Delhi High Court - Orders
Aptech Limited vs Union Of India And Anr on 14 November, 2024
Author: Prateek Jalan
Bench: Prateek Jalan
$~16
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 13700/2024
APTECH LIMITED .....Petitioner
Through: Dr. Abhishek Manu Singhvi,
Senior Advocate with Mr. Sumit
Chander, Ms Kiran Chander, Mr.
Gurdeep Chauhan, Ms. Mahak
Dua, Mr. Amit Agarwal, Ms.
Priyanka Midha and Mr. Yash
Jhori, Advocates
versus
UNION OF INDIA AND ANR .....Respondents
Through: Mr. Piyush Beriwal, Mr. Vedansh
Anand and Mr. Sandip Munian,
Advocates for R-1 and R-2
CORAM:
HON'BLE MR. JUSTICE PRATEEK JALAN
ORDER
% 14.11.2024
CM APPL. 57357/2024 (Stay)
1. The writ petition has been filed against an order dated 06.09.2024, passed by the Ministry of Railways, by which the petitioner and its allied firms have been debarred from participating in any procurement process under the Ministry, for a period of two years from the date of the order.
2. While issuing notice in the writ petition on 30.09.2024, the contentions of the petitioner were noted with regard to the applicability of the General Financial Rules, 2017 ["GFR"] and an Office Memorandum ["OM"], issued by the Department of Expenditure, Ministry of Finance ["DoE"] on 02.11.2021, entitled "Guidelines on Debarment of firms from Bidding". Certain clarifications were sought from the respondent Union of India ["UOI"], encapsulated in paragraph 5 of the order as follows:
" 5. Mr. Piyush Beriwal, learned counsel for the respondent, who W.P.(C) 13700/2024 Page 1 of 9 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/11/2024 at 00:02:54 appears on advance notice, is directed to clarify as to whether the debarment, in the present case, has been ordered under the Guidelines dated 02.11.2021 and if so, whether it falls within category 1(i) identified above. He will also clarify as to whether the debarment was ordered by a competent authority at the level of Joint Secretary/Additional Secretary, as provided in paragraph 5(f) therein. The respondents will also state whether the GFR continues to apply, and the effect thereof."
The UOI was granted two weeks' time to file its counter affidavit, and was also directed to produce the necessary records before the Court.
3. The petitioner moved CM APPL. 62523/2024 for early hearing, which was declined by order dated 23.10.2024. However, the following additional directions were passed on that date:
" .......However, the respondents are directed to ensure that the counter affidavit is filed well in advance, at least one week prior to the next date of hearing, failing which the Court may consider passing appropriate interim orders on the next date of hearing. ...."
4. Despite these orders, the counter affidavit has not yet been filed, and the record has also not been produced for perusal of the Court. Mr. Piyush Beriwal, learned counsel for the respondents, seeks and is granted further time of four weeks, to file the counter affidavit. Rejoinder thereto, if any, may be filed within two weeks thereafter. However, as indicated in the order dated 23.10.2024, the petition is taken up for consideration of interim orders.
5. At the outset, it may be noted that learned counsel for the parties are ad idem that the order of debarment passed by the Ministry of Railways, is governed by the OM dated 02.11.2021, issued by the DoE, read with "Debarment Instructions", issued by the Railway Board on 09.11.2022.
6. In the OM dated 02.11.2021, the DoE referred to Rule 151 of the W.P.(C) 13700/2024 Page 2 of 9 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/11/2024 at 00:02:54 GFR and issued "Debarment Guidelines" in supersession of earlier instructions of this subject. The Guidelines classify debarment into two categories -- (i) Where the debarment is proposed to be limited to a single Ministry; and (ii) where the debarment is proposed to extend beyond the jurisdiction of a particular Ministry, i.e., to cover all central ministries /departments. Category (i) orders can be issued by the concerned Ministry, whereas category (ii) orders are to be issued by the DoE. It is common ground that the present case falls within category '(i)', where the debarment order has been issued by the Ministry of Railways, and is intended to apply only to that Ministry and its allied offices.
7. As far as debarment by a single Ministry or Department is concerned, the Guidelines provide inter alia as follows:
"c. A bidder can also be debarred for any actions or omissions by the bidder other than violation of code of integrity, which in the opinion of the Ministry/Department, warrants debarment, for the reasons like supply of sub-standard material, non-supply of material, abandonment of works, sub-standard quality of works, failure to abide "Bid Securing Declaration" etc. d. It shall not be circulated to other Ministries/Departments. It will only be applicable to all the attached/subordinate offices, Autonomous bodies, Central Public Sector Undertakings (CPSUs) etc. of the Ministry/Department issuing the debarment Order. e. The concerned Ministry/Department before issuing the debarment order against a firm must ensure that reasonable opportunity has been given to the concerned firm to represent against such debarment (including personal hearing, if requested by firm).
f. Secretary of Ministry/Department may nominate an officer at the rank of Joint Secretary/Additional Secretary as competent authority to debar the firms."
