Page No.# 1/14 vs Oval Projects Engineering Private ...
2025 Latest Caselaw 2413 Gua

Gauhati High Court

Page No.# 1/14 vs Oval Projects Engineering Private ... on 28 January, 2025

Author: Manish Choudhury

Bench: Manish Choudhury

                                                               Page No.# 1/14

GAHC010001382025




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                      THE GAUHATI HIGH COURT
  (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

                        Case No. : I.A.(Civil)/24/2025

         THE CHAIRMAN AND MANAGING DIRECTOR, OIL AND NATURAL GAS
         CORPORATION LTD. AND 5 ORS
         PANDIT DEENDAYAL UPADHYAYA URJA BHAWAN, 5, NELSON MANDELA
         MARG, VASANT KUNJ, NEW DELHI-110070.

         2: THE CHIEF GENERAL MANAGER- HEAD MM
         OIL AND NATURAL GAS CORPORATION LIMITED
          NAZIRA
         ASSAM ASSET
          OFFICE OF THE CGM -HEAD MM
          ROB-II
          1ST FLOOR
          NAZIRA-785685.

         3: THE PROJECT COORDINATOR
         ASSAM ASSET
          OIL AND NATURAL GAS CORPORATION LIMITED
          SIVASAGAR
         ASSAM-785697.

         4: THE HEAD ENGINEERING SERVICES
          OIL AND NATURAL GAS CORPORATION LIMITED
         ASSAM ASSET
          SIVASAGAR
         ASSAM-785697.

         5: THE MATERIALS MANAGER (IN-CHARGE)
         MATERIALS MANAGEMENT DEPTT
          OIL AND NATURAL GAS CORPORATION LTD.
         ASSAM ASSET
          SIVASAGAR
         ASSAM-785697.

         6: THE EXECUTIVE DIRECTOR
                                                                                  Page No.# 2/14

             ASSET MANAGER
             OIL AND NATURAL GAS CORPORATION LIMITED
             ASSAM ASSET
             NAZIRA
             SIVASAGAR
             ASSAM-785685

            VERSUS

            OVAL PROJECTS ENGINEERING PRIVATE LIMITED
            HAVING ITS REGISTERED OFFICE AT MILAN CHAKRA, BADHARGH, POST
            OFFICE, A.D. NAGAR NO. 11, AGARTALA, TRIPURA, PIN- 799003,
            REPRESENTED BY SRI GAUTAM DEBNATH.



Advocate for the Petitioner   : MR S CHAKRABORTY,

Advocate for the Respondent : MS M HAZARIKA, MS V V THANYU,MS. S NEWAR




                                    BEFORE
                   HONOURABLE MR. JUSTICE MANISH CHOUDHURY

                                           ORDER

28.01.2025

Heard Mr. I. Choudhury, learned Senior Counsel assisted by Ms. S. Chakraborty, learned counsel for the applicants-respondent nos. 1 to 6; and Ms. M. Hazarika, learned Senior Counsel assisted by Ms. V.V. Thangu, learned counsel for the opposite party-writ petitioner.

2. The instant interlocutory application is preferred by the applicants-respondent nos. 1 - 6 seeking vacation / modification of an interim order dated 29.11.2024 passed in the accompanying writ petition, W.P.[C] no. 6299/2024, which was passed ex-parte.

3. The accompanying writ petition has been preferred by the opposite party as the writ petitioner to assail a Show Cause Notice dated 21.11.2024 issued to the opposite party-writ petitioner by the Chief General Manager, Head MM [the respondent no. 2].

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4. The interim order which has been sought to be vacated / modified, read as under :-

This writ petition is directed to put into challenge the show cause notice dated 21.11.2024, putting the petitioner to show cause as to why the contract presently being executed by the petitioner with ONGC should not be terminated on the grounds mentioned in the show cause notice.

Issue notice in the interim prayer returnable in 3 weeks.

Since the respondents are not represented by counsels, steps be taken within a course of 1 week by usual course and by registered post A/D. List this matter on 22/01/2025.

Till the returnable date the further proceedings in pursuant to the show cause notice dated 21.11.2024 shall be kept in abeyance.

