Gujarat High Court
Sai Infosystem (India) Privatelimited vs Bharat Sanchar Nigam on 27 August, 2013
Author: Rajesh H.Shukla
Bench: Rajesh H.Shukla
SAI INFOSYSTEM (INDIA) PRIVATELIMITED....Petitioner(s)V/SBHARAT SANCHAR NIGAM LIMITED C/SCA/20140/2005 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 20140 of 2005 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE RAJESH H.SHUKLA ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ SAI INFOSYSTEM (INDIA) PRIVATELIMITED....Petitioner(s) Versus BHARAT SANCHAR NIGAM LIMITED & 1....Respondent(s) ================================================================ Appearance: MR BIJAL CHHATRAPATI, ADVOCATE for SINGHI & CO, ADVOCATE for the Petitioner(s) No. 1 MR GOPESH J SONI, ADVOCATE for the Respondent(s) No. 2 MS PJ DAVAWALA, ADVOCATE for the Respondent(s) No. 1 NOTICE SERVED BY DS for the Respondent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE RAJESH H.SHUKLA Date : 27/08/2013 ORAL JUDGMENT
The present petition has been filed by the petitioner under Articles 14, 19 and 226 of the Constitution of India on the grounds stated in the petition for the following prayers:
12.a.
That this Hon ble Court may be pleased to issue a writ of mandamus and/or certiorari and/or any other appropriate writ, direction or order and be pleased to quash and set aside the impugned Order dated 27.09.2005.
b.
That this Hon ble Court may be pleased to issue an appropriate writ, order or direction holding that the Impugned Order dated 27.09.2005 of blacklisting the Petitioner Company and disqualifying in all future bids is bad in law and not justified.
Pending the hearing, admission and final disposal of this Petition, this Hon ble Court may be pleased to stay the operation and implementation of the Impugned Order and permitting the Petitioner to make bids in future tenders of the Respondent no.1;
d.
Pending the hearing, admnission and final disposal of this Petition, this Hon ble Court may be pleased to restrain the Respondent No.1 from invoking the Bank Guarantee of Rs.3,60,000 and Rs.3,00,000 and to direct the Respondent No.2 to maintain status quo and restrain from acting in any manner whatsoever for invoking the Performance Bank Guarantee;
e.
Pending the hearing, admission and final disposal of this Petition, the Hon ble Court may be pleased to restrain the Respondent No.1 from putting the name of the Petitioner on its website pursuant to black listing;
f.
This Hon ble Court may be pleased to award costs;
g.
This Hon ble Court may be pleased to grant such and further reliefs as deemed fit in the interest of justice;
Heard Learned Advocate Shri Bijal Chhatrapati for Singhi & Co. for the petitioner and learned Advocate Ms.P.J.Davawala for the Respondent No.1.
The facts of the present case briefly stated are that the Respondent No.1 invited tenders for procurement of equipment for net working and implementation of integrated computer software package for its customer service DOTSOFT at various circles like Palanpur, Bhuj, Mehsana, Jamnagar, Godhra and Surendranagar. The tender of the petitioner was accepted and the purchase order was placed to the petitioner on 10.10.2001 for implementation of DOTSOFT for customer service. Therefore, a deed of agreement was executed between the petitioner and the Respondent No.1 on 17.10.2001 and the work has commenced on 20.11.2001 for implementation of DOTSOFT. Thereafter, pursuant to the news appeared in the local daily about manipulation of the bills and fraud, necessary steps were taken and meetings were held between the representatives of the petitioner and the Respondent No.1 and thereafter the Managing Director of the petitioner company and the officers of the Respondent No.1. It is the case of the Respondent No.1 that due to such manipulation the bills are generated and there was fraud committed by the petitioner company or its employees which ultimately led to the vigilance inquiry. The performance bank guarantee was withheld and the petitioner has also been blacklisted, which has led to filing of the present petition challenging the action of the respondent on the grounds stated in the memo of the petition, inter alia, violation of rules of natural justice.
Learned Advocate Shri Bijal Chhatrapati for Singhi & Co. for the petitioner referred to the papers in detail and submitted that as could be seen from the record the tender of the petitioner was accepted for the purpose of establishment of DOTSOFT customer service and admittedly that work has also been completed. Therefore, whatever manipulation or fraud in the bills have made is at the instance of the employees/ officers of the respondent No.1 only and the petitioner company cannot be blamed. He submitted that even during the course of the tender work the employees of the petitioner company would have limited access and it was once that software data has been transferred or shifted as required, the employees of the petitioner company cannot have access to the details like codeword or other technical facilities, by which they can exploit the system to generate and manipulate the bills. He, therefore, submitted that work which had started on 20.11.2001 and completed on 01.04.2002.
