[Cites 11, Cited by 0]
Orissa High Court
Bhilai Engineering Corporation vs Steel Authority Of India Limited on 11 February, 2026
Author: B.P. Routray
Bench: B.P. Routray
Signature Not Verified
Digitally Signed
Signed by: BASANTA KUMAR BARIK
Reason: Authentication
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C) No.18264 of 2025 and W.P.(C) No.23363 of 2025
(In the matter of an application under Articles 226 and 227 of the
Constitution of India)
In W.P.(C) No.18264 of 2025
Bhilai Engineering Corporation .... Petitioner
Limited, Hatkhoj Village Industrial
Area, Bhilai Dist., Durg,
Chhatisgarh
-versus-
Steel Authority of India Limited, .... Opposite Party
Rourkela
In W.P.(C) No.23363 of 2025
Arvind Kumar Jain and others .... Petitioners
-versus-
Steel Authority of India Limited, .... Opposite Party
Rourkela
Advocate(s) appeared in this case:-
For Petitioners : Mr. Milan Kanungo,
Senior Advocate
(In both the Writ Petitions)
For Opposite Party : Mr. Gautam Mishra,
Senior Advocate
(In both the Writ Petitions)
CORAM: JUSTICE B.P. ROUTRAY
JUDGMENT
th
11 February 2026
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
B.P. Routray, J.
1. Before commencing hearing, Mr. Milan Kanungo, learned
Senior Advocate for the Petitioner in W.P.(C) No.18264 of 2025
submits that prayer in said writ petition may be confined to and limited
in respect of quashing/setting aside the impugned banning order dated
03.06.2025 (Annexure-1), i.e. the Prayer-A. He also files a memo to
that effect, which is kept on record. However, Mr. Kanungo seeks
leave to approach appropriate forum in order to pursue the Prayer No.B
& C.
2. Heard Mr. Milan Kanungo, learned Senior Advocate for the
Petitioners and Mr. Gautam Mishra, learned Senior Advocate for the
Opposite Party in both the writ petitions.
3. Both the writ petitions having similar issues are heard together
and disposed by this common judgment.
4. The common question arises in both the writ petitions is that,
whether the direction for blacklisting the company, i.e. Bhilai
Engineering Corporation Limited (hereinafter referred as the
'Company') and its' Directors on the allegations of commission of
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
fraud in furnishing the Performance Bank Guarantee (in short, 'PBG')
in respect of the contract awarded in favour of the Company, is valid ?
5. Brief facts of the case, as common to both the writ petitions, are
that, the Petitioner-Company in the first writ petition, i.e. W.P.(C)
No.18264 of 2025 has been awarded with the contract dated
05.10.2024 floated by the Steel Authority of India Limited, Rourkela
Steel Plant (the Opposite Party) for installation of Coke Dry Cooling
Plant including BPTG, Gas Fired Boiler and DM Water Plant as
specified in Annexure-3. The contract was granted on 05.10.2024 by
executing the agreement and as per the stipulation thereof, the
Petitioner-Company has to furnish PBG within a period of thirty days
from the date of execution of the contract. Article 5.1 of Annexure-3
(the contract) stipulates, as follows:-
"5.1 The Facilities shall be commissioned in 41 (Forty One)
months from the Effective Date of the Contract.
The Performance Bank Guarantee (PBG) shall be submitted by
the Contractor within 30 days of signing of Contract.
The Letter of Credit (LC), if applicable, shall be opened by
Employer within 30 (thirty) days of 'receipt of correct
Performance Bank Guarantee from the Contractor in the format
as per Annexure 1 of GCC and its confirmation from the bank'.
In case, there is delay in opening of Letter of Credit by
Employer, then time of completion shall be extended
accordingly. However, in case, there is delay in submission of
PBG by the Contractor then the time of completion shall remain
unchanged, provided LC has been opened within 30 (thirty)
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
days of receipt of correct Performance Bank Guarantee and its
confirmation from the bank."
