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Inder Kumar vs Union Of India (Uoi) And Ors.

High Court Of Judicature at Allahabad|23 November, 2001


1. The petitioner has filed this writ petition challenging the order dated 10.7.1999 and 30.6.1998. The petitioner has also sought writ of certiorari for quashing the above two orders and has sought directions in the nature of mandamus commanding the respondents not to give effect to the above two orders contained in Annexures-1 and 2 respectively in the writ petition. The petitioner has further sought directions in the form of mandamus commanding the respondents to allow the petitioner to participate in the contracts ignoring the above two orders and to release his outstanding payments to the petitioner.
2. The brief facts relevant to the present writ petition are that the petitioner firm is engaged primarily in taking Government contracts pertaining to constructions and repair of buildings. As contended by the petitioner it has been successfully performing the said business for the last several years. The petitioner is registered with the respondents (Annexure-3 to the writ petition). In respect of certain works assigned to the petitioner by the Head Quarter's Commander Works Engineer pertaining to "Special Repairs to Married J.C.O./C.R.'s Quarters" executed by the petitioner in the year 1996-97, a show cause notice dated 9th June, 1998 (Annexure-5 to the writ petition) was issued alleging the sub-standard works having been done by the petitioner. The petitioner in his reply dated 29th June, 1998, had explained asserting that the entire work had been performed strictly in accordance with the specifications given to the petitioner, and that after completion of the work, the Garrison Engineer had inspected the same and had thereafter issued a completion certificate. It was further asserted in his reply dated 29.6.1998 (Annexure-IV to the writ petition) that no defect had been pointed out at the time of inspection and the indication to the breakage of window pane etc. could not be attributable to the petitioner, which might have and broken on account of user of the quarters after handing over the same by the petitioner. The petitioner has further contended that after receipt of the reply, on the very next day i.e.. 30th June, 1998 (Annexure-2 to the writ petition) an order was passed by the Commander, Works Engineer whereby, the business dealings with the petitioner were suspended and the name of the petitioner's firm had been removed from the approved list of Contractors allegedly for certain lapses in execution of C.A. No. C.W.E. L.K.O/E./10 of 96-97 without the opportunity of hearing having been given to the petitioner prior to the passing of the order dated 30th June, 1998.
3. Being aggrieved from the above order dated 30.6.1998 the petitioner filed a Writ Petition No. 3029 M/B of 1998 primarily on the ground that it was passed in violation of the principles of natural justice. The said writ petition was disposed of on 21.5.1999 by this High Court with a direction to the respondent to expedite the appeal of the petitioner preferred against the order dated 30.6.1998 which was pending disposal. The petitioner had in the memo of appeal specifically complained that the order dated 30th June, 1998 suspending business dealings with petitioner was an order of black listing and consequently it was incumbent upon the Commander, Works Engineer to have afforded an opportunity of hearing to the petitioner. Consequent upon the order passed by this Hon'ble Court, the appellate authority i.e,, the Chief Engineer. Lucknow Zone, rejected the appeal by an order dated 10th July, 1999 in a non-speaking terms and without assigning any reasons. In respect of the specific plea of the petitioner, the appellate authority made the following observations :
"No blacklisting has been done as stated by you in several paras of our appeal."
4. In the present Writ Petition No. 2766 of 1999, the petitioner has assailed the appellate order dated 10.7.1999 and the order dated 30.6.1998 blacklisting the petitioner and has further pleaded that prior to the passing of said order, no opportunity of hearing was given to the petitioner and the opposite party has not acted in a bonafide manner. For convenience the relevant averments of the writ petition made in the following paragraphs are given as under :
"Para 3. --That while recording the finding (by the opposite party No. 2 in the order dated 10.7.1999) that no blacklisting had been done and the name of the petitioner's firm had merely been removed from the approved list of contractors is nothing but an eyewash and an endeavour to put a veil over the illegal action of the respondents in hot having afforded any opportunity of hearing to the petitioner. The said finding is per se misconceived and aptly demonstrates that the opposite party No. 2 has not acted in a bona fide manner. Malice is over omnipresent in the order dated 10.7.1999. rendering it violative of Article 14 of the Constitution.