Learned Counsel Shri Chhatrapati has further referred to the bid document for the DOTSOFT produced at Annexure-C and submitted that it provides for arbitration clause and/or any dispute would be therefore covered by this Clause. He also referred to the corrigendum/ clarification and also the deed of agreement dated 17.10.2001 executed between the petitioner and the respondent no.1 regarding execution of work in question. He has referred to the minutes of the meeting held on 12.02.2004 between the officers of Respondent No.1 and representatives of the petitioner company regarding some problems and manipulation of telephone bills in Telecome District Godhra and he pointedly emphasized the nature of work and the role which was to be played by the petitioner. He submitted that the petitioner M/s. SIS has a limited role to implement DOTSOFT and not to operate DOTSOFT. He has, therefore, submitted that as stated in the said minutes it includes porting of DATA from old billing system and providing training to all users for operation of DOTSOFT and therefore, the responsibility of M/s. SIS is limited to support the hardware. He therefore, submitted that admittedly the bills were manipulated from February, 2002 to October, 2003. He submitted that the petitioner had tried to convince that bills could not have been manipulated by its engineers. He submitted that on one hand Respondent No.1 has issued various certificates which are placed on record in respect of different areas through out the country and on the other hand the petitioner is sought to be blacklisted without issuing a notice or providing an opportunity of hearing, therefore, the action of the respondent no.1 is totally arbitrary and illegal.
Learned Counsel Shri Chhatrapati submitted that the petitioner company would not be indulging any such activity of manipulation when it has got the huge contract from the respondent no.1 from various parts of the country and therefore it cannot be afforded to get involved in any such manipulation. He submitted that in fact whatever manipulation has taken place could be by their own officers. He also submitted that though the vigilance inquiry has been conducted having fully aware that there is no evidence against the petitioner company or its employees, the charge-sheet has been filed against the petitioner company. He submitted that due to lack of evidence and material when the respondent no.1 is not able to take action against the petitioner company, they cannot be penalized the petitioner company in this way by blacklisting it without issuing a notice or providing an opportunity of hearing. He has, therefore, submitted that if the impugned action of blacklisting the petitioner company is not set aside then it will cause serious prejudice to the petitioner company and therefore, the present petition may be allowed. He submitted that had the notice or opportunity of hearing been given, the petitioner could have resolved any doubt and without issuing any notice or providing an opportunity of hearing such action of blacklisting the petitioner company is in violation of rules of natural justice and it is required to be set aside. In support of this submission, he has referred to the judgment of the Hon ble Apex Court in the case of M/s. Erusian Equipment and Chemicals Ltd. V. State of West Bengal and another reported in AIR 1975 SC 266. He pointedly referred to the observations made in Para No.20 to support his submission that 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. He, therefore, submitted that the impugned action of Respondent No.1 of blacklisting the petitioner without providing an opportunity of hearing is in violation of rules of natural justice and deserves to be quashed and set aside.
Learned Advocate Shri Chhatrapati has further referred to and relied upon the judgment of the Hon ble Apex Court in the case of Joseph Vilangandan V. The Executive Engineer (PWD) Ernakulm and others reported in AIR 1978 SC 930 and emphasized the observations made in Para 17. He has submitted that this very issue was considered in this judgment as to whether a person is entitled to hearing before he is blacklisted and the observations have been made in Para No.17 that fundamentals of fair play require that the persons concerned should be given an opportunity to represent his case before he is put on the black-list. He has also referred to and relied upon the judgment of the Hon ble Apex Court in the case of Raghunath Thakur v. State of Bihar and others reported in AIR 1989 SC 620 and emphasized the observations made in Para No.4 as under:
It has to be realised that blacklisting any person in respect of business ventures has civil consequence for the future business of the person concerned in any event. Event if the rules do not express so, it is an elementary principle of natural justice that parties affected by any order should have right of being heard and making representations against the order.
Learned Counsel Shri Chhatrapati has submitted that no such opportunity has been afforded and the impugned order of blacklisting the petitioner company deserves to be set aside. He has also referred to and relied upon the judgment of the High Court of Panjab and Haryana in the case of M/s. MSV International V. HSRDC reported in AIR 2013 Panjab and Haryana 7.
