Allowed

M/S N Kay Refractory Works Pvt. Ltd. v. Indian Oil Corporation Ltd. and 4 Others

Allahabad HC19 Aug 2019WRIC/2630/2019

Case brief

AI extract

What is this about?

This court quashed the HCFC order debarring the petitioner firm from contracts for two years due to fake documents. The HCFC noticed the order was cryptic and failed to apply its mind to the petitioner's explanation that an employee stole his digital signature. The matter was remitted to take fresh, reasoned action.

What did the court decide?

The impugned order placing the petitioner on the Holiday List and debarring the firm from entering into contracts for two years is quashed. The matter is remitted to the competent authority to pass a

M/S N Kay Refractory Works Pvt. Ltd. Vs… — Public Procurement and Tenders | Allahabad HC (2019)

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Court No. - 1

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Case :- WRIT - C No. - 2630 of 2019

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Petitioner :- M/S N Kay Refractory Works Pvt. Ltd Respondent :- Indian Oil Corporation Ltd. And 4 Others Counsel for Petitioner :- Vivek Dubey,Hari Nath Tripathi Counsel for Respondent :- Yogendra Kumar,Ankush Tandon,Anoop Trivedi

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Hon'ble Ramesh Sinha,J. Hon'ble Ajit Kumar,J.

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The petitioner who is a registered firm of Mathura, U.P. and is alleged to have submitted tender to the Indian Oil Corporation Ltd. Mathura Refinery Mathura has been placed on Holiday List and thus debarred from entering into any contracts with Indian Oil Corporation for a period of two years under the order passed by Deputy General Manager (Contracts) Indian Oil Corporation dated 3rd January, 2019.

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Briefly stated facts are that Corporation issued notice inviting E-tender for repair and maintenance of various roads including off-sites road at Mathura Refinery. It is alleged that petitioner applied by submitting tender pursuant to the notice inviting tender and alongwith said application two documents were submitted one signed by one Branch Manger of Shilpi Engineer Pvt. Ltd. and other signed by Hindustan Petroleum Corporation as certificate of experience. On verification, it was found according to Corporation that documents were not issued by the signing authorities and thus were fake and forged documents . Consequently, respondent issued a show cause notice on 29.9.2018 requiring the petitioner to explain as to why the petitioner firm should not be placed on "Holiday List" and debarred from entering into contract with Indian Oil Corporation and as to why firm be not delisted for submitting fake, false or forged documents/ certificates.

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In response to the aforesaid show cause notice, petitioners submitted replied on 10.10.2018 reminding the respondent Corporation that he had already moved application on 27th September, 2018 through mail requesting for cancellation of tender in question on the ground that proprietor of firm was suffering from long ailment of heart disease and the kidney

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transplant and was on continued bed rest for last several months. It was further explained that one Chetan Sharma who was an employee of the petitioners' firm and while petitioner was suffering from kidney disease between 23rd July, 2018 and 26th July, 2018, the documents were submitted misusing digital signature of the petitioner and also stealing password from the diary of the petitioner. So in effect the explanation submitted was that petitioner had not at all applied and no sooner date he came to know about misdeed and wrong committed by one Chetan Sharma, he not only terminated him from his services but also lodged a complaint with police. The petitioner alongwith such application also submitted all the relevant documents regarding his ailment and thus pleaded innocence in the matter and prayed for favourable consideration of his application in the matter. The competent respondent , namely, The Deputy General Manager, 5th respondent considered the show cause notice and having considered the reply of the petitioner decided to place the petitioner on Holiday List and further to debar him from entering into any contracts with Indian Oil Corporation for a period of two years.

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Assailing the order placing the petitioner on Holiday List and thus debarring it from entering into agreement/contract of work with respondent Corporation, learned counsel for the petitioner has argued that order passed by 5th respondent is absolutely non speaking order. He submits that though it has been stated in the order that reply and the document submitted by the petitioner have been considered but there is nothing in the order to decipher as to what consideration has taken place that may amount to due consideration of the reply of the petitioner and appreciation of documents appended therewith and what weighed the authority fro holding the petitioner guilty of furnishing the documents and debarring him for a period of 2 years. He submits that placing a firm on an Holiday List and debarring such firm from entering into any agreement of work/contract of work amounts to blacklisting and he, therefore, submits that before order of blacklisting is passed, there should have been due consideration of the reply and appreciation of the

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documents supplied by the firm in support thereof. he submits that order is absolutely cryptic and unseasoned order and cannot pass the test of Article 14 of the Constitution.

