Hon’ble Sri Justice C.V.Nagarjuna Reddy Writ Petition No.25738 of 2009 Dated 26th July, 2011 Between: The Rekonda Halik and Sharmajeevi Co-Operative Stores Ltd., a Mutually Aided Co-Operative Society, having its Office at Rekonda Village, Karimnagar District represented by its authorised Signatory and Secretary-Sri K.Machaiah …Petitioner And The State of A.P., Women Development and Child Welfare Department, Secretariat, Saifabad, Hyderabad, reptd. By its Principal Secretary and two others. …Respondents Counsel for the petitioner : Sri B.Nalin Kumar Counsel for respondents: Ms G.M.Sunitha, learned counsel Representing GP for Women Development and Child Welfare Department. The Court made the following: Order: At the interlocutory stage, the writ petition is taken up for hearing and disposal with the consent of the learned counsel for the parties. This writ petition is filed for a Mandamus to set aside the proceedings bearing No.520/SNP/A1/2007, dated 06.04.2009, of respondent No.2. The petitioner sought for a consequential direction to the respondents to make payment of the sum of Rs.1 lakh representing the forfeited Earnest Money Deposit and also the sum of Rs.3,90,096/- deducted under the impugned order for alleged adulteration of Moong dal. The petitioner which is a Mutually Aided Co-Operative Society was entrusted with the work of supplying of essential commodities to Child Development Project Offices at Rajendranagaer, Thandur and Maheshwaram. Under the contract, the petitioner has undertaken to supply as many as seven commodities for the period from 31.12.2008 to 30.06.2009 or till the quantities allotted to the supplier during the above period are supplied completely. Before the contract period has come to an end, respondent No.2 has issued the impugned proceedings, a perusal of which shows that complaints were received from two persons on the quality of food commodities like Moong dal, Wheat Rawa to the three SNP ICDS Projects at Rajendranagar, Thandur and Maheshwaram; that on those complaints, the samples of food grains supplied by the petitioner were sent to Andhra Pradesh Foods, Nacharam, for testing the food grains and sending analysis report; and that the analysis report, dated 24.03.2009, of the Chief Public Analyst, State Food Laboratory, Nacharam, Hyderabad, revealed that as per the tests done, the greengram dal/Moong dal is adulterated with added synthetic colour and about 20% of other grains. Respondent No.2, based on the said analysis report, forfeited the Earnest Money Deposit of Rs.1 lakh and also deducted payment of 20% of the cost of Moong dal amounting to Rs.3,90,096. This order is appealed by the petitioner in this writ petition. No counter is filed by the respondents. I have heard Sri B.Nalin Kumar, learned counsel for the petitioner and Ms G.M.Sunitha, learned counsel representing Government Pleader for Women Development and Child Welfare Department. The principal ground on which the impugned order is questioned is that respondent No.2 has unilaterally come to the conclusion that the petitioner has indulged in adulteration of Moong dal; that no show cause notice was issued to the petitioner and the purported Analysis report was not supplied to it; and that respondent No.2 has not called for any objection from and gave an opportunity of being heard to the petitioner before passing the impugned order. The ancillary ground raised by the learned counsel for the petitioner is that the agreement between the parties does not empower respondent No.2 to recover any part of the amount and withhold the Earnest Money Deposit, as was done by him. As regards the first submission of the learned counsel for the petitioner, this Court is conscious of the fact that respondent No.2 has acted under the concluded contract, therefore, the scope of judicial review of his action is very limited. As held by the Apex Court in ABL International Ltd and Anr V. Export Credit Guarantee Corporation of India and Ors[1], even where the State or its functionaries act under a commercial contract, they are expected to keep in mind the public law limitations and act in a fair and transparent manner and that, while ordinarily this Court does not exercise its extra-ordinary jurisdiction under Article 226 of the Constitution of India to adjudicate on the disputes arising under concluded non-statutory contracts, where the Court is satisfied that the action of the State or its officers is in patent violation of the principles of natural justice or arbitrary, this Court will interfere even in case of concluded contracts. A perusal of the impugned order does not show that before the same was passed, the petitioner was given any show cause notice. It also does not show that the petitioner was supplied with a copy of the Analysis report which constituted the sole basis for respondent No.2 to come to the conclusion that the petitioner has supplied adulterated Moong dal to the extent of 20%. Since the action of respondent No.2 visit it with penal consequences, his failure to put the petitioner on notice, giving it an effective opportunity of being heard after supplying the Analysis report, not only violates the principles of natural justice but the same constitutes patent arbitrariness. In my opinion this case fall within the exceptions carved by the Apex Court in ABL International Ltd (cited supra). As regards the second submission of the learned counsel for the petitioner, I am afraid this Court will not examine this aspect at this stage. The petitioner is entitled to raise all conceivable objections to the show cause notice required to be issued by respondent No.2. It shall be open to it to plead that the agreement does not empower respondent No.2 to forfeit the Earnest Money Deposit or also to withhold any part of the amount payable to it on account of alleged adulteration. In such an event, respondent No.2 shall decide those issues with reference to the terms of the agreement and any other relevant document. For the above mentioned reasons, the impugned proceedings are set aside. Respondent No.2 is directed to issue the show cause notice enclosing to it the Analysis Report, the complaints and other relevant material to the petitioner within a period of one month from the date of receipt of a copy of this order. The petitioner is permitted to file its explanation within two weeks from the date of receipt of the show cause notice. Within one month after expiry of the time stipulated for filing explanation by the petitioner, respondent No.2 shall hear the petitioner and pass appropriate orders. Subject to the above directions, the writ petition is allowed. As a sequel to allowing the writ petition, W.P.M.P.No.33519 of 2009 filed by the petitioner for interim relief is disposed of as infructuous. ______________________ (C.V.Nagarjuna Reddy, J) 26th July, 2011 DR [1] (2004) 3 SCC 553