Per contra, Learned Advocate Ms.P.J.Davawala appearing for Respondent No.1 has referred to the papers at length particularly the deed of agreement produced at Annexure-C and submitted that the special conditions of contract are provided under Section IV. It was submitted that Condition No.5 of Section IV provides that Purchaser reserves the right to black list a bidder for a suitable period in case he fails to honour his bid without sufficient grounds. Therefore, it was submitted that it is not a question of acceptance of bid but more serious matter where the manipulation and fraud has been alleged. She has further referred to the deed of agreement produced at Annexure-E and submitted that it provides for arbitration clause and if the petitioner had any grievance against the invocation of the bank guarantee or any such action, he could have taken the recourse as provided in the contract by way of arbitration.
Learned Counsel Ms. Davawala submitted that main emphasize by learned Advocate Shri Chhatrapati for the petitioner about violation of principles of natural justice is required to be considered in background of the facts. She pointedly referred to the facts that though it is claimed that notice has not been given, ultimately the idea of notice is to give an opportunity to show cause and make aware about proposed action based on the material. She submitted that in the facts of the present case, though the notice for blacklisting has not been given, it is very much within the knowledge of the petitioner in asmuchas the representatives of the petitioner and thereafter Managing Director of the petitioner company have remained present in the meetings where the issue has been discussed including the vigilance inquiry. She, therefore, submitted that the notice is not an empty formality and it is only with a view to make person aware about any such action against him. However, when the entire issue has been discussed to the knowledge of the petitioner company and when no prejudice is caused or shown to have caused by non issuance of the notice, the complaint about violation of rules of natural justice cannot be made. She submitted that it is not a straight jacket formula. She further emphasized and submitted that by judicial pronouncement over a period of time it has also been observed that the prejudice has to be shown. She submitted that therefore, unless it is shown that the prejudice is caused due to non issuance of notice, the rules of natural justice have been violated cannot be accepted. She referred to the Annexure-H, which is communication from Respondent No.1 to the petitioner Company and submitted that it makes it very clear that bills have been corrected to the disadvantage of BSNL and it appears to have been done by the petitioner company or its employees with the modus operandi stated in detail.
Learned Counsel Ms. Davawala, therefore, submitted that when it was specifically drawn to the attention of the petitioner company that they had an opportunity to make necessary clarification when it was under scrutiny and thereafter vigilance inquiry. She further referred to the minutes of the meeting held on 12.02.2004 produced at Annexure-I and submitted that it has been clearly discussed with reference to this very issue about how the petitioner could be found responsible and it has been recorded as under:
M/s.
SIS asked for to show records/ evidence from which BSNL concluded that this manipulation appears to be done by M/s. SIS.
DGM(F) informed that this manipulation started from Derol exchange. He has shown bills of Derol of 11/04/02, 11/06/02 and 11/08/02 which were CBR wrongly through form and manipulated there after by SQL DGM(F) that log upto Sep 03 are deleted. DGM(F) informed that nobody in the SsA except SIS engineer and AO Computer is having knowledge of SQL, hence, it is most likely that no body else can manipulate bills except these two. DGM(F) further added that it was came to his notice that during implementation a table was created to modify the bills. DGM(F) informed that these are the only records/ evidence from which they came to conclusion that M/s. SIS might have modified the bills. & & Also from the mode of operandi it is very clear that there is no manipulation in pre-bill stage, during bill generation but bills were modified in post bill stage. Bills have been modified after generation, after dispatch of bills from Godhra. The person who is stationed at Godhra and having control of system can easily do manipulation during pre-bill state or during generation of bill, he need not to wait till dispatch of bill or post bill manipulation.
M/s.
SIS informed that from above facts it is apparent that bills are not manipulated by his engineer and requested to withdraw allegation.
DGM(F) informed that so far manipulation found in 395 cases involving appx Rs.22.00 lacs. He will submit detail report after investigation.
Therefore, Learned Counsel Ms.Davawala referred to technical details about OMR (Opening Meter Reading) and CMR (Closing Meter Reading) that the previous bills would disclose about any such manipulation. She, therefore, submitted that it was within the knowledge of the petitioner and loss of income has caused to the Respondent No.1 and the public exchequer. She, therefore, submitted that relying the seriousness of the matter subsequently the Managing Director of the petitioner company remained present during the discussion in the meeting and therefore the knowledge and awareness about issue was very much known to the petitioner and in fact every aspect was discussed and considered. Thereafter, when such a explanation is not accepted, the decision has been taken, which cannot be said to be erroneous. She referred to the affidavit-in-reply as well as affidavit-in-rejoinder with all the details and submitted that as stated in the affidavit-in-reply the software engineers of the petitioner company were doing the work of issuing regular bill from 11.02.2002 to 11.10.2003. She further submitted that no training was imparted by the petitioner company or the representatives of the petitioner to the Respondent no.1 and in fact the experts of the petitioner company took advantage of security loopholes and manipulated the bills. She submitted that in fact the Andhra Pradesh Circle had also found apprehension about loopholes, which led to any such manipulation.
