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Sidharth Construction Trading Private Limited v/s Union of India


Company & Directors' Information:- SIDHARTH CONSTRUCTION AND TRADING PRIVATE LIMITED [Active] CIN = U45201OR1982PTC001046

Company & Directors' Information:- R SIDHARTH & COMPANY (INDIA) PVT LTD [Strike Off] CIN = U17111WB1991PTC051089

Company & Directors' Information:- M A CONSTRUCTION & TRADING COMPANY PVT LTD [Active] CIN = U45209WB1991PTC053738

Company & Directors' Information:- THE INDIA COMPANY PRIVATE LIMITED [Active] CIN = U74999TN1919PTC000911

Company & Directors' Information:- UNION CONSTRUCTION COMPANY PRIVATE LIMITED [Strike Off] CIN = U45201PN2001PTC015926

Company & Directors' Information:- INDIA CORPORATION PRIVATE LIMITED [Active] CIN = U65990MH1941PTC003461

    Letters Patent Appeal No. 292 Of 2006

    Decided On, 27 April 2010

    At, High Court of Bihar

    By, THE HONOURABLE MR. JUSTICE NAVIN SINHA & THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH

    For the Appearing Parties: K.D. Chatterji, Mriganj Mauli, A.K. Verma, Hemendra Prasad Singh, Advocates.



Judgment Text

NAVIN SINHA & DINESH KUMAR SINGH, JJ.

(1.) Heard learned Counsel for the appellant and the learned Counsel for the respondent Railways.

(2.) The appellant was awarded a contract for manufacture, supply and stacking of hand broken track ballast from Shekhpura Quarries for doubling of the Barauni -Tilrath Section including easing out of Barauni by pass line project of the Railways. The total quantity to be supplied was 17.146.27 MT. The Total value of the contract was Rs. 1,40,57,854. The ballast supplied by the appellant is said to have been tested by the respondents and found to be in order leading to release of payments. A surprise check of the ballast Stack No. 77, 78 and 107 by the Vigilance Department of the Railways and the sample tested at the Railway Laboratory at Mughalsarai revealed deficiencies in the physical properties such as abrasion value, impact value, water absorption test and sieve analysis. A show cause notice was issued on 18.11.2004 duly replied on 16.8.2005 whereafter the final order dated 8.9.2005 was passed.

(3.) The impugned order banned the award of railway contracts to the appellant for two years. Orders were then issued on 9.9.2005 for recovery of a sum of Rs. 1,93,862 being value of the substandard ballast. The appellant questioned the same in the judgment under appeal.

(4.) The writ court noticed the submission that the appellant only challenged the procedural part of the decision making process and not the veracity of the test report. It finally proceeded to hold that there was no infirmity in the decision making process and that it was but natural that a sample of the ballast was collected suddenly by the Vigilance Department of the Railways, it had necessarily to be in absence of the appellant as otherwise the very purpose of a surprise raid itself would be rendered nugatory. Final orders had been passed after full opportunity to meet the allegations. The ballast concerned matters of safety of railway tracks which were technical issues. The writ petition came to be dismissed.

(5.) The order of the writ Court was stayed in appeal on 9.1.2007. This was nearly one year and four months after the impugned order dated 8.9.2005 inter alia debarring the appellant from railway contract for two years. It is not in controversy between the parties that after the stay order, fresh contracts have also been awarded to the appellant by the Railway. It is the further contention of the appellant that there has been no complaint against his performance in these fresh contracts. It is also submitted that there is no allegation of supply of ballast from a source other than that specified by the respondents themselves.

(6.) The submission on behalf of the appellant that the samples were collected behind his back, after they had been spread out and that he was denied the opportunity to explain the alleged substandard ballast or even replace them under the terms of the contract, does not appeal to us. We are satisfied that there has been no error in the decision making process. It was not the case of the appellant that the sample of ballast from the three stacks in question were not collected from the stacks piled by the appellant for supply in the contract area. It was also not the case of the appellant that in his reply to the show cause that the samples were not collected from the contract area or not supplied by him. Once it is not denied that the samples collected were from that supplied by the appellant, we find it difficult to hold that the order has been passed in violation of the principles of natural justice only because the samples were collected behind his back.

(7.) The next contention of the appellant was that he was to supply ballast from Shekhpura Quarries only. He was thus only an agent to supply certain stones from the source designated by the Railway. He was not at liberty to supply the ballast from any other source. The ballast was broken out pieces of rocks suitable for use of Railway. The show cause notice given to him itself refers to physical properties of the ballast. These are based on certain other geographical considerations also. Different strands of rocks may have different qualities. The Railways did not make any allegation of a deliberate supply of substandard quality of ballast. In fact, in a contract of over One Crore Forty lakhs it stands to reason why a regular Contractor of the Railway, the appellant, would indulge in substandard supply of ballast of the value of approximately Rs. 1,93,000/- only. It may be possible that the earlier sample was collected from one side of the stack of ballast and the other sample from another side of the stack. In that event even if the two were from different strands of the rock variations cannot be ruled out.

(8.) Learned Counsel for the Railways submitted that the sample of the ballast supplied by the appellant was substandard and failed the quality test. That another sample may have met the standards was not relevant. Therefore, there was no error in the recovery of the amount of Rs. 1,93,862/- being the value of the substandard ballast. Since the appellant had supplied substandard ballast so found upon laboratory test, there was no error in the order barring him from railway contract for two years.

(9.) The contention on behalf of the appellant that in a contract of approximately One Crore Forty Lakhs it stands to reason why he would for miniscule amount of Rs. 1,93,000/- risk his entire reputation and possibility of future contract, cannot be rejected by us outright as illogical, irrelevant and devoid of any reason. Simultaneously the submission that the show cause notice itself was suggestive that there could be different strands of the same rock, from one quarry, some of which were found in order, surely are technical matters to be more appropriately considered by the Railway themselves.

(10.) Nonetheless it remains an issue of fact, the Railways making no direct allegation of deliberate wrong supply, that substandard ballasts were found. The defence of the appellant that he may have been a victim himself of ballast supplied from a quarry designated by the Railway with varying geographical factors of the rocks also cannot be easily brushed aside as devoid of any merit not to require consideration by the Railways.

(11.) The Respondents do not allege that the Appellant made supplies from a source other than the designated Shekhpura Quarry.

(12.) We, therefore, hold that in so far as the aspect of recovery is concerned, the fact of availability of substandard ballast at the work site of the appellant shall be sufficient justification for recovery of the amount sought to be done. To that extent we find no merit in the appeal.

(13.) But, simultaneously for the reasons discussed above we do consider it a proper case where the appellant perhaps cannot be saddled with the responsibility of deliberate supply of substandard ballast to visit him with the extreme punishment of debarment from railway contracts for two years. As noticed above, the period of one year four months had already expired before the judgment under appeal came to be stayed by this Court. That leaves the re

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maining period of eight months of the ban. The appellant claims to have been awarded further contracts after the interim order in Appeal without any allegation against him. (14.) In the entirety of the facts and circumstances without interfering with the direction for recovery we consider the present a fit case where the Railways may be directed to reconsider their decision of banning the appellant from Railway contracts for the remaining period of eight months. (15.) It is clarified that the present order is confined to the issues raised in the present appeal with regard to supply of substandard ballast only and shall have no bearing on the other issues between the parties unconnected therewith under the agreement. (16.) The appeal stands disposed in the aforesaid terms.
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