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2021 DIGILAW 1052 (ALL)

Devnath Singh v. State of U. P.

2021-09-15

JAYANT BANERJI, MANOJ MISRA

body2021
JUDGMENT : 1. Heard Sri Kunal Shah for the petitioners; the learned Standing Counsel for the respondents; and have perused the record. 2. In brief the facts giving rise to this petition are as follows: 2a. The petitioners were issued character certificates on 04.02.2019 that enabled their business firms/company to be registered as approved contractors to bid for work contracts floated by the State Government. On a complaint made by one Santosh Kumar Singh, by order dated 4th June, 2020, the District Magistrate, Mau cancelled the character certificates of the petitioners on the ground that Rajnath Singh, the brother of the petitioner no.1, the brother-in-law of the petitioner no.2 and paternal uncle of the petitioners no.3 and 4, is a person with criminal antecedents and that the petitioners' firms were being used just as a facade to enable Rajnath Singh to bag Government contracts as he himself would not have otherwise been eligible, being a person with criminal antecedents. It was also stated in the cancellation order that the petitioners had obtained character certificates by suppressing material facts. 2b. Challenging the order of cancellation of character certificates, Writ-C No.10041 of 2020 was filed by the petitioners. Before the writ Court it was urged that the petitioners by themselves had no criminal antecedents; their firms had no concern with Rajnath Singh; they suppressed no information and, therefore, cancellation of the character certificates by taking into consideration the criminal antecedents of their relative was not justified. In addition to above, it was urged that the objection taken by the petitioners to the show cause notice to demonstrate that in none of their firms or company Rajnath Singh had any interest was not dealt with properly. 2c. The Court found substance in the submissions made on behalf of the petitioners and, vide order dated 7th December, 2020, it quashed the order dated 4th June, 2020 and remitted the matter to the District Magistrate, Mau to pass a fresh order after affording opportunity of hearing to the petitioners and after dealing with their explanation filed in response to the show cause notice. 2d. 2d. Consequent to the order dated 7th December, 2020 passed in Writ-C No.10041 of 2020, by the impugned order dated 11th February, 2021, the District Magistrate, Mau again cancelled the character certificate issued to the petitioners by observing as follows: (i) that the records reveal that by a resolution of the Board of Directors, in one of the companies of the petitioners, Rajnath Singh had been removed from the Company which is suggestive of the fact that Rajnath Singh was earlier a part of the Company; (ii) that paragraph 2 of the G.O. No.6738/23-7-2006, dated 05.01.2007, provided that public works department shall not award contract to any person with criminal antecedents; (iii) that paragraph 2 of G.O. No.3503/23-7-2002-41 MS/54, dated 12.09.2007, provided that if it is found that the contract awarded is actually being performed by a person with criminal antecedents, the contract would be rescinded; (iv) that paragraph 12 of G.O. No.2466/92-1-2018-65 M/2014, dated 30..07.2018, provided that if, after award of contract, it is found that the contractor is involved in mafia like activity or in anti-social activities or organised criminal activity, his contract would be cancelled; (v) that from the report of Superintendent of Police, Mau, dated 03.08.2020, and the report of Circle Officer, City, Mau, dated 02.08.2020, on the basis of a confidential inquiry, it appeared that the petitioners and Rajnath Singh are members of a joint family and have a common mess and that the petitioners provide a facade behind which, Rajnath Singh, the man with criminal antecedents, operates and, therefore, the character certificate of the petitioners is liable to be cancelled. 3. Assailing the cancellation order, the learned counsel for the petitioners contended that the grounds cited in the impugned order might be germane to cancellation of the contract, if established, but they cannot be taken as ground to cancel the character certificate issued to the petitioners because nothing adverse has been said with regard to the character of the petitioners. Further, in none of the firms or Company of the petitioners Rajnath Singh had a place. It is submitted that a character certificate is nothing but a report that nothing adverse in relation to the character of that person exists. If there exists nothing adverse touching the character of that person, then the character certificate once issued is not to be cancelled. It is submitted that a character certificate is nothing but a report that nothing adverse in relation to the character of that person exists. If there exists nothing adverse touching the character of that person, then the character certificate once issued is not to be cancelled. Otherwise also, it cannot be cancelled by looking at the adverse material against a relative of the certificate holder. In a nutshell, the submission is that cancellation of the character certificate can only take place if the person to whom such certificate is issued is of bad character or that he has suppressed relevant information touching his character. In the instant case, no statement made by the petitioners to obtain character certificate has been found false. Even in the impugned order, the District Magistrate, Mau has not been able to point out a single case against the petitioners, and, therefore, cancellation of the character certificate issued to the petitioners only on the ground that a relative of the petitioners has criminal antecedents is not justified and the action of the District Magistrate in cancelling the character certificate is arbitrary. 