Grosons Pharmaceuticals (P) Ltd. & Anr. Vs. The State of Uttar Pradesh & Ors.
EmailAppeal: Civil Appeal No. 708 of 1993
(From the Judgment and Order dated 24.8.91 of the Allahabad High Court in W.P. No. 2746 (M/B) of 1991)
(From the Judgment and Order dated 24.8.91 of the Allahabad High Court in W.P. No. 2746 (M/B) of 1991)
Petitioner: Grosons Pharmaceuticals (P) Ltd. & Anr.
Respondent: The State of Uttar Pradesh & Ors.
Apeal: Civil Appeal No. 708 of 1993
(From the Judgment and Order dated 24.8.91 of the Allahabad High Court in W.P. No. 2746 (M/B) of 1991)
(From the Judgment and Order dated 24.8.91 of the Allahabad High Court in W.P. No. 2746 (M/B) of 1991)
Judges: V. N. KHARE & B. N. AGRAWAL, JJ.
Date of Judgment: May 09, 2001
Appearances:
Mr. Ravi P. Mehrotra, Mr. M.P.S. Tomar, Ms. Deepti R. Mehrotra and Ms. Sandhya Goswami, Advocates for the Appellants.
Mr. R.B. Mehrotra, Senior Advocate and Mr. A.K. Srivastava, Advocate with him for the Respondents.
Head Note:
CONTRACTS LAWS
Contracts – Blacklisting of contractor – Validity – Proper proce-dure – Appellant firm having a contract with state government for supply of medicines – Consequent upon landing of criminal prose-cution against appellant under Prevention of Corruption Act government blacklisting the appellants after issuing notice and considering the reply given by appellants – Appellants challeng-ing such action of blacklisting on the ground of non supply of material on the basis of which such action was taken by govern-ment. Held since opportunity for being heard was provided by the government to the appellant and the action was taken only after considering the reply to show cause notice and as there was no requirement for furnishing the material on the basis of which charges were based the action of blacklisting cannot be held to be bad or illegal.
Held:
Admittedly, the appellant has only contractual relationship with the state government and the said relationship is not governed by any statutory rules. There is no statutory rule which requires that an approved contractor cannot be blacklisted without giving an opportunity of show cause. It is true that an order black-listing an approved contractor results in civil consequences and in such a situation in the absence of statutory rules, the only requirement of law while passing such an order was to observe the principle of audi alteram partem which is one of the facet of the principles of natural justice. The contention that it was incumbent upon the respondent to have supplied the material on the basis of which the charges against the appellant were based was not the requirement of principle of audi alteram partem. It was sufficient requirement of law that an opportunity of show cause was given to the appellant before it was blacklisted. It is not disputed that in the present case, the appellant was given an opportunity to show cause and he did reply to the show cause which was duly considered by the state government. We are, therefore, of the view that that the procedure adopted by the respondent while blacklisting the appellant was in conformity with the principles of natural justice. (Para 2)
JUDGEMENT:
V. N. KHARE, J.
1. The appellant herein is a small scale industry engaged in manufacture and sale of drugs and was registered with the Direc-torate of Industry (Stores Purchase Section), Kanpur, U.P. As a result of the aforesaid registration, the appellant was an ap-proved contractor for supply of drugs to the government depart-ments. The appellant, in pursuance thereof, had been supplying drugs to the U.P. government. It appears that certain irregular-ities came to the notice of the government in purchase of medi-cines and, therefore, a vigilance inquiry was set up as a result of which the record and product of the appellant were seized. Further, criminal prosecution was also launched against the appellant under provisions of Prevention of Corruption Act read with section 120 IPC. Under such circumstances, the state gov-ernment served a notice on the appellant to show cause why it should not be blacklisted in its dealing with the government. It appears that the appellant sent a reply to the show cause notice. The state government on expiry of the period for reply by the appellant passed an order blacklisting the appellant. The order indicated that the period of blacklisting will be till the dispo-sal of the case pending in the court as well as till the final decision is arrived at in the investigation of proceedings insti-tuted against the firm on various accounts. The appellant chal-lenged the aforesaid order by means of a writ petition under Article 226 of the Constitution of India. The said writ petition was dismissed. Aggrieved, the appellant challenged the said order and judgment by way of special leave petition in this court. The said special leave petition was numbered as 10087/91. When the matter came up for hearing before a bench of this court, this court was of the view that the state government was re-quired to reconsider the matter along with the explanation submitted by the appellant while keeping the impugned order in tact. With the aforesaid direction, the special leave petition was disposed of. In pursuance of the direction of this court, the state government reconsidered the matter and affirmed the earlier order of blacklisting the appellant. The appellant again challenged the said order by means of a writ petition before the High Court. The High Court looked into the record and found that elaborate reasons were recorded and thereafter the order of blacklisting was passed. In that view of the matter, the writ petition was dismissed. It is against the said judgment, the appellants have preferred this appeal.