8. The Ministry of Railways, in its Instructions dated 09.11.2022, referred to the aforesaid OM, and provided certain additional instructions. It was also stated that in the case of any conflict, the Debarment W.P.(C) 13700/2024 Page 3 of 9 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/11/2024 at 00:02:55 Guidelines of DoE would prevail. For the present purposes, the following provisions of the said Instructions dated 09.11.2022 are relevant:
"1. Competent Authority for approval for debarment for Ministry of Railways shall be concerned Additional Member. In case Additional Member is not in position, Concerned Board member may nominate concerned Principal Executive Director or Executive Director as Competent Authority.
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9. Show Cause notice (format as per Annexure-II) shall be issued to the delinquent firm indicating clearly the charges (based on the facts as can be proved) through registered post (and also email, if available). In case no reply to the show cause notice is received from the firm within the stipulated time (30 days), followed by reminder for 10 days more, action for processing the case ex-parte against the firm should be initiated. Subsequently, an opportunity shall be given to the firm for in- person hearing (oral hearing) by fixing a date for hearing. Hearing should be held at the level of minimum Director (or Joint Director if Director is not posted) level officer in Board. Brief for the same shall be prepared and jointly signed by the Director (or joint Director as applicable) and representative of the firm attending the hearing. Firm's reply to show cause notice and their submission in oral hearing will be examined.
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11. Based on above, case should be processed for approval of Competent Authority for debarment of the firm or otherwise."
9. The first issue raised by Dr. Abhishek Manu Singhvi, learned Senior Counsel for the petitioner, is that the impugned order dated 06.09.2024 has not been passed by the Additional Member, Railway Board, as required by the Instructions dated 09.11.2022, but by the Joint Director Establishment (N), Railway Board. Mr. Piyush Beriwal, learned counsel for the UOI, on the other hand, submits that approval for the debarment was taken in terms of the Instructions, from the Additional Member, but has been communicated under the signature of the Joint Director. He has also clarified that the Additional Member, Railway Board is an officer above the rank of Additional Secretary to the W.P.(C) 13700/2024 Page 4 of 9 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/11/2024 at 00:02:55 Government of India and, therefore, falls within the category of officers empowered to take debarment decisions even in terms of the OM dated 02.11.2021.
10. A perusal of the impugned order itself shows that the order was communicated to the petitioner by the Joint Director. Although it refers to the approval of the "Competent Authority", there is no elaboration or identification provided. In the absence of a counter affidavit, or production of records, it is not possible for this Court to ex facie accept the factual submission asserted by Mr. Beriwal.
11. Additionally, Dr. Singhvi submits that the petitioner was not granted a hearing before the Additional Member, and hearing was granted only by the concerned Executive Director, Railway Board, which is also impermissible. He submits that the hearing must be granted by the officer empowered under the circular to take the decision, in conformity with the principle "he who hears, must decide", laid down by the Supreme Court in Gullapalli Nageswara Rao v. A.P. State Road Transport Corpn., [AIR 1959 SC 308]; followed in Automative Tyre Manufacturers Association v. Designated Authority and Ors. [(2011) 2 SCC 258].
12. Mr. Beriwal, however, submits that the process of hearing by an officer at the level of Director, Railway Board, and approval on the file by the competent authority, i.e., Additional Member, is provided under Clauses 9 and 11 of the Debarment Instructions itself, which have not been challenged.
13. I am of the view that this contention is also misconceived at this stage. The factual position, that approval was taken from the Additional Member, has only been stated across the Bar today, and the petitioner W.P.(C) 13700/2024 Page 5 of 9 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/11/2024 at 00:02:55 therefore had no occasion to challenge the provision. The petitioner cannot be faulted for proceeding on the basis of the record, as evident from the impugned order itself.
14. In the absence of the relevant material having been placed on record by UOI, the petitioner has thus made out a prima facie case of violation of the OM and the Debarment Guidelines.
15. Additionally, on merits, Dr. Singhvi has drawn my attention to the "reasoned order" enclosed with the impugned order which considers the following two charges against the petitioner:
" 3. Investigation into the complaint by vigilance authorities from the Ministry of Railwaysrevealed following irregularities in the exam conducted by the agency:
i. The agency was involved in corrupt practice as its Head of the Confidential Team did not maintain the confidentiality of the question paper and gave access to the other employees resulting in leaking of the question paper before commencement of the exam of 06.08.2021.
ii. The agency did not provide the requisite data demanded by the Railway Board Vigilance Team for investigation of the matter regarding the above selection and they also did not cooperate with the vigilance team. These acts of the agency indicates suspicious activities in carrying out the business entrusted by the Indian Railways."