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Countering the submission of learned counsel for the petitioner, learned counsel appearing for Corporation submits that once Corporation has given opportunity of hearing by issuing a show cause notice, Corporation has complied with reasonable procedure and there was nothing indicative of any genuineness in the claim of the petitioner that tender was not submitted by him but by his employee. Therefore, action taken by the respondents in placing petitioner firm on Holiday List cannot be termed as arbitrary one. He submits that Corporation is best authority to consider reply and having done so if in its wisdom, it has arrived at a drawn conclusion to place the petitioners' firm on a Holiday List, this Court may not interfere with such finding of facts and decision in exercise of power under Section 226 of the Constitution.

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Having heard learned counsel for the petitioner and learned counsel for contesting respondent Corporation and their argument raised across the bar and having perused the record, we find it necessary to refer to the show cause notice and the reply and also order impugned in sequence.

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After due verification, it is alleged, when the Corporation came to know that two certificates submitted on behalf of the petitioner's firm alongwith tender application regarding work experience obtained from Shila Works Ltd. and Hindustan Petroleum Corporation Ltd. were forged and fake, show cause notice was issued on 29.9.2018 in following terms:

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“Sub: Show Cause Notice

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Reference: (1) Our Tender No. MRCC18T024/076- " Repair and Maintenance of Various Roads including Off-Sites Roads at Mathura Refinery" Dear Sir,

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Referring to the documents submitted by you against the pre-qualification criterial for the subject job. On scrutiny it has been found that none of the documents have been issued by "M/s. Shilpi" or "M/s. HPCL."

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Therefore you are hereby required to show cause in writing within 15 days from the date hereof why you be not placed on the "holiday list" and be debarred from entering into any contracts with Indian Oil Corporation Ltd. be not de-listed from the list of approved Vendors/Contractors of Indian Oil Corporation Ltd. for the following reasons:

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Submission of fake, false or forged documents/Certificates:

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Your reply (if any) should be supported by all documents and documentary evidence which you wish to bring to notice in support of your reply.

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Should you fail to reply to this Show Cause notice within the time and manner aforesaid, it will be presumed that you have nothing to say, and we shall proceed accordingly.

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Your reply, if any, and the documents/documentary evidence given in support shall be taken into consideration prior to arriving at a decision. "

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The petitioner in response to the aforesaid notice may reply on 10.10.2018 and categorically stated in his reply that he had already applied for withdrawal of tender on 27.9.2018 as soon as he came to know about submission of tender application on his behalf. He pleaded misconduct of his employee Chetan Sharma for taking undue advantage of his ailment by using digital signature of the petitioner and stealing password. Reply as submitted by the petitioner on 10.10.2018 is reproduced hereunder:

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“REF: Your show cause notice dated 29.8.2018 regarding tender no. MRCC 18 T024/076- “ repairing and maintenance of various roads including off sites roads at Mathura refinary.

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Dear Sir,

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With reference to the above mentioned, we have to draw your kind attention towards our letter dated 27.09.2018 send through and post requesting your good self for removal and cancellation of our aforesaid tender no. MRCC18T024/076 wherein the undersigned expressed about my long ailment because of heart disease and proposed kidney transplant and continuing complete bed rest for last several months, so that I have not been able to ook after eh work of my office, presently I have to undergo dialysis and recently have to be admitted in fortis hospital for kidney transplant.

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Particularly I had been suffering kidney disease was on that since 23.7.2018 to 26.07.2018 and during this period one of my employees i.e. Chetan Sharma submitted the above mentioned tender with documents misusing my digital signature and stalling password from my diary the misdeed done by Chetan Sharma not in my knowledge, thus Chetan Sharma submitted the tender without my consent and knowledge when came to know about the misdeed and wrong committed by Chetan Sharma, I have taken strict action against him by terminating his employment and also making a complaint against him to the police.

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I really feel sorry and my regret for the inconvenience caused to IOCL I consequence of wrongful act committed by Chetan Sharma. Relevant documents supporting the fact of my illness and action taken against Chetan Sharma are enclose herewith for your kind consideration.

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It would be worth mentioning that my company do not undertake any type of roadwork we are only specialized for refractory work.

