Karnataka High Court
H M S Enterprises vs Karnataka Stae Road Transport ... on 6 April, 2023
Author: N.S.Sanjay Gowda
Bench: N.S.Sanjay Gowda
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 6TH DAY OF APRIL 2023
BEFORE
THE HON'BLE MR.JUSTICE N.S.SANJAY GOWDA
W.P.No.12487/2016 (GM-TEN)
BETWEEN:
H.M.S. ENTERPRISES,
REPRESENTED BY ITS PROPRIETOR,
MUNEERPASHA,
S/O ABDUL KARIM,
AGED ABOUT 59 YEARS,
No.44/57, V CROSS,
H.SIDDIAH ROAD,
BANGALORE-27. ... PETITIONER
(BY SRI.H.P.LEELADHAR, ADVOCATE)
AND:
1. KARNATAKA STATE ROAD
TRANSPORT CORPORATION
REPRESENTED BY ITS CHAIRMAN,
K.H.ROAD, SHANTI NAGAR,
BANGALORE-560 027.
2. THE CONTROLLER OF STORES & PURCHASE
KARNATAKA STATE ROAD,
TRANSPORT CORPORATION
K.H.ROAD,SHANTI NAGAR,
BANGALORE-560 027.
3 THE WORKS MANAGER,
KARNATAKA STATE ROAD,
TRANSPORT CORPORATION,
REPRESENTED BY ITS CHAIRMAN,
2
K.H.ROAD, SHANTHI NAGAR,
BANGALORE-560 027. ... RESPONDENTS
(BY SRI.P.D.SURANA, ADVOCATE FOR R-1 TO R-3)
THIS PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA, PARRYING TO CALL
FOR ENTIRE RECORDS IN RESPECT OF THE IMPUGNED
ORDER ATE ANNEXURE-A LETTER DATED:23.12.2015 OF E-
PROCUREMENT TENDER; QUASH THE TERMINATION NOTICE
ISSUED BY R-2 VIDE LETTER DATED:23.12.2015 AT
ANNEXURE-A, ETC.
THIS PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 29.03.2023, COMING ON FOR
PRONOUNCEMENT THIS DAY, THE COURT MADE THE
FOLLOWING
JUDGMENT
1. The petitioner is challenging the order dated 23.12.2015, by which it has been black-listed for a period of two years and further, the Earnest Money Deposit paid by the petitioner in respect of four separate contracts, to four Corporations is ordered to be forfeited and it has also been held that the amount paid towards M.S. Scrap and other lots, which were held at the Regional Workshops, Bengaluru, would also stand forfeited.
2. The following facts are not in dispute: 3
3. In the month of May-2015, an e-Auction was conducted by M/s.Metal Scrap Trade Corporation (MSTC) for sale of scrapped materials. One of the items of e- Auction was 50 metric tons, which was at the Regional Workshops, Kengeri, Bengaluru. In the e-Auction, the petitioner was the highest bidder and accordingly, an acceptance letter dated 15.06.2015 was issued to him.
4. The petitioner thereafter deposited a sum of Rs.7,74,082/- after deducting a sum of Rs.80,660/- which he had paid towards Earnest Money Deposit. The petitioner also lifted 14.170 metric tons of M.S. scrap on 13.07.2015.
5. Thereafter, the petitioner sent a vehicle bearing registration No.KA-01/AD-846 on 24.07.2015 for lifting balance quantity of M.S. scrap. The officials of the Corporation suspected manipulation of the weight of the loaded truck and hence, the delivery team took the loaded vehicle to another weigh bridge i.e., M/s.IMAC Coach Builders and the weight of the loaded vehicle was 4 checked and it was noted that the weight was 30,820 kg. It was contended that as a result of this counter-check weighment, there was a difference of 8,500 kg between the first weighment and second weighment. The vehicle was thereafter taken to a third weigh bridge i.e., M/s. RK Weigh Bridge for checking the weight of the vehicle and it was found to be 31,070 kg and there was a difference to the tune of 8,590 kg. The Corporation thereafter took the view that the petitioner had colluded with the Weigh Bridge to deceive the Corporation and proceeded to lodge a Police complaint on 24.07.2015.