6. Subsequently, the Petitioner-Company did not furnish PBG
within the time stipulated, compelling the authority to request them
through several letters to furnish said PBG. Ultimately on 28.03.2025,
PBG was furnished vide the letter submitted by Petitioner-Company to
Opposite Party. It is mentioned therein that they are submitting the
original Bank Guarantee amounting to Rs.40,37,48,800.00p with
validity upto 21.08.2029 and claim period upto 21.08.2030 issued by
the Banker, namely, Punjab and Sind Bank, Khar Branch, Mumbai in
respect of the contract under Annexure-3.
7. After furnishing of PBG at Annexure-5, the Opposite Party
verified the same and sent it for confirmation to the concerned Banker
at Mumbai on 03.04.2025, which was then detected to be a fraudulent
one. Thus, finding the PBG as a fraudulent act committed by the
Petitioners, as a Company as well as individuals in the capacity of its
Directors, a show-cause notice was issued to the Company as to why
action as per the Integrity Pact of Steel Authority of India Limited
(SAIL) shall not be taken. The Petitioner-Company submitted its show-
cause dated 29.04.2025 under Annexure-9 series and thereafter, upon
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
consideration of all such facts and explanation offered by the
Petitioner-Company, Opposite Party vide order dated 9th July 2025
(Annexuer-15) terminated the contract. Before that, the Company as
well as individual Directors of the Company are banned or blacklisted
vide impugned order dated 3rd June 2025 under Annexure-1 to both the
writ petitions. The Opposite Party put three years ban order, i.e. till
09.04.2028, from having business dealings with all the plants/units of
SAIL including its subsidiaries thereof. The contents of that impugned
order under Annexure-1 read as follows:-
"OFFICE ORDER
Ref. No.: PROJ/MM (P)/554 Date: 03.06.2025
M/s. Bhilai Engineering Corporation Ltd., Bhilai including its
Proprietor/Partners/Directors is hereby banned from having
business dealings with all Plants/Units of Steel Authority of
India Limited (SAIL), including its Subsidiaries for a period of
03 Years till 09,04.202.8 (considering suspension order issued
effective from 10.04.2025).
The ban is imposed on account of submission of Fake/Forged
documents (i.e. Performance Bank Guarantee (PBG)) to comply
with the terms and conditions of Contract No.
P/PROJ/640/2290000025/R1/24049266 dated: 05.10.2024 for
"Coke Dry Cooling Plant including BPTG, Gas Fired Boiler and
DM Water Plant for Installation of a Stamp Charged COB#7 at
Rourkela Steel Plant (Package-B)".
The existing offers against ongoing tenders (prior to issuance of
contract) / new offers of the Agency / Application for Fresh
Enlistment & Participation in all types offenders i.e. (Open
Tender & LTE) shall not be entertained from M/s.Bhilai
Engineering Corporation Ltd, Bhilai during the said Banning
period.
The details of M/s. Bhilai Engineering Corporation Ltd., Bhilai
as per available records are mentioned below:
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
1. Name of Firm M/s.Bhilai Engineering
Corporation Ltd.
2. Vendor Code No. 1000079413, 1000000526,
1000079508
3. Address 4/5, Industrial Area,
Nandini Road, Bhilai-
490026, Dist-
Durg (CG}
4. Name of Proprietor/ Shri Arvind Kumar Jain
Partner/ Directors (Managing Director)
This issues with the approval of the Competent Authority.
(A.K. Sahu)
CGM (Proj.-Coml.)"
8. Mr. Kanungo, learned Senior Advocate for the Petitioners, while
challenging the impugned order of banning, submits that such direction
of Opposite Party to ban the Company as well as its' Directors or
blacklisting them for a period of three years is without application of
mind, since none of the grounds submitted in the show-cause reply of
the Company has been taken into consideration by the Opposite Party.
It is further submitted that it is not the Opposite Party alone but the
Petitioner have been duped and defrauded by such action done by a
third party consortium, i.e. Mr.Vijay Chopra, Mr.Ashish Modi and Mr.
