Case Note & Summary
The petitioner, Sarku Engineering Services SDN BHD, a Malaysian company, challenged an order dated 4 January 2016 issued by respondent No.2, Oil and Natural Gas Corporation Ltd. (ONGC), banning the petitioner from all future business dealings with ONGC. The ban was based on an internal enquiry report that concluded the petitioner was responsible for the delayed completion of a project for revamp of 26 Well Platforms. The petitioner contended that the order was passed without providing a copy of the enquiry report or any opportunity of hearing, thus violating principles of natural justice. The court examined the facts and found that the enquiry was conducted internally by ONGC, and the report was not shared with the petitioner before the ban was imposed. The court held that such an order, affecting the petitioner's right to carry on business, could not be passed without following the principles of natural justice. The court quashed the ban order and directed ONGC to provide a copy of the enquiry report to the petitioner and give a reasonable opportunity of hearing before passing any fresh order. The court also noted that the petitioner had completed the project and that the delay was partly attributable to ONGC itself. The decision was in favor of the petitioner.
Headnote
A) Constitutional Law - Writ Jurisdiction - Article 226 of the Constitution of India - Judicial Review of Administrative Action - The High Court can interfere with an order passed by a public sector undertaking if it is arbitrary, unreasonable, or violative of natural justice. (Paras 1-2) B) Administrative Law - Natural Justice - Right to be Heard - Audi Alteram Partem - An order imposing a business ban without providing the affected party a copy of the enquiry report and an opportunity of hearing is violative of principles of natural justice. (Paras 30-40) C) Contract Law - Public Sector Undertakings - Business Ban - Delay in Project Completion - The respondent, a public sector undertaking, must act fairly and reasonably before imposing a ban on a contractor for alleged delay, and must share the enquiry report and give a hearing. (Paras 20-30) D) Constitutional Law - Article 14 - Arbitrariness - An order passed without following fair procedure is arbitrary and liable to be quashed. (Paras 35-45)
Issue of Consideration
Whether the order banning the petitioner from future business dealings with respondent No.2, passed without providing the petitioner a copy of the enquiry report and an opportunity of hearing, is arbitrary and violative of principles of natural justice.
Final Decision
The court allowed the writ petition, quashed the order dated 4 January 2016, and directed respondent No.2 to provide a copy of the enquiry report to the petitioner and give a reasonable opportunity of hearing before passing any fresh order.
Law Points
- Natural justice
- right to be heard
- arbitrariness
- public sector undertakings
- contractual disputes
- writ jurisdiction under Article 226
- principles of fairness
- audi alteram partem