5. As the genesis of this interlocutory application is the Show Cause Notice dated 21.11.2024 which came to be issued after a series of communication exchanged between the parties, mentioned in the reference clause of the Show Cause Notice, the relevant excerpts of the Show Cause Notice are extracted hereinbelow, for better appreciation of the issues raised by the contesting parties, :-

* * * * * Sub : Show-Cause Notice for termination of contract, invocation of PBG and suspension of business dealings on account of submission of forged document in respect of Contract of Civil Works and Tank Repair at Lakwa & Lakhmani Fields' ONGC, Assam Asset - Outline Agreement no. 9030010800.

       *             *             *              *           *
       Sir,
       Please     refer   to    Contract   vide       no.   SIB/AA/SUPPORT/MM/RO-

MM/2021/DSCOPARP/845005/R15NC21001/9030010800 for Civil Works and Tank Repair at Lakwa & Lakhmani Fields' ONGC, Assam Asset, awarded on 09.03.2022 for Rs. 27,00,64,435.71 with completion period upto 08.03.2025.

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In this connection, you appointed M/s Kavin, as Design Engineering Consultant for the Contract. However, during a review of technical document, submission of drawing document submitted by you for the subject job has been not found in order as signature and stamp on the drawing seems to be forged by your company. The authentic of signature and stamp was sought from M/s Kavin vide mail dated 16.02.2024. In response, they confirmed vide mail dated 16.02.2024 that sign and stamp in the document were not done by them. Copy of the aforesaid mail dated 16.02.2024 received from M/s Kavin is annexed herewith.

In this regard a mail was sent to you on 19.02.2024 citing above issue. You have responded as follows :

Quote This has reference to your email dated 19.02.2024 on the subject cited above. The matter has come to my knowledge and the same has been investigated by myself. In this regard, the following is clarified. On behalf of Oval Projects Engineering Pvt. Ltd. I regret and condemn the unfortunate incident at the highest level. The individual has committed the error inadvertently in a rush of work pressure. Please restasured that such lapses will not be allowed in future. In order to fully plug such lapses to reoccur in future, the DEC, M/s Kavin shall be kept in loop during all design engineering documents approval process between OPEPL and ONGC on this project. The erring individual has been replaced with more responsible person to take better care of responsibilities related to the design engineering coordination work with the client. ONGC is out most prestigious client and we are serious in our with them. On the basis of this assurance, I request ONGC to let go of this sole incident as one time error.

Unquote

Thus, in view of above, it is apparent that the drawing was forged by way of deceit in signature which is a forgery and is to be dealt under the Clause 16 of Contract read with provisions of the Integrity Pact which forms a part of the Contract.

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Clause 16 of the Contract provides as under :

Quote:

Bidder/Contractor should note that ONGC may verify authenticity of all the documents/certificate/information submitted by the bidder[s] against the tender. In case at any stage of tendering process or Contract/PO execution etc., if it is established that bidder has submitted forged documents/certificates/information towards fulfillment of any of the tender/contract conditions, ONGC shall immediately reject the bid of such bidder[s] or cancel/terminate the contract and forfeit EMD/SD submitted by the bidder.

Unquote

In view of above, you have violated Clause 16 of the Contract and violated provisions of the Integrity Pact. Hence, as per company policy, you are hereby being informed that an opportunity is being provided to you to submit your response within 14-days as to why ONGC should not terminate the contract & invoke the PBG as per Clause 16 of GCC pertaining to authenticity of documents and suspend business dealings with you i.e. M/s Oval Projects Engineering Pvt. Ltd. for violation of the Integrity Pact.

To give a fair chance to you to present your case, you may reply to this show cause notice with all relevant facts along with supporting documents within 14 days of the issuance of this notice i.e. on 04.12.2024, failing which it would be presumed that you have not further explanation to offer and the matter would be decided on the basis of the facts and documents already available with ONGC.

This is without prejudice to any other terms and conditions of the contract and law.

