Case Note & Summary
The dispute arose from a request for qualification issued by the Municipal Corporation of Greater Mumbai (MCGM) on 23 October 2013, inviting consultants engaged in quality assurance, quality control and quality audit for road works to be empanelled for a period of three years at a fixed remuneration of 0.85% of the actual cost of the work done by contractors. The petitioner, SGS India Private Limited—a subsidiary of SGS SA based in Geneva and a company incorporated under the Companies Act, 1956—successfully qualified and was empanelled as a consultant by MCGM vide letter of acceptance dated 8 January 2014. Consequently, a work order was issued on 1 February 2014, and the petitioner commenced its assigned functions, which included project monitoring services and quality assurance, quality control and quality audit for road works in Greater Mumbai. In May 2016, the petitioner was confronted with the lodging of an FIR alleging commission of certain offences during the execution of road projects. Shortly thereafter, on 6 June 2016, the petitioner was served with a show cause notice dated 4 June 2016, issued by the third respondent, the Director (Engineering Services and Projects) of MCGM. The notice alleged that serious lapses and violations had been committed by the road contractor, which the petitioner, as the appointed consultant, had failed to report. It was specifically charged that the petitioner had submitted incomplete, inaccurate or fabricated findings in regular and monthly reports, thereby enabling the contractor to obtain payments from MCGM for works that were either not carried out or were defective, resulting in a total payment of Rs.184,39,93,438.86 to the contractor. The show cause notice claimed that the petitioner had colluded with the contractor and MCGM staff to misrepresent, cheat and defraud the Corporation, causing loss of public money. The petitioner was given 55 days to respond and was informed of a personal hearing before the third respondent. On 21 September 2016, the petitioner submitted an interim reply, styled as ‘Without Prejudice’, in which it requested a range of documents including the enquiry report, test reports, contract copies, measurement books, and other records, asserting that without these it could not make an effective defence. The petitioner complained that the complete set of documents relied upon by the Internal Enquiry Committee was not supplied, and that its request for summoning and cross-examining concerned MCGM officials was denied. Despite repeated correspondence and a corrigendum to the show cause notice dated 8 November 2016, the petitioner maintained that it was unable to present a full defence. A further show cause notice dated 14 June 2017 was also received. Ultimately, on 12 July 2017, the third respondent passed the impugned order removing the petitioner’s name from the empanelled list and blacklisting it, along with its directors and power of attorney holders, for a period of seven years, thereby debarring it from entering into any contract with MCGM departments. Aggrieved by this order, the petitioner filed the present writ petition under Article 226 of the Constitution of India, contending that the entire proceeding was conducted in violation of the principles of natural justice, as it was handicapped by the non-supply of relevant documents and denial of cross-examination. Before the High Court, senior counsel for the petitioner argued that the third respondent had transgressed his powers and misinterpreted the terms and conditions of the contract. The respondents resisted the petition. The High Court, after hearing extensive arguments, granted Rule and proceeded to dispose of the petition finally by the judgment. The detailed reasoning and final decision of the Court are not available in the provided excerpt of the judgment.
Headnote
A) Administrative Law - Blacklisting - Natural Justice - Constitution of India, 1950, Article 226 - The petitioner, a private limited company empanelled as a consultant for quality assurance, quality control and quality audit of MCGM road works, challenged its blacklisting for seven years on the ground of denial of fair hearing. The petitioner contended that it was not supplied with the full set of documents relied upon by the Enquiry Committee, nor afforded the opportunity to cross-examine the officials whose statements formed the basis of the allegations, thereby rendering the proceedings arbitrary and in violation of the principles of natural justice. The Court heard extensive arguments at the admission stage and proceeded to dispose of the petition finally by the judgment. (Paras 1-12)
Issue of Consideration
Whether the blacklisting order dated 12 July 2017 passed by the Director (Engineering Services and Projects) of MCGM, removing the petitioner from the empanelled list and blacklisting it for seven years, is violative of the principles of natural justice and thus liable to be quashed under Article 226 of the Constitution of India.
Law Points
- natural justice
- right to hearing
- supply of documents
- cross-examination
- blacklisting
- empanelment
- consultant liability
- writ jurisdiction under Article 226