Raunak, who were authorized to act on behalf of the Petitioner to
furnish the PBG. It is further submitted by Mr. Kanungo that a criminal
case in Marine Drive P.S. Case No.0119 dated 24.06.2025 has been
registered at the instance of the Petitioners, on behalf of the Company.
But the Opposite Party has failed to consider such aspects and
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
attributed entire fraudulent action on the Petitioners, as a Company as
well as individuals to take such drastic steps to ban them for a period of
three years as per the impugned order. It is also submitted on behalf of
the Petitioners that, the Directors of the Company, who are the
Petitioners in 2nd writ petition, i.e. W.P.(C) No.23363 of 2025, have not
committed anything wrong in their individual capacity to attribute such
alleged action on their part to face the ban order as individuals. He
further submits that the Directors of the Company have never been
given any opportunity of hearing in their individual capacity before
effecting the ban/blacklist order against them personally by the
Opposite Party. It is therefore, submitted by the Petitioners that the
impugned order has been suffered from gross illegality coupled with
non-application of mind and should not be allowed to stand as a
punitive action against them.
9. The Opposite Party has filed its counter in both the cases
answering the challenge of the Petitioners that such action in furnishing
a fraudulent PBG upon execution of the contract is within the liability
of the Petitioners, as a Company as well as individuals, and therefore
they cannot escape from the consequences thereof. It is submitted by
Mr. Mishra, learned Senior Advocate for the Opposite Party that when
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
the fraudulent PBG is admitted, as furnished by the Petitioners, to the
tune of Rs.40 crores and more, there is no explanation available for the
Petitioners to get rid of consequent punitive action banning them from
future participation in the contracts. Mr. Mishra further submits that
lodging of FIR on behalf of the Petitioner-Company does not take
away their liability from the action they have committed with a motive
to defraud the Opposite Party. Rather such a step taken by the
Petitioner-Company, who lodged the criminal case, is an eye-wash to
get rid of the liability on them.
10. Execution of the contract between the parties on 05.10.2024 as
per Annexure-3 is not disputed by either party. The execution of such
contract is admitted by both Petitioners and Opposite Party and they
also admit the requirement of furnishing PBG within a period of thirty
days from the date of execution of the contract. It is also not disputed
by either party that the alleged PBG as per Annexure-5 was submitted
on 28.03.2025, i.e. much after 30 days of prescribed period, and at the
same time, it is also admitted that such bank guarantee to the tune of
Rs.40 crores and odd furnished by the Petitioner-Company in respect
of the contract was found to be fake and fraudulent one. Thus, it is
admitted on the part of the Petitioner that the PBG furnished by him on
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
28.03.2025 under Annexure-5 was a fake one. But, according to the
Petitioner, he has no deliberate intention of defrauding the Opposite
Party thereby or he has not intentionally furnished such PBG to the
tune of Rs.40 crore and odd. It is the contention of the Petitioner that,
such furnishing of the PBG to Opposite Party is without his knowledge
that the same is a fake one, because he relying on the third party, as
named in the FIR, furnished the Bank Guarantee as per the instruction
received from said parties.
11. So, in view of the rival contentions advanced by both the parties,
particularly when the PBG as admitted to be a fake one, the question
arises for determination is whether the Petitioners, as a Company as
well as its' Directors in individual, would be held liable for such action
of banning, or they had the intention to defraud the Opposite Party by
furnishing such fake PBG as per Annexure-5.
12. Here some dates are important to be mentioned that, the contract
was signed on 05.10.2024, thereby stipulating the time period upto
04.11.2024 to furnish the PBG and till 28.03.2025, no PBG was
furnished either fake or genuine. More to that, the PBG furnished
under Annexure-5 dated 28.03.2025 was found to be a fake one, as
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
confirmed by the Bank authority under Annexure-A to the counter,
upon verification of the same by the Opposite Party. These are all
undisputed facts. It is the case of the Petitioner that, while furnishing
such PBG he relied on some private parties, as named in the FIR
(stated above) and relying on them the PBG was furnished as received
from them, to the Opposite Party in respect of the contract executed on
05.10.2024. It is the further case of the Petitioners that, in the history of
their performance of different contracts with different authorities
including SAIL and other public authorities, not a single antecedent is
there or even allegation with regard to fraud or dereliction of contract.
