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Madhya Pradesh High Court · body

2013 DIGILAW 1421 (MP)

S. K. Jain v. State of M. P.

2013-11-19

Ajit Singh, Alok Aradhe

body2013
ORDER Singh, J.1. By this petition filed under Article 226 of the Constitution, the petitioner has prayed for quashing of orders dated 29.12.2009 (Annexure P/9) and 7.12.2011 (Annexure P/13) passed by respondent no.2. 2. The petitioner is a partnership firm and is registered as A-5 contractor with the respondents Public Works Department of the State Government. The petitioner submits that it has the experience of more than 20 years and during this period it has successfully executed different contract works of the State of Madhya Pradesh worth Rs. 500 crore. 3. The respondents had invited tenders for execution of various works in the districts of Chhattarpur, Satna, Dewas, Narsinghpur and Mandla. A tender was also invited for the construction of Gada Sarai Bajaag Road 16.40 kms. According to the petitioner it ubmitted 12 tenders for these works on the same date i.e. 30.11.2009 which included a tender regarding construction of Gada Sarai Bajaag Road. For all these tenders the petitioner was required to furnish fixed deposit receipts. Out of 12 tenders submitted by the petitioner, the fixed deposit receipts with 11 of them were found to be genuine. But the three fixed deposit receipts submitted for one contract work i.e. regarding Gada Sarai Bajaag Road were found to be fake and for this reason the respondents by order dated 29.12.2009, Annexure P9, has not only cancelled the registration of petitioner as contractor but also black listed it for all times to come. Aggrieved, the petitioner filed a revision but it too has been dismissed vide order dated 7.12.2011, Annexure P13, passed by respondent No.2. It is in this background the petitioner has filed the present petition. 4. It is argued on behalf of the petitioner that for the work of Gada Sarai Bajaag Road it was the sub-contractor Manoj Ahuja who had on his own fraudulently prepared the fake fixed deposit receipts and submitted the same for his wrongful gain without informing the petitioner. It has also been argued that when the fraud was revealed, the petitioner had immediately lodged the first information report at Police Station M.P. Nagar, Bhopal and the police after investigation have filed a charge sheet against Manoj Ahuja, Ashish Bhatia and Preetam Das Ahuja for offences under sections 406, 420, 467, 468 and 471 of the Indian Penal Code. It has also been argued that when the fraud was revealed, the petitioner had immediately lodged the first information report at Police Station M.P. Nagar, Bhopal and the police after investigation have filed a charge sheet against Manoj Ahuja, Ashish Bhatia and Preetam Das Ahuja for offences under sections 406, 420, 467, 468 and 471 of the Indian Penal Code. The petitioner has even filed a copy of the inquiry report of the City Superintendent of Police, M.P. Nagar, Bhopal dated 15.10.2010, Annexure-A, addressed to the Superintendent of Police, Bhopal, wherein it is stated that sub-contractor Manoj Ahuja and his elder brother Preetam Das Ahuja in fact committed fraud with the petitioner in preparing and using the fake fixed deposit receipts for their wrongful gain. The police have not proposed any criminal action against the petitioner. On these facts submission is made that the fundamental right of the petitioner to do business has been violated by cancelling its registration and black listing it for all times to come. According to the learned counsel for petitioner by applying the principle of proportionality the action taken by the respondents is wholly disproportionate for the alleged lapse on the part of petitioner. The respondents in reply have justified the action taken against the petitioner. 5. The question which calls for consideration is whether the action taken by the respondents against the petitioner is disproportionate for the alleged lapse on its part. 6. A statutory discretion or power, whether it be administrative or quasi-judicial, although conferred in wide terms is subject to certain implied conditions or limitations. A violation of these conditions or limitations even though there be no violation of any express condition can give rise to judicial review. The implied limitations arise for Parliament is presumed not to legislate contrary to the rule of law which enforces “minimum standard of fairness both substantive and procedural” so that the exercise of statutory discretion conforms to the “principles of good administration”. The implied limitations arise for Parliament is presumed not to legislate contrary to the rule of law which enforces “minimum standard of fairness both substantive and procedural” so that the exercise of statutory discretion conforms to the “principles of good administration”. The implied conditions or limitations are : The person on whom the power is conferred must exercise it in good faith for furtherance of the object of the statute; he must not proceed upon a misconstruction of the statute; he must take into account matters relevant for exercise of the power; he must not be influenced by irrelevant matters; he must not act unreasonably, i.e. irrationally or perversely; he must not fetter his discretion in advance by adopting a rigid rule of policy, and in matters affecting fundamental rights he must follow the principle of proportionality. Also the principle of proportionality requires the court to apply a three stage test: (1) whether the objective sought to be achieved is relevant and sufficiently important to justify limiting the fundamental rights; (2)whether the means chosen to limit that right are rational fair and not arbitrary, and (3) whether the means used impair the right as minimally as reasonably possible. (See Principles of Statutory Interpretation by Justice G. P. Singh 13th Edition, 2012 pp. 440 to 448). 7. As already seen above that on 13.11.2009 the petitioner had submitted 12 tenders for different works in response to the notice inviting tenders published by the respondents. It is not disputed by the respondents that out of 12 tenders submitted by the petitioner the fixed deposit receipts with 11 of them were found to be genuine. Admittedly all the tenders were submitted on the same date i.e. 30.11.2009. With regard to one tender i.e. regarding construction of Gada Sarai Bajaag Road the petitioner reposed trust on his subcontractor Manoj Ahuja who along with his brother Preetam Das Ahuja played fraud with the petitioner and deposited fake fixed deposit receipts by enhancing the amounts in the previously prepared fixed deposit receipts. It is to be noted that when the petitioner came to know about the fraud played by Manoj Ahuja, the first information report was lodged immediately by it. The police also after investigation have charge sheeted Manoj Ahuja his brother Preetam Das Ahuja and Ashish Bhatia. It is to be noted that when the petitioner came to know about the fraud played by Manoj Ahuja, the first information report was lodged immediately by it. The police also after investigation have charge sheeted Manoj Ahuja his brother Preetam Das Ahuja and Ashish Bhatia. Not only this even the inquiry report dated 15.10.2010 prepared by City Superintendent of Police, M.P. Nagar, Bhopal, Annexure-A, clearly reveals that Manoj Ahuja and his brother Preetam Das Ahuja had played fraud with the petitioner in preparing the fake fixed deposit receipts and depositing the same with the respondents. The petitioner has a fundamental right to do business. It is a common knowledge that contractors do engage sub-contractors for carrying out the work by reposing trust. And if the sub-contractor taking advantage of the trust reposed, plays fraud with the contractor as in the present case, in our considered view the latter cannot be prohibited to do business forever. 8. We, therefore, by applying principle of proportionality hold that action taken by the respondents against the petitioner is wholly disproportionate for the lapse on its part. The petitioner’s registration as contractor has remained cancelled with its black listing for more than 3 ½ years, which we find to be a reasonable period for the lapse and not being vigilant. We accordingly quash the orders dated 29.12.2009 (Annexure P/9) and 7.12.2011 (Annexure P/13) passed by the respondents of cancelling the registration of petitioner as contractor and black listing it for all times to come and instead reduce the period of cancellation of registration and black listing till today. 9. The petition is allowed to the extent above. Sankalp Kochar with Shivendra Pandey for petitioner; K.S. Wadhwa, Additional Advocate General for respondents.