Judgment:
ORDER
1. The appellant has preferred this appeal against the order dated 9.11.2004, passed in W.P.(C) No. 2961/2004 whereby the said writ application filed by him was disposed of without accepting the appellant's prayer for quashing the letter No. 669 dated 4.6.2004, issued by the Deputy Development Commissioner (respondent No. 2). The appellant had filed the said writ application, inter alia, praying for quashing the aforesaid letter No. 669 dated 4.6.2004, issued by the respondent No. 2, whereby the appellant's contract for transportation of food grains was terminated as a corollary and consequence of cancelling the letter No. 506 dated 31.3.2004 by which the contract for transportation of food grains under District Rural Employment Programme for the financial year 2004-05 had been awarded.
2. According to the appellant, he was awarded the contract for transportation of food grains for district rural employment agency, to transport to each block on certain terms and conditions incorporated in the agreement dated 25.1.2002. The said agreement was for the period from June 2002 to March 2003. The appellant successfully completed the terms in accordance with the stipulation of the agreement and having been satisfied with the appellant's work the period of his contract was extended for further period for 2003-2004 and subsequently for the year 2004-2005 on the same terms and conditions. For the period 2004-2005 a fresh agreement was entered into between the appellant and respondent No. 2 dated 31.2.2004. According to Clause 7 of the terms of the agreement, the second party was given option to cancel the agreement on detection of any illegality. The appellant's case is that in order to execute the work under contract, he hired trucks by entering into another agreement with the truck owners on the term of payment of Rs. 10,000/- per month. Suddenly the respondent No. 2 by his letter No. 669 dated 4.6.2004 informed the appellant that the Deputy Development Commissioner after discussion has directed to invite open tender for the purpose of transportation of food grains for the remaining period and that on appointment of the contractor after the said tender, the contract with the appellant would automatically come to an end. The grievance of the appellant is that there was no irregularity or illegality on his part and no illegality has been pointed out to him giving him any notice or an opportunity of hearing. According to the appellant he has changed his position on the basis of the said extension of the contract by hiring trucks for one year on the monthly rent of Rs. 10,000/- and that sudden termination would cause him irreparable loss and injury and shall visit him with evil consequences and that the order as contained in the letter dated 4.6.2004 is wholly arbitrary and illegal.
3. The State-respondents contested the appellant's claim by filing a counter affidavit. It has been stated that the appellant was given contract to transport food grains to each block of East Singbhum district in 2002-2003 as he was the tenderer with the lowest rate. The officers of the different blocks reported that the work of the appellant was satisfactory. The contract was extended for 2003-04. In the month of March 2004 a declaration was made for holding general election. The Election Commission of India imposed Model Code of Conduct. Under such circumstance, open tender process could not be initiated in course of the said election process till 3rd week of May 2004 and as such the Managing Director, D.R.D.A. issued an order further extending the period of the appellant's contract for the year 2004-05. It has been further stated that one local transporter was interested in dislodging the appellant from the said work. He filed a petition before the Deputy Commissioner with recommendation of the local M.L.A. He represented that he was ready to do the transportation work at the rate lower than that of the appellant. On such recommendation, the Deputy Commissioner ordered for a fresh tender mentioning therein that the appellant shall be allowed to continue the said work till finalisation of the tender process. It has been also stated that the respondent No. 2 has right to invite a fresh tender cancelling the appellant's contract as there was no people's participation, in allotting the said work to the appellant. The State-respondents thus tried to support the extension of the period of contract in favour of the appellant on the one hand and on the other also justified the impugned order for fresh tender and cancellation of the appellant's said agreement.
4. One Lawa Purti who happens to be subsequent tenderer intervened in course of hearing of the said writ application and he was so allowed. According to him the extension of period of contract in favour of the appellant, without people's participation, was illegal. He claimed that the rates quoted by him for the transportation work in question is lower than the rate given by the appellant and as such there is no illegality in the order contained in letter No. 669/2004.
5. The learned Single Judge, after hearing the parties, passed the impugned order holding that the extension of the period of contract in favour of the appellant for the subsequent year was illegal and as there was fresh tender in which the appellant also participated, the same need be finalized by the respondents, and process of which must be completed preferably by 30.11.2004.
6. The appellant has assailed the said impugned order of the learned Single Judge on the ground that the extension of the period of contract was granted on the satisfactory performance of the appellant coupled with the need of the time in view of the implementation of the Model Code of Conduct and also in view of the urgency to maintain the supply line of the food grains for the said welfare scheme. According to the appellant, the said extension is neither illegal nor arbitrary rather the same was allowed to meet the exigency. Further that the said order of extension was issued by the D.R.D.A. but the subsequent letter for inviting fresh tender for the remaining period of 2003-04 has not been issued by the DRDA but the same has been issued on the arbitrary direction of the Deputy Commissioner and the same is tainted with bias and as such the letter dated 4.6.2004 is wholly illegal and unsustainable. According to the appellant, the said vital aspect have not been considered by the learned Single Judge while passing the impugned order and as such the order of the learned Single Judge is vitiated and liable to be set aside.