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6. Mr. Choudhury, learned Senior Counsel appearing for the applicants-respondent nos. 1

- 6 has submitted that in a competitive bidding process for a contract, 'Contract of Civil Works and Tank Repair at Lakwa & Lakhmani Fields' ONGC, Assam Asset ['the Contract-Work'] initiated by a tender notice, Tender no. R15NC21001', the opposite party-writ petitioner [hereinafter also referred to as 'the Contractor', at places, for easy reference] emerged as the successful bidder. On such emergence of the opposite party as the successful bidder, a Notification of Award [NoA] was issued to the opposite party on 09.03.2022 setting forth the rates, terms and conditions of the Contract-Work.

7. As per the Notification of Award [NoA] dated 09.03.2022, the contract-work shall be valid for a period of 3 [three] years from the date of NoA and the completion period for the Contract-Works were as under :-

Phase 1 Phase 2 Phase-1 consists of Construction of Repairing of Crude Oil storage Tanks, Non-Plant Buildings, SWD Installation of Sprinkler System., Network, CBD Network, OWS Foam Pourer System & Network, removal of sludge from Implementation of M B Lal sludge ponds of GGS-III & its site Recommendations.

grading and Roads, Boundary Wall, etc. Major work of this phase is Total 6 nos. [4x5000 m3 and 2x1650 construction of 3 nos. of Non-Plant m3] of Tanks are to be repaired under Buildings at GGS-III LKW & 2 nos. this phase.

of Non-Plant Buildings at GGS-I. Phase-2 is to be completed within a Phase-1 is to be completed within a period of 36 months from the date of period of 24 months from the date NoA.

of NoA.

8. Mr. Choudhury has further submitted that after the NoA, the opposite party started executing the Contract-Work. It is submitted that for the purpose of the Contract-Work, one Page No.# 7/14

M/s Kavin Engineering & Services Private Limited has been appointed as Design Engineering Consultant [DEC]. One of the duties of the DEC is to approve the technical data sheet of instrumentation cable document for the Contract-Work under reference. During the continuance of the Contract-Work, it came to the knowledge of the ONGC authorities that one of the technical data sheets of instrumentation cable documents which required approval of the DEC, had been submitted by the Contractor without signature and stamp of the competent authority of the DEC. Having come to learn about the same, it was communicated to the Contractor on 19.02.2024 seeking its response about the reported discrepancy for submission of the technical data sheet of instrumentation cable document without the approval of the DEC. The Contractor was asked to submit its Reply on or before 23.02.2024. In response, the Contractor responded by a Communication dated 22.02.2024. It was after receiving such Reply and after examining the Reply after thorough deliberation in the matter, the Show Cause Notice dated 21.12.2024 came to be issued. Mr. Choudhury has further submitted that the Show Cause Notice has been issued in conformity with Clause 16 read with Clause 8.3, more specifically, Clause 8.3.7 of the Contract Agreement. Thus, it cannot be said that the Show Cause Notice is without jurisdiction. By the Show Cause Notice, an opportunity has been provided to the Contractor to submit its response as to why the ONGC authorities should not take the proposed actions, indicated therein. He has submitted that the Contractor instead of submitting a Reply to the Show Cause Notice, has directly approached this Court by instituting a writ petition. He has submitted that law is settled as regards the cause of action in case of a show cause notice as it is a prelude to process where every opportunity of hearing is to be provided prior to taking final decision as regards the proposed actions indicated in the Show Cause Notice. It is his further contention that the accompanying writ petition suffers from non-joinder of a party inasmuch as the Contractor as the writ petitioner has not impleaded the ONGC as a party-respondent and has merely impleaded the officials of the ONGC as party-respondents. In support of his submissions, Mr. Choudhury has relied upon the decisions in Union of India and another vs. Kunisetty Satyanarayana, reported in [2006] 12 SCC 28; Union of India and another vs. Vicco Laboratories, reported in [2007] 13 SCC 270; and a Judgment and Order dated 03.09.2010 rendered by a Division Bench of this Court in three writ appeals including the Writ Appeal no. 11[AP] of 2008.