For the first time, the Petitioners by relying on such third parties have
furnished the PBG as per Annexure-5, which was subsequently found
as a fraudulent one. The Petitioners have further intimated said fact
immediately coming to their knowledge on 03.04.2025 vide Annexure-
6 to the Opposite Party to withdraw said PBG as some confusion and
mistake appeared in the same. The Petitioners have not stopped there,
but further proceeded to lodge the criminal case that how they have
been defrauded, as well as the Opposite Party, by such third parties.
Therefore, the Petitioners in their best have expressed their
genuineness in their action to furnish the PBG that it was never their
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
intent and within their knowledge to furnish the PBG in order to
defraud the Opposite Party.
13. Here, the sequence of events, which need to be analyzed, is that
on the same date of noticing the PBG as a fake one by the Opposite
Party, the Petitioners have submitted its letter to the Opposite Party to
withdraw the same on the ground of some confusion and mistake. It is
stated in their show-cause reply that how they have been defrauded by
said third parties upon whom they have relied to perform the PBG in
support of the contract as required by the Opposite Party.
14. It is true that, the banning or blacklisting is a drastic step taken
against the defaulter to prevent him from the advantage of entering into
lawful participation in future contracts with the authority. In Erusian
Equipment & Chemicals Ltd. vs. State of West Bengal and another,
(1975) 1 SCC 70, the concept has been explained. It is explained by the
Hon'ble Supreme Court that:
"12. Under Article 298 of the Constitution the executive power of
the Union and the State shall extend to the carrying on of any trade
and to the acquisition, holding and disposal of property and the
making of contracts for any purpose. The State can carry on
executive function by making a law or without making a law. The
exercise of such powers and functions in trade by the State is
subject to Part III of the Constitution. Article 14 speaks of equality
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
before the law and equal protection of the laws. Equality of
opportunity should apply to matters of public contracts. The State
has the right to trade. The State has there the duty to observe
equality. An ordinary individual can choose not to deal with any
person. The Government cannot choose to exclude persons by
discrimination. The order of blacklisting has the effect of depriving
a person of equality of opportunity in the matter of public contract.
A person who is on the approved list is unable to enter into
advantageous relations with the Government because of the order
of blacklisting. A person who has been dealing with the
Government in the matter of sale and purchase of materials has a
legitimate interest or expectation. When the State acts to the
prejudice of a person it has to be supported by legality.
xxx xxx xxx
14. The State can enter into contract with any person it chooses. No
person has a fundamental right to insist that the Government must
enter into a contract with him. A citizen has a right to earn
livelihood and to pursue any trade. A citizen has a right to claim
equal treatment to enter into a contract which may be proper,
necessary and essential to his lawful calling.
15. The blacklisting order does not pertain to any particular
contract. The blacklisting order involves civil consequences. It
casts a slur. It creates a barrier between the persons blacklisted and
the Government in the matter of transactions. The blacklists are
"instruments of coercion".
16. In passing an order of blacklisting the government department
acts under what is described as a standardised code. This is a code
for internal instruction. The government departments make regular
purchases. They maintain list of approved suppliers after taking
into account the financial standard of the firm, their capacity and
their past performance. The removal from the list is made for
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
various reasons. The grounds on which blacklisting may be ordered
are if the proprietor of the firm is convicted by court of law or
security considerations to warrant or if there is strong justification
for believing that the proprietor or employee of the firm has been
guilty of malpractices such as bribery, corruption, fraud, or if the
firm continuously refuses to return Government dues or if the firm
employs a government servant, dismissed or removed on account
of corruption in a position where he could corrupt government
servants. The petitioner was blacklisted on the ground of
justification for believing that the firm has been guilty of
malpractices such as bribery, corruption, fraud. The petitioners
were blacklisted on the ground that there were proceedings pending
against the petitioners for alleged violation of provisions under the
Foreign Exchange Regulations Act.