7. Mr. Indrajit Sinha, learned counsel appearing on behalf of the appellant, submitted in course of hearing that the extension of contract of the appellant is not at all illegal and arbitrary rather the same was legal and genuine and is an outcome of the compelling circumstance as fresh tender was not possible due to imposition of Model Code of conduct in course of the Parliamentary Election process. According to the learned counsel, letter dated 4.6.2004, is itself tainted with undue external influence and dictation as the same has been issued at the instance of the local M.L.A. whose recommendation for allotment of work was in favour of one Lawa Purti. According to him, the contract was between the appellant and the DRDA and the impugned order has been issued by the Deputy Development Commissioner on the command of the local M.L.A. as well as the Deputy Commissioner. The impugned order is not the order of the D.R.D.A. rather the same is merely an intimation of the dictation of the local M.L.A. and the Deputy Commissioner who were not empowered to issue such letter. The said order is thus vitiated in law. The learned counsel relied on the decision of the Supreme Court in the case of Commissioner of Police, Bombay v. Gordhandas Bhanji, reported in AIR 1952 S.C. 16. According to the learned counsel, the impugned letter dated 4.6.2004 has been issued without giving any prior notice and opportunity of representation to the appellant and the same is arbitrary and violative of Article 14 of the Constitution of India. Learned counsel relied on a decision of the Full Bench of the then Patna High Court rendered in the case of Pancham Singh v. State of Bihar. reported in 1991 (1) PLJR 352 (FB) and that of the Supreme Court in Mahabir Auto Stores and Ors. v. Indian Oil Corporation and Ors., reported in (1990) 3 SCC 752. Learned counsel emphasized that every action of the State executive authority must be informed by reasons and conform to the rule of law, fair play and reasonableness to meet the test of Article 14 of the Constitution. He further submitted that cancellation of the appellant's contract in the garb of the impugned letter is wholly arbitrary, illegal and against the principle of natural justice and the same is unsustainable.
8. It is relevant to mention that during the pendency of this appeal the work for the remaining period was allotted to one M/s. Shiv Transport and Co. who was allowed to be added as a respondent. Mrs. Ritu Kumar appearing on behalf of the said respondent submitted that the extension of the period of the contract in favour of the appellant was wholly illegal and arbitrary and the same has been rightly sought to be cancelled. She submitted that any Government contract cannot be said to be reasonably allotted unless the same is granted by floating open public tender giving opportunity to the eligible persons to participate. It was further submitted that against the illegal extension of the period representation was made by the aggrieved persons to the local M.L.A., who intervened in the matter and at his instance, the Deputy Commissioner directed to issue the impugned order. According to the learned counsel, no notice is required for cancellation of such illegal contract and that the impugned order is not in any way illegal or arbitrary. Learned counsel further submitted that the tender was rightly floated for the remaining period in which the appellant also participated but the tender of her client was found with the lowest rate. She urged that the High Court in exercise of writ jurisdiction should not interfere with such order of cancellation. In support of the said submission, the learned counsel cited a decision of the Apex Court rendered in the case of State of Bihar v. Hindustan Agency, reported in 1995 (Suppl.) 4 SCC 607. Learned counsel submitted that the learned Single Judge has rightly upheld the order and passed the impugned order, which is legal and sound and warrants no intervention of this Court.
9. Mr. H.K. Singh, learned Standing Counsel No. III, on the one hand, supported the extension of the period of contract in favour of the appellant in view of the exigency and need of the time due to imposition of Model Code of Conduct during the process of general elections and on the other, also supported the action of the respondents in cancelling the appellant's contract and floating open tender for the remaining period of the financial year.
