Dismissing BSNL's blacklisting order against the petitioner for vague Show Cause Notice and failure to consider statutory factors for debarment, allowing the writ petition and setting aside the action.
The Show Cause Notice and impugned blacklisting order were set aside; the petition was allowed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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PRACHAR COMMUNICATION LIMITED ..... Petitioner Through: Mr S. Venktesh, Mr Somesh Srivastava and Mr vikas Maini, Advocates.
versus
BHARAT SANCHAR NIGAM LIMITED ..... Respondent
Through: Mr Sanjeev Narula and Mr Krish Kalra, Advocates.
CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU
O R D E R % 04.07.2018
VIBHU BAKHRU, J
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W.P. (C) 7846/2016
3.1 On 11.07.2008, BSNL issued an “Expression of Interest for Empanelment of Advertising Agencies for BSNL Corporate Office” (hereafter „EOI‟). In terms of the EOI, BSNL had invited bids from eligible bidders for rendering services relating to creative designing; media planning; and PR activities. The petitioner submitted its bid pursuant to the EOI. The said bid was accepted, and on 26.12.2008, BSNL issued a Letter of Intent (LOI) to the petitioner.
3.2 Thereafter, on 05.06.2009, the parties entered into an Agreement (hereafter „Empanelment Agreement‟) in terms of which the petitioner was required to provide the specified service – that is, media planning; media buying and public relation services – on the terms as agreed between the parties. The Empanelment Agreement was valid for a term of two years with an option of further extension for a period of one year. It was specifically agreed between the parties that the
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petitioner‟s performance would be reviewed in every three months and in the event its performance was found to be unsatisfactory, BSNL would have the right to terminate the Empanelment Agreement. Admittedly, there were no complaints against the petitioner during the term of the Empanelment Agreement and the petitioner‟s performance was not found dissatisfactory.
3.3 It is stated that almost five years after the term of the Empanelment Agreement had expired, BSNL issued the SCN, inter alia, alleging that the petitioner had “ committed irregularities in the matter of empanelment of advertising agency ” during the years 200810 and the petitioner was called upon to show cause why action should not be taken against the petitioner.
3.4 The petitioner responded to the SCN by a letter dated 17.06.2016, inter alia , stating that the petitioner was a reputed agency and was empanelled with several public sector undertakings. The petitioner asserted that it had filed an application for being empanelled as an Advertising Agency along with the necessary documents and had been empanelled at the discretion of BSNL. It also claimed that its financial bid was below the rate card of various media channels and publications and BSNL had benefited from the competitive rates offered by the petitioner.
3.5 On 18.07.2016, BSNL passed the impugned order debarring the petitioner from any business dealing with BSNL for a period of five years from the date of the impugned order.
W.P. (C) 7846/2016
Reasons an Conclusion
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W.P. (C) 7846/2016
“To M/s Prachar Communication Limited, Regd. Office: B-wing, 105, Samkeet Apartment Sant Janabai Marg off Hanuman Road, Ville Parle (E), Mumbai- 400 057
Sub: Show Cause Notice regarding irregularities in the matter of empanelment of advertising agency in BSNL Corporate Office during 2008-10.
Dear Sir(s),
WHEREAS a preliminary enquiry was conducted by CBI on the basis of reference received from CVC vide no. PE 7 (A)/2012/AC-III dated 23.03.2012 against some BSNL officers / ex-officers and M/s Percept Communications through its Directors & Promoters for committing irregularities in the matter of empanelment of advertising agency in BSNL Corporate Office, New Delhi during 2008-10.
WHEREAS it appears to the undersigned that M/s Prachar Communications Limited committed irregularities in the matter of empanelment of advertising agency in BSNL Corporate Office, New Delhi during 2008-10.
THEREFORE, I, V.K. Sharma, General Manager (Corporate Marketing), in exercise of powers conferred upon me by the BSNL, for and on behalf of the CMD BSNL, hereby give you this notice to “show cause” within 15 days to my satisfaction why action should not be taken against you (i.e. M/s Prachar Communications Ltd.) for indulging in unhealthy business practices. Please note that in case no cause is shown by you within the stipulated period or the cause shown is not to my satisfaction, I shall take such actions against you as deemed fit, without further notice.”
W.P. (C) 7846/2016
“The blacklisting order involves civil consequences. It casts a slur. It creates a barrier between the persons blacklisted and the Government in the matter of transactions. The blacklists are “instruments of coercion”.
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xxxx xxxx xxxx xxxx
Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction.”
