Chhattisgarh High Court Stays ₹16.22 Lakh Recovery Order and Arbitrator’s Decision Against Paddy Procurement In-charge: “Opportunity to Be Heard Is a Fundamental Principle of Natural Justice, Appeal Rights Under Clause 14 Must Be Honored”

Court’s Decision:

The High Court of Chhattisgarh stayed two crucial orders:

1. The Arbitrator-cum-Collector’s order dated 21.10.2024: This order had dismissed the petitioner’s arbitration application.
2. The recovery order dated 29.11.2024: This recovery memo demanded the petitioner pay ₹16,22,449.26.

The court allowed the petitioner liberty to file an appeal before the Commissioner of Raipur Division within 15 days. It clarified that if the petitioner failed to file the appeal within this period, the interim stay on the orders would cease.

Facts of the Case:

1. Background: The petitioner was the In-charge of a Paddy Procurement Center. Under a tripartite agreement with the Chhattisgarh State Market Federation and a co-operative bank, the petitioner’s society procured paddy during the Kharif season 2023-24.
2. Alleged Shortage: Due to delays in lifting the paddy from the procurement center, the grains were exposed to direct sunlight and lost moisture, resulting in a shortage.
3. Actions by the Authorities:
   • The respondent authorities accused the petitioner of negligence in safeguarding the paddy.
   • A recovery order was issued against the petitioner for ₹16,22,449.26 to recover the loss.
4. Arbitration Proceedings:
   • The petitioner filed a case before the Arbitrator-cum-Collector under Clause 14 of the agreement. However, the Arbitrator dismissed the petitioner’s application without providing him an opportunity to be heard.
   • The petitioner claimed that the decision was made ex-parte (in his absence).
5. Filing of Writ Petition: After receiving the certified copy of the Arbitrator’s order on 29.11.2024, the petitioner filed this writ petition seeking a stay on the recovery order and liberty to file an appeal.

Issues Before the Court:

1. Whether the recovery order and Arbitrator’s decision could be challenged under Clause 14 of the tripartite agreement.
2. Whether the petitioner was entitled to interim relief until his appeal was decided.

Petitioner’s Arguments:

1. Violation of Natural Justice: The petitioner argued that the Arbitrator’s decision was passed without giving him an opportunity to be heard, violating principles of natural justice.
2. Timely Filing of Appeal: He asserted that the appeal period of 30 days under Clause 14 of the agreement was still valid, as he received the certified copy of the Arbitrator’s order on 29.11.2024.
3. Request for Interim Relief: The petitioner sought a stay on the recovery order until his appeal could be filed and decided.

Respondent’s Arguments:

1. Negligence of Duty: The respondents contended that the petitioner had failed to protect the paddy, leading to financial losses.
2. Validity of Recovery Order: They argued that the recovery order was lawfully issued based on the Arbitrator’s findings.
3. Availability of Appeal Mechanism: The respondents acknowledged that the Arbitrator’s order could be appealed under Clause 14 of the tripartite agreement.

Analysis of the Law:

1. Clause 14 of the Tripartite Agreement: This clause provides a mechanism for appealing the Arbitrator’s decisions to the Commissioner within 30 days.
2. Principle of Natural Justice: The court emphasized that decisions affecting a person’s rights must be made after giving them a fair opportunity to present their case.

Precedent Analysis:

No specific judgments were cited in the case. However, the court relied on established principles of fairness and procedural justice in administrative and contractual disputes.

Court’s Reasoning:

1. Appeal Rights: The court recognized the petitioner’s statutory right to appeal under Clause 14 of the agreement and noted that the appeal period was still valid.
2. Fair Hearing: The court observed that the petitioner had been denied an opportunity to present his case before the Arbitrator, warranting interim relief to prevent irreparable harm.
3. Balance of Convenience: The court found it appropriate to stay the recovery proceedings temporarily to allow the petitioner to file an appeal and seek further remedies from the appellate authority.

Conclusion:

The court disposed of the writ petition with the following directives:

1. The petitioner was granted liberty to file an appeal before the Commissioner within 15 days.
2. The effect of the recovery order and the Arbitrator’s decision would remain stayed during this period.
3. The court clarified that the interim stay would lapse if the petitioner failed to file the appeal within the stipulated time.

Implications:

1. Protection of Appeal Rights: The judgment reinforces the principle that administrative and quasi-judicial decisions should be subject to review through a fair appeal mechanism.
2. Procedural Safeguards: The case highlights the importance of adhering to natural justice principles, ensuring that affected parties are given a fair hearing.
3. Contractual Disputes: The judgment underscores the significance of honoring procedural clauses in contractual agreements.

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