Grosons
Pharmaceuticals (P) Ltd. & Anr Vs. The State of Uttar Pradesh & Ors [2001] Insc 462 (5 September 2001)
V.N.
Khare & B.N. Agrawal V. N. Khare, J.
The
appellant herein is a small scale industry engaged in manufacture and sale of
drugs and was registered with the Directorate of Industry (Stores Purchase
Section), Kanpur, U.P. As a result of the aforesaid
registration, the appellant was an approved contractor for supply of drugs to
the government departments. The appellant, in pursuance thereof, had been
supplying drugs to the U.P. government. It appears that that certain
irregularities came to the notice of the government in purchase of medicines
and, therefore, a vigilance inquiry was set up as a result of which the record
and product of the appellant were seized. Further, criminal prosecution was
also launched against the appellant under provisions of Prevention of
Corruption Act read with Section 120 IPC. Under such circumstances, the State
government served a notice on the appellant to show cause why it should not be
blacklisted in its dealing with the government. It appears that the appellant
sent a reply to the show cause notice. The State Government on expiry of the
period for reply by the appellant passed an order blacklisting the appellant.
The order indicated that the period of blacklisting will be till the disposal
of the case pending in the Court as well as till the final decision is arrived
at in the investigation of proceedings instituted against the firm on various
accounts. The appellant challenged the aforesaid order by means of a writ
petition under Article 226 of the Constitution of India. The said writ petition
was dismissed. Aggrieved, the appellant challenged the said order and judgment
by way of special leave petition in this Court. The said special leave petition
was numbered as 10087/91. When the matter came up for hearing before a Bench of
this Court, this Court was of the view that the State Government was required
to reconsider the matter along with the explanation submitted by the appellant
while keeping the impugned order in tact. With the aforesaid direction, the
special leave petition was disposed of.
In
pursuance of the direction of this Court, the State government reconsidered the
matter and affirmed the earlier order of blacklisting the appellant. The
appellant again challenged the said order by means of a writ petition before
the High Court. The High Court looked into the record and found that elaborate
reasons were recorded and thereafter the order of blacklisting was passed. In
that view of the matter, the writ petition was dismissed. It is against the
said judgment, the appellants have preferred this appeal.
Learned
counsel appearing for the appellant, urged that seeing the nature and
seriousness of the order passed against the appellant, the respondent ought to
have supplied all the materials on the basis of which the charges contained in
the show cause notice were based along with show cause notice and in the
absence of supply of materials, the order impugned is against the principles of
natural justice. We do not find any merit in this contention. Admittedly, the
appellant has only contractual relationship with the State government and the
said relationship is not governed by any statutory Rules. 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 facet 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
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 he did reply to the show cause which was duly
considered by the State Government. We are, therefore, of the view that that
the procedure adopted by the respondent while blacklisting the appellant was in
conformity with the principles of natural justice.
It was
then urged that the impugned order blacklisting the appellant does not contain
any reasons and, therefore, the order is invalid. We do not find any merit in
the submission. The High Court summoned the entire record and found that
elaborate reasons were recorded by the State Government while passing the order
blacklisting the appellant. The High Court further recorded a positive finding
that the State Government has passed the impugned order after recording
elaborate reasons and summary of which is contained in the impugned order.
For
the aforesaid reasons, we do not find any merit in the appeal and it fails and
is dismissed accordingly. There shall be no order as to costs.
J.
(V. N.
Khare) ...J.
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