Vulcan Industrial Engineering Co. Ltd. v. Coal India Ltd.
2015-03-30
R.P.DHOLARIA, V.M.SAHAI
body2015
DigiLaw.ai
JUDGMENT : R.P. Dholaria, J. 1. We have heard Mr. Shalin Mehta, learned Senior Counsel assisted by Mr. Harshadray A. Dave, learned Counsel for the petitioner and Mr. Vivek B. Gupta, learned Counsel for the respondents. This petition has been filed by the petitioner challenging the order dated 18-8-2014 brought on record by way of amendment at page 22/C by which the petitioner-Company has been banned for a period of five years from dealing with the Coal India Ltd. and its subsidiary companies. 2. Mr. Shalin Mehta, learned Senior Counsel appearing for the petitioner urged that there is violation of Clause 4.7.10 of the Purchase Manual because the show-cause notice does not provide for the period for which ban is likely to be imposed on the petitioner. Learned Counsel for the petitioner then urged that there is violation of principles of natural justice because the final order of banning the petitioner has been passed mechanically and without application of mind and it is a carbon copy of the previous show-cause notice, and therefore, no consideration has been afforded to its reply. Learned Counsel for the petitioner then urged that the final order is passed in violation of Clause 4.7.9 of the Purchase Manual because banning period is dependent upon the gravity of the offence and quantum of loss suffered by the Coal India Limited and its subsidiary companies. He further urged that there is violation of Art. 14 of the Constitution as another person has been banned for a period of one year, whereas the petitioner has been banned for a period of five years. However, Mr. Shalin Mehta has very fairly admitted that the person who was banned for a period of one year was not indulged in the case of fraud, but it was the case of misrepresentation. Lastly, he submitted that the Coal India Limited is a State within the meaning of Art. 12 of the Constitution and the contract with the Coal India Limited constitutes the property and when that right to property is taken by authority of law and if there is violation of the right to property, the petitioner is entitled for the protection under Art. 300A of the Constitution. The said argument of Mr.
The said argument of Mr. Shalin Mehta is based on the recent judgment of the Division Bench of this Court delivered on 26-3-2015 in Special Civil Application No. 13134 of 2009 (Niko Resources Ltd. v. Union of India). 3. Clauses 4.7.9 and 4.7.10 of the Purchase Manual read as under: "4.7.9. PERIOD OF BANNING The period should be a minimum of three years and should be decided based on the gravity of the offence and the quantum of loss suffered by C.I.L. or the Subsidiary Company. Copies of all orders of banning of business issued by Subsidiary Companies must be forwarded to C.I.L. and all other Subsidiaries of C.I.L. and C.I.L. Hqrs. Vigilance for such action as may be considered necessary." "4.7.10. PROCEDURE FOR BANNING Any proposal of banning of business should be put up by the concerned Executive of the Department of the Head of the Department along with all relevant documents. The H.O.D., in turn, will have the case investigated, if necessary with the assistance of the Vigilance Department and submit the case with his recommendation to the competent authority i.e. C.M.D. of the Subsidiary Company/D(T), C.I.L. In case the competent authority decides that action against a firm is called for, it may recommend issue of a notice to the firm asking it to show-cause why it should not be banned for a specified period in view of the allegations against it. Details of the allegations/charges may be appended to the show-cause notice and the firm should be asked to submit within 21 days a written statement of defence. All the correspondence with the firm may be made by registered post with A.D. The show-cause notice should be sent by the H.O.D. of the concerned Department. On receipt of a reply of the show-cause notice or where no reply is received, the H.O.D. may put up a proposal for either - (a) Exonerating the firm if the statement of defence of the firm is found to be satisfactory and the charges framed against the firm are not substantiated. (b) Banning of business dealings with the firm for a specified period. On receipt of the order of banning of business with any firm by any Subsidiary Company, C.I.L. Hqrs.
(b) Banning of business dealings with the firm for a specified period. On receipt of the order of banning of business with any firm by any Subsidiary Company, C.I.L. Hqrs. will consider whether the offence committed by the firm is serious enough to warrant banning of business with the firm across all Subsidiaries of C.I.L. For this purpose the contracts/supplies with other Subsidiary Companies will have to be examined by C.I.L. Hqrs. It is decided to resort to banning of business of the firm with all Subsidiaries, a fresh show-cause notice will have to be issued to the firm giving it reasonable time to reply to the notice. Thereafter, the usual procedure for banning of business is to be followed and a final order is to be issued with the approval of Chairman, C.I.L. Any copy of the order of banning of business received from the Subsidiary Companies in the C.I.L. Hqrs. must be put to D(T), C.I.L. within period of 30 days indicating whether further action is to be taken on the same. This time-limit is to be observed strictly. If the competent authority, after going through the proposal of the H.O.D., decides to ban business dealings with a firm, an order to that effect should be issued to the firm. The order imposing banning on the business dealings with the firm should specifically mention whether the ban would extend to all the Subsidiary Companies, in case it is decided to do so and also the period of banning in number of years. Copies of the order of the competent authority banning business dealing with any firm should be sent to all H.O. Ds. of the Subsidiary Companies concerned and during the period of banning, no business dealing can be entered into with the firm. As far as possible, the existing on-going contracts may also be terminated after observing the formalities regarding termination as stipulated in the contracts. If after an order is issued banning business with a firm, the firm comes up with any appeal or representation seeking withdrawal or any modification of the order, the matter should be decided under the order of Chairman, C.I.L." 4.