17. The Government is a Government of laws and not of men. It is
true that neither the petitioner nor the respondent has any right to
enter into a contract but they are entitled to equal treatment with
others who offer tender or quotations for the purchase of the goods.
This privilege arises because it is the Government which is trading
with the public and the democratic form of Government demands
equality and absence of arbitrariness and discrimination in such
transactions. Hohfeld treats privileges as a form of liberty as
opposed to a duty. The activities of the Government have a public
element and, therefore, there should be fairness and equality. The
State need not enter into any contract with any one but if it does so,
it must do so fairly without discrimination and without unfair
procedure. Reputation is a part of a person's character and
personality. Blacklisting tarnishes one's reputation.
18. Exclusion of a member of the public from dealing with a State
in sales transactions has the effect of preventing him from
purchasing and doing a lawful trade in the goods in discriminating
against him in favour of other people. The State can impose
reasonable conditions regarding rejection and acceptance of bids or
qualifications of bidders. Just as exclusion of the lowest tender will
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
be arbitrary, similarly exclusion of a person who offers the highest
price from participating at a public auction would also have the
same aspect of arbitrariness.
19. Where the State is dealing with individuals in transactions of
sales and purchase of goods, the two important factors are that an
individual is entitled to trade with the Government and an
individual is entitled to a fair and equal treatment with others. A
duty to act fairly can be interpreted as meaning a duty to observe
certain aspects of rules of natural justice. A body may be under a
duty to give fair consideration to the facts and to consider the
representations but not to disclose to those persons details of
information in its possession. Sometimes duty to act fairly can also
be sustained without providing opportunity for an oral hearing. It
will depend upon the nature of the interest to be affected, the
circumstances in which a power is exercised and the nature of
sanctions involved therein.
20. Blacklisting has the effect of preventing a person from the
privilege and advantage of entering into lawful relationship with
the Government for purposes of gains. The fact that a disability is
created by the order of blacklisting indicates that the relevant
authority is to have an objective satisfaction. Fundamentals of fair
play require that the person concerned should be given an
opportunity to represent his case before he is put on the blacklist."
15. In Patel Engineering Limited vs. Union of India and another,
(2012) 11 SCC 257, the Hon'ble Supreme Court relying on Erusian
Equipment & Chemicals Ltd. (supra) and other cases also, have stated
that to blacklist a person from entering into a contractual relationship
with the State amounts to depriving such person to be treated equally
with others in the matter of contract. It is stated as follows:-
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
"14. The nature of the authority of the State to blacklist the
persons was considered by this Court in the abovementioned
case and took note of the constitutional provision (Article
298), which authorises both the Union of India and the States
to make contracts for any purpose and to carry on any trade
or business. It also authorises the acquisition, holding and
disposal of property. This Court also took note of the fact
that the right to make a contract includes the right not to
make a contract. By definition, the said right is inherent in
every person capable of entering into a contract. However,
such a right either to enter or not to enter into a contract with
any person is subject to a constitutional obligation to obey
the command of Article 14. Though nobody has any right to
compel the State to enter into a contract, everybody has a
right to be treated equally when the State seeks to establish
contractual relationships. The effect of excluding a person
from entering into a contractual relationship with the State
would be to deprive such person to be treated equally with
those, who are also engaged in similar activity.
15. It follows from the above judgment in Erusian
Equipment case that the decision of the State or its
instrumentalities not to deal with certain persons or class of
persons on account of the undesirability of entering into the
contractual relationship with such persons is called
blacklisting. The State can decline to enter into a contractual
relationship with a person or a class of persons for a
legitimate purpose. The authority of the State to blacklist a
person is a necessary concomitant to the executive power of
the State to carry on the trade or the business and making of
contracts for any purpose, etc. There need not be any
statutory grant of such power. The only legal limitation upon
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
the exercise of such an authority is that the State is to act
fairly and rationally without in any way being arbitrary--
thereby such a decision can be taken for some legitimate
purpose. What is the legitimate purpose that is sought to be
achieved by the State in a given case can vary depending
upon various factors."