2. Learned counsel appearing for the appellant, urged that seeing the nature and seriousness of the order passed against the ap-pellant, the respondent ought to have supplied all the materials on the basis of which the charges contained in the show cause notice were based along with show cause notice and in the ab-sence of supply of materials, the order impugned is against the principles of natural justice. We do not find any merit in this contention. Admittedly, the appellant has only contractual relationship with the state government and the said relationship is not governed by any statutory rules. There is no statutory rule which requires that an approved contractor cannot be black-listed without giving an opportunity of show cause. It is true that an order blacklisting an approved contractor results in civil consequences and in such a situation in the absence of statutory rules, the only requirement of law while passing such an order was to observe the principle of audi alteram partem which is one of the facet of the principles of natural justice. The contention that it was incumbent upon the respondent to have supplied the material on the basis of which the charges against the appellant were based was not the requirement of principle of audi alteram partem. It was sufficient requirement of law that an opportunity of show cause was given to the appellant before it was blacklisted. It is not disputed that in the present case, the appellant was given an opportunity to show cause and he did reply to the show cause which was duly considered by the state government. We are, therefore, of the view that that the proce-dure adopted by the respondent while blacklisting the appellant was in conformity with the principles of natural justice.
3. It was then urged that the impugned order blacklisting the appellant does not contain any reasons and, therefore, the order is invalid. We do not find any merit in the submission. The High Court summoned the entire record and found that elaborate reasons were recorded by the state government while passing the order blacklisting the appellant. The High Court further record-ed a positive finding that the state government has passed the impugned order after recording elaborate reasons and summary of which is contained in the impugned order.
4. For the aforesaid reasons, we do not find any merit in the appeal and it fails and is dismissed accordingly. There shall be no order as to costs.
1. The appellant herein is a small scale industry engaged in manufacture and sale of drugs and was registered with the Direc-torate of Industry (Stores Purchase Section), Kanpur, U.P. As a result of the aforesaid registration, the appellant was an ap-proved contractor for supply of drugs to the government depart-ments. The appellant, in pursuance thereof, had been supplying drugs to the U.P. government. It appears that certain irregular-ities came to the notice of the government in purchase of medi-cines and, therefore, a vigilance inquiry was set up as a result of which the record and product of the appellant were seized. Further, criminal prosecution was also launched against the appellant under provisions of Prevention of Corruption Act read with section 120 IPC. Under such circumstances, the state gov-ernment served a notice on the appellant to show cause why it should not be blacklisted in its dealing with the government. It appears that the appellant sent a reply to the show cause notice. The state government on expiry of the period for reply by the appellant passed an order blacklisting the appellant. The order indicated that the period of blacklisting will be till the dispo-sal of the case pending in the court as well as till the final decision is arrived at in the investigation of proceedings insti-tuted against the firm on various accounts. The appellant chal-lenged the aforesaid order by means of a writ petition under Article 226 of the Constitution of India. The said writ petition was dismissed. Aggrieved, the appellant challenged the said order and judgment by way of special leave petition in this court. The said special leave petition was numbered as 10087/91. When the matter came up for hearing before a bench of this court, this court was of the view that the state government was re-quired to reconsider the matter along with the explanation submitted by the appellant while keeping the impugned order in tact. With the aforesaid direction, the special leave petition was disposed of. In pursuance of the direction of this court, the state government reconsidered the matter and affirmed the earlier order of blacklisting the appellant. The appellant again challenged the said order by means of a writ petition before the High Court. The High Court looked into the record and found that elaborate reasons were recorded and thereafter the order of blacklisting was passed. In that view of the matter, the writ petition was dismissed. It is against the said judgment, the appellants have preferred this appeal.
2. Learned counsel appearing for the appellant, urged that seeing the nature and seriousness of the order passed against the ap-pellant, the respondent ought to have supplied all the materials on the basis of which the charges contained in the show cause notice were based along with show cause notice and in the ab-sence of supply of materials, the order impugned is against the principles of natural justice. We do not find any merit in this contention. Admittedly, the appellant has only contractual relationship with the state government and the said relationship is not governed by any statutory rules. There is no statutory rule which requires that an approved contractor cannot be black-listed without giving an opportunity of show cause. It is true that an order blacklisting an approved contractor results in civil consequences and in such a situation in the absence of statutory rules, the only requirement of law while passing such an order was to observe the principle of audi alteram partem which is one of the facet of the principles of natural justice. The contention that it was incumbent upon the respondent to have supplied the material on the basis of which the charges against the appellant were based was not the requirement of principle of audi alteram partem. It was sufficient requirement of law that an opportunity of show cause was given to the appellant before it was blacklisted. It is not disputed that in the present case, the appellant was given an opportunity to show cause and he did reply to the show cause which was duly considered by the state government. We are, therefore, of the view that that the proce-dure adopted by the respondent while blacklisting the appellant was in conformity with the principles of natural justice.
3. It was then urged that the impugned order blacklisting the appellant does not contain any reasons and, therefore, the order is invalid. We do not find any merit in the submission. The High Court summoned the entire record and found that elaborate reasons were recorded by the state government while passing the order blacklisting the appellant. The High Court further record-ed a positive finding that the state government has passed the impugned order after recording elaborate reasons and summary of which is contained in the impugned order.
4. For the aforesaid reasons, we do not find any merit in the appeal and it fails and is dismissed accordingly. There shall be no order as to costs.