If after an order is issued banning business with a firm, the firm comes up with any appeal or representation seeking withdrawal or any modification of the order, the matter should be decided under the order of Chairman, C.I.L." 4. The petitioner was very well aware as previously also, the petitioner instituted the writ petition being Special Civil Application No. 9927 of 2013 wherein the same contentions were raised, and therefore, in the aforesaid writ petition, this Court directed to issue the show-cause notice as envisaged in Clause 4.7.10 of the Purchase Manual to the petitioner for seeking his reply to the show-cause notice. Accordingly, the respondent issued the show-cause notice which is at Annexure-B to the petition. On going through the aforesaid show-cause notice, all the details regarding fraud committed and misrepresentation made by the petitioner have been clearly detailed and the reply has been asked for. Of course, in the show-cause notice, the period is not prescribed, but on going through the show-cause notice, it clearly spelling out that as to why the business of the petitioner should not be banned which itself is indicative banning for unspecified/indefinite period i.e. permanently. Therefore, argument advanced by Mr. Shalin Mehta, learned Senior Counsel that the aforesaid show-cause notice suffers from the vice of not specifying particular period and the authority ought to have banned for a period of one year has no substance because the show-cause notice has clearly and categorically made it clear regarding banning of business for permanent period. 5. So far as the contention as regards the personal hearing is concerned, in the aforesaid writ petition, this Court has not directed to give any personal hearing but only opportunity of filing the reply was granted. Even, the aforesaid procedure laid down in the Purchase Manual also does not contemplate any sort of personal hearing. Not only that, even if we may appreciate the reply which came to be filed by the petitioner itself after issuing the show-cause notice was sufficient compliance of principles of natural justice. The petitioner itself has admitted that at the time of availing the benefit of deposit of Earnest Money Deposit, Security Deposit and Tender Fees, the document was forged by one of his officials i.e. Mr. Rajesh Panchal against whom, criminal complaint has been filed. It is pertinent to note that Mr.
The petitioner itself has admitted that at the time of availing the benefit of deposit of Earnest Money Deposit, Security Deposit and Tender Fees, the document was forged by one of his officials i.e. Mr. Rajesh Panchal against whom, criminal complaint has been filed. It is pertinent to note that Mr. Rajesh Panchal has been disowned by the petitioner and has stated that they never knew that he was indulging in fraud to favour the petitioner-Company. This explanation cannot be accepted for the simple reason that for about two decades, the petitioner-Company has availed the aforesaid benefit by filing successfully forged document before the respondent and that itself is indicative of guilt. The petitioner was fully aware of the fraud committed by Mr. Rajesh Panchal and they were privy to it otherwise it does not stand to reason that the petitioner would not know about fraud committed by Mr. Rajesh Panchal and Mr. Rajesh Panchal will keep on benefiting the petitioner-Company without knowledge of the petitioner, and hence, knowledge and conspiracy of the petitioner is clearly inferred. 6. We have perused the entire material brought on record in the nature of show-cause notice, reply to the show-cause notice as well as the impugned order under challenge and other material relied upon by learned Senior Counsel for the petitioner. On overall appreciation of the material on record, it clearly reveals that the employee of the petitioner-Company who was working as an agent of the petitioner-Company has tendered forged document for availing the aforesaid benefit and proper opportunity of explanation is already afforded. In the explanation itself, the petitioner-Company has admitted that forgery is committed by one of his official Mr. Rajesh Panchal and the petitioner-Company tried to shirk its liability, but the petitioner-Company is beneficiary of the aforesaid benefit. As argued by Mr.
In the explanation itself, the petitioner-Company has admitted that forgery is committed by one of his official Mr. Rajesh Panchal and the petitioner-Company tried to shirk its liability, but the petitioner-Company is beneficiary of the aforesaid benefit. As argued by Mr. Shalin Mehta, learned Senior Counsel for the petitioner that so far as complaint is concerned, investigation is going on, but we refrain from making any observation on the criminal offence against the petitioner, but once the petitioner-Company itself has admitted that the documents were forged, then it goes to the root of the matter and fraud vitiates everything, In this view of the matter, we are of the considered opinion that the order passed by the respondent authority is completely in consonance with the principles of natural justice and justified in the facts of the present case which does not call for any interference while exercising the powers under the writ jurisdiction. 7. The last argument of Mr. Mehta regarding right to property which cannot be taken away by the respondent authority cannot sustain in view of the finding recorded above as it is clear that the petitioner has committed fraud for about last 20 years by taking forged N.S.I.C. certificate and by virtue of N.S.I.C. certificate claiming exemption from payment of tender fees, deposit of E.M.D. and security deposit. It is by now well settled that fraud vitiates everything, and therefore, in such situation, the right to property, if any, vested with the petitioner could also be divested and taken away by the respondent and the petitioner cannot claim any right to property which is based on fraud. 8. In the result, this petition fails and the same is dismissed. Rule is discharged. Interim relief, if any, granted earlier stands vacated. No costs. In view of the above order, Civil Application does not survive and the same is dismissed accordingly.