Para 4.--That the petitioner also begs to assail the order dated 30.6.1998 passed by the opposite party No. 1 by means of which the name of the petitioner's firm has been removed from the approved list of contractors, allegedly for certain lapses in execution of C.A. No. CWE-LKO/E/10 of 96-97 (special repairs of married J.C.O./C.Rs. accommodation at Bahadur Shah Marg, Lucknow) ; primarily on the ground that the said order is blatantly illegal, arbitrary and erroneous and has been passed without application of mind. The opposite party No. 1 failed to take Into consideration that the work regarding the said contract for repairing the houses had already been completed on 27.10.1997 and as per Clause 49 of the contract, the Garrison Engineer who is the competent authority as per Clause 46 of the contract had given the completion certificate after inspecting the work.
Para 5.--That the petitioner submits that issuance of a completion certificate is conclusive proof of execution of the works satisfactorily. Endeavour to hold a roving enquiry and fish out material against the petitioner is palpably arbitrary and mala fide.
Para 10.--That the petitioner first executed sample repair work of quarter No. 196, Bahadur Shah Marg, Lucknow, and after approval of the same was required to complete the entire work, which it accordingly did. On 27.10.1997 a completion certificate was issued by the Garrison Engineer. As submitted above the said certificate is Issued only after satisfactory inspection of the works executed. However, in the said completion certificate, a direction was contained to remove some minor defects. The same were rectified by the petitioner prior to 27.11.1997. After issuance of the completion certificate a bill amounting to Rs. 1,23,441 was prepared by the Assistant Garrison Engineer and the same was sent to the Technical Section for payment to the petitioner."
5. The counter-affidavit dated 4.10.1999 has been filed on behalf of the respondents with the main averments :
(a) The orders impugned in the writ petition did not amount to blacklisting of the petitioner and consequently there was no requirement to afford any opportunity of hearing to the petitioner.
(b) The remedy of arbitration was available to the petitioner in view of the specific terms of the contract and that an inspection could be done upto 12 months after the issuance of the completion certificate.
It would be worthwhile to reproduce the specific stand taken by the respondents in paragraphs 3, 4, 5, 9 and 17 of the counter-affidavit which read as follows :
"Para 3.--"That the contents of para 3 of the writ petition are absolutely incorrect and false hence denied. The petitioner is not blacklisted by passing the impugned orders. It is only the removal from the approved list of the contractors. After blacklisting of a contractor, it cannot be issued a tender form by any department in the Government of India which is not in the case. If on the basis of the impugned orders the petitioner had been refused to issue a tender form it could have been alleged that the impugned orders amount to a blacklisting of the petitioner firm. In fact there is no violation of Article 14 of the Constitution of India. The removal of the petitioner firm is in accordance of the Rules."
Para 4.--"That the para 4 of the writ petition are denied. The order dated 30.6.1998 is passed by the opposite party No. 2 and not by opposite party No. 1. Further the order is rightly passed in accordance with the condition No. 46 of I.A.F.W. 2249 forming that part of the contract. Since the serious defects had developed during the defect liability period, the same were brought into the knowledge of the petitioner but in spite of rectifying those defects, they claimed there no fault in an unsatisfactory manner. Therefore, the opposite party No. 2 had to pass the order dated 30.6.1998 contained in Annexure-2 to the writ petition after the issuing of the completion certificate."
Para 5.--"That para 5 of the writ petition are misconceived hence denied. A completion certificate cannot be conclusive proof of execution of work satisfactorily. As per condition No. 46 as above referred a contractor cannot be absolved from its liability till the expiration of defect liability period."
Para 9.--"That in reply to para 10 of writ petition it is submitted that in normal procedure after the work being completed the bills are prepared. So in the present case also the department was not prejudiced in preparing the bills but as serious defects had developed within the defect liability period and the petitioner failed to remove the same the payment has not been made i.e.. not improper in view of the condition No. 67 of the above referred Rules."
Para 17.--"That the contents of para 18 of the writ petition are vague and misconceived. The writ petition is not liable to be taken into cognizance in view of the condition No. 70 of the I.A.F.W. 2249 which deals with the adjudication of disputes by the arbitration. The said condition is agreed by the petitioner along with the other condition of contract. In this regard a photocopy of the relevant agreement is Annexure-CA-4 to this counter-affidavit. As matter of fact the writ petition is in abuse of process of law and is liable to be dismissed with cost. No legal ground exist therein which can be alleged as a violation of fundamental right guaranteed to the petitioner."
6. For convenience, the relevant conditions of contract are given here as below :
"46. Inspection of the works.--M.E.S, Officers concerned with the contract shall have power at any time to inspect and examine any part of the works and the contractor shall give such facilities as may be required to be given for such inspection and examination.
