M/S Northern Agency vs The Food Corporation of India & Ors

Heard Sri H.S. Paonam, learned Senior Counsel assisted by S.Gunabanta for the petitioner as well as Sri H.Tarunkumar, learned Counsel for

the FCI respondents.

This is the third round of litigation on the same issue relating to forfeiture of security deposits and recovery of damages from the petitioner for

alleged failure to perform the contract of transportation of food grains.

Only a brief reference to the background facts may be necessary. The petitioner was appointed as a transport contractor by the Food

Corporation of India (FCI) for transportation of food grains from the Railhead at Dimapur to Sangaiprou, Imphal for a period of 2 (two) years

from 5.2.2009 to 4.2.2011.

The allegation of the FCI is that the petitioner failed to transport any stock since April 2009. The plea of the petitioner on the other hand is that

he could not execute the transportation because of a crippling economic blockade imposed by some hill based organisations which turned violent in

which many trucks were destroyed by fire or otherwise seriously damaging the vehicles. To add to the woe of the transporters, there was also a

subsequent counter blockade imposed by some of the organisations based in the valley, thus making it impossible for the transporters to operate

on the National Highways. While the FCI contended that sufficient security was provided, the petitioner contended that it was not provided and

was not conducive for transportation. In any event, the FCI ultimately terminated the contract and forfeited the security deposits as well imposed

damages for the extra expenditures incurred by the FCI for transporting food grains during the said economic blockadethrough vehicles

requisitioned by the State Government, amounting to Rs. 1,18,23,688.50.

Being aggrieved, the petitioner challenged the order forfeiting security deposit as well as imposing damage by filing a writ petition before this

Court, being W.P.(C) No. 773 of 2011 which was disposed of by this Court on 10.10.2012 by directing the FCI authorities for constitution for a

dispute/grievance redressal committee to look into the dispute as the dispute involved disputed facts. The petitioner was permitted to submit a

detail representation and the Committee was to hear the petitioner. Thereafter, the FCI authorities were to pass appropriate orders accordingly on

the basis of the recommendation of the dispute/grievance redressal committee after hearing the petitioner.

Pursuant to the aforesaid order passed in W.P.(C) No.773 of 2011, the dispute/grievance redressal committee was constituted and the

petitioner was heard and on the basis of the finding of the committee, the FCI authorities issued the order on 3.5.2013 rejecting the claim of the

petitioner and directed the petitioner to make good the loss caused to the FCI to the tune of Rs. 1,18,23,866.50.

The aforesaid order dated 3.5.2013 of the FCI came to be challenged by the petitioner by filing another writ petition, being W.P.(C) No. 346

of 2013 contending, inter alia, that while the authorities fixed the liability on the petitioner, the committee/FCI authorities did not take into

consideration the statement made by the Minister of Home Affairs in the Parliament in the Lok Sabha on 19.8.2010 which portrayed the disturbed

condition prevailing in the State of Manipur including on the highways arising out of the economic blockade. The petitioner took the plea that the

aforesaid statement made by the Home Minister of the country would reveal that the transportation on the National Highway could be possible

only after the State Government made arrangement for transportation only in the first week of August, 2011. Accordingly, to the petitioner, it was

otherwise not possible for the private transporters to operate on the National Highways without adequate security which were not available till the

State Government made necessary arrangements. It was also pleaded in the said writ petition that inspite of the FCI floating two tenders after the

termination of the contract with the petitioner, no one responded to the said tenders, thus clearly showing that no transporter was willing to take the

risk of transporting food grains during the economic blockade which was marked with burning down of vehicles and other damages and threat to

the drivers. Therefore, it was unreasonable on the part of the FCI authorities to insist on the petitioner to transport food grains during the said

blockade.

This Court, after hearing the parties allowed the said writ petition, W.P. (C) No. 346 of 2013 vide judgment and order passed on 17.10.2016

and set aside the order dated 3.5.2013 and further directed the FCI authorities to pass a fresh order after taking into consideration the aforesaid

proceedings of the Lok Sabha.

The FCI, in pursuance of the aforesaid order of this Court passed in W.P. (C) No. 346 of 2013, passed the order dated 16.1.2017 which is

challenged in this petition.

The main ground taken in this petition is that while passing the impugned order dated 16.1.2017, the FCI authorities did not properly consider the

statement made by the Home Minister. According to the petitioner, in fact, the FCI authorities had belittled the related Lok Sabha proceedings by

holding that the proceedings of the Parliament of 19.8.2010 do not tender any credence to the petitioner in view of the evidences on record.

The petitioner has also raised some other issues. However, this Court is not adverting to those issues as this Court is not proposing to enter into

those issues except for examining as to whether, the FCI authorities had taken into consideration the proceeding of the Lok Sabha of 19.8.2010

while passing the impugned order dated 16.1.2017.

Having perused the impugned order what this Court has observed is that though there was reference to the proceeding of the Lok Sabha of

19.8.2010 in the impugned order, it is not clear whether the dispute/grievance redressal committee had indeed considered it and if so, how it was

considered. Of course, it has been mentioned in paragraph no. 6 (II) of the impugned order that Committee consisting of General Manager

(Region) i/c, Dimapur (Nagaland), Deputy General Manager (Region), Imphal Manipur and General Manager (Law), Z.O. (NE) examined the

matter on 11.2.2017 and the Committee went through the relevant records as well as the proceeding of the Lok Sabha as directed by the Court.