6. The Police registered a First Information Report against the petitioner and M/s.S.M. Weigh Bridge. A complaint was also lodged to the Assistant Controller of Department of Legal Metrology to take further action. It appears that the Assistant Controller, Legal Metrology verified the complaint and seized M/s.S.M. Weigh Bridge and imposed a penalty of Rs.6,000/- on M/s.S.M. Weigh Bridge.
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7. As the matter stood thus, the petitioner approached this Court in Writ Petition Nos.37464-72 of 2015 seeking for a direction to the respondents to deliver the materials and to complete the tender process pursuant to the acceptance letters/sale orders issued to the petitioner. This Court by an order dated 27.11.2015 disposed of the writ petition, recording the submission of the learned counsel for the respondent that the material in question had been seized by the Police and the interim custody of the same has been taken by the Karnataka State Road Transport Corporation ("KSRTC" for short) on the execution of indemnity bond in favour of the Police.
8. This Court further observed that since there was a Criminal Case pending before the Court of the jurisdictional Magistrate, it would be open for the petitioner to approach the said Court insofar as the material is concerned and the writ petition was therefore not maintainable.
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9. This Court accordingly recorded the submission of the KSRTC and disposed of the writ petition reserving liberty to the petitioner to approach the Criminal Court for release of the material.
10. This Court also observed that a Show-cause notice had been issued by the KSRTC to the petitioner and it would be open for the petitioner to issue a reply to the said show cause notice and the Corporation was required to take a decision within two weeks.
11. In the interregnum, the KSRTC came to the conclusion that an attempt was being made to deceive the Corporation and hence, a show-cause notice dated 20.10.2015 was issued to the petitioner seeking explanation in writing.
12. As ordered by this Court, the petitioner filed a reply to the show cause notice.
13. The Corporation thereafter proceeded to hold that the petitioner had merely denied the allegations and had 7 not replied to the actual allegations made against him nor had it produced any evidence as to why it should not be black-listed and earnest money deposit should be forfeited.
14. Further, the Corporation proceeded to hold that the procedure followed by the petitioner amounted to an unethical business practice and also a criminal act, which would result in financial loss to the KSRTC and it therefore proceeded to pass the impugned order black- listing the petitioner for a period of two years.
15. The Corporation also ordered forfeiture of the Earnest Money Deposit paid by the petitioner in respect of the M.S. scrap which was held at the Regional Workshops, Kengeri and also the other lots of scrap materials, which were being held in other divisions of the Corporations to be forfeited. The Corporation also ordered the amount paid towards the M.S. scrap and other lots to be forfeited.
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16. The learned counsel for the petitioner contends that this order of forfeiture and black-listing of the petitioner was illegal and irrational. The learned counsel contends that it cannot be assumed that the petitioner had colluded with M/s.S.M. Weigh Bridge.
17. Learned counsel submits the fact that M/s.S.M.Weigh Bridge was subjected to inspection and the Department of Legal Metrology imposed a penalty of Rs.6,000/- would by itself go to show that there was something wrong with M/s.S.M. Weigh Bridge and this tampering of the Weigh Bridge by M/s.S.M. Weigh Bridge cannot be attributed to the petitioner. It was submitted that there was absolutely no evidence indicating that the petitioner had in any way colluded with M/s.S.M. Weigh Bridge.
18. Learned counsel also argued that at time of weighment, all the officials were present and it was found that when the empty vehicle was weighed at the weigh bridge of the Corporation itself, it had been found 9 that the empty lorry weighed 8,980 kg and when the very same lorry had been weighed at the S.M. Weigh Bridge, which was nearby, it had been found that the weight of the empty vehicle was 8,940 kg, thereby indicating the difference of only 40 kg. He also contended that thereafter, when the vehicle was filled with M.S. scrap and weighed at M/s.S.M.Weigh Bridge, it was found that the weight of the vehicle was 22,320 kg, but on re-weighment at a different weigh bridge, it had been indicated that the weight of the vehicle was 30,820 kg and 31,070 kg at M/s.RK Weigh Bridge.