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It is therefore requesting that submissions made above may kindly be given favourable consideration. “

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Considering the above reply respondent no. 5 decided to place the petitioner on 'Holiday List' by impugned order dated 3rd January, 2019, which is very short order and, therefore, is reproduced in its entirety:

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"Ref: MRCC18T024/076 Dated: 03.01.2019 To,

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M/s N. Kay Refractory Works Pvt. Ltd. 54, Army Garden, Krishna Nagar, Mathura-281004

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Email: [email protected]; Mobile: 9412830298

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Subject: Holiday Listing of Contractor Intimation of placement on Holiday List.

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Dear Sir,

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This is further to our Show Cause Notice to you dated 29.09.2018.

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Your reply to the Show Cause Notice (and the documents and documentary evidence submitted in support of your reply vide letter dated 10.10.2018) has been duly considered.

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It is found that you have submitted fake, false or forged documents/ certificates against IOCL Tender # MRCC18T024/076.

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After considering the allegations made in the Show Cause Notice/Your reply to the Show Cause Notice (and the documents and documentary evidence furnished in support thereof), it has been decided that your be placed on Holiday List and debarred from entering into any contracts with Indian Oil Corporation Ltd. for a period of 01 (Two) Years effective from the date hereof.

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Your Faithfully, Sd/ Deputy General Manager (Contracts)" (Emphasis added)

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Thus from perusal of the aforesaid three documents and recitals made therein as have come to be quoted hereinabove, this is clear that petitioner had stated in so far many words about his ailments, then cheating at the end of one Chetan Sharma and complaint lodged with the police and also application for withdrawal of the tender on 27.9.2018 were all required to be considered. It is worth noticing that application for withdrawal of tender as noted in reply was prior to the date of passing show cause notice i.e. 29.9.2018.

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What we find in the impugned order is that respondents have not even referred to the facts stated in the reply of the petitioner in the order impugned and just have noted down that reply to the show cause had been submitted alongwith documentary evidence in support thereof and thus has proceeded to hold that it has been decided to place the petitioner on a Holiday List and further debar him from entering into any contract with Corporation of period of two years. It is

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not clear from the order as to what document the authority in fact considered and what contents of reply he had found in appreciation in forming the ultimate opinion that reply was not satisfactory and that documents were such that they reflected to be a manifest illegal act on the part of the petitioner. What is very surprising further is that petitioner's application dated 27.9.2018 has not been even referred to in the order impugned.

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It has been held in the case of Chairman, Disciplinary Authority, Rani Lakshmi Bai Kshetriya Gramin Bank v. Jagdish Sharan Varshney and Others (2009) 4 SCC 240 that unless reasons are disclosed how can the person know whether authority has applied its mind or not ? Giving all reasons minimize the chances of arbitrariness . Again in the case of Punjab State Electricity Board and Others v. Jit Singh (2009) 13 SCC 118, the Apex Court while testing the order passed by the State Electricity Board which was assailed on the ground of arbitrary one as being sans reasons, observed that fair play requires recording precise and cogent reasons when an order affects rights of the citizen.

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Again in the case of In case of Rashmi Metaliks Limited and Another v. Kolkata Metropolitan Development Authority and Others, (2013) 10 SCC 95, considering the aspect of judicial review in case of administrative action, the Apex Court held that if the reasons are not contained in the order, it is bad.

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Again in the case of T.P.Senkumar. IPS v. Union of India and Others, (2017) 6 SCC 801, the Apex Court has held that an administrative order must be judged by reason mentioned therein and cannot supplemented by the reason through affidavit or otherwise in subsequent court proceedings.

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Further in the case of Mangalam Organics Ltd. v. Union of India (2017) 7 SCC 221 vide taking note of the limited scope of judicial review of administrative action, the Court did carve out an exception if an order is passed with /an extraneous purpose, upon extraneous consideration or arbitrary without applying its mind to the relevant consideration or were it

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is not guided by norms which are relevant to the object already achieved under Article 14 of the Constitution.

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In view of above exposition of law, the order impugned dated 03.01.2019 cannot be sustained in law and is hereby quashed. The matter is remitted to the competent authority to take decisions afresh in accordance with law after due consideration of reply of the petitioner and the documents supplied by him alongwith reply. The order that will be passed will be reasoned and speaking order.

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The writ petition stands allowed with the aforesaid observations and directions.

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Order Date :- 19.8.2019 Sanjeev

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(Ajit Kumar,J.) (Ramesh Sinha,J.)

M/S N Kay Refractory Works Pvt. Ltd. v. Indian Oil Corporation Ltd. and 4 Others

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M/S N Kay Refractory Works Pvt. Ltd. v. Indian Oil Corporation Ltd. and 4 Others

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