Case Note & Summary
The petitioner, M/s J.K. Surface Coatings Pvt. Ltd., a company engaged in corrosion resistant coating application, challenged a banning order dated 25 April 2014 issued by Oil and Natural Gas Corporation (ONGC) by which it was debarred from participating in future tenders for three years. The ban followed a show cause notice dated 4 December 2013 that alleged irregularities in a previous maintenance painting contract (Contract dated 8 May 2009) completed on 31 May 2011. The petitioner had submitted a reply refuting the allegations, which related to quantity of paint supplied, manpower deployment, and document maintenance. Despite a joint committee report (13 March 2013) concluding in petitioner's favour regarding two invoices, ONGC invoked bank guarantees and appropriated Rs.55.42 lakhs. The petitioner contended that the show cause notice never indicated that a banning proposal was being considered, no inquiry report was shared, and no pre-decisional hearing was afforded, rendering the order violative of Articles 14 and 19(1)(g) of the Constitution. The petitioner also alleged mala fides, pointing out that it was the lowest bidder (L-1) in a fresh tender (No. Y-15 MC 11001) with a bid 63% lower than the second lowest. The High Court issued rule and heard the matter; however, the operative portion of the judgment and the court's detailed analysis are not available in the provided excerpt. The court reserved judgment on 5 October 2016 and pronounced it on 27 October 2016. The outcome of the writ petition and the final directions are not included in the supplied text.
Issue of Consideration
Whether the banning order dated 25 April 2014 passed by ONGC against the petitioner violated principles of natural justice, was arbitrary, and issued without proper notice and hearing
Law Points
- banning order
- blacklisting
- natural justice
- show cause notice
- Article 14
- Article 19(1)(g)
- arbitrary
- disproportionate
- mala fides
- contractual disputes
Case Details
2016 LawText (BOM) (10) 38
Writ Petition No. 2752 of 2014 along with Notice of Motion 210 of 2016 and Notice of Motion (L) 117 of 2015
S.C. Dharmadhikari, B.P. Colabawalla
Raju Z Moray, S.R. Nargolkar, Aumkar Vijaykumar Joshi for the Petitioner; Kevic Setalvad, Daisy Dubhash, J.P. Kapadia, O. Mohandas, Amrit Khare for Respondent Nos.1-3; Rajiv Singh, Astha Tamhankar for Respondent No.5
M/s J.K. Surface Coatings Pvt. Ltd.
1. Oil and Natural Gas Corporation, 2. The General Manager (Civil) ONGC Ltd, 3. Executive Director, MH Asset, 4. Shri Kalraj Mishra, 5. M/s Global Corrosion Control
Subscribe to unlock Case Details (Citation, Judge, Date & more)
Subscribe Now
Nature of Litigation
Writ petition under Article 226 of the Constitution of India challenging a blacklisting/banning order issued by a State-owned corporation
Remedy Sought
Quashing of the banning order dated 25 April 2014 and a direction to permit the petitioner to obtain documents and participate in future tenders floated by respondent No.1
Filing Reason
Petitioner was banned from participating in any tender of ONGC for three years based on alleged irregularities in a previous contract, which it contended was in violation of natural justice
Issues
Whether the impugned banning order was passed in violation of the principles of natural justice for want of a proper show cause notice in which the proposal to blacklist was not disclosed
Whether the failure to furnish any inquiry report and provide an opportunity of pre-decisional hearing vitiated the banning order
Whether the banning order was arbitrary and disproportionate given that the disputes were essentially contractual in nature and a joint committee had exonerated the petitioner
Whether the entire action was mala fide and intended to oust the petitioner who was the lowest bidder in a subsequent tender
Submissions/Arguments
Petitioner argued that the show cause notice dated 4 December 2013 did not even indicate that it was issued with a view to consider banning the petitioner from future tenders, and it limited the scope of inquiry to alleged contractual discrepancies which could be resolved through contractual and statutory remedies
Petitioner contended that no inquiry report, if any, was furnished and thus no opportunity of responding to the same was afforded before the banning order was passed
Petitioner submitted that the banning order was extremely harsh and violative of Article 14 and Article 19(1)(g) of the Constitution
Petitioner alleged mala fides, stating that the blacklisting was done only to ensure that a particular bidder was favoured and the petitioner ousted from the bidding process, especially as the petitioner’s bid in a fresh tender was 63% lower than the second lowest
Judgment Excerpts
Rule. Respondents waive service. By consent of parties, Rule made returnable forthwith and heard finally.
the SCN dated 4th December, 2013 issued to the Petitioner did not even indicate that the same was issued with a view to consider banning the Petitioner from future tenders for a particular period
Procedural History
Petitioner filed Writ Petition No. 2752 of 2014 together with Notice of Motion 210 of 2016 and Notice of Motion (L) 117 of 2015. On the returnable date, the court issued Rule and, with consent of parties, made it returnable forthwith. The matter was heard finally and reserved for judgment on 5 October 2016, and pronounced on 27 October 2016.
Acts & Sections
- Constitution of India: Article 12, 14, 19(1)(g), 226
- Companies Act, 1956:
