Union Of India Through Secretary To vs M/S Tarmat Ltd
2026 Latest Caselaw 721 J&K

Jammu & Kashmir High Court

Union Of India Through Secretary To vs M/S Tarmat Ltd on 13 February, 2026

Author: Rajnesh Oswal

Bench: Rajnesh Oswal

                                                                             2026:JKLHC-JMU:335-DB
     HIGH COURT OF JAMMU & KASHMIR AND LADAKH
                                 AT JAMMU

CJ Court                          LPA No. 49/2018
                                  IA No. 1/2018

                                  Reserved on:   29.01.2026
                                  Pronounced on: 13.02.2026
                                  Uploaded on:   13.02.2026

                                  Whether the operative part or full judgment
                                  is pronounced: Full judgment.

1.       Union of India through Secretary to
         Govt. Ministry of Defence, Govt. of
         India, New Delhi.
2.       Military Engineering Service (MES),
         through Engineer-in-Chief, Integrated
         Hqrs., Ministry of Defence (Army)
         Kashmir House, Rajaji Marg, New
         Delhi.
3.       Chief Engineer, Northern Command, .....Appellant(s)/Petitioner(s)
         Udhampur, C/o 56 APO.
4.       Chief Engineer Headquarter, Air
         Force Zone, Udhampur.
                       Through: Mr. Vishal Sharma, DSGI with
                                Mr. Eishaan Dadhichi, CGSC
                  Vs
1.       M/s      Tarmat      Ltd.,   Tarmat
         Chambers, Plot No. 19, Sector 24,
         Near Turbhe Flyover, Sanpada,
         Navi Mumbai-400705, Through its ..... Respondent
         Attorney Holder Sh. Parvez Ahmed
         Dar, aged 53 years, S/o Shri Ghulam
         Mohammad Dar, R/o H. No. 13, Sector
         3, Trikuta Nagar, Jammu.
2.       Lt. Gen. Sanjeev Talwar (AVSM),
         Engineer-in-Chief,         Integrated .....Performa Respondent
         Headquarters/Registering   Authority,
         Military Engineering Services (MES)
         Ministry of Defence (Army), Kashmir
         House, Rajaji Marg, New Delhi.

                       Through: Mr. R. K. Gupta, Sr. Advocate with
                                Mr. Uday Bhaskar, Advocate



LPA No. 49/2018                                               Page 1 of 11
                                                                                  2026:JKLHC-JMU:335-DB
Coram: HON‟BLE THE CHIEF JUSTICE
       HON‟BLE MR. JUSTICE RAJNESH OSWAL, JUDGE
                                   JUDGMENT

1. The respondent-company was awarded a contract work of resurfacing of

runway at Air Force Station, Awantipora, Kashmir for an amount of

Rs. 87,99,24,814.26/-. During execution of the above-mentioned contract,

the respondent-company forged an invoice No. 8918061840 dated

21.05.2015 for an amount of Rs. 51,27,948/- instead of actual amount of

Rs. 23,74,750/- issued by the Ultra Tech Cement Limited. On the basis of

said invoice, an inflated amount of Rs. 51,27,948/- was released in favour

of the respondent-company by the appellants and as such, the respondent -

company received Rs. 26.99 lacs in excess. When the tampered invoice was

forwarded by the appellants to Ultra Tech Cement Limited for its

verification, it was conveyed vide communication dated 10.08.2015 by the

Ultra Tech Cement Limited that the above referred invoice was not its

invoice and was forged. It was further conveyed that the original invoice of

the same number and date issued to the respondent-company was

forwarded to Mr. K. N. Gupta, A.E. (Civil). M/S Ultra Tech Cement

Limited sought an explanation from the respondent-company, as to how the

company‟s invoice was forged.

2. Thereafter, the appellant No. 2/Engineer-in-Chief i.e. the competent

authority issued a show cause notice dated 31.12.2015 to the respondent-

company to submit justification and reply for the alleged act of forgery as

mentioned above and further, as to why their firm be not "removed and

debarred" from doing any further business with the Government.

2026:JKLHC-JMU:335-DB Respondent-company was directed to submit its reply by or before

20.01.2016.

3. The respondent-company sought an extension of time until 31.01.2016 and

in its reply dated 28.01.2016, it admitted its guilt but left the quantum of

reasonable punishment to the discretion of appellant No. 2. Thereafter, the

competent authority vide communication dated 18.02.2016, after

considering the reply of the respondent-company, downgraded the

respondent-company from „SS‟ class to „S‟ class and suspended the

business dealing with the respondent-company for a period of two years

from the date of issuance of the communication.

