Back
2016 Supreme(Bom) 318
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.C. Dharmadhikari & G.S.Patel, JJ.
ANCHOR OFFSHORE SERVICES LTD (AOSL) - PETITIONER
Versus
OIL & NATURAL GAS COPORATION LTD. & Ors. - RESPONDENTS
WRIT PETITION (L) NO. 3264 OF 2015
Decided On : 2-3-2016
Advocate Appeared:
For the Petitioner: Mr. Viraag Tulzapurkar, Senior Counsel, a/w Mrs. Anita Castelino, Mrs. Alisha Lambay, Mr. Vikas K. Singh, i/b M/s. Lambay & Co.
For the Respondents Nos. 1 TO 5:Mr. Kevic Setalvad, Senior Advocate, a/w Ms. Daisy Dubash, Mr. J. P. Kapadia, Mr. O. Mohandas, i/b M/s. Little & Co.
For the Respondent No. 6: Mr. D. P. Singh
For the Respondent No. 7: Mr. H. S. Venegaonkar, AGP.
The Court held that the impugned order was unreasoned, mala fide and violative of principles of natural justice.
Headnote:
ANCHOR - BLACKLISTING - INTEGRITY PACT - ONGC - [SECTION 3(3)] - The Court quashed the impugned order of blacklisting passed by ONGC against Anchor for two years. The Court held that the impugned order was unreasoned, mala fide and violative of principles of natural justice. The Court also held that there was no material misdirection in regard to the relevant clauses of the Integrity Pact.
Fact of the Case:
Anchor, a company that has done a considerable volume of business with ONGC in the supply, installation and commissioning of various kinds of equipment used in oil and gas production at ONGC’s various sites, challenged the impugned order dated 5th November 2015 passed by ONGC blacklisting Anchor from all business dealings with ONGC for two years. The ostensible reason for this ban was that Anchor allegedly violated an “Integrity Pact”, a formal and binding contract between Anchor and ONGC.
Finding of the Court:
The Court held that: 1. There has been a breach of principles of natural justice, in that ONGC considered material behind Anchor’s back and never disclosed this material to it nor gave it an opportunity of dealing with that material; 2. Contrary to ONGC’s own manual, which has a clause requiring reasons to be given, and though this is also a mandate of the law whether or not the manual contains such a provision, the impugned order is entirely unreasoned; 3. There is a material misdirection in regard to the relevant clauses of the Integrity Pact.
Issues: 1. Whether there has been a breach of principles of natural justice? 2. Whether the impugned order is unreasoned? 3. Whether there is a material misdirection in regard to the relevant clauses of the Integrity Pact?
Ratio Decidendi: 1. The Court held that there has been a breach of principles of natural justice, in that ONGC considered material behind Anchor’s back and never disclosed this material to it nor gave it an opportunity of dealing with that material. 2. The Court held that contrary to ONGC’s own manual, which has a clause requiring reasons to be given, and though this is also a mandate of the law whether or not the manual contains such a provision, the impugned order is entirely unreasoned. 3. The Court held that there is a material misdirection in regard to the relevant clauses of the Integrity Pact.
Final Decision: The Court quashed the impugned order of blacklisting passed by ONGC against Anchor for two years.
G.S. Patel, J.
1. Rule. Respondents waive service. By consent, Rule is made returnable forthwith and the Petition is taken up for hearing and disposal. We have heard Mr. Tulzapurkar, learned Senior Counsel for the Petitioner and Mr. Setalvad, learned Senior Counsel for Respondents Nos. 1 to 5. We have considered their respective submissions and, with their assistance, the material on record.
2. The challenge in this Writ Petition brought under Article 226 of the Constitution of India is to what is effectively a blacklisting order dated 5th November 2015 passed by the 2nd Respondent, the Executive Director of the 1st Respondent, the Oil and Natural Gas Corporation Limited (“ONGC”). By this order, Exhibit “A”, pages 86 to 87A, the Petitioner (“Anchor”) has been banned from all business dealings with ONGC for two years. The ostensible reason for this ban is that Anchor allegedly violated an “Integrity Pact”, a formal and binding contract between Anchor and ONGC. The impugned order in terms states that no tender inquiry is to be issued to Anchor or any of its allied concerns, partners, associates, directors or proprietors for any ongoing or future tenders during the period of the ban.
3. The additional prayer added by an amendment is that the provisions of Section 3[3] of the Integrity Pact be struck down and be held not to be binding on the Petitioners.
4. Mr. Tulzapurkar places his challenge on three principal grounds: first, that there has been a breach of principles of natural justice, in that ONGC considered material behind Anchor’s back and never disclosed this material to it nor gave it an opportunity of dealing with that material; second, that contrary to ONGC’s own manual, which has a clause requiring reasons to be given, and though this is also a mandate of the law whether or not the manual contains such a provision, the impugned order is entirely unreasoned; and third, that there is a material misdirection in regard to the relevant clauses of the Integrity Pact.
5. We believe it is necessary, for a clearer understanding of the subsequent events and their implications and ramifications, to set out the background of Anchor’s case. This is a company that, for the last three decades or so, has done a considerable volume of business with ONGC in the supply, installation and commissioning of various kinds of equipment used in oil and gas production at ONGC’s various sites. Anchor’s services and business offerings include the operation, repair and maintenance of such equipment. Anchor employs about 300 skilled and qualified technicians and engineers. For the last eight years, Anchor says, being the lowest bidder and having acquired a reputation for excellence for the quality of its services, it has been awarded contract for the operation and maintenance of Offshore Cranes installed on ONGC’s various offshore production platforms. Anchor has discharged its contractual obligations successfully, demonstrating an average crane availability of about 98% as against ONGC’s benchmark of 95%. Anchor claims that there has, as a result, been no oil and gas production loss from any of these offshore platforms attributable to the want of any crane supplied or installed by it. Anchor’s record is untarnished.
6. An Operations and Maintenance (“O&M”) Contract for Offshore Cranes was awarded by ONGC to Anchor against a global tender. This was for a three year period from 18th June 2011 to 17th June 2014. The contract inter alia required the execution of an “Integrity Pact” with ONGC, Exhibit “B” pages 88-93. This was required to ensure transparency and fairness during the tendering process and during the execution of the contract, a mandate in compliance with anticorruption laws.
7. Under the contract, Anchor was responsible for ensuring the uninterrupted operation of the cranes in question with a minimum crane availability of 95%. Failure to do so would result in heavy penalties and recovery by ONGC. Consequently, to ensure the uninterrupte