19. It was contended that the weight of the empty vehicle when weighed both at M/s.S.M.Weigh Bridge and the Weigh Bridge of the Corporation was more or less the same, the assertion that the petitioner had colluded with M/s.S.M. Weigh Bridge to deceive the Corporation could not have been accepted.
20. The learned counsel also pointed out that the Department of Legal Metrology had inspected the Weigh 10 Bridge at M/s.S.M.Weigh Bridge and had found some wrongdoing on its part and had imposed a penalty of Rs.6,000/-. The Department of Legal Metrology had not informed or even suggested the involvement of the petitioner and therefore, the assumption of the Corporation that the petitioner had colluded with M/s.S.M.Weigh Bridge cannot be accepted.
21. Learned counsel lastly submitted that the Corporation had no jurisdiction to forfeit the Earnest Money Deposit in respect of other contracts and also order forfeiture of all the amounts paid by the petitioner in respect of other lots, which it had purchased. He contended that the power available under Clause (16) of the e-Auction (Annexure 'B') for black-listing was only if the bidder had not followed the terms and conditions of payment, delivery or other conditions of the e-Auction.
22. He contended that since there was no evidence to show that the petitioner had indulged in malpractices either by himself or through his agents, the black-listing 11 was without any jurisdiction. He submitted that the power of forfeiture being a drastic measure, could not be exercised without absolute proof of any wrongdoing.
23. The learned counsel for the Corporation, Sri.P.D.Surana, on the other hand, contended that it was self-evident that the petitioner had colluded with M/s.S.M. Weigh Bridge and this was clear from the variance in the weights of the loaded vehicle between M/s.S.M. Weigh Bridge and the other Weigh Bridges. He, therefore, submitted that the order of forfeiture cannot be found fault with.
24. The entire thrust of the allegations against the petitioner was that it had colluded with M/s.S.M. Weigh Bridge and had attempted to manipulate the weight of the empty vehicle and the vehicle loaded with scrap. In order to prove this assertion, reliance was placed on the weighment done at M/s.I-MAC India Coach Builders Private Limted and M/s.R.K. Weigh Bridge, in which the loaded vehicle was shown the weight of 30,820 kg and 12 31,070 kg as against the weight of 22,320 kg at M/s.S.M. Weigh Bridge. In order to prove this collusion between the petitioner and M/s.S.M. Weigh Bridge, apart from the complaint that had been lodged to the Police, there is no other material. In order to prove collusion, there must be a direct evidence of the collusion.
25. The Department of Legal Metrology, which conducted an investigation into the complaint lodged by KSRTC as regards M/s.S.M. Weigh Bridge, found that M/s.S.M. Weigh Bridge had undertaken repairs without obtaining the prior approval of the Department and it had therefore violated the licence conditions. The Department, in fact, seized the M/s.S.M.Weigh Bridge and thereafter imposed a penalty on the said Weigh Bridge.
26. In this letter of the Department to the KSRTC, there was not even an allegation that the undertaking of repairs by M/s. S.M. Weigh Bridge was at the instance of the petitioner.
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27. The learned counsel for the KSRTC relied upon a judgment of this Court in the case of M/s.United India Insurance Company Limited vs. Salauddin Abdulkhadar Maniyar and Another, 2008 (2) KCCR 1166, to contend that a statement recorded by the Police could be used as substantive evidence in civil cases. In the case relied upon, this Court was dealing with an appeal which arose under the decision rendered by the Motor Accident Claims Tribunal, relating to compensation to a victim to an accident. In that context, this Court stated that there was an admission by the injured that he was a gratuitous passenger and that clear admission wais decisive. In my view, this decision made in the context of a motor vehicle case cannot be made applicable to this case.
28. In the absence of any evidence indicating the involvement of the petitioner with M/s.S.M. Weigh Bridge, the assumption that the petitioner had colluded with M/s.S.M. Weigh Bridge cannot be accepted. 14
29. In fact, since M/s.S.M. Weigh Bridge was found to be guilty of a wrong-doing and had been imposed a penalty of Rs.6,000/-, would by itself, exonerate the petitioner. The petitioner cannot be blamed for the mistake in the equipment which was used at M/s.S.M. Weigh Bridge. The impugned order apart from merely stating that there was collusion between M/s.S.M. Weigh Bridge and the petitioner, has not relied upon, any credible evidence to establish collusion.