Should the G.E. consider, at any time during the construction or reconstruction or prior to the expiration of period of a twelve calendar months after the works have been handed over to Government (hereinafter referred to as the "defects liability period") that any work has been executed with unsound, imperfect or unskilful workmanship or of a quality inferior to that contracted for or not otherwise in accordance with the contract (in respect whereof the decision of the G.E. shall be final and binding), the contractor shall, on demand in writing from the G.E, specifying the fault notwithstanding that the same may have been inadvertently passed, certified and paid for, forthwith rectify or remove and reconstruct the work so specified, in whole or in part as the case may require. at his own expense ; and in the event of his failing to do so within a period to be specified by the G.E. in his demand aforesaid, the G.E. may carry out the work by other means at the risk and expense in all respects of the contractor. Provided always that the liability of the contractor under this condition shall not extend beyond the defects liability period except as regards workmanship which the G.E. shall have previously given notice to the contractor to rectify."
"67. Recovery from contractor.--
Whenever any claim(s) for payment of a sum of money arise(s) out of or under this contract against the contractor, the contractor shall on demand make the payment of the same or agree for effecting adjustment from any amounts due to him by the Government. If, however, he refuses or neglects to make the payment on demand, or does not agree for effecting adjustment from any amount due to him, Government shall be entitled to withhold an amount not exceeding the amount of the claim(s), from any sum when due or which at any time thereafter may become due to the contractor, under this or any other contract with the Government or from any other sum due to the contractor from the Government (which may be available with the Government) or from the Contractor's Security Deposit or Security Bond amount, and retain the same by way of Hen till such time, payment is made by the contractor or till the claim(s) is/are settled or adjudicated upon, or till the contractor, at his expense furnishes fixed deposit receipt(s) duly endorsed as directed by the Accepting Officer, or a Guarantee Bond from a Scheduled Bank for an amount equal to the amount of the claim(s) in the form as directed by the Accepting Officer."
In respect of Condition No. 70 (I.A.F.W.-2249) dealing with adjudication of disputes by the arbitration the enclosed Annexure CA-4 with the counter-affidavit which are provided as under :
C.A. No. CWE/LKO/E/10 of 96-97 Serial Page No. 28 GENERAL CONDITIONS OR CONTRACTS (IAFW-2249) 1987 PRINT FOR LUMP SUM CONTRACTS (IAFW-2159) AND TERMS CONTRACTS FOR ARTIFICERS WORKS AND MEASUREMENT CONTRACTS (1779-A) It is hereby agreed by me/us that the general conditions of contract including condition 70 pertaining to settlement of disputes by Arbitration (IAFW-2249) (1987 Print) containing 33 (thirty three) pages (Serial page Nos. 29 to 61) with errata Nos. 1 to 12 and amendment Nos. 1 to 12 (Serial page Nos. 62 to 69) though not enclosed with the tender documents are forming part of the tender documents.
This tender submitted by me/us is subject to the aforesaid General Condition of Contracts I.A.F.W.-2249, a copy of which has been supplied to me/us and is in my/our possession and which I/we have read and understood, before submission of this tender.
My/Our signature hereunder is deemed to be my/our having signed the aforesaid General Conditions of Contracts together with errata and amendments (I.A.F.W.-2249-1987 Print) forming part of this tender.
Delete whichever is not applicable.
SW for Accepting Officer."
(Signature of the Contractor) Date :
In the rejoinder-affidavit dated 11.10.1999 referred by the petitioner the several assertions made in the counter-affidavit have been controverted.
In paragraph 3 of the rejoinder-affidavit the petitioner has Indicated that Rule 46 of I.A.F.W.-2249 would reveal that it is the G.E. alone under whom the petitioner has completed the work and who is the Inspecting authority, who can Initiate the impugned action. In the present case contrary to any such action having been initiated by the G.E., after Inspecting the work, a completion certificate has been issued by him. Some minor defects which had been pointed out were rectified within the prescribed time. The opposite party No. 1 while deciding the appeal has failed to appreciate this fact. The appellate order is bereft of any reasoning and totally non-speaking and thus hit by the provisions contained in Article 14 of the Constitution.
In paragraph 6 of the rejoinder-affidavit the petitioner has submitted that under condition No. 49 of I.A.F.W.-2249, the completion certificate was issued which is conclusive proof of execution of work satisfactorily.
An interim order was also passed by this Court on 19.4.1994 the relevant part of this order is quoted below :
"The Impugned order has been passed deleting the name of the petitioner from the list of contractors on 30th of June. 1998 in respect of contract C.A. No. CWE-LKO/E/10/96-97. The impugned order is prospective in nature. It does not state that the payment of the petitioner has been withheld in respect of other contracts where there is no dispute or any allegation of any kind was made.
