Gail India Limited and Another vs K.R. Construction Company

C.M. No. 5061/2009 (for delay)

Heard.

For the reasons mentioned in the application, the delay of 21 days in filing the appeal is condoned and the application stands disposed of.

LPA No. 151/ 2009 and C.M. No. 5060/2009 (for stay)

The present appeal is preferred against the order of the learned Single Judge dated 2nd February, 2009. The respondent (the original petitioner in the Writ Petition) claims to be a contractor engaged in mechanical maintenance and allied activities. It had been an enlisted contractor with the appellant Gas Authority of India Limited (in short ''GAIL'') for a long period of time. The business relationship between the appellant (the original respondent in the Writ Petition) and the respondent herein has subsisted since 1991. It was alleged in the writ petition by the respondent that GAIL abruptly and without granting any explanation stopped the respondent from participating in its tender processes. As per the respondent, three years passed and no reasons for black listing had been intimated and the factum of black listing was made known to him for the first time on 5th August, 2005. The appellants did not deny having a business relationship with the respondent. It however, referred to a Vigilance Enquiry which was conducted and a copy of the Chief Vigilance Officer''s report dated 19th September, 2002 was also placed on record. As per the appellants, the respondent had furnished a false experience certificate and when called upon to furnish its genuineness, the respondent was unable to do so. The Chief Vigilance Officer, therefore, recommended black listing. The GAIL also produced before the learned Single Judge copies of the circular dated 25th September, 2002, by which the respondent was black listed permanently.

The respondent''s case in the writ petition was that the black listing order had a permanence which could not be upheld by the Court. It was also contended that the said order was never served upon the respondent who was not given any opportunity of hearing before its issuance. In the circumstances, it was thus contended that the order ought to be quashed.

On behalf of the GAIL, it was contended that the respondent had been granted time to furnish details to establish the veracity of the experience certificate. Upon its inability to do so, the GAIL was constrained to issue the black listing order. No material could be placed by GAIL on record to suggest that a show-cause notice seeking the respondent''s explanation and further warning of the intended consequence of black listing was ever issued to the respondent.

The learned Single Judge relying on judgments of the Supreme Court, rightly held that having regard to the adverse nature of black listing orders, the public agency should adhere to principles of natural justice by issuing a show-cause notice, granting adequate opportunity and issuing a speaking order. The learned Single Judge rightly held that in the present case, apart from the contents of the vigilance report which show that respondent was asked to produce a certificate, there was no material pointing to a specific show-cause notice having issued before the black listing order.

The learned Single Judge thus held that aside from the fatal infirmity to the black listing order noticed above, the impugned order also could not be sustained because it suffered from the vice of permanence. It virtually forbade the respondent from engaging in any business or commercial transactions with GAIL. Such an order, as per the learned Single Judge, was plainly unreasonable as it was absolutely disproportionate. We see no infirmity in the findings of the learned Single Judge to warrant any interference.

However, we deem it fit and proper, in the interest of justice, to permit the appellants to issue, if they so choose to do, a fresh show- cause notice to the respondent in case they intend to initiate action for black listing the respondent. The appellants must follow proper procedure as established by law and adhere to principles of natural justice by issuing a show-cause notice, granting adequate opportunity to the respondent to explain his case and thereafter issue a speaking order. Needless to say that it would be open to the respondent to challenge the said order in accordance with law. The impugned order is modified only to this limited extent. The appeal is accordingly disposed of in terms of what has been stated hereinabove. The pending application also stands disposed of.