Page No.# 8/14

9. In response, Ms. Hazarika, learned Senior Counsel appearing for the opposite party- writ petitioner has submitted, by referring to the Show Cause Notice, that it is evident from the contents of the Show Cause Notice that the Show Cause Notice had been issued with pre- determination for the proposed actions of termination and suspension of the business dealings. It is true that in response to the Communication dated 19.02.2024, the opposite party-writ petitioner replied on 22.02.2024 and in the said Communication dated 22.02.2024, the opposite party-writ petitioner had, in all fairness, stated that the actual facts. The facts disclosed in the Communication dated 22.02.2024 would indicate that it was an inadvertent mistake on the part of a subordinate official and the competent authority having learnt about the same, had immediately rectified the situation so as to prevent occurrence of such events in future. Ms. Hazarika has further submitted that the reported discrepancy came to the knowledge of the ONGC authorities as far back as in the month of February, 2024 and after receipt of the reply from the opposite party-writ petitioner [the Contractor], the ONGC authorities did not proceed further while allowing a request of the opposite party-writ petitioner [the Contractor] for extension of the period of contract. Ms. Hazarika has submitted that it was on 27.02.2024, the request was made for extension of the completion date of Phase-I of the Contract-Work with justifications and the ONGC authorities being satisfied with the justifications, accepted the request for extension with certain terms and conditions, vide its Communication dated 11.03.2024. Such approval to the extension request is prima-facie indicative of acceptance of the reply submitted to the reported discrepancy. But, it was after about nine months from the reply, the impugned Show Cause Notice has been issued which can only be for reasons other than bona fide. In support of submissions, Ms. Hazarika has relied upon a decision of the Hon'ble Supreme Court of India in Siemens Ltd. vs. State of Maharashtra and others, reported in [2006] 12 SCC 33.

10. I have given due consideration to the submissions of the learned counsel for the parties and have gone through the materials available on records, for the purpose of considering the prayer made in the instant interlocutory application.

11. The case of the applicant is based on Clause 16 and Clause 8.3, more specifically, Clause 8.3.7 of the Contract Agreement executed between the parties. Clause 16 has already Page No.# 9/14

been referred in the Show Cause Notice, extracted hereinabove. Clause 8.3 of the Contract Agreement is the clause for termination and Clause 8.3.7 has laid down the consequences of termination. Clause 8.3.7 read as under :-

8.3.7. Consequence of termination

In all cases of termination herein set forth, the obligation of the ONGC to pay shall be limited to the period upto the date of termination. Notwithstanding the termination of this Agreement, the parties shall continue to be bound by the provisions of this Agreement that reasonably require some action of forbearance after such termination.

In case of termination of Contract herein set forth under 8.3.1 and 8.3.2 [Annexure-II], and/or annulment of the contract due to non-submission of Performance Guarantee [as per Clause 28 of Part-I] following actions shall be taken against the Contractor.

i. ONGC shall conduct an inquiry against the Contractor consequent to the conclusion of the inquiry, if it is found that the fault is on the part of the Contractor, then they shall be put on holiday [i.e. neither any tender enquiry will be issued to such a Contractor by ONGC against any type of tender nor their offer will be considered by ONGC against any ongoing tender[s] where contract between ONGC and that particular Contractor [as a bidder] has not been concluded] for a period of two years from the date the order for putting the Contractor on holiday shall not have any effect on other ongoing contract[s], if any with that Contractor which shall continue till expiry of their term[s].

ii. Pending completion of the enquiry process for the putting Contractor on holiday, ONGC shall neither issue any tender enquiry to the defaulting Contractor nor shall consider their offer in any ongoing tender.

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12. From Clause 16, it transpires that the ONGC authorities can verify authenticity of all the documents/certificates or information submitted by a bidder. The ONGC authorities can also examine authenticity of any documents/certificates or information towards fulfillment of any of the tender/contract conditions also at any stage of the execution of the contract-work.

13. In the Communication dated 22.02.2024, which was made by the Chairman and Managing Director of the opposite party-writ petitioner [the Contractor], occurrence of the lapse in the matter of obtaining approval from the DEC in the technical data sheet of instrumentation cable document has been admitted.

