Bsbk Pvt. Ltd. And Anr. vs Delhi State Industrial ...
2003 Latest Caselaw 1255 Del

JUDGMENT

S.K.Mahajan, J.

1. Rule.

2. The matter being short, the same has been heard with the consent of the parties and is disposed of by this order.

3. The first petitioner is a company incorporated under the Companies Act and is engaged in the civil construction work. It was awarded the contract of construction of infrastructure works, etc. by the respondent in Sector-4 at the Relocation of Industries Project, Udyog Vihar, Bawana in November, 2000. There were certain additional/extra items of work directed by the respondent to be undertaken by the petitioner and certain items were also substituted after the award of the work. The work is stated to have been completed on 21.10.2002 and the defect liability period was to expire one year after the completion of the project. It is alleged that despite persistent demands, the entire payment under the running bills and the final bill were not made by the respondent. On 17.10.2003, i.e., three days before the expiry of the defect liability period, the petitioner received letter from the respondent alleging that the work was executed in an unskilled workmanship with inferior material and the defects having not been removed, the respondent may be forced to remove the defects at the risk and costs of the petitioner. It was at that time that the petitioner allegedly came to know that on or about 24.9.2003, the respondent had issued an internal office memorandum barring the respondent's officials from entering into business dealings with the petitioner.

4. On receipt of the above information the petitioner filed this present petition for quashing the aforesaid memorandum dated 24.9.2003 on the allegations that no opportunity whatsoever was given by the respondent to the petitioner to show cause against the alleged banning and the order is, therefore, clearly contrary to the principle of natural justice and is liable to be set aside. On notice being issued to the respondent, a short affidavit has been filed wherein it is stated that on a complaint to the Anti-corruption Branch of the Central Bureau of Investigation regarding the alleged making of over payment to the petitioner in respect of the aforesaid work, investigations were made by the CBI and it had recommended that the allegations regarding over payment to the petitioner were proved. It is further stated that acting on the advice of the CBI, the case was examined by the respondent-corporation and office memorandum dated 24.9.2003 was issued to the effect that the respondent will not have any business dealing with the petitioner. It is submitted that the said office memorandum has been issued entirely on the recommendations of the CBI.

5. In the counter affidavit it is not denied by the respondents that no notice was given by the respondent to the petitioner to show cause as to why business dealings with the petitioner should not be banned. It is now well-settled that any order having civil consequences should be passed only after following the principle of natural justice. The Supreme Court in Raghunath Thakur v. State of Bihar and others has held that it has to be realised that blacklisting any person in respect of business ventures has civil consequences 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. The deletion of the party's name from the list of approved contractors on the ground that there were some vigilance report against it, can only be done consistent with and after due compliance with the principle of natural justice. That having been not done, it requires to be held that the order banning the dealings with the petitioner was not justified.

6. Since there is a clear violation of the principle of natural justice, the order dated 24.9.2003 banning the business dealings with the petitioner cannot be sustained. I, accordingly, make the rule absolute and quash the aforesaid memorandum dated 24.9.2003. This order will, however, not prevent the respondents from taking appropriate action, as may be permissible in law, after issuing notice to the petitioner and after following the principle of natural justice.

7. Copy of the order be given dusty to counsel for the parties.