10. After hearing the learned counsel and perusing the records, we find that the appellant was given contract for the transportation of food grains to different blocks of the district. The first agreement was for the period of June 2002 to March 2003. On the basis of his successful completion of work in accordance with the terms of the agreement, the appellant was granted extension of contract for a further period of one year from 2003 to 2004 without any objection, which was also successfully completed. Before the expiry of the period of the said agreement, programme for holding of General Parliamentary Election was declared and Model Code of Conduct was imposed. The respondents under such circumstance extended the period of the said agreement for the financial year 2004-05. An agreement was also entered into and executed by the parties (Annexure 3 to the writ application). The period of the said agreement was up to 31st of March 2005. By the impugned order, as contained in Annexure 5 to the writ application, the respondent No. 2 sought to float a fresh tender for the remaining period of the financial year. It has been mentioned in the said order that on appointment of another contractor the contract of the appellant shall be automatically terminated. There is no allegation of any breach of the terms of the agreement. There is no clause in the agreement providing such abrupt cancellation without any notice to the appellant. For our satisfaction we also perused the said agreement Annexure-3 and we found that the only stipulation for cancellation was mentioned in Clause 7 of the agreement which reads that the agreement can be cancelled if any irregularity is found on the part of the appellant. Admittedly, no notice was served on the appellant before issuing the said order as contained in Annexure 5 to the writ application pointing out any irregularity and no opportunity has been given to the appellant to represent against the same. The Supreme Court in Mahabir Auto case (supra), held : 'In cases where the instrumentality of the State enters the contractual field, it should be governed by the incidence of the contract. But even though the rights of the citizens are in the nature of contractual rights, the manner, the method and motive of a decision of entering or not entering into a contract, are subject to judicial review on the touchstone of relevance and reasonableness, fair play, natural justice, equality and non-discrimination in the type of the transactions and nature of the dealings...... Every action of the State or an instrumentality of the State in exercise of its executive power must be subject to the rule of law and be informed by reason. In appropriate cases, actions uninformed by reason may be questioned as arbitrary in proceedings under Article 226 or Article 32 .... Rule of reason and rule against arbitrariness and discrimination, rule of fair play and natural justice are part of the rule of law applicable in situation or action by State instrumentality in dealing with citizens in a situation like the present one.' In Pancham Singh v. State of Bihar, (supra) the Full Bench of the Patna High Court held that 'Where an agreement executed in accordance with Article 299 of the Constitution is cancelled on a ground which is not referable to any of the terms of the contract, and is per se violative of Article 14 of the Constitution, this Court can exercise the jurisdiction under Article 226 of the Constitution..... There is no escape from the conclusion that the ground for cancellation of the contract does not flow from any of the terms of the agreement, it is de hors any terms of the contract and as such can be subject matter of judicial review. If the action of the State is within the purview of the judicial review, then it has to be examined as to whether the State has acted in an unreasonable, arbitrary manner, without observing the rule of fair play, which is the imperative requirement of every executive action of the State.' Testing the action of the respondent on said touch stone which according to us has since been well founded, we find that the order dated 4.6.2004 issued by the respondent No. 2 does not stand the test of law, fair play and reasonableness. No notice was served on the appellant before issuing the said order and the appellant was not taken into confidence. It has been stated that the work under the said agreement was properly executed and was in progress. There was no complaint against the appellant and the trucks were hired on the monthly rental of Rs. 10,000/- which has not been denied by the respondents. On the basis of the terms of the agreement, the appellant made arrangements and adjusted his position as such an abrupt cancellation of the agreement without giving even a notice to him undoubtedly visits the appellant with civil consequences. The action of the respondents is thus wholly arbitrary, unfair and unreasonable and the same is violative of Article 14 of the Constitution rendering the impugned order dated 4.6.2004 null and void. We also find substance in the submissions of Mr. Sinha that the order is tainted with the external influence and non-application of mind, inasmuch as, the order has not been passed by the DRDA on its own rather the order, as a matter of fact, is that of the MLA and the Deputy Commissioner, and the Deputy Development Commissioner has only communicated the same. In that view also, the impugned order dated 4.6.2004 is not valid and sustainable in law. In the light of the above discussions, we find no substance in the submissions of the learned counsel for the private-respondent as well as the part of the submissions made on behalf of the State, supporting the order as contained in Annexure 5 to the writ application. In the facts and circumstance of the case, the ratio of the decision of the Supreme Court rendered in the case of State of Bihar v. Hindustan Agencies, supra, has no application, which was rendered on different facts and situations. In the said case there was an enquiry in the matter on a report of the technical cell of the vigilance department. In the instant case there is absolutely no enquiry, rather there is an abrupt action leading to the cancellation of the appellant's contract. There is thus violation of rule of fair play and principles of natural justice, inasmuch as, the order has been issued at the instance of the others and there is no application of mind by the issuing authority.
11. The other aspect of the case is that the period of the agreement is to expire by 31.3.2005 i.e. after 2/3 months and there is no allegation that the work of the appellant is unsatisfactory or there is any breach of the terms of the agreement on his part.
12. In view of the above discussions and the reasons aforementioned, we find that the order of the learned Single Judge is not sound, proper and sustainable. We, therefore, set aside the order of the learned Single Judge and quash the letter No. 669 dated 4.6.2004 as contained in Annexure 5 to the writ application and allow this appeal. However, in the facts and circumstances of the case, there shall be no order as to costs.
S.J. Mukhopadhaya, A.C.J.
13. I agree.