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2019 DIGILAW 588 (GAU)

Oil And Natural Gas Corporation Limited v. Jay Bee Energy Private Limited

2019-05-13

A.K.GOSWAMI, A.S.BOPANNA

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JUDGMENT : A.S. Bopanna, J. 1. Heard Mr. G.N. Sahewalla, learned senior counsel for the appellants. Also heard Mr. S. Dutta, learned senior counsel, appearing for the respondent. 2. The appellants, who are the respondents in wp(c) No.6731/2017, is before this Court in this intra-Court appeal assailing the order dated 27.09.2018 passed by the learned Single Judge. Through the said order, the learned Single Judge has allowed the writ petition and set aside the order dated 23.05.2006, by which the respondent herein was debarred from participating in any of the tender processes to be issued by the appellants herein. It is in that circumstance, the appellants claiming to be aggrieved by the order passed by the learned Single Judge is before this Court in this appeal. 3. The brief facts leading to the present situation is that the respondent herein, which is a Company registered under the Companies Act, 1956, had participated in the tender process, which was initiated by the appellants herein. The said process was floated in the year 1996. The respondent being successful had been entrusted with the work and had also completed the same. Subsequently, since according to the appellants, the respondent herein had secured the said contract by submitting a certificate, which was obtained by fraud, was issued with a show-cause notice dated 15.11.2005 and pursuant thereto, the order dated 23.05.2006 was passed debarring the respondent from participating in any of the tender processes to be floated by the appellants herein. It is in that circumstance, the respondent herein claiming to be aggrieved was before the learned Single Judge. 4. The learned Single Judge having taken into consideration the Integrity Pact, by which the appellants Company had indicated the period of debarment, was of the opinion that in a circumstance where the same provides for the maximum debarment period of 3(three) years, in the instant case, when the debarment is of a permanent nature, the same would not be sustainable. To arrive at such conclusion, the learned Single Judge had also referred to the decision of the Hon’ble Supreme Court in the case of Kulja Industries Limited Vs. Chief General Manager, Western Telecom Project, Bharat Sanchar Nigam Limited, reported in (2014) 14 SCC 731 . 5. To arrive at such conclusion, the learned Single Judge had also referred to the decision of the Hon’ble Supreme Court in the case of Kulja Industries Limited Vs. Chief General Manager, Western Telecom Project, Bharat Sanchar Nigam Limited, reported in (2014) 14 SCC 731 . 5. The learned senior counsel for the appellants while assailing the order passed by the learned Single Judge would contend that the Integrity Pact, which was introduced in the year 2005, could not have been made applicable to a case which emanated from the tender process of the year 1996. He contends that the said Integrity Pact is with prospective effect and, therefore, the maximum time period indicated therein would not apply to the present case. He, therefore, contends that the learned Single Judge has committed a serious error in applying the same and, therefore, the benefit granted to the respondent would not be justified. Hence, he contends that the order passed by the learned Single Judge is liable to be set aside. 6. The learned counsel appearing for the respondent would, however, seek to sustain the order passed by the learned Single Judge based on the very same contentions, which had been put forth before the learned Single Judge and with reference to the reliance placed on the judgment of the Hon’ble Supreme Court in the case of Kulja Industries Limited (supra). 7. In the light of the rival contentions, we have perused the order passed by the learned Single Judge in the background of the documents available along with the writ appeal papers. In so far as the factual aspects that the respondent herein had participated in a tender process of the year 1996 and that the Integrity Pact was introduced in the year 2005 there is no serious dispute. However, the issue for consideration is - whether the learned Single Judge was justified in the conclusion to apply the Integrity Pact and grant the benefit. It is to be noticed that even though the contract was of the year 1996 regarding which certain allegations are made against the respondent, the show-cause notice issued to the petitioner (respondent herein) relating to the same was on 15.11.2005. By such time, the Integrity Pact had already come into force having been introduced through the Circular dated 30.06.2005. It is to be noticed that even though the contract was of the year 1996 regarding which certain allegations are made against the respondent, the show-cause notice issued to the petitioner (respondent herein) relating to the same was on 15.11.2005. By such time, the Integrity Pact had already come into force having been introduced through the Circular dated 30.06.2005. Though the Circular as such does not refer to the applicability of the same to the earlier actions, since the show-cause notice issued was subsequent to the said dates and all proceedings were held subsequently, the policy prevailing as on the date when the ultimate order dated 23.05.2006 was passed, cannot be lost sight of. If that be the position, to that extent, the said policy, in any event, would be relevant. Be that as it may, even if that aspect of the matter is ignored for the present, what is necessary to be taken note is that the Hon’ble Supreme Court in the case of Kulja Industries Limited (supra) while considering the permanent ban imposed on the contractor therein, has concluded as under:- "24. 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. 25. 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." 8. If that be the position, the position is that the debarment in any event cannot be permanent but an appropriate decision is required to be taken by the authority concerned on application of mind to the nature of the charge alleged against contractor. If that be the position, the position is that the debarment in any event cannot be permanent but an appropriate decision is required to be taken by the authority concerned on application of mind to the nature of the charge alleged against contractor. Therefore, if this aspect is kept in the background, even though the Integrity Pact is introduced subsequently, the maximum period provided under all circumstances is 3(three) years. If that be the position, in the instant case, when the debarment order is dated 23.05.2006, the learned Single Judge was justified in arriving at the conclusion that the permanent debarment would not be appropriate. Therefore, in the facts and circumstance, since the learned Single Judge has kept in view all aspects of the matter and had arrived at a conclusion, we are of the opinion that such order does not call for interference in an intra-Court appeal of the present nature. Accordingly, the appeal being devoid of merit, stands disposed of.