiving the petitioner's reply, clarifying that the final outcome concerning the supply of medicine would depend on this decision. The writ petition was accordingly disposed of.

Case Title: M/s Pama Pharmaceuticals V. The Ranchi Municipal Corporation

LL Citation: 2024 LiveLaw (Jha) 156

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