Gautam Guha vs Indian Air Lines And Anr.
2003 Latest Caselaw 474 Del

JUDGMENT

Badar Durrez Ahmed, J.

1. Rule. This petition is taken up for final hearing with the consent of the parties.

2. The Petitioner is the institutional coordinator for four suppliers to the Indian Airlines. The four suppliers are (1) M/s. Ajit Chemicals Pvt. Ltd., Kanpur, (2) M/s. Todi Metal Industries, Mumbai, (3) M/s. Dabur Foods Ltd. Sahibabad and (4) M/s. Mafatlal Industries Ltd. Mumbai. According to the petitioner he has been the institutional coordinator for the last about ten years.

However, this fact is disputed by the Learned counsel for the respondent who states that he may have been the institutional coordinator/liaisoning agent for the last five or six years.

3. Whatever the terminology be, whether the petitioner is the institutional coordinator or a liaisoning agent, the fact of the matter is that the petitioner was the agent acting on behalf of the aforesaid four suppliers for coordinating the supplies to the Indian Airlines. In effect, the petitioner was the agent on behalf of these four suppliers and represented them before the Indian Airlines to carry out their supplies. It is also not disputed that the orders were placed on these four suppliers in their names and the supplies were made by these four suppliers directly to Indian Airlines. The payments also for these supplies were made by the Indian Airlines directly to the four suppliers. His role was only to carry out the orders and to see that procedural aspects are taken care off. In fact he has no financial dealing with Indian Airlines.

4. On 24.10.2001 a news item appeared in the Indian Express and Nav Bharat Times to the effect that the petitioner had been arrested by CBI in connection with some FIR relating to some transactions with MTNL. By a fax dated 30th October, 2001 the respondent Indian Airlines informed Mafatlal Industries Limited with respect to the said news reports with regard to the supply of uniform material by Mafatlal Industries Limited to MTNL and the discrepancies observed in the supplies. In the same fax it was mentioned that the Petitioner was arrested and had been sent to CBI remand. It was further informed that the respondent would not be dealing with the petitioner in future in any matter. Immediately, by fax massage of 30.10.2001 itself Mafatlal Industries Limited replied and stated that paper reports do not have any authenticity in reporting and can be managed by jealous competitors. It further clarified that no case had been made out against Mafatlal Industries Limited or the petitioner and investigation was still inconclusive. It was pointed out that till the case was proved and there was a conviction by the judiciary no action should be initiated. By this letter Mafatlal Industries Limited categorically stated that the respondent's actions cannot be implemented without any legal options. Thereafter, by another fax message dated 31.10.2001 Indian Airlines reiterated its earlier fax to Mafatlal Industries and informed Mafatlal Industries that it had decided that till the investigation is completed by the appropriate authority, it would not be dealing with its agent i.e. the petitioner till he was exonerated from the charges. On the same date, i.e. 31.10.2001 Mafatlal Industries sent a detailed reply to the respondent Indian Airlines in respect of its earlier fax on 30.10.2001. I need not set out the details mentioned in the said fax except to note the fact that Mafatlal Industries had requested Indian Aairlines to overlook such wrong news items and to feel free to ask Mafatlal Industries in case it needed any clarification in this regard.

5. The learned Counsel for the petitioner has referred to the FIR which is at page 39 of the paper book. The FIR has been recorded on 10.10.2001 at 4 p.m. in the Delhi Special Police Establishment, CBI, ACB, New Delhi. The FIR mentions the name and addresses of the accused "as per list attached." The list attached discloses that apart from other accused, being mainly officials of MTNL, Mafatlal Industries Limited, M/s. Sandhya Textiles (which is the Sole Proprietorship concern of the petitioner) and the petitioner have been mentioned as persons accused. Learned counsel for the petitioner had submitted that while Mafatlal Industries Limited is itself an accused along with the petitioner in the same FIR, the Respondent Indian Airlines continues to deal with Mafatlal Industries Ltd. but is refusing to deal with the petitioner as an agent of Mafatlal Industries. This, according to him, is clearly arbitrary and discriminatory. He further points out the relevant paragraphs of the Store and Purchase Manual which provide for blacklisting of vendors and suspension of business as per paragraph 3.8 and 3.9 which are set out at page 170 of the paper book. The relevant paragraph 3.8 and 3.9 are set out hereunder:-

"3.8 BLACKLISTING OF VENDORS:

3.81. An order for blacklisting implies that all Departments of the Company are forbidden form dealing with the firms. The grounds on which the blacklisting may be ordered are:-

(a) If the proprietor/partner/employee/representative of the firm is convicted by a Court of Law following prosecution by Special Police Establishment or under normal process of law for offences involving moral turpitude in relation to business dealings.

(b) If security consideration involving question of loyalty to the State so warrants.

(c) If there is justification for believing that proprietor/partner/employee/representative of the firm has been found guilty of malpractices such as bribery, corruption, fraud, substitution of a tender, interpolation etc.

(d) If the firm continuously refuses to return the Company's dues without showing adequate cause and the Company is satisfied that this is not due to a reasonable dispute which would attract proceedings in arbitration or Court of Law.

3.82. Blacklisting for the above reasons shall not be ordered except under instructions from or with the approval of the office of DSP/GM(S&P)/Dy. G.M. (S&P).