16. In Blue Dreamz Advertising Private Limited and another vs.
Kolkata Municipal Corporation and others, (2024) 15 SCC 264, the
Hon'ble Supreme Court relying on various previous decisions
including Kulja Industries Limited vs. Chief General Manager,
Western Telecom Project Bharat Sanchar Nigam Limited and others,
(2014) 14 SCC 731, have stated that such action of banning or
blacklisting is demonstrated as a penalty that treats the blacklisted
company or person as ineligible from participating any contract under
the State. It is stated as follows:
"24. What is significant is that while setting out the
guidelines prescribed in USA, the Court noticed that
comprehensive guidelines for debarment were issued there
for protecting public interest from those contractors and
recipients who are non-responsible, lack business integrity or
engage in dishonest or illegal conduct or are otherwise
unable to perform satisfactorily. The illustrative cases set out
also demonstrate that debarment as a remedy is to be invoked
in cases where there is harm or potential harm for public
interest particularly in cases where the person's conduct has
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
demonstrated that debarment as a penalty alone will protect
public interest and deter the person from repeating his actions
which have a tendency to put public interest in jeopardy. In
fact, it is common knowledge that in notice inviting tenders,
any person blacklisted is rendered ineligible. Hence,
blacklisting will not only debar the person concerned from
dealing with the employer concerned, but because of the
disqualification, their dealings with other entities also is
proscribed. Even in the terms and conditions of tender in the
present case, one of the conditions of eligibility is that the
agency should not be blacklisted from anywhere.
25. In other words, where the case is of an ordinary breach of
contract and the explanation offered by the person concerned
raises a bona fide dispute, blacklisting/debarment as a
penalty ought not to be resorted to. Debarring a person albeit
for a certain number of years tantamounts to civil death
inasmuch as the said person is commercially ostracised
resulting in serious consequences for the person and those
who are employed by him.
26. Too readily invoking the debarment for ordinary cases of
breach of contract where there is a bona fide dispute, is not
permissible. Each case, no doubt, would turn on the facts and
circumstances thereto."
17. In the given facts of the present case, the circumstances
appeared, as explained by the Petitioner-Company that his action in
furnishing the PBG under Annexure-5 was never an intentional one,
but he did it in good faith relying on those private parties named in the
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
FIR and subsequently on detection of the same or finding any defect
therein, he immediately applied on 03.04.2025 to withdraw the same to
furnish another fresh PBG. Looking to the other side from the angel of
Opposite Party, it is found that though the Petitioner-Company was
liable to furnish the PBG on or before 04.11.2024 in terms of the
contract under Annexure-3, but the same was not submitted. Rather it
was submitted upon persuasion by the Opposite Party after more than
four months on 28.03.2025. When the Opposite Party doubting on the
conduct of the Petitioner-Company verified the same, it came to their
knowledge on 03.04.2025 through the e-mail sent by the concerned
Banker that such PBG furnished by the Petitioner was a fake one and
does not bear any genuineness. The confirmation was received from
the Banker at 10.29 AM on 03.04.2025 as per Annexure-A. But,
surprisingly the letter addressed by the Petitioner-Company to the
Opposite Party on the same day as per Annexure-6 does not bear any
time, which would otherwise infer that the same has been submitted
after 10.29 AM on 03.04.2025. It is true that, the FIR has been lodged
by the Petitioner-Company at Mumbai, but the fate of the said FIR is
still in dark till date and on query, it is submitted by the learned
counsel for the Petitioner that those accused persons, who have
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
furnished the security for equal amount to the PBG, are still absconded
and yet to be apprehended. Thus, it becomes clear that said criminal
case is still awaiting collection of evidence and nothing has progressed
in it till now.