In these circumstances, if the petitioner has completed contract of M.E.S. and if there is nothing against the petitioner, payment shall be released in respect of contracts other than C.A. No. CWE/LKO/E/10 of 96-97."
7. Learned counsel for the petitioner has very categorically contended that the removal of the name of the petitioner from the list of approved contractors is akin to blacklisting as has been held in M/s. Southern Painters (supra) 1994 Supp (2) SCC 699 Para 11, indicating as below :
"The deletion of the appellant's name from the list of approved contractors on the ground that there were some vigilance report against it, could only be done consistent with and after due compliance with the principles of natural Justice. That not having been done, it requires to be held that withholding of the tender form from the appellant was not justified. In our opinion, the High Court was not justified in dismissing the writ petition."
8. In the case Raghunath Thakur v. State of Bihar, (1989) SCC 299. it was held prior to passing an order of blacklisting an opportunity of hearing has necessarily to be given. The relevant observations in the said case are being reproduced hereunder for convenience :
"Indisputably, no notice had been given to the appellant of the proposal of blacklisting the appellant. It was contended on behalf of the State Government that there was no requirement in the Rule of giving any prior notice before blacklisting any person. In so far as the contention that there is no requirement specifically of giving any notice is concerned, the respondent is right. But it is an implied principle of the Rule of law that any order having civil consequence should be passed only after following the principles of natural justice. It has to be realised that blacklisting any person in respect of business ventures has civil consequence for the future business of the person concerned in any event. Even if the Rules do not express so. it is an elementary principle of natural justice that parties affected by any order should have right of being heard and making representations against the order."
9. It was also asserted on behalf of the petitioner that the person affected by the order of blacklistings has a right of being heard and making representations against the order even if the Rules did not provide so expressly as the order has civil consequences for future business of person concerned in reference to Raghunath Thakur (supra).
10. The decision of M/s. Southern Painters (supra) was followed by the Division Bench of this Court in the case of Monika Plaslic Pipes (P.) Ltd. v. Director of Industries, 1998 (1) AWC 2.48 (NOC) : 1998 (16) LCD 388. In the said case, a show cause notice was given by the Director of Industries and response to the same was submitted. However, before passing the order of blacklisting, the petitioner was not afforded an opportunity of hearing. Relying upon several decisions of the Hon'ble Supreme Court as referred in paragraphs 23 and 24 of the said decision of Monika Plastics (supra) this Court has been pleased to strike down the said blacklisting.
11. The learned counsel for the petitioner has also contended that he has been denied the right to know the reasons as to why the said appeal of the petitioner has been rejected and his valuable right has been denied in derogation of the decision of the Hon'ble Supreme Court in Star Enterprises v. C.I.D.C. of Maharashtra. (1990) 3 SCC 280 para 9 and 10. where recording of reasons by the executive has been found to be essential and failure to do so vitiates the action of the authority.
12. In respect of the plea of arbitration, it has been submitted by Sri Prasant Chandra learned counsel for the petitioner that the arbitration could only be resorted to in respect of any dispute arising out of the contract. This Court finds force in the submission of the petitioner, in the present case, there is no dispute arising out of the contract and the aforesaid writ petition is confined in its challenge to the action of the respondent in blacklisting the petitioner without affording any opportunity of hearing to the contractor.
13. The impugned orders challenged in the present writ petition did not suffer from any infirmity as the terms of the contract, as annexed to the counter-affidavit (Annexure CA-1) confer such a Jurisdiction upon the respondents, such contentions of the respondents are devoid of legal force as from a perusal of Annexure CA-1 it is revealed that only the Garrison Engineer is competent to make inspection and issue show cause notice rather than the authority which had issued the same. The Annexure CA-1 thus support the case of the petitioner, and in any case does not throw any light on the aspect of blacklisting.
14. In view of the foregoing submissions this Court finds that the petitioner was not afforded any opportunity of hearing prior to the passing of the impugned orders more so contrary to the decisions of Hon'ble Supreme Court.
15. In the above circumstances, the order dated 30th June. 1998 and 10th July, 1999, contained in Annexures-2 and 1 respectively to the writ petition are not legally sustainable and the writ petition is allowed accordingly with the directions to the respondents to allow the petitioner to participate in the tenders issued by the respondents. henceforth and to issue forms to the petitioner to enable him to participate in the same.
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Inder Kumar vs Union Of India (Uoi) And Ors.


High Court Of Judicature at Allahabad

23 November, 2001
  • R Misra