“With blacklisting, many civil and/or evil consequences follow. It is described as “civil death” of a person who is foisted with the order of blacklisting. Such an order is stigmatic in nature and debars such a person from participating in government tenders which means precluding him from the award of government contracts.”
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that the noticee is required to meet. In Gorkha Security Services ( supra ), the Supreme Court had explained the above principles in the following words:-
“21. The Central issue, however, pertains to the requirement of stating the action which is proposed to be taken. The fundamental purpose behind the serving of Show Cause Notice is to make the noticee understand the precise case set up against him which he has to meet. This would require the statement of imputations detailing out the alleged breaches and defaults he has committed, so that he gets an opportunity to rebut the same. Another requirement, according to us, is the nature of action which is proposed to be taken for such a breach. That should also be stated so that the noticee is able to point out that proposed action is not warranted in the given case, even if the defaults/breaches complained of are not satisfactorily explained. When it comes to black listing, this requirement becomes all the more imperative, having regard to the fact that it is harshest possible action.
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i) The material/grounds to be stated on which according to the Department necessitates an action;
ii) Particular penalty/action which is proposed to be taken. It is this second requirement which the High Court has failed to omit.
we may hasten to add that even if it is not specifically mentioned in the show cause notice but it can be clearly and safely be discerned from the reading thereof, that would be sufficient to meet this requirement.”
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and the SCN has been issued on the recommendation of CBI at the advice of CVC. The impugned order further states that the response submitted by the petitioner was unsatisfactory and, therefore, a competent authority had decided to debar the petitioner from business dealings with BSNL for a period of five years.
(b) The frequency of incidents and/or duration of the wrongdoing.
W.P. (C) 7846/2016 Page 10 of 12
(d) Whether the contractor has been excluded or disqualified by an agency of the Federal Government or has not been allowed to participate in State or local contracts or assistance agreements on a basis of conduct similar to one or more of the causes for debarment specified in this part.
(e) Whether and to what extent did the contractor plan, initiate or carry out the wrongdoing.
(f) Whether the contractor has accepted responsibility for the wrongdoing and recognized the seriousness of the misconduct.
(g) Whether the contractor has paid or agreed to pay all criminal, civil and administrative liabilities for the improper activity, including any investigative or administrative costs incurred by the Government, and has made or agreed to make full restitution.
(h) Whether the contractor has cooperated fully with the government agencies during the investigation and any court or administrative action. (i) Whether the wrongdoing was pervasive within the contractor‟s organization.
(j) The kind of positions held by the individuals involved in the wrongdoing.
(k) Whether the contractor has taken appropriate corrective action or remedial measures, such as establishing ethics training and implementing programs to prevent recurrence.
(l) Whether the contractor fully investigated the circumstances surrounding the cause for debarment and, if so, made the result of the investigation available to the debarring official.”
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VIBHU BAKHRU, J
JULY 04, 2018 RK
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3 issues framed by the court
Whether a Show Cause Notice is valid if it does not contain specific particulars of allegations or the proposed penal action against the noticee.
Whether principles of natural justice were violated by blacklisting the petitioner without disclosing specific misconduct or considering statutory factors for debarment.
Whether the impugned blacklisting order can be sustained without a meaningful opportunity to respond to detailed allegations.
Colour shows how this judgement treated each authority
Erusian Equipment & Chemicals Ltd v. State of West BengalApplied¶39
Erusian Equipment & Chemicals Ltd v. State of West Bengal & Anr : AIR 1975 SC 266 · Who else cites this
Gorkha Security Services v. Govt. (NCT of Delhi)Applied¶45
Gorkha Security Services v. Govt. (NCT of Delhi) and Others : (2014) 9 SCC 105 · Who else cites this
Raghunath Thakur v. State of BiharReferred¶47
Raghunath Thakur v. State of Bihar & Ors. : (1989) 1 SCC 229 · Who else cites this
Kulja Industries Ltd. v. Chief General Manager, Western Telecom Project BSNLApplied¶66
Kulja Industries Ltd. v. Chief General Manager, Western Telecom Project BSNL & Ors.: AIR 2014 SC 9 · Who else cites this
1 provisions across 1 enactments
Prachar Communication Limited
Bharat Sanchar Nigam Limited
Vibhu Bakhu
As recorded by the court registry
A petition under Article 226 of the Constitution asking a High Court to issue a writ against the State or a public authority in a civil matter.
Judgements on the same questions, provisions and authorities, from every court