3.8.3 Blacklisting orders issued by the Hqrs. Or any one Region shall be endorsed to and automatically implemented by all other Regions.

3.8.4 The reasons for blacklisting should not be communicated to the firm.

3.8.5 Issue of such orders shall normally involve immediate cessation of all further business with the firm by all departments of the Company. While initiating the issue of such orders to the other Regions/Departments, the authority issuing the blacklisting orders shall specify:-

a) Reasons due to which blacklisting has been decided upon.

b) the period (whether indefinite or specific) for which they will be effective;

c) Names of all partners of the firm and its allied concerns to whom also such orders would apply.

3.8.6 Particular care should be taken to see that the same firm does not appear in a different name to transact business with the Company.

3.8.7 Blacklisting orders should not ordinarily be revoked unless:-

a) the period specified therein has expired;

b) n a review it is found that the punishment already meted out is adequate in the circumstances of the case.

c) in respect of the same facts, the accused has been honourably acquitted by a Court of Law.

3.9 SUSPENSION OF BUSINESS:

3.9.1 Suspension of business may be ordered where pending full enquiry into the allegations, competent authority is of the view that it is not desirable that business with the firm should continue. Such an order may be passed;-

a) If the firm is suspected to be of doubtful loyalty;

b) If Special Police Establishment under the Ministry of Home Affairs, Govt. of India, recommends such a course in respect of a case under investigation; and

c) If competent authority is prima facie of the view that the firm is guilty of an offence involving moral turpitude in relation to business dealings which if established would result in its blacklisting.

3.9.2 Orders for suspension of business shall be passed by the G.M. (S&P)/Dy. G.M. (S&P). Copies of all orders for blacklisting shall be forwarded by the office of DSP/GM (S&P)/Dy. G.M.(S&P) shall maintain an up-to-date list of blacklisted firms and circulate to all other Regional/Hqrs with additions/removals from time to time."

6. From the above provisions, it is apparent that the supplier can be blacklisted if its representative is convicted by a Court of Law or if there is justification for believing that the representative has been found guilty of malpractices such as, bribery, corruption, fraud, substitution of a tender, interpolation etc. It is pertinent to note that the provision of blacklisting is in respect of the supplier itself. The supplier can be blacklisted for the wrong doing of the representative or the agent. But, the essential condition is that such representative or agent must first be convicted or be found guilty by a Court of Law. The other relevant provision is paragraph 3.9 which relates to suspension of business. Business of the supplier of the principal can also be suspended on the grounds mentioned therein. But here again, what is important is that it is the suspension of the business of the firm i.e. the principal supplier or vendor and not of its representative or agent.

7. The Petitioner is finally aggrieved by the letter dated 20th February, 2002 which had been addressed to Mafatlal Industries Limited which reads as under:-

"Dear Sir,

Consequent to the newspaper reports of Indian Express & Navbharat Times dated 24.10.2001 regarding Sh. Gautam Guha Thakurta in connection with CBI enquiry, it has been advised by our Vigilance Department that Indian Airlines should not have any dealings with this agent.

You are therefore requested to advise your liasioning agent Sh Gautam Guha Thakurta not to visit Indian Airlines offices with immediate effect.

Thanking you",

8. Similar letters were sent to the other three suppliers also. The result of this letter is that the petitioner had been shut out or prevented from carrying on the business as an institutional coordinator for these four suppliers. It may be pertinent to note that the impugned letter dated 20th February, 2002 is addressed to the suppliers requesting them to advise the petitioner not to visit Indian Airlines offices with immediate effect. It is up to the suppliers to decide as to upon whom they repose confidence. If, upon receiving such letters, the suppliers still persist with the petitioner the respondent cannot have any objection particularly in view of the fact that dealings with the suppliers have neither been suspended nor the suppliers have themselves been blacklisted. Had the petitioner been convicted or been found guilty, in that event also it would be the suppliers who would either be under suspension or blacklisted. In that eventuality, it would be open to the respondents to debar the petitioner from representing such supplier as the suppliers themselves would have been suspended or blacklisted.

9. The learned counsel for the respondent has made several submissions. However, those submissions merely relate to the fact that investigations have not been concluded and as such it would not be proper for a public sector organisations to deal with the persons who are being investigated. This argument is not tenable particularly, in view of the specific provisions in the Stores and Purchase Manual of the respondent itself which provides for suspension and blacklisting of vendors. No other provisions have been pointed out whereby a representative of a supplier could be prevented from representing a supplier when the supplier himself had not been blacklisted or suspended.

10. In these circumstances, it is clear that the petitioner has been dealt with arbitrarily and unreasonably and, accordingly, the decision of the respondent debarring the petitioner from representing his principals which include the aforesaid four suppliers is set aside. The respondent's letter dated 30th October, 2001, 31st October, 2001 and 20th February, 2002 are quashed. It is, however, the supplier's prerogative to act or not to act on the lines which have been indicated particularly in the letter dated 20th February, 2002 by the respondent to the suppliers. The respondent Indian Airlines cannot prevent the petitioner from representing these suppliers when neither business dealings with these suppliers have been suspended nor have they been blacklisted.

11. The writ petition is allowed to this extent. There shall be no order as to costs.