However, what actually transpired before the Committee and what was the opinion of the Committee are not forthcoming in the impugned order.

Nothing is also mentioned in the impugned order that the petitioner was also heard at the time of reconsideration by the FCI authorities. The

Executive Director (NE) who issued the impugned order dated 16.1.2017 in paragraph no. 6 (XIII) makes the observation that the Committee in

their meeting held on 21.1.2012 made some findings. In the concluding paragraph of the impugned order it has been stated that ""Taking all the

above aspects into consideration and report of the Committee, it is concluded that M/S Norther Agency has intentionally not provided trucks to

FCI as per the requirement in terms of the contract........"".

However, apart from the reference to the findings of the Committee held on 21.1.2012 [which is prior to the direction issued on 17.10.2016 in

W.P.(C) No. 346 of 2013], there is no reference to any other finding of the Committee including when the matter was examined by the Committee

on 11.1.2017 as mentioned in para No. 6 (II) of the impugned order.What is being referred to in the impugned order is the finding of Committee in

their proceeding held on 21.1.2012.

This Court is of the view that when this Court,on 17.10.2016 in W.P.(C) No. 346 of 2013,directed the FCI authorities to take into

consideration the proceedings of the Lok Sabha held on 19.8.2010, the Committee again ought to have considered the same, that too after hearing

the petitioner. This Court while giving the earlier direction on 10.10.2012 in W.P.(C) No. 773 of 2012 for consideration of the matter by the

Committee had allowed the petitioner to be heard. Thereafter the Committee after hearing the petitioner made the finding on 21.1.2012.

Thereafter, the FCI authorities issued the earlier order dated 3.5.2013 after considering the report/finding of the Committee in their proceeding

held on 21.1.2012. It was accordingly, expected that the Committee when it considered the matter again on 11.1.2017 as mentioned in paragraph

no. 6(II) of the impugned order after the second order by this Court for reconsideration, ought to have heard the petitioner again while

reconsidering.Though this requirement to hear the petitioner was not specifically mentioned in the order of this Court and was silent when this

Court passed the order on 17.10.2016 in W.P.(C) No. 346 of 2013 directing the FCI authorities to pass a fresh order after taking into

consideration the proceedings of the Lok Sabha referred to above, it should have been done so by clear implication. The reconsideration by the

FCI/authorities/Committee would be deemed to be the continuation of the earlier proceeding. What has been noted is that though it is mentioned in

the impugned order dated 16.1.2017 that the matter was examined by the Committee on 11.1.2017, it was not done so after hearing the

petitioner. This Court is of the view that the Committee when it examined the matter on 11.1.2017 ought to have heard the petitioner again.

The Committee when it examined the matter again on 11.1.2017 ought to have heard the petitioner on the relevance or otherwise of the

proceedings of the Lok Sabha of 19.8.2010. But there is nothing on record to show that the petitioner was heard on 11.1.2017 when the

Committee examined the matter again.

Similarly, though the Executive Director (NE) while passing the impugned order dated 16.1.2017 referred to some portions of the Lok Sabha

proceedings of 19.8.2010, he relied on the findings of the Committee recorded on 21.1.2012. There is no reference to any other subsequent

finding by the Committee. This, in the opinion of the Court, was not proper. The Executive Director (NE) ought not to have referred to the

recommendation/findings of the Committee recorded on 21.3.2013 only after the matter was examined by the Committee again on 11.1.2017. The

Executive Director (NE) ought to have referred to the observation/findings, if any, of the Committee on 11.1.2017. The fact that the Committee

examined the matter again on 11.1.2017 could indicate that the Committee must have made some observation, which is not reflected in the

impugned order.

This Court has given emphasis on this aspect, as this Court is not itself examining the relevance or other otherwise of the proceedings of the

Lok Sabha of 19.8.2010. The Committee was mandated to examine the grievance of the petitioner by the earlier order of this Court 10.10.2012

passed in W.P.(C) No. 773 of 2012. Hence, after passing of the order dated 17.10.2016 in W.P.(C) No. 346 of 2013, the matter ought to have

been referred to the Committee to give its view on the relevance or applicability of it, that too after hearing the petitioner on this issue, which

according to the petitioner was of vital importance. It would not suffice, according this Court, that the matter be examined only by the Executive

Director (NE) as has been done.

In view of the above reasons, this Court is of the opinion that it would be appropriate for this Court to again direct the FCI authorities to

reconsider the matter by taking into consideration the proceeding of the Lok Sabha of 19.8.2010. For doing so, the dispute/grievance redressal

committee may hear the petitioner again on the applicability or relevance of the proceedings of the Lok Sabha of 19.8.2010 and on the basis of

such finding/recommendation of the Committee, the FCI authorities may pass a fresh appropriate order.

In the result, for the reasons discussed above, the impugned order dated 16.1.2017 is set aside with the above direction.