4. The said communication was assailed by the respondent-company through

the medium of OWP No. 624/2016 and the learned writ court vide interim

order dated 28.04.2016, while issuing the notice in the main writ petition,

directed the appellants that until the decision of the application seeking

review filed by the respondent-company on 13.04.2016, the penalty

imposed in terms of communication dated 18.02.2016 shall not be acted

upon.

5. Vide communication dated 11.05.2016, the competent authority considered

the review application and reduced the period of suspension of business

dealing with the respondent-company from 2 years to 1 ½ years but keeping

in view the serious lapse of tampering/forging the voucher, the decision to

downgrade the respondent-company to „S‟ class was kept intact.

6. The order/communication dated 11.05.2016 was assailed by the

respondent-company through the medium of OWP No. 873/2016 with a

prayer to allow it to participate in the further tendering process. The

appellants filed detailed objections and vide judgment dated 27.03.2018,

2026:JKLHC-JMU:335-DB the learned Writ Court quashed the downgrading of the respondent-

company from „SS‟ class to „S‟ class with further direction to consider the

issue of ban regarding the business dealing on the basis of recommendation

made by the Garrison Engineer within a period of 20 days from the receipt

of copy of the judgment.

7. The appellants, being aggrieved of the judgment dated 27.03.2018, have

challenged the same on the grounds inter alia that in communication dated

23.02.2011, the competent authority while issuing enlistment/renewal cum

re-classification of the respondent Company as „SS‟ class from 01.01.2011

to 31.12.2015 has provided in Para „9‟ that MES authority has the right to

suspend, remove or blacklist the respondent from MES list of contractors in

the event of submission of non-bonafide tenders or for technical or other

delinquency and the competent authority by taking a lenient view instead of

blacklisting/removing the respondent-company, downgraded it to „S‟ class.

It is also urged that the respondent-company was downgraded after

affording due opportunity of hearing and more particularly when the

respondent-company had admitted its guilt of tampering/forgery. It is also

urged that the review application dated 13.04.2016 was considered and vide

communication dated 11.05.2016, the competent authority after taking

lenient view of the matter, reduced the ban in business dealing from 2 years

to 1 ½ years, however downgrading of the respondent Company was

maintained. It is also contended by the appellants that the learned Single

Judge's decision to quash the downgrading is an error. The Show Cause

Notice specifically noted that the respondent‟s conduct fell short of the

standards expected of an „SS‟ class contractor and the notice sufficiently

covered the lesser penalty imposed. Given that the respondent was asked to

2026:JKLHC-JMU:335-DB show cause as to why it should not be „removed and debarred,‟ the

appellants submit that downgrading is a minor punishment, as removal

constitutes a far weightier penalty than a reduction in class.

8. Mr. Vishal Sharma, learned DSGI has submitted that respondent company

unequivocally admitted of submitting a forged invoice to obtain an excess

payment of Rs. 26.99 lacs. He vehemently argued that the Show Cause

Notice explicitly stated such fraudulent conduct was unbecoming of an „SS‟

class contractor. The respondent was initially asked to show cause against

being „removed and debarred‟ from future government business. However,

the competent authority took a lenient view; rather than removing the

company from the enlisted list, which would have stripped it of all

privileges, the authority imposed the lesser punishment of downgrading the

respondent from „SS‟ to „S‟ class. Additionally, the initial two years

suspension was modified to 1 ½ years, further demonstrating that a

mitigated penalty was awarded.

9. Per contra, Mr. R. K. Gupta, learned Senior counsel appearing for the

respondent has argued that no show cause notice for downgrading the

respondent-company was ever served upon the respondent-company, as

such, the learned Writ Court has rightly set aside the downgrading of the

respondent Company from „SS‟ class to „S‟ class.

10. Heard learned counsel for the parties and perused the record.

11. The requirement to issue a show-cause notice and the specific details it

must contain to satisfy the principles of natural justice have already been

established by the Hon‟ble Supreme Court in case titled, 'Gorkha Security

Services vs. Govt. of NCT of Delhi' reported in 2014 INSC 521. The

relevant Para is extracted as under:-

2026:JKLHC-JMU:335-DB "19. 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."

