ISOLATORS AND ISOLATORS THROUGH ITS PROPRIETOR MRS. SANDHYA MISHRA versus MADHYA PRADESH MADHYA KSHETRA VIDYUT VITRAN CO. LTD. AND ANR

Citation: [2023] 4 S.C.R. 445 · Decided: 18-04-2023 · Supreme Court of India · Bench: DINESH MAHESHWARI · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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ISOLATORS AND ISOLATORS THROUGH ITS PROPRIETOR
MRS. SANDHYA MISHRA
v.
MADHYA PRADESH MADHYA KSHETRA VIDYUT VITRAN
CO. LTD. AND ANR.
(Civil Appeal Nos. 2890-2891 of 2023)
APRIL 18, 2023
[DINESH MAHESHWARI AND SANJAY KUMAR, JJ.]
Contract – Imposition of penalty, debarment/blacklisting of
the appellant-firm – Requirement of specific show-cause notice –
Held: Cancellation orders dtd. 19.11.19 and 21.11.19 cannot be
read as show-cause notice specifically for the purpose of imposition
of penalty – Finality attaching to the action of cancellation cannot
be read as a due notice for imposition of penalty even if the
respondents chose to employ the expression ‘cancelled with imposition
of penalty’ in those orders – Thus, the action of the respondents in
imposing the penalty without even putting the appellant to notice as
regards this proposed action cannot be approved – Further, even
the order debarring the appellant for a period of 3 years for default
in making the requisite supplies has its own shortcomings – Appellant
had indeed made substantial supplies against the purchase orders
in question – On 18.09.2019, the respondent No.2 dealing with the
procurement specifically informed the appellant that the supply
under the purchase order in question was to be deferred – After
such an order of deferment, there had not been any other
communication or even indication from the respondents which would
have informed the appellant to resume supplies – Debarment order
was issued against the appellant without due regard to the
undeniable factual situation where the entire blame could not have
been foisted upon or shifted towards the appellant – Impugned
orders imposing penalty and debarring the appellant are quashed
and set aside.
Practice & Procedure – Maintainability of fresh appeal after
withdrawal of the earlier one and after another round of approach
to the High Court – Discussed.
[2023] 4 S.C.R. 445
445
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SUPREME COURT REPORTS
[2023] 4 S.C.R.
Allowing the appeals, the Court
HELD: 1.1 Imposition of penalty cannot be approved for
two major factors: The first and foremost being that in the show-
cause notice dated 26.11.2019, the appellant was put to notice
only as regards the proposition of debarment and in the said
notice, nothing was indicated about the proposed imposition of
penalty. Though in the cancellation orders dated 19.11.2019 and
21.11.2019, the respondents purportedly reserved their right to
take appropriate steps, those orders cannot be read as show-
cause notice specifically for the purpose of imposition of penalty.
The submissions on behalf of the respondents in this regard that
the said orders dated 19.11.2019 and 21.11.2019 have attained
finality do not take their case any further. Finality attaching to
the action of cancellation cannot be read as a due notice for
imposition of penalty even if the respondents chose to employ
the expression ‘cancelled with imposition of penalty’ in those
orders. Looking to the terms of contract, quantification of the
amount of penalty (if at all the penalty is considered leviable)
could not have been carried out without affording adequate
opportunity of response to the appellant. That being the position,
the action of the respondents in imposing the penalty without
even putting the appellant to notice as regards this proposed
action cannot be approved. [Paras 23][470-A-E]
UMC Technologies Private Limited v. Food Corporation
of India and Anr. (2021) 2 SCC 551; A.P. State Financial
Corporation v. C.M. Ashok Raju and Ors. (1994) 5 SCC
359 : [1994] 1 Suppl. SCR 474 – relied on.
1.2 Secondly, the authority concerned has proceeded to
impose the maximum of penalty to the tune of 10% of the deficit
supply without specifying as to why the maximum of penalty was
sought to be imposed. In this regard, the relevant factors as
indicated by the appellant could not have been ignored altogether.
Unfortunately, the High Court has totally omitted to consider this
aspect of the grievance of the appellant. Though, ordinarily, for
such an omission of the High Court, the course would have been
to remit the issue for consideration but, no useful purpose would
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be served by remitting such an issue in this matter. This is for
the simple reason that imposition of penalty against the appellant
cannot be approved because of the want of specific show-cause
notice. Moreover, no specific quantum of loss has been specified
by the respondents so as to justify t

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