The Allahabad High Court has set aside the order blacklisting a company and awarding the contract for supply of 250 KVA and 400 KVA transformers to Kanpur Electricity Supply Company Limited (KESCO).
The Division Bench of Justice Shekhar B Saraf and Justice Vipin Chandra Dixit passed this order while hearing a petition filed by M/S Prinav Gis Technologies Private Limited.
This is a writ petition under Article 226 of the Constitution of India wherein the petitioner is aggrieved by unsigned order dated 11.09.2024 issued by the Managing Director, KESCO being the respondent no 3 herein.
Counsel appearing on behalf of the petitioner submitted that the contract entered into by the parties was for a period of two years, whereby transformers of 250 KVA and 400 KVA along with other materials were supplied by the petitioner to KESCO.
However, three show cause notices were received by the petitioner dated 23.03.2024, 12.04.2024 and 14.08.2024. Subsequent to these show cause notices, the impugned order has been passed wherein the contract has been terminated, penalty has been imposed upon the petitioner and confiscation of bank guarantee and the petitioner company has been debarred/ black listed for a period of two years.
Counsel appearing on behalf of the petitioner places her arguments on three limbs. Firstly she submitted that the report with regard to the quality of the transformers that was obtained by the respondent authorities was never supplied to the petitioner.
Second, the testing of the transformers was not done in the presence of the petitioner, which is de hors the departmental circular dated 18.05.2024 that requires that any sample testing is to be done in the presence of the petitioner.
Thirdly, the order that has been supplied to the petitioner, is unsigned and does not take into consideration the reply filed by the petitioner and the arguments raised by the petitioner before the authority concerned.
Per contra, counsel appearing on behalf of the respondent has submitted that the order has been supplied to the petitioner is only a communication and the original order was passed by four authorities namely Assistant Engineer KESCO, Senior Account Officer KESCO, Superintending Engineer (Store Purchase) and Chief Engineer and Director Technical KESCO.
The Court noted that,
With regard to supply of the report to the petitioner, counsel relies on a letter of the petitioner dated 30.08.2024, wherein it appears by way of a handwritten note that the report was supplied to the petitioner.
Counsel appearing on behalf of the petitioner has categorically submitted that this receipt has not been issued by any official of the petitioner company.
“Upon a perusal of the documents, we are of the view that the respondent authorities have not followed the procedure prescribed by them with regard to sample testing and neither the report of the test carried out by third party being handed over to the petitioner. The order passed by the authority wherein four persons have signed, has also not been communicated to the petitioner and another letter has been issued to the petitioner which appears to be the impugned order that has not been signed by the Managing Director.
We find the entire procedure adopted by the authority to be not in accordance with law and in violation of principles of natural justice. It is trite law that the authority where it relies on a particular document/report the same has to be provided to the party against whom such document/report is to be used against.
In the absence of the same, the person against whom the report is being used is put at a clear disadvantage as the person cannot dispute or deny any of the contents of the report. This particular procedure accordingly amounts to violation of the principles of natural justice,” the Court observed while allowing the petition.
The Court is of the view that the impugned order that has been communicated to the petitioner and the earlier order that appears to be signed by four personnel are both required to be quashed and set aside.
“The respondent authority shall be at liberty to once again issue a fresh show cause notice and proceed in accordance with law. Needless to mention, a copy of the report that is being relied upon by the authority is required to be provided to the petitioner company,” the order reads.