16. On the first charge, the order records as follows:
" i. With respect to the charge, that the agency was involved in corrupt practice as its Head of the Confidential Team did not maintain the confidentiality of the question paper and gave access to the other employees resulting in leaking to the question paper before commencement of the exam on 06.08.2021, it is observed that the protocol prescribed for transfer of question paper, its transmission to the authoring team and communications back and forth between Chairman/RRB and the agency does not establish clearly that the agency or its employees were involved in the leakage of question paper. Transmission of the question was through SFTP mode which is a standard protocol for transmission of question paper with the agency. During the in-person hearing, it was revealed that question W.P.(C) 13700/2024 Page 6 of 9 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/11/2024 at 00:02:55 paper was to be given by Chairman/RRB to the agency in bilingual mode, however, it was not observed and only the English version was transmitted. Breach of established protocol is fraught with risk specially when handling confidential matters. Chairman/RRB should have transmitted the bilingual question paper in the manner prescribed by the agency. However, it is also incumbent upon the agency that it ensures that the confidential material is received in the manner prescribed. deviations from the prescribed protocol laid down by the agency themselves indicates a casual way of working which may result in compromising of the integrity of the entire process of examination which happened in this case. This departure from the established protocol does not clearly prove that company was responsible for leakage of question paper. But it does establish that there was a considerable degree of casualness in handling the sensitive material like the question paper."
[Emphasis supplied.]
17. As far as this aspect is concerned, the observations are in fact, in favour of the petitioners, or at best, tentative and vague. The order accepts that the involvement of the petitioner or its employees in leakage of the question paper was not clearly established, and fault is found with the manner in which the Chairman, Railway Recruitment Board ["RRB"] transmitted the question paper. The vague finding against the petitioner is confined to "casual way of working", while also reiterating that departure from the established protocol does not clearly prove that the company was responsible for leakage of the question paper. Prima facie, this is an inadequate factual foundation for a debarment order.
18. As far as the second charge is concerned, it concerns destruction of data by the petitioner, as a result of which the data was not made available to the Railway Board Vigilance Team for investigation. The petitioner relied upon a provision in paragraph 2.14 of the "Detailed Scope of Work", which requires the master data to be maintained for at least one year after the publication of panel. The impugned order, in this W.P.(C) 13700/2024 Page 7 of 9 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/11/2024 at 00:02:55 context, draws a distinction between the final merit list which, according to the petitioner, was equivalent to publication of the panel, and the mapping of candidates' names against particular posts which, according to the Railways, constitutes the final empanelment. While reserving a decision on this issue for the stage of final adjudication, suffice it to say at this stage, that this interpretative dispute also appears prima facie, in the absence of a clear and choate finding on the first charge, to be incapable of supporting a drastic order of debarment.
19. Factually, the argument of Mr. Beriwal - again, unsupported by any affidavit - is that the letter dated 31.08.2021, by which the petitioner claims to have sent data to the Chairman, Railway Recruitment Cell ["RRC"] by Blue Dart, was not received. Mr. Beriwal draws my attention to the impugned order, where this contention has been noted. However, this contention would have to be examined after an affidavit is filed by the UOI. It may be noted that, even in the impugned order, there is no categorical finding that the data was not supplied.
20. On the basis of the aforesaid observations, the following conclusions have been recorded in the impugned order:
"On the basis of above submissions and discussion, it is observed that the charges of leakage of question paper cannot be solely ascribed to agency and is a matter of detailed investigation. However, it has been proven that the agency did not follow its own protocol for handling the question paper. This recruitment was an internal one, number of candidates were far too less and the size of the examination was easier to manage. However, big recruitment in railways involving lakhs or crores of candidates which are extremely complex cannot be dealt with in a cavalier manner. The credentials of the agency does not inspire confidence as the casualness with which the agency handled the sensitive material leaves a lot to be desired.
ii. It has been clearly established that data was not maintained by W.P.(C) 13700/2024 Page 8 of 9 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/11/2024 at 00:02:55 the agency despite the fact that panel was not published for the said examination and the agency was bound by the contract to maintain the data. This charge of not providing relevant data to the Vigilance Team is established.
ished.
iii. Competent authority has therefore decided that the agency should be banned for business with Ministry of Railways for a period of two (02) years from the date of issue of the debarment order."
[Emphasis supplied.]
21. The drastic consequences of a debarment order on the business of a contractor have been judicially recognised, inter alia in the judgment of Supreme Court in Kulja Industries Ltd. v. Western Telecom Project BSNL [(2014) 14 SCC 731]. The said judgment lays down various factors which may be considered while taking such a decision including the requirements of reasonableness, fairness and proportionality. The conclusions recorded in the impugned order, in this context, at least for the purposes of interim relief, are prima facie not supportable, in the absence of an affidavit filed, or record produced by the Union of India, despite opportunity. The petitioner has therefore established a prima facie case for the grant of interim relief.
22. For the reasons aforesaid, operation of the impugned order dated 06.09.2024, will remain stayed until the next date of hearing.
23. Needless to say, this order will not prejudice the parties at the final hearing of the writ petition.
24. List on 13.02.2025.
PRATEEK JALAN, J NOVEMBER 14, 2024 "SV/Kb"/ W.P.(C) 13700/2024 Page 9 of 9 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/11/2024 at 00:02:55