4. In support of the above contention, the learned counsel for the petitioners has placed reliance on a decision of the Apex Court in Manyata Devi Vs. State of U.P. (2015) 10 SCC 198 . In paragraphs 9 and 10 of the judgment in Manyata Devi (supra) it was observed as follows:- "9. It was argued on behalf of the respondent-State that since the appellant had no experience of executing contracted works, the refusal of a character certificate was only meant to prevent her from getting registered as a contractor with the department. It was also argued that the registration of a contractor was necessary and unless such registration was granted only in deserving cases, the very purpose of the registration would stand defeated. There was, according to learned counsel for the respondent, a "contractors mafia" operating in the State of Uttar Pradesh which demanded that registration is granted only to people who have no criminal background so that genuine contractors are not prevented from winning contracts from the Government and competing for allotment of works. There was, according to learned counsel for the respondent, a "contractors mafia" operating in the State of Uttar Pradesh which demanded that registration is granted only to people who have no criminal background so that genuine contractors are not prevented from winning contracts from the Government and competing for allotment of works. It was argued that since the husband of the appellant could not himself be registered on account of his criminal background, the appellant was being projected for such a registration only to make it possible for the husband to carry out the works in the name of his wife. Registration of the appellant, in such a situation, would defeat the very purpose behind such registrations, argued the learned counsel. 10. There is no quarrel with the proposition that registration can be insisted upon by the State Government or its departments for purposes of allotment of works and participation in auctions relating thereto. There is also no difficulty in the State providing for production of a character certificate as one of the conditions of eligibility. Experience of the Contractor, if considered relevant for the purposes of such registration, could also be stipulated as one of the requirements to be satisfied by the applicants under the Rules or Regulations. That such regulation ought to ensure participation of only genuine contractors and prevent the mafia from hijacking the system cannot also be faulted. The question, however, is whether that purpose which is indeed laudable could be achieved by a side wind viz. by the District Magistrate denying a character certificate to an applicant. Our answer is in the negative. We say so because the very fact that a character certificate is issued does not mean that everyone who has such a certificate gets a vested right to be registered as a contractor. The District Magistrate did not have any authority under the rules stipulating registration of contractors to consider such requests for registration or to grant or refuse the same. It is the competent authority in the Irrigation Department concerned who has to take a call. Inasmuch as the District Magistrate took upon himself the duty of examining whether the appellant was suitable for registration, he went beyond the legitimate sphere of the jurisdiction vested in him which was limited to considering the request for issuance of a character certificate." 5. Inasmuch as the District Magistrate took upon himself the duty of examining whether the appellant was suitable for registration, he went beyond the legitimate sphere of the jurisdiction vested in him which was limited to considering the request for issuance of a character certificate." 5. Placing reliance on the aforesaid observations, the learned counsel for the petitioners submitted that for award of a work contract or for registration of a work contractor there are different considerations than what are there for issuance of a character certificate. For award of a contract, the experience, the technical and financial capacity of the contractor may be, among others, relevant; whereas, for award of a character certificate to a person it is the character of that person which alone is relevant. As nothing is found against the petitioners to whom the character certificates were issued, cancellation of the character certificate on the ground that the petitioners' relative had criminal antecedents is arbitrary and illegal. 