Rajesh Enterprises v. Uttarakhand Power Corporation Ltd. & Ors.

Mr. B.D. Upadhyay, Senior Advocate assisted by Mr. Sunil Upadhyay, Advocate for the respondents.

The petitioner manufactures wires and cables and supplies them, inter alia, to its consumers, including Uttarakhand Power Corporation Ltd. An order was given to the petitioner for supply of certain quantity of Aluminium Conductor Unarmored Power Cable. Supply of this particular product was made to the Uttarakhand Power Corporation Ltd. which was declared to be defective by them and the petitioner offered to take the goods back. However, the supply of the said goods was again made by the petitioner which was again declared to be defective inasmuch as a large portion of it was much below the Guaranteed Technical Particulars. Consequently a show cause notice was given to the petitioner vide letter dated 23.4.2012 which reads as under :- (cid:147)14 Km. Cable of size 1 x 240 Sq. mm was supplied by you against DI No. MM/240/2011-12/Rajesh dt.

03.10.2011. Above cable was found under size during joint inspection held on 04.11.2011 at Store Division, Dehradun and the same was rejected and on your request, you were allowed to lift all rejected lot of cable 2 and to replace the same with new cable strictly as per specification & agreement. As reported by Material Management wing of UPCL, the above cable was re-supplied by you against D.I. No. MM/473/2011-12 Rajesh dt 23.02.2012 but the same was also found inferior to the specification during departmental inspection held on 16.03.2012 at Store Centre, Araghar, Dehradun (copy of report is enclosed). Above act on your part is tantamount to breach of agreement and fraud with the Corporation. Therefore, show cause notice is being served on you due to your breach of contractual obligations & fraud with the Corporation. You are hereby required to explain to UPCL that why UPCL should not cancel the Purchase Order No. 332/UPCL/GM/CCP-II/12/2010- 11 (Rajesh) dt. 22.03.2011 for balance quantity, forfeit the Security Deposit against aforesaid order & black list you forever participation in tenders of UPCL. You are required to explain the above within 10 days from the date of issue of this notice, otherwise it shall be assumed that you have nothing to say in this matter and further actions, as deemed fit, shall be taken accordingly by UPCL.(cid:148)

As per the said show cause notice, the Power Corporation wanted the reply within (cid:147)ten days(cid:148). The show cause notice was received by the petitioner within time and he replied the said notice on 1.5.2012 again stating that the material was only supplied to the respondents after the joint inspection was made. Moreover, if the material is defective, he is prepared to replace the same. However, before this letter could reach the respondents, an order was passed by the respondents on 4.5.2012 not only cancelling the entire 3 purchase order but also blacklisting the petitioner and sending the copy of the said order to various electricity departments in the country. It is this order dated 4.5.2012 which has been challenged by the petitioner before this Court.

On the last occasion, this Court had enquired from the counsel appearing for the Uttarakhand Power Corporation Ltd. as to what procedure they have in their department for blacklisting a particular contractor or person when his goods are found to be defective. The reply which was given to this Court was that there was no prescribed procedure.

Be that as it may, first of all the department must have a procedure for taking such severe action as blacklisting of a contractor. Nevertheless, if no such procedure was existing the minimum what must be done is that the principle of natural justice and fair play must be followed. Therefore, without going into the merit of the contention of the petitioner as well as the respondents, this Court finds that the show cause notice given to the petitioner on 23.4.2012 asking a reply within ten days was too short a time. However, it is not the case of the petitioner that he did not receive the show cause notice. In fact he received the show cause notice and replied within a period of ten days i.e. on 1.5.2012. However, before this letter could reach the respondents, the order was passed on 4.5.2012 blacklisting the petitioner, as the reply of the petitioner was received by the respondents after ten days as directed. No opportunity therefore has been given to the petitioner for explaining the reasons why he should not be blacklisted. Therefore, as far as cancellation of purchase of the goods from the petitioner or forfeiture of the security amount is concerned, no interference is called for since the goods supplied by the petitioner have been found to be 4 defective and of sub-standard quality. However, so far as the blacklisting of petitioner is concerned, that part of the order is liable to be set aside with the liberty to the respondents to initiate the process of blacklisting, if they so desire, but only in accordance with law after giving an opportunity of hearing to the petitioner. It is made clear that the petitioner shall cooperate in the process. The petitioner shall be present with the authorities within three weeks from today. The concern authority shall hear the petitioner and thereafter pass a speaking order.

It is made clear that the respondents may not give the petitioner a separate show cause notice. The petitioner must show cause in writing to the respondent authority as to why he should not be blacklisted. The respondents are at liberty to give a personal opportunity of hearing to the petitioner or its authorized representative. It is further made clear that in case the petitioner does not appear before the authority concerned in terms of this order, the authority concerned is at liberty to pass any fresh order as it deems necessary under the circumstances.

Interim order, if any, stands vacated.

No order as to costs. Avneet (Sudhanshu Dhulia, J.)

25.9.2012