Learned Advocate Ms. Davawala, therefore, submitted that in view of the arbitration clause when the petitioner has the remedy under the contract itself, the present petition under Article 226 cannot be maintainable and in any case the Court may not exercise its discretionary jurisdiction having regard to the facts of the given case. She also referred to Page No.169 and submitted that what the department fault was that the possibility of involvement of the department staff cannot be rules out, however that does not suggest that there is no involvement of the petitioner company and its representatives. She therefore submitted that the present petition may not be entertained. In support of her submission that there is no violation of rules of natural justice, she has referred to and relied upon the judgment of the Hon ble Apex Court in case of Vivekanand Sethi V. Chairman, J&K Bank Ltd., and others reported in 2005 (5) SCC 337 and emphasizes that there could not be any straight jacket formula as observed in this judgment. Similarly, she has referred to and relied upon the judgment of the Hon ble Apex Court in the case of Haribhai Gulabbhai Patel and Anr., V. Parmabhai Kanjibhai Parmar and others reported in 2002 (2) GLH 19 and emphasizes the observations made in Para No.9. She submitted that for compliance of rules of natural justice what is required to be considered is whether the party has the opportunity and knowledge or not. She submitted that as the opportunity of hearing was provided in the joint meeting, therefore there is no violation of rules of natural justice and the present petition may not be entertained.
In view of these rival submissions, it is required to be considered whether the present petition can be entertained or not.
As could be seen from the facts the tender of the petitioner company was accepted with regard to DOTSOFT customer service and it includes porting of DATA from old billing system and providing training to all users for operation of DOTSOFT. It appears that there was loopholes in the system for which the work was done by the petitioner company. As stated specifically in the affidavit-in-reply, the bills for the period from 11.02.2002 to 11.10.2003 were made by the experts of the petitioner company. The inquiry was made, which prima facie, disclosed and reveled that the representatives of the petitioner company who were working on that system had inserted a form in DOTSOFT for modification of the bill which was not otherwise a part of DOTSOFT. The letter produced at Annexure R-II from the Telecome District, Godhra to the Deputy General Manager (Vigilance), Ahmedabad clearly suggests about involvement of the petitioner company or its representatives while working for the DOTSOFT. It is observed that:
On scrutiny of bills issued from 11/02/2002 to 11/10/2003 it is found that during the course implementation and issue of bills the billing data have been manipulated. In course of verification, it is found that
1.
The bills have been reduced by way of unauthorized cancellation.
2. The bills have been reduced by allowing unauthorized off line credit and adjusting the bills thereafter.
3. The bills have been reduced by increasing the opening meter reading and recalculating the bills accordingly. In most of the cases it is found that the bills have been revised after issue of bills.
So far manipulation of metering date have been found in 401 Telephone of difference exchanges like D Baria. Dahod, Derol, Godhra, Halol Jhalod. Total amount so far detected in Rs.21,97,202/-.
Technical persons having through knowledge in DOTSOFT and having command on Oracle was not available at Godhra SSA at that time. SO, the Technical help of M/s. Sai Info Systems (India) Pvt. Ltd. was taken for issuance of Telephone Bills. Further, the software engineer of M/s. Sai Info System (India) Pvt. Ltd., happens to be a local man and metering date can be changed through SQL. The involvement of the Software Engineer of M/s. Sai Info System (India) Pvt. Ltd. Cannot be ruled out.
As the Telephone bills and P.T. Bills have been issued with active support of M/s. Sai Info System (India) Pvt. Ltd. the case has been discussed with Managing Director of M/s. Sai Info System (India) Pvt. Ltd. According to M/s. Sai Info System (India) Pvt. Ltd., that billing data can be modified by the following users through SQL in their password.
1.AO (Cash) 2.AO (Inventory) 3.AO (sub ledger) 4.AO (TR) 5.Commercial Officer New Line 6.Operator off line entry 7.Operator online entry
8.Official/Officer on line payment process 9.Official/Officer offline payment process 10.DOTSOFT DBF 11.FRS If the billing date can be manipulated by the above officials/ officers. On their password through SQL, the involvement of Departmental staff also cannot be ruled out. The case was discussed with DSP along with all details. But, as per their requirement the sufficient evident in respect of conspiracy angle is not there to lodge FIR. However, as per the advice a complaint has been sent to Local Police Authority to investigate into the matter, as involvement of outsider in this case cannot be ruled out.
