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Sidharth Construction Trading Pvt. 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:- INDIA CORPORATION PRIVATE LIMITED [Active] CIN = U65990MH1941PTC003461

    Civil Writ Jurisdiction 12811 Of 2005

    Decided On, 01 March 2006

    At, High Court of Bihar


    For the Appearing Parties: -----------

Judgment Text


(1.) This writ petition is directed against the order dated 8.9.2005 (Annexure 1), whereby it has been decided by the Ministry of Railways (Railway Board) that business dealings with the petitioner and also its sister concern(s) and partner(s) should be banned on all Indian Railways including Patna Units for a period of two years with immediate effect, and a sum of Rs. 1,93,862/- has been ordered to be recovered from the petitioner for supplying track ballast not upto the required specifications of the said value,

(2.) According to the writ petition, the petitioner had submitted tenders for supply of track ballast of total quantity of 17,146,27 MT. After the supplies were made, samples of the same were sent for test to the Muzaffarpur Institute of Technology and were found upto the specified standards as per the test report dated 29.6.2004 (Annexure 4/1), It is further stated in the writ petition that the work was completed on 15.7.2004, and during the course of vigilance check on 2.9.2004. further samples were collected from stack Nos. 77,78 and 107, A copy of the minutes of sample collection dt. 2.9.2004, by four functionaries of the vigilance team is marked Annexure -9 to the writ petition. It is further stated that the remaining materials of the three stacks were spread on 8.9.2004. The samples were tested in the Laboratory of East Central Railways at Muqhalsarai, The report dated 10.9.2004 (Annexure 1.6) was adverse to the petitioner leading to the show cause notice dated 18,11.2004 (Annexure 8). 2.1) The petitioner challenged the show-cause notice by preferrinq CWJC No. 15127 of 2004, inter alia, on the ground that the Railways could utmost call upon the petitioner to replace the materials equivalent to Rs. 1,93,862/-. The writ petition was disposed of by order dated 11.1.2005 (Annexure 11) with the observations that the petitioner may raise all the issues available to him in law in his show-cause. The petitioner preferred LPA No. 83 of 2005, which was rejected by order dated 1.2.2005 (Annexure 12). The petitioner thereafter had shown cause on 16.8,2005 (Annexure 20), The petitioner then preferred a fresh writ petition bearinq CWJC No. 4511 of 2005 which was disposed of by order dated 7.7,2005 (Annexure 17), whereby the respondent authorities were directed to allow the petitioner inspection of all the documents. The order further stated that if the ballasts were not yet spread, then the petitioner was to be craven an opportunity to examine the ballast supplied by him. This was followed by the impugned order dated 8.9.2005.

(3.) While assailing the validity of the impugned action, learned counsel for the petitioner submitted that the impugned order was in violation of the principles of natural justice. Samples were collected behind the petitioner's back and were sent to the own laboratory of the railways. He further submitted that no complaint was made during the progress of the work and the samples were found to be of prescribed specifications as per the first report. The work was completed on 5,7.2004, samples were collected on 2.9.2004, from the three stacks in Question which were used before the report was received. He further submitted that the first test was conducted in an independent laboratory and the samples were found to be upto the specifications, whereas the second set of samples were taken when the work was nearing completion and were tested in the own laboratory of the Railways. The three stacks were spread and used on 8.9.2004 as a result of which the disputed stacks had lost identity leaving nothing for the petitioner to verify. He has relied on the following reported judgments:- (i) AIR 1975 SC 267 (Erusian Eguipments and Chemicals Ltd. v. State of West Bengal) Paragraphs- 15 and 20 (ii) 1983 PLJR 501 (Sri Ram Refrigeration Industries Ltd. v. The state Bank of India) Paragraph- 20 (iii) 2000(2) PLJR 68(Elite Engineering Company v. Bihar State Electricity Board and Ors.) Paragraph-15 3.1 Learned counsel for the petitioner next submitted that in the absence of any imputation of dishonest motive, the penalty is disproportionate to the gravity of the allegation, A very smallquantity has been found to be defective. The petitioner ought to have been asked to replace the materials as per the agreement to the extent found defective. He lastly submitted that the impugned order does not assign any reasons,

(4.) Learned counsel for the respondents has submitted that the quantity of defective materials may be less, but the entire material must be of specified standard failing which the petitioner may incur penalty, The second laboratory test report of the Mughalsarai Laboratory has found the goods to be sub-standard. He next submitted that the vigilance team had collected the samples on 2,9,2004 which was by its very nature a surprise inspection and, therefore, the petitioner's presence was not ensured. In any case, the samples were collected in the presence of four functionaries of the vigilance team and were sent to its own laboratory, There is no prescribed procedure for collection of such samples and, therefore, it should satisfy the requirements of justice and fair play. It is incorrect to state that the samples were collected after the work was over. After the adverse report was received show-cause notice was issued and the principles of natural justice were fully observed before the final decision was taken. The petitioner was allowed inspection of all the documents. He next submitted that the petitioner only challenges the procedural part of it, and does not challenge the validity or the veracity of the test report. He relies on the judgment of the Supreme Court in Erusian Equipments and Chemicals Ltd. (supra), 4.1) He lastly submitted that a strict view may he taken against the petitioner because it relates to safety and security of the tracks and passengers.