12. As established in the judgment supra, a show-cause notice must contain

two key elements: (i) the specific charges against the noticee, and (ii) the

nature of the action intended to be taken. This ensures the noticee

understands the case they must answer and the potential consequences

involved.

13. Applying the aforementioned legal parameters, we will now determine

whether the notice dated 31.12.2015 meets the requirements of a valid

notice. The relevant part of the show cause notice dated 31.12.2015 served

upon the respondent-company is extracted as under:-

"SHOW CAUSE NOTICE FOR SUBMISSION OF FORGED PURCHASE INVOICE IN CA NO. CEAFU-09/2012-13 RESURFACING CF RUNWAY AT AWANTIPUR Dear Sir,

1.Whereas GE (AF) Awantipur vide letter 8103/CEAFU-09/2012- 13/1491/E8 dated 29 Aug 2015 has issued show cause notice bringing out submission of forged invoice No. 8918061840 dated 21 May 2015 thereby wilfully claiming enhanced payment than contractually payable.

2. And whereas you have failed to submit any justification to the GE (AF) Awantipur by due date of 02 Sep 2015 indicating you have nothing to reply.

3. You are hereby again requested to submit justification and reply for the alleged act of forgery in submission of documents so as to gain fraudulently. This very act is a serious lapse and this conduct is not expected from a „SS‟ Class contractor. Being Registering Authority of your enlistment this show cause notice is served on you giving you opportunity to forward your replies. Accordingly please show cause why your firm should not be removed & debarred from doing any further business with the Government."

(emphasis added)

2026:JKLHC-JMU:335-DB

14. A perusal of the show-cause notice reveals that the respondent-company

was informed of its illegal act of claiming enhanced payment based on a

forged invoice (No. 8918061840). The notice specifically noted that such

conduct was unbecoming of an „SS‟ class contractor. Consequently, the

respondent was required to show cause as to why it should not be 'removed

and debarred' from future government business.

15. The reply contains an unambiguous and unequivocal admission of guilt by

the respondent-company. Although the company attributed the forgery to

its Project Manager by claiming that he tampered with a third-party invoice

without realizing the legal implications, it simultaneously deferred to the

Registering Authority‟s discretion regarding the quantum of punishment.

The relevant portion of the respondent‟s reply to the show-cause notice is

extracted below:

"With our head hanging, due to the involvement of our site in charge, we accept that Tarmat Project Manager tampered with the Invoice of a third party without knowing its legal implications merely to claim an additional amount but recoverable amount on account of claiming advance for material brought to the site during the month of May-2015. Since the act of our Project Manager has tarnished our image which we have build past 30 years we accept our guilt and leave the quantum of reasonable punishment to the registering authority. Kindly consider while deciding the fate of our company that over Twelve hundred families associated with us are earning their lively hood and supporting their family over a long period may not suffer because of the act of one single person."

(emphasis added)

16. By an order dated 18.12.2016, the competent authority downgraded the

respondent-company from „SS‟ class to „S‟ class and suspended its business

dealings for two years. Upon review of the respondent‟s application, the

authority reduced the suspension period to 1.5 years but maintained the

downgrade to „S‟ class. Simultaneously, the authority noted that the

disciplinary action would be reviewed based on the respondent‟s

2026:JKLHC-JMU:335-DB performance and the successful completion of the runway contract by the

end of October 2016.

17. As previously noted, the respondent-company admitted its guilt and

deferred to the Registering Authority‟s discretion regarding the quantum of

punishment. Concerning the first requirement of the show-cause notice, the

respondent was fully apprised of the allegations regarding the forged

invoice, a fact it expressly admitted in its reply. However, Mr. R.K. Gupta,

learned Senior Counsel for the respondent, contended that the notice failed

to propose the specific penalty of downgrading the company from „SS‟ to

„S‟ class, stressing that the only actions proposed in the notice were

'removal and debarment‟.

18. An order of „removal‟ would result in the respondent‟s name being struck

from the list of approved contractors; however, even without enlistment, the

company might still have participated in certain tendering processes. In

contrast, „debarment‟ would have caused a total cessation of business

dealings with the appellants. While the respondent‟s business dealings were

initially suspended for two years, a period later reduced to 1.5 years

following a review application, that suspension has since expired. Neither

party has raised a grievance regarding the suspension itself. Instead, the

learned DSGI vehemently contends that downgrading the company‟s

classification was a 'lesser' punishment, given that the competent authority

had the power to impose the far more severe penalty of total removal from

the enlistment list.