30. In this view of the matter, the conclusion of the Controller of Stores and Purchases that the petitioner had engaged in unethical practices cannot be accepted. The order of black-listing cannot therefore be sustained.
31. It may also be noticed here that the Corporation by the impugned order has proceeded not only to black-list the petitioner, but also ordered forfeiture of the Earnest Money Deposits in respect of the contacts that the petitioner had entered with the four Corporations and 15 had also ordered that the amount paid towards M.S. scrap and other lots of the petitioner would also stand forfeited.
32. Clause (16) of the Notification, on the basis of which the forfeiture was ordered, reads as follows:
" 16. BLACKLISTING: If it is found that the bidder is not following the terms and conditions of payment, delivery or other conditions of the e-Auction and also indulging in malpractices either himself or by his agents, deputies or observer, such bidders are liable to be black- listed and appropriate action will be taken as deemed fit by Seller/MSTC. "
33. As could be seen from the above Clause, the petitioner can be black-listed only if there is any violation in respect of payment, delivery or any other conditions of the e-Auction. The black-listing can be done if there are any malpractices indulged by the petitioner. However, the said Clause does not entitle forfeiture of the Earnest Money Deposit paid in respect of other contracts and hence ordering forfeiture of Earnest Money 16 Deposits in respect of other contracts cannot be sustained.
34. In my view, since the Clause which entitles the KSRTC to black-list the petitioner, does not entitle them to forfeit the Earnest Money Deposit of all other contracts, the impugned order which has ordered forfeiture of all the Earnest Money Deposit all of the contracts and also all the amounts paid by the petitioner towards M.S. scrap and other lots at the Regional Workshops cannot be sustained.
35. The learned counsel for the KSRTC relied upon the decision rendered by the Apex Court in the case of M/s. Radhakrishna Agarwal and others vs. State of Bihar and others, (1977) 3 SCC 457, to contend that there was no question of violation of Article 14 of the Constitution of India or any other statutory provisions and the State or its authorities act in terms of the rights conferred to them under a contract.
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36. In the above judgment, the Apex Court was considering the validity of the orders passed by the State Government revising the rate of royalty payable under a lease and thereafter, canceling the lease. In the context of the facts that the rate of royalty was being revised in terms of the lease, the said ratio would have no application in the present case.
37. The learned counsel also relied upon another decision of the Apex Court in the case of State of Maharashtra and others vs. A.P.paper Mills Limited, AIR 2006 SC 1788, to contend that the forfeiture of the earnest money deposit was valid. The Supreme Court in that case was considering a situation where the tender was withdrawn within the stipulated period of 45 days and in that context, the Court had held that the earnest money deposit could be forfeited.
38. In this case, the earnest money deposit was forfeited on the ground that there was malpractice by the petitioner in connivance with the S.M.Weighbridge. 18 As already stated above, since this connivance was not at all established, the forfeiture of the earnest money deposit would not be justified at all.
39. The learned counsel also relied upon a decision rendered by the Hon'ble Supreme Court in the case of Bharat Coking coal Limited and others vs. Amr Dev Prabha and others, (2020) 16 SCC 759, to contend that the interference in the contractual matters was limited.
40. In the present case, the validity of an order black- listing the petitioner is being examined and there is no question of the violation of a contractual right or duty. As already held above, the black-listing was on an allegation of malpractice which has not at all been established. Hence, this decision is also of no relevance to the present case.
41. Thus, the decisions relied upon by the KSRTC would be of no avail.
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42. In the result, there is no merit in the contentions advanced by the learned counsel for the respondents.
43. The impugned order therefore is quashed. The KSRTC is directed to refund the Earnest Money Deposits, which it has ordered to be forfeited under the impugned order to the petitioner.
44. Since the KSRTC has taken the custody of the scrap material from the Court, the KSRTC would also be required to refund the amounts in respect of the M.S. scrap material which it has taken from the custody of the Court, to the petitioner.
45. The writ petition is accordingly allowed.
Sd/-
JUDGE RK Ct:SN