14. From a reading of Clause 8.3.7[ii], it emerges that after issuance of a Show Cause Notice, an inquiry is to be conducted and consequent to the conclusion of the inquiry, if it is found that the fault is on the part of the contractor, then the contractor would be put on holiday for a period of two years from the date the order for putting the contractor on holiday is issued. The clause has further provided that the action taken by the ONGC authorities for putting the contractor on holiday shall not have any effect on other ongoing contract[s], if any, with that contractor which shall continue till expiry of the term[s]. The clause has further provided that pending completion of the inquiry process for putting a contractor on holiday, ONGC shall neither issue any tender enquiry to the defaulting contractor nor shall consider their offer in any ongoing tender.

15. By the Show Cause Notice, the writ petitioner-Contractor has been informed that the Contractor has the opportunity to submit its response within 14 [fourteen] days as to why the ONGC [i] should not terminate the contract; [ii] invoke the PBG as per the Clause 16 of the GCC; and [iii] suspend business dealings with it for violation of the Integrity Pact. In the Show Cause Notice, it is further mentioned that to give a fair chance to the noticee to present its case, the noticee can reply with all relevant facts along with the supporting documents.

16. By issuance of the Show Cause Notice, noticee has simply been asked to respond to the proposed actions. The applicant-writ petitioner has not assailed the validity of the Show Cause Notice on the ground of jurisdiction. Thus, it is not a case where legality and validity of Page No.# 11/14

the Show Cause Notice has been questioned by the applicant-writ petitioner on the ground that the authority which has issued the Show Cause Notice has no jurisdiction to issue the Show Cause Notice. Had it been the case, it could have been on occasion for the Court to examine whether the applicant-writ petitioner is well within its right to maintain the writ petition and challenge the notice on that ground. But, such is not a case here. In the absence of any such challenge, this Court should not embark to examine the issue.

17. This Court is also of the considered view that with issuance of only a show cause notice, the rights and obligations of the parties have not been decided finally. The event of issuance of a show cause notice is a step towards taking a final decision in the matter by the competent authority. A tentative view taken in the notice cannot be deemed to be a final view in the matter. The final view is always dependent on the response received from the noticee and if the noticee is able to show sufficient cause as to why no action, as contemplated in the show cause notice, should be taken, the final view may altogether be different.

18. In Kunisetty Satyanarayana [supra], the Hon'ble Supreme Court had considered the issue of maintainability of a writ petition against a show cause notice. It has been held that a writ petition impugning a show cause is ordinarily not maintainblale. However, in some very rare and exceptional cases, the High Court in its discretionary jurisdiction under Article 226 of the Constitution of India can quash a show cause notice if it is found to be wholly without jurisdiction or otherwise wholly illegal. It may be appropriate to refer to the following observations made by the Hon'ble Supreme Court in Kunisetty Satyanarayana [supra] :-

13. It is well settled by a series of decisions of this Court that ordinarily no writ lies against a charge-sheet or show-cause notice vide Executive Engineer, Bihar State Housing Board vs. Ramesh Kumar Singh and others , [1996] 1 SCC 327; Special Director and another vs. Mohd. Ghulam Ghouse and another, [2004] 3 SCC 440; Ulagappa and others vs. Divisional Commissioner, Mysore and others, [2001] 10 SCC 639; State of U.P. vs. Brahm Datt Sharma and another, [1987] 2 SCC 179.

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14. The reason why ordinarily a writ petition should not be entertained against a mere show-cause notice or charge-sheet is that at that stage the writ petition may be held to be premature. A mere charge-sheet or show-cause notice does not give rise to any cause of action, because it does not amount to an adverse order which affects the rights of any party unless the same has been issued by a person having no jurisdiction to do so. It is quite possible that after considering the reply to the show-cause notice or after holding an enquiry the authority concerned may drop the proceedings and/or hold that the charges are not established. It is well settled that a writ lies when some right of any party is infringed. A mere show-cause notice or charge-sheet does not infringe the right of anyone. It is only when a final order imposing some punishment or otherwise adversely affecting a party is passed, that the said party can be said to have any grievance.

15. Writ jurisdiction is discretionary jurisdiction and hence such discretion under Article 226 should not ordinarily be exercised by quashing a show-cause notice or charge sheet.