6. Per contra, learned Standing Counsel submitted that no doubt nothing incriminating has been reported against the petitioners but the avowed object of the State policy is to ensure that contractors with clean antecedents are awarded contract and that the government does not have to deal with criminals. It is submitted that the reports suggested that the brother of the petitioner no.1, namely, Rajnath Singh, is a person having criminal antecedents and that the petitioners being of the same family are being used as an innocent face to grab contracts from the government and make profit therefrom. It is stated in the counter affidavit that Rajnath Singh is a close associate of anti social elements and, therefore, cancellation of character certificates is justified. 7. We have given our anxious consideration to the rival submissions and have perused the record carefully. 8. To our understanding, except the criminal antecedents of the petitioners' relative the respondents have shown no adverse material to impeach the character of the petitioners. Nothing has been brought on record either in the impugned order or in the counter affidavit that the petitioners have criminal cases lodged against them or that they suppressed any adverse material touching their character while seeking issuance of a character certificate. Admittedly, the character certificates were issued to the petitioners after verifying their personal antecedents. Nothing has been brought on record either in the impugned order or in the counter affidavit that the petitioners have criminal cases lodged against them or that they suppressed any adverse material touching their character while seeking issuance of a character certificate. Admittedly, the character certificates were issued to the petitioners after verifying their personal antecedents. May be the purpose of a character certificate is to enable a person to bid for a work contract. But no law has been shown to us that if a relative of a person is of criminal antecedents then he can be denied a character certificate even if that person has nothing adverse touching his own character. The government orders on which reliance has been placed in the impugned order are in respect of cancellation of the contract, and they do not speak of cancellation of the character certificate. The decision of the Apex Court in Manyata Devi Vs. State of U.P. (supra) is also to the effect that a character certificate cannot be denied on the ground that a close relative of the applicant has criminal history. In the instant case, the District Magistrate while cancelling the character certificate has spelt only those grounds that might be available under the specified government orders to cancel a contract which, in our view, were not germane to cancellation of character certificates. We are, therefore, of the considered view that the order cancelling the character certificate of the petitioners has been passed on grounds not tenable in law and, therefore, the same is liable to be quashed. 9. At this stage, we may hasten to clarify that mere possession of a character certificate by a person does not mean that that person could be registered as a contractor or would be entitled to bid even if he does not possess the requisite technical or financial capacity required for the purpose. Further, award of character certificate would not preclude the department that awarded the contract to cancel the contract on grounds legally permissible, and in accordance with the law. In this context, we may notice the relevant observations made by the Apex Court in paragraphs 11 and 12 of its judgment in Manyata Devi Vs. State of U.P. (supra), extracted below:- "11. Having said so, we must add that copy of the rules regulating the registration of contractors has not been produced by the State. In this context, we may notice the relevant observations made by the Apex Court in paragraphs 11 and 12 of its judgment in Manyata Devi Vs. State of U.P. (supra), extracted below:- "11. Having said so, we must add that copy of the rules regulating the registration of contractors has not been produced by the State. It is, therefore, difficult for us to say whether the rules are comprehensive enough to disentitle persons who do not have any experience in execution of the contract works from claiming registration. But there is no manner of doubt that, if the ground situation in the State of Uttar Pradesh so requires, the department concerned can and indeed ought to strengthen the registration procedure by framing new rules or amending the existing rules on the subject making registration possible only upon satisfaction of such conditions as may be prescribed by such rules including experience in executing contracts as one such condition." "12. .............We make it clear that even when the character certificate is issued by the District Magistrate in favour of the appellant, the Competent Authority shall be free to examine the prayer for registration or renewal in accordance with law having regard to the requirements that already exist or may be prescribed on the subject by the authority competent to do so." 10. In view of the above, the order impugned, dated 11th February, 2021, passed by the District Magistrate, Mau, cancelling the character certificate is quashed. This order shall not preclude the respondents from cancelling the registration of the petitioners as contractor or their work contract on grounds legally permissible, and in accordance with the law. 11. Subject to above, the petition is allowed. There is no order as to costs.