1. I have perused the materials on record and considered, the submissions of learned counsel for the parties. I must first of all deal with the petitioner's contention that the impugned order does not assign reasons, in my view, it is manifest on a bare perusal of the impugned order that it does assign reasons. The relevant portion of the impugned order is set out hereinbelow for the facility of quick reference:-

2. With reference to the Memorandum and Statement of charges served to M/s Siddharth Construction and Trading Pvt. Ltd. Kolkata, the reply dated 16.08.2005 as furnished by M/s Siddharth Construction and Trading Pvt. Ltd. Kolkata to the above Memorandum has been considered on merits of the case by the competent authority and it is concluded that the above said firm has been found guilty of misconduct so much so that they violated the General Conditions of Contract and acted with a malafide intention by supplying of sub-standard stone ballast which not only caused loss to railways but also posed a risk to railway safety.

(Emphasis added) The most important reason which attracts attention immediately is the sub-standard stone ballast posing a risk to railway safety, The fact that sub-standard materials had been supplied is surely for unlawful gain, and was obviously with a mala fide intention. The fact that it is sub-standard material is also not in doubt because the same is evidenced by the test report dated 10.9.2004 (Annexure 16). Therefore, the reasons assigned are supply of sub-standard materials which are below the prescribed specifications in violation of the conditions of contract, with mala fide intention, causing loss to the railways, and. posing a risk to railway safety.

(6.) Learned counsel for the respondents is right in his submission that even though supposing for the sake of argument that only a small portion has been found to be sub-standard, but the entire stocks had to be absolutely upto the specifications keeping in view the nature and the purpose for which it was to be used in particular, apart from the terms and conditions of the contract, Test is conducted only of samples and not of the whole. It is just like tasting a small portion of the food to find out as to how it has been prepared. One does not have to taste the whole of the food to find out the kind and quality of preparation.

(7.) Learned counsel for the petitioner has streneously contended that the principles of natural justice were violated. I am unable to accedeto the submission for the reason that in view of the position it was done by a vigilance team, the petitioner could not have been associated with the same. Secondly, all precautions were taken to collect the materials properly in the presence of four officers who have maintained the record properly. Unlike the Prevention of Food Adulteration Act which prescribes a procedure for collection of samples and its testing, no such procedure is to be found in the agreement inter-parties. Therefore, the Railways were required to act in accordance with justice and fair Play which has been fully observed in the present case. A detailed show-cause notice was issued, full opportunity was afforded to the petitioner to meet the charge, which has been disposed of by a reasoned order. The relevant portion of the judgment in Erusian Equipments and Chemicals Ltd. v. State of West Bengal (supra) is set out hereinbelow for the facility of quick reference:- 16. in passing an order of blacklisting the Government department acts under what is described as a standardised Code. This is a Code for internal instruction, The Government departments make regular purchases, They maintain list of approved suppliers after taking into account the financial standard of the firm, their capacity and their past performance. The removal from the list is made for various reasons. The grounds on which blacklisting may be ordered are if the proprietor of the firm is convicted by court of law or security considerations so warrant of if there is strong justification for believing that the proprietor or employee of the firm has been guilty of malpractices such as bribery, corruption, fraud, or if the firm continuously refuses to return Government dues or if the firm employs a Government servant, dismissed or removed on account of corruption in a position where he could corrupt Government servant. The petitioner was blacklisted on the around of justification for believing that the firm has been guilty of malpractices such as bribery, corruption, fraud. The petitioners were blacklisted on the ground that there were proceedings pending against the petitioners for alleged violation of provisions under the Foreign Exchange Regulation Act. 20. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction, Fundamentals of fair play requirethat the person concerned should be given an opportunity to represent his case before he is put on the blacklist. I am thus convinced that the principles of natural justice and fair play were fully observed. 7. Relying on the judgment in the following observation in the judgment of this Court in the case of Elite engineering Company v. BSEB (supra), learned counsel for the petitioner submitted that the respondent authorities should have at best called upon the petitioner to replace the defective materials. Inspite of repeated efforts of the petitioner to rectify the defects and for to replace the defective parts, the Board has for undisclosed reasons refused to invoke the warranty clause.... This is completely overlooking the fact situation of that case which is fundamentally different from the present case. In the reported judgment, the petitioner was supplier of electrical equipments to the Board which had to be supplied in three instalments. The first instalment was supplied and installed to their satisfaction and payments were made. The second instalment of the equipments had been inspected by the officers of the board were supplied and installed and put-to use whereafter the Board complained about its efficiency. The petitioner had invoked the warranty clause which provided that the petitioner was bound to rectify the detects but the Board refused to accede to th

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e same. This had, therefore, led to the petitioner's black-listing which the Court had found to be absolutely illegal because the same had been done on the basis of the findings recorded by the Board against a different supplier in course of an enquiry against him for supply of similar Products. The Court had, therefore, held that the petitioner cannot be black-listed in view of the findings against another supplier and, therefore, the impugned order was quashed. On the other hand, in view of the threat posed by the defective supply of materials to the safety and security of the tracks and the passengers, the respondents have rightly taken the decision to inflict the Punishment on the petitioner, (8.) We are unable to accede to the submission that the punishment is disproportionate to the gravity of the findings, it will bear repetition that the safety and security of the tracks and the passengers is in question. Keeping in view the increasing number of railway accidents, the respondent authorities have in their wisdom decided to punish the petitioner rather than being content with invoking the warranty clause. Furthermore, the impugned order will operate for a limited period of two years only. In the result, this writ petition fails and is accordingly dismissed. In the facts and circumstances of the case, however, there shall be no order as to costs.