19. The respondent-company was not removed from the list of enlisted

contractors; rather, it was downgraded from „SS‟ to „S‟ class. The show-

cause notice explicitly noted that such misconduct was unbecoming of an

2026:JKLHC-JMU:335-DB „SS‟ class contractor. We find merit in the submission of Mr. Vishal

Sharma, learned DSGI, that the competent authority opted for a lesser

punishment despite the respondent's unequivocal admission of guilt.

Ultimately, the respondent‟s status was merely reduced from „SS‟ to „S‟

class, rather than being entirely removed from the list of enlisted

contractors.

20. The respondent was duly notified of the potential for removal and

debarment. By choosing to downgrade the company from „SS‟ to „S‟ class

instead, the competent authority imposed a lesser punishment within its

jurisdiction. We find no deficiency in the show-cause notice regarding the

charges or the proposed actions; therefore, the downgrading was legally

valid. The relevant observations of the Hon'ble Apex Court in case titled,

'Gorkha Security Services (supra) are extracted below:

26. We are, therefore, of the opinion that it was incumbent on the part of the Department to state in the show-cause notice that the competent authority intended to impose such a penalty of blacklisting, so as to provide adequate and meaningful opportunity to the appellant to show cause against the same. However, we may also add that even if it is not mentioned specifically but from the reading of the show-cause notice, it can be clearly inferred that such an action was proposed, that would fulfil this requirement.

In the present case, however, reading of the show-cause notice does not suggest that noticee could find out that such an action could also be taken. We say so for the reasons that are recorded hereinafter.

(emphasis added)

21. Upon examination of the impugned judgment, we find that the learned Writ

Court set aside the downgrading of the respondent company primarily

because no specific show-cause notice for 'downgrading' had been issued.

We cannot concur with this finding. Given that a show-cause notice for

'removal' was duly served, the award of a lesser punishment of

downgrading falls within the authority's jurisdiction. Consequently, the

2026:JKLHC-JMU:335-DB Writ Court's decision vide judgment dated 27.03.2018 to quash the

downgrade cannot be sustained.

22. However, it is equally true that such a penalty cannot continue indefinitely.

Ten years have elapsed since the respondent was downgraded, and we note

that its original „SS‟ class registration was valid only from 2011 to 2015.

We are also mindful of the respondent‟s expressed remorse and the fact that

the excess payments have been adjusted, resulting in no pecuniary loss to

the appellants. In "Kulja Industries Ltd. v. Western Telecom Project

BSNL", (2014) 14 SCC 731, the Hon‟ble Supreme Court has observed as

under:

25. Suffice it to say that "debarment" is recognised and often used as an effective method for disciplining deviant suppliers/contractors who may have committed acts of omission and commission or frauds including misrepresentations, falsification of records and other breaches of the regulations under which such contracts were allotted.

What is notable is that the "debarment" is never permanent and the period of debarment would invariably depend upon the nature of the offence committed by the erring contractor.

26. In the case at hand according to the respondent BSNL, the appellant had fraudulently withdrawn a huge amount of money which was not due to it in collusion and conspiracy with the officials of the respondent Corporation. Even so permanent debarment from future contracts for all times to come may sound too harsh and heavy a punishment to be considered reasonable especially when (a) the appellant is supplying bulk of its manufactured products to the respondent BSNL, and (b) the excess amount received by it has already been paid back.

23. In view of the foregoing, we are of the considered opinion that should the

respondent company apply for fresh registration or renewal as an „SS‟ class

contractor, its application deserves to be considered on its own merits. The

previous downgrading from „SS‟ to „S‟ class shall not act as a bar to such

2026:JKLHC-JMU:335-DB consideration, provided the application otherwise complies with all

applicable rules and regulations.

24. Accordingly, we allow this appeal and set aside the order dated 27.03.2018

passed by the learned Writ Court and the respondent-company is granted

liberty to approach the appellants for enlistment or renewal as an „SS‟ class

contractor. In the event such an application is made, the appellants shall

consider the same in accordance with the law/rules, uninfluenced by the

previous decision to downgrade the respondent from „SS‟ to „S‟ class.

25. Disposed of.

                            (RAJNESH OSWAL)                      (ARUN PALLI)
                                JUDGE                            CHIEF JUSTICE

Jammu
13.02.2026
Neha-II
                              Whether the order is speaking:     Yes/No.
                              Whether the order is reportable:   Yes/No.