Everest Enterprises Thr. Sole ... vs National Buildings Construction ...
2009 Latest Caselaw 145 Del

59
*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+                          W.P. (C) 4533/2007
                                           Date of decision: 19.01.2009
       EVEREST ENTERPRISES THR. SOLE PROPRIETOR
       RAJESH SHARMA                               ..... Petitioner
                      Through: Mr. Anil, Advocate.
                 versus

       NATIONAL BUILDINGS CONSTRUCTION
       CORPORATION LTD.                          ..... Respondent
                      Through: Ms. Neelam Singh,
                      Advocate for NBCC.
       CORAM:
       HON'BLE MR. JUSTICE S. RAVINDRA BHAT

1.     Whether the Reporters of local papers
       may be allowed to see the judgment?

2.     To be referred to Reporter or not?

3.     Whether the judgment should be
       reported in the Digest?

       S.RAVINDRA BHAT, J. (ORAL)

% Issue Rule. Heard counsel for the parties.

2. The petitioner seeks quashing of a Circular dated 25.10.2002 issued by

the respondent - National Buildings Construction Corporation (hereafter

referred to as NBCC), having the effect of black listing it from participating in

future tender processes or entering into contracts or commercial

arrangements with it.

3. The petitioner claims to have been engaged in the housekeeping of

NBCC's premises for the period 1993-2002. The latter issued a notice

inviting tenders for the job of general upkeep on 26.6.2001, in which the

petitioner was held successful and was awarded a contract for the period

1.8.2001 to 31.7.2002. In these circumstances, the petitioner avers that

when tenders were called for a subsequent period and it responded, (in

relation to another organization), it learnt, on 29.5.2007 from Hindustan

Aeronautics Limited that it had been black listed by the NBCC. It claims that

the order of black listing was not served upon it and therefore the same

should be quashed.

4. The NBCC contends in its counter affidavit that although the

agreement was entered into at the relevant time in 2001, as averred by the

petitioner, its services were unsatisfactory; it relies upon a show cause notice

dated 9.10.2002, issued through speed post whereby deficiencies were

notified to the petitioner and it was called upon to show cause why it should

not be black listed or debarred from having future dealings with it.

5. Learned counsel reiterated the position taken in the pleadings. It was

besides contended on behalf of the NBCC that the petitioner has approached

this Court belatedly after a lapse of 5 years of issuance of the impugned

Circular. Counsel for the petitioner, on the other hand, contended that the

impugned black listing/debarment is unsupportable in law because it was

neither communicated to it and more importantly it does not have a

terminus quo.

6. The NBCC's response, is that the order was kept in its Notice Board

and the petitioner should have acquainted itself of this position.

7. The factual narrative shows that there is no dispute about the fact that

the petitioner was issued with a show cause notice before the order was

made. However, the petitioner disputes that the actual debarment order was

ever communicated to it. The said order reads as follows: -

"NATIONAL BUILDINGS CONSTRUCTION CORPORATION LIMITED (A GOVERNMENT OF INDIA ENTERPRISE)

NBCC BHAWAN LODI ROAD, NEW DELHI - 110 003.

Dated: 25th October, 2002 No. NBCC/ADMIN/Maint/2002

CIRCULAR

The competent authority has decided that until further order NBCC shall not award any work to the firm known as M/s Everest Enterprises (prop. Shri Rajesh Sharma) Q-60, Sector- 12, Noida - 201301 and the partners/Directors of this firm, and any other firm/company by whatever name called in which the aforesaid firm or any or more of its partners or their family members, have any share of interest whatsoever.

It may be ensured that the above decision is implemented by all concerned with immediate effect.

TThis issues with the approval of Chairman-cum-Managing Director.

Sd/-

(B. Prasad) GROUP GENERAL MANAGER (Admin.)

Copy to:

1. All Zonal Heads-GGM/GM/AGM, NBCC, Limited.

2. All HODs in the corporate office, NBCC Limited, New Delhi.

3. ED (Vig.), NBCC Limited, New Delhi-3.

4. SO to CMD/DSE to Director (P), NBCC, Limited, N. Delhi.

5. All AGM/DGM/PM/DPM/Unit Incharges, NBCC Limited.

6. Notice Board.

Sd/-

(B. Prasad) GROUP GENERAL MANAGER (Admin.)"

8. According to the NBCC's contentions, the decision to debar the

petitioner was taken in accordance with law and communicated in

accordance with its practices. Its contention appears to be that by placing

such Circular on the Notice Board, the requirement of natural justice stands

fulfilled. It has been held repeatedly by the decisions of the Supreme Court

as well as this Court (referred to Erusian Equipment & Chemicals Ltd. v.

State of West Bengal and Anr. reported as AIR 1975 SC 266) that since

an order of black listing or debarment involves drastic consequences, the

public agency concerned should follow a fair and reasonable procedure the

appropriate procedure before issuing it. Now, there is no dispute that the

petitioner was issued with a show cause notice. However, the manner in

which the order was made and communicated, (or not communicated, which

is a better way of describing what happened) can hardly be upheld by the

Court. It has been held right from more than four decades ago that any

adverse order visiting the party concerned with adverse consequences must

not only be made after following minimum requirement of fair procedure but

also must be communicated to him.

9. In this case, the impugned Circular (extracted above) was addressed to

all parties except the petitioner who is made to suffer the consequences.

Besides this the other serious infirmity, in the view of this Court, is that the

Circular is open ended in the sense that no term or tenure has been

indicated by the NBCC. In that sense, the impugned circular is

disproportionate since it forbids the petitioner for all times from engaging in

any kind of commercial transactions with the respondent - NBCC. Such

virtual "civil death sentence", is arbitrary and unreasonable. It is one thing

for a public body or agency to say that it would not do business, for a

specified term, having regard to behavior, conduct or performance (or non-

performance) of a private concern. Yet, to forbid business altogether negates

the rights of such persons under Articles 14 and 19(1)(g) of the Constitution

of India. It bristles with absoluteness, and whimsicality that is unsupportable

in law. Such action - of not entering into contract - may be a choice available

to a private individual, or company, but cannot be countenanced, when

expressed for an indefinite term, by a public agency.

10. In view of the above discussion, the petition deserves to be allowed.

Accordingly, the impugned Circular dated 25.10.2002 is hereby quashed.

The Writ Petition is allowed in the above terms. No costs.

S. RAVINDRA BHAT, J JANUARY 19, 2009 /vd/