18. It is true that, the Petitioner-Company, despite giving its
intimation on 03.04.2025 under Annexuere-6 to the Opposite Party, has
not mentioned anything thereafter till submission of the show-cause
reply regarding their innocence or non-involvement in furnishing the
fake PBG on 28.03.2025. The explanation came from the side of the
Petitioner-Company with reasons as to their bona-fideness only in their
reply to the suspension order effected on 10.04.2025.
19. It is a different aspect that the contract executed between the
Petitioner-Company and the Opposite Party has already been
terminated and stated to be sub-judice before this Court in another writ
petition. In the present writ petition, it needs to be seen whether there
was any bona fide approach on the part of the Petitioner in submitting
such PBG on 28.03.2025 without any intention to defraud the Opposite
Party. Had the investigation in the criminal case been completed or
progressed to substantial extent, there have been a clear picture with
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
regard to the intention of the Petitioner-Company in submission of the
fake PBG on 28.03.2025, but this is not the case here. It is to be
adjudged from the circumstances stated above regarding conduct of the
Petitioner.
20. As stated earlier, the Petitioners have not cleared anything in
their letter dated 03.04.2025 under Annexure-6 regarding any sort of
confusion or mistake on their part for furnishing a fresh PBG in place
of the PBG furnished on 28.03.2025. It is also true that, even after
lodging of the FIR, the Petitioner-Company do not think it proper to
intimate the Opposite Party as to the fake PBG furnished by him on
28.03.2025, but when the order of suspension of the contract came on
10.04.2025, it is replied on 11.04.2025 about such action committed on
their part. By taking recourse to the FIR and the contents thereof, it has
been tried best on the part of the Petitioner to explain how he furnished
the PBG on 28.03.2025 in good faith believing the same as genuine.
Here, it is to be reminded that the contract between the Petitioner-
Company and the Opposite Party does not specify inclusion of any
third party in the matter of furnishing the PBG. It is between the
Petitioner-Company and those persons named in the FIR that they
entered into a deal how to procure the PBG for the required amount,
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
i.e. a tune of Rs.40 crore and odd. Thus, the Opposite Party has nothing
to do in the dealings made between the Petitioner-Company and those
third parties named in the FIR, who in the opinion of the Petitioner-
Company, have played the fraud with him as well as the Opposite
Party.
21. The burden is on the Petitioner-Company to justify his action
that by furnishing the PBG dated 28.03.2025 under Annexure-5 they
have acted in a good faith, since it is their case that they were
completely unaware of such fraudulent action taken by those other
parties named in the FIR. It is a matter between the Petitioner-
Company and those accused persons, who have defrauded the
Petitioner-Company in furnishing such PBG on behalf of the Petitioner
to the Opposite Party. The Opposite Party has nothing to do in the
same. In order to discharge such burden that comes on the Petitioner-
Company, they took rescue of the actions taken in lodging the criminal
case against the fraudsters as well as the intimation sent to the Opposite
Party on 03.04.2025. But as stated earlier, the letter dated 03.04.2025
under Annexure-6 submitted by the Petitioner-Company to the
Opposite Party does not explain in detail that they have also been
defrauded by those third persons and upon good faith believing on
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
those persons, the PBG has been furnished to the Opposite Party.
Though the Petitioner-Company has failed to discharge its burden to
prove his good faith in submitting the fake PBG on 28.03.2025, but at
the same time it is to be accepted on record that the action of the
Petitioner-Company with the intention to defraud the Opposite Party
by furnishing the fake PBG is yet to be proved by concrete materials.
This would have been better achieved by progress in the criminal case.
In such situation, it is important to look into the Integrity Pact and the
conditions of banning order as per the guidelines of Opposite Party.
22. Annexure-E to the counter is the Integrity Pact along with the
guidelines for banning the agents participating in the tender and limited
tender. Clause 3 of the Integrity Pact speaks of disqualification from
tender process and exclusion from future contracts. It reads as follows:-
"Section 3 - Disqualification from tender process and
exclusion from future contracts
If the Bidder(s)/Contractor(s), before award or during
execution has committed, a transgression through a
violation of Section 2, above or in any other form such as
to put their reliability or credibility in question, the
Principal is entitled to disqualify the
Bidder(s)/Contractor(s) from the tender process or take
action as per the procedure mentioned' in the "Guidelines
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
on Banning of business dealings". Copy of the
"Guidelines on Banning of business dealings" is placed at
(page nos.20-30)."