Thus, the submission made by learned Advocate Shri Bijal Chhatrapati that there was no reason for the representatives of the petitioner company or they have no access to the data or the codeword by which they can manipulate the bills, cannot be accepted. Similarly, his submission that the work was submitted and thereafter it had happened is also misconceived. In fact, as stated in affidavit-in-reply that during that period representatives of the petitioner company were working there itself and due to loopholes in the system it was manipulated, which has been discovered from the inquiry by the respondent no.1. This aspect has also been discussed in the joint meeting, meaning thereby, opportunity of hearing or representing about innocence of the petitioner or its representatives has been effectively evolved. Therefore, complaint about violation of rules of natural justice has to be considered in background of the facts and the material.
It is well accepted that the law or such proceedings do not apply in abstract but has to be considered with reference to the background of the facts in a given case. Therefore, as rightly submitted by learned Advocate Ms.Davawala that rules of natural justice cannot have any straight jacket formula and it has to be considered with reference to the facts of a given case. Having regard to the facts of the present case, as discussed in detailed the opportunity of representing or giving clarification about innocence of the petitioner company or its representatives has been made available to them. Thus, it is not the decision but the decision making process which is relevant. It is required to be considered if the decision making process is just, fair and transparent then it cannot be said to be in violation of rules of natural justice. In fact, at every stage of decision making process sufficient opportunity has been made available to the petitioner company who could have at once shown with reference to the technical aspect that the petitioner company and its representatives could not have been involved. However, the fact remains that during such period particularly when training was imparted to the departmental employees of the respondent no.1, on the contrary the representatives and technical experts of the petitioner company could have manipulated, which has led to such manipulation of bills. May be it was in connivance of some of the departmental employees but it does not absolve the petitioner from its liability. Again, the respondent no.1 has also therefore clearly stated that the possibility of involvement of the departmental employees cannot be ruled out. Further, when there is a manipulation with the system which requires some kind of knowhow or the specialized knowledge. Admittedly, when the representatives and the experts of the petitioner company had an access to the system of the Respondent no.1, the submission made by learned Advocate Shri Chhatrapati about total unawareness or total innocent cannot be readily accepted.
In present view of the matter, which requires technical aspect and when there is a clause for arbitration itself in the agreement, the petitioner could have availed of the same. Assuming that the arbitration referred to a matter with regard to the issue involved in the agreement and the aspect of blacklisting was not covered, even then, the Court would not be justified in exercising powers under Article 226 of the Constitution interfering with the impugned action, which does not reflect any arbitrariness or violation of rules of natural justice.
Further, a useful reference can also be made to the observations made in a judgment of the Hon ble Apex Court in case of Grosons Pharmaceuticals (P) Ltd. and another V. State of U.P. And others reported in (2001) 8 SCC 604, wherein it has been observed as under:
There is no statutory rule which requires that an approved contractor cannot be blacklisted without giving an opportunity of show-cause. It is true that an order blacklisting an approved contractor results in civil consequences and in such a situation in the absence of statutory rules, the only requirement of law while passing such an order was to observe the principle of audi alteram partem which is one of the facets of the principles of natural justice. The contention that it was incumbent upon the respondent to have supplied the material on the basis of which the charges against the appellant were based, was not the requirement of the principle of audi alteram partem. It was sufficient requirement of law that an opportunity of show-cause was given to the appellant before it was blacklisted. It is not disputed that in the present case, the appellant was given an opportunity to show cause and it did reply to the show-cause which was dully considered by the State Government. We are, therefore, of the view that the procedure adopted by the respondent while blacklisting the appellant was in conformity which the principles of natural justice.
Thus, the principle of natural justice is the genesis of providing an opportunity of replying and concept of fair play in the decision making process. If, the decision making process is fair and the opportunity of providing any clarification or justification is also made available, it cannot be said that rules of natural justice have been violated.
Therefore, having regard to the relevant facts and the aforesaid observations, the present petition deserves to be dismissed and accordingly stands dismissed. Rule is discharged. Interim relief, granted earlier, stands vacated.
(RAJESH H.SHUKLA, J.) FURTHER ORDER After the order was pronounced, learned Advocate on behalf of Singhi & CO. has requested for stay of operation of the order up to four weeks stating that the work is going on in other centers. Therefore, the request is granted, as prayed for and time is granted to enable the petitioner to have further recourse up to 17th September, 2013.
(RAJESH H.SHUKLA, J.) Tuvar Page 22 of 22