16. No doubt, in some very rare and exceptional cases the High Court can quash a charge-sheet or show-cause notice if it is found to be wholly without jurisdiction or for some other reason if it is wholly illegal. However, ordinarily the High Court should not interfere in such a matter.

19. In Vicco Laboratories [supra], the Hon'ble Supreme Court had the occasion to examine the scope and judicial review qua a show cause notice. The Hon'ble Supreme Court in that connection, had observed as under :-

31. Normally, the writ court should not interfere at the stage of issuance of show-

cause notice by the authorities. In such a case, the parties get ample opportunity to put forth their contentions before the concerned authorities and to satisfy the concerned authorities about the absence of case for proceeding against the person against whom the show-cause notices have been issued. Abstinence from interference at the stage of issuance of show-cause notice in order to relegate the parties to the proceedings before the concerned authorities is the normal rule. However, the said Page No.# 13/14

rule is not without exceptions. Where a show-cause notice is issued either without jurisdiction or in an abuse of process of law, certainly in that case, the writ court would not hesitate to interfere even at the stage of issuance of show-cause notice. The interference at the show-cause notice stage should be rare and not in a routine manner. Mere assertion by the writ petitioner that notice was without jurisdiction and/or abuse of process of law would not suffice. It should be prima facie established to be so. Where factual adjudication would be necessary, interference is ruled out.

20. The observations made Siemens Limited [supra] are no different from the observations made in Kunisetty Satyanarayana [supra] and Vicco Laboratories [supra]. In Siemens Limited [supra], it has been observed that when a notice is issued with premeditation, a writ petition would be maintainable and in such an event, even if the court directs the statutory authority issuing the show cause notice, to hear the matter afresh, ordinarily such hearing would not yield any fruitful purpose.

21. On the basis of the observations made in Siemens Limited [supra], the learned Senior Counsel appearing for the opposite party-writ petitioner has referred to the contents of the Show Cause Notice to urge the point that the ONGC authorities had the pre-determination to take the actions, proposed therein. In the case in hand, the opposite party-writ petitioner through its Chairman & Managing Director, in its communication dated 22.02.2024, had admitted occurrence of a lapse. Ms. Hazarika has contended that in the Show Cause Notice, the ONGC authorities had brought allegations of deceit and forgery of a document which itself are indicative of their pre-determined mind. But on a close look at the contents of the Show Cause Notice, I am not persuaded to accept such submission advanced on behalf of the opposite party-writ petitioner in view of the fact that the ONGC authorities have based its observations, which are albeit tentative, in reference to the contents of the Communication of the Chairman & Managing Director of the opposite party-writ petitioner. In the considered view of this Court, the observations made in the Show Cause Notice are merely tentative view and cannot be held to be final view of the ONGC authorities. The opposite party-writ petitioner has been assured of all the opportunity to submit its response and a fair chance of hearing to present its case with all the relevant facts and supporting documents in the Page No.# 14/14

proceedings contemplated.

22. This Court is also of the view that if the noticee asked for an opportunity of personal hearing, the same shall be provided to the noticee. The instant interlocutory application stands accordingly allowed to the extent indicated above.

23. In so far as the other issue regarding maintainability of the writ petition for not impleading the ONGC, which is a instrumentality of the State, as a party-respondent in the writ petition, is kept open for consideration at an appropriate stage for the fact that in the meantime, an interlocutory application has been preferred by the opposite party-writ petitioner seeking impleadment of the ONGC as a party-respondent by way of an amendment/correction, etc.

24. At this stage, Ms. Hazarika, learned senior counsel appearing for the opposite party- writ petitioner has submitted that the opposite party-writ petitioner be granted the liberty to respond to the Show Cause Notice in writing within 14 [fourteen] days from today. Having regard to the reasonableness of the prayer so made, such liberty is granted.

24. In view of the discussions made above and the reasons assign therein, I am of the considered view that the interim order passed on 29.11.2024 needs to be vacated. Accordingly, the interim order dated 29.11.2024 stands recalled. It is, however, made clear that the observations made in this order shall not be construed as final observations of this Court and the accompanying writ petition is to be adjudicated on its own merits.

JUDGE

Comparing Assistant