The guidelines as per Annexure-E for banning the business
dealing reads at Clause 6.7 that, if the agency has resorted to corrupt,
fraudulent practices including mis-representation of facts and/or
fudging/forging/tampering of documents.
23. Further Clause 7.7 stipulates as follows:-
"The Banning period may range from 1 year to 3years
depending on the gravity of the case as decided by the
Competent Authority. Ordinarily, the period of banning
shall be in the range of 1-2 years from the date of issuance
of order depending on the severity of the irregularities/
lapses committed/ termination of contract due to poor
performance, etc. However, in case of fraud/ forgery/
corrupt/ fraudulent practice or tampering of documents by
the Agency as given in para 6.7 above, the period of
banning to be imposed on the Agency would be three
years. The period of suspension, if any, shall be accounted
for up to a maximum of 6 months in the period of banning
provided the banning order is issued within the period of
suspension."
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
24. In terms of the period mentioned in Clause 7.7, the Petitioner-
Company has been banned for a period of three years as found
committing fraud on the Opposite Party.
25. In the circumstances as stated above, leading to furnishing the
fake PBG dated 28.03.2025 under Annexure-5 as per the explanation
of the Petitioner as well as the circumstances subsequent to the same
including lodging of FIR, if analysed minutely as discussed above,
even taking into account the previous conduct of the Petitioner-
Company that it has a unblemished record in the matter of contract
with State, in the opinion of this Court, no reason is found to interfere
with the impugned banning order in respect of the Company, Further,
the period of three years is left un-interfered since there is no scope
under Clause 7.7 to interfere into the quantum of punishment. As such,
the impugned order banning the Petitioner-Company in the first writ
petition, i.e. W.P.(C) No.18264 of 2025 is not interfered with.
26. So far as the second writ petition regarding the order of ban on
the Directors in individual capacity is concerned, as seen from the
impugned order re-produced above, the name of the proprietor/partner/
Director is stated as Arvind Kumar Jain (Managing Director). But in
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
W.P.(C) No.23363 of 2025, four Petitioners have joined together
stating them as Directors of the Petitioner-Company, i.e. Bhilai
Engineering Corporation Limited, that they have been affected
individually by such banning order issued by the Opposite Party.
27. It is apparent from record that before giving any individual ban
to the Directors of the Company, no opportunity of hearing in the
individual capacity to its' Directors has been granted either to said
Arvind Kumar Jain or any other Director. The record also does not
show on the face of it any action committed by the Directors of the
Company in individual capacity either to defraud the Opposite Party or
in furnishing the fake PBG dated 28.03.2025 under Annexure-5.
Therefore, the impugned ban order cannot operate against the Director
of the Company in individual capacity. It is true that, a Company is
juristic person and it has to be run by its' Directors for practical
purposes. But at the same time, a punitive order or a penalty imposed
on the Company cannot be allowed to act on individual capacity
against the Directors, particularly without granting any opportunity of
hearing in individual capacity. Therefore, the impugned order dated
03.06.2025 under Annexure-1 in W.P.(C) No.23363 of 2025 to the
effect it is upholding against Shri Arvind Kumar Jain in individual
Signed by: BASANTA KUMAR BARIK
Location: High Court of Orissa, Cuttack
Date: 17-Feb-2026 17:51:59
capacity or any other Director of the Company is liable to be set aside.
The same is accordingly set aside in respect of W.P.(C) No.23363 of
2025, i.e. against the individual capacity of the Directors.
28. In the result, W.P.(C) No.18264 of 2025 is dismissed and
W.P.(C) No.23363 of 2025 is allowed as stated above.
(B.P. Routray)
Judge
C.R. Biswal
B.K. Barik/
A.R.-cum-Senior Secretaries
