IMPORTANT POINT
Blacklisting of contractors requires adherence to contractual terms and principles of natural justice; actions taken post-contract expiration are unsustainable.

JUDGMENT :

MICHAEL ZOTHANKHUMA, J.

1. Heard Mr. I. Choudhury, learned Sr. Counsel for the petitioners assisted by Mr. K.P. Pathak. Also heard Mr. D. Saikia, learned Sr. Counsel for the respondent ONGC assisted by Mr. N. Anix Singh.

2. The petitioners are aggrieved by the impugned order dated 09.01.2024 issued by the ONGC, by which the petitioners have been banned from having any further business dealings with the ONGC in any capacity and for participating in future tenders of the ONGC for a period of 1 year, i.e., till 08.01.2025. The petitioners’ case is that the petitioners were awarded the contract work for operation and maintenance of gas compression services at South Banskandi in the district of Cachar vide contract bearing No. 9010030760 dated 16.10.2019, for a period of 3 years, which was extended till 09.11.2023. An agreement was executed between the parties on 16.10.2019 and in terms of the said agreement, the termination of a contract of the contractor entailed the blacklisting of the contractor in terms of Clause 18 of the contract agreement. Further, Section 2 and 3 of the Integrity Pact, which is a part and parcel of the contract agreement, provided the manner in which a contractor could be disqualified from the tender process and also from being excluded from any future contracts of the ONGC.

3. The petitioners’ counsel submits that the contract between the parties expired on 09.11.2023, when the work was completed, while the impugned order dated 09.01.2024 blacklisting the petitioners, was issued 2 months later. The petitioner’s counsel submits that in view of there being no privity of contract between the parties as on 09.01.2024, the ONGC could not have issued any order blacklisting the petitioners for a period of 1 year, either in terms of Clause 18 of the contract agreement or in terms of Section 3 of the Integrity Pact.

4. The learned Sr. Counsel further submits that the show-cause-notice dated 05.10.2023 issued to the petitioner was only with reference to Clause No. 36 of the contract agreement executed between the parties and there was no mention of either Clause 18 or the Integrity Pact in the show-cause-notice. As such, when the petitioners have not been put to notice with regard to the intention of the ONGC to blacklist the petitioners in terms of either Clause 18 of the contract agreement or Sections 2 & 3 of the Integrity Pact, the impugned order blacklisting the petitioners was not sustainable and has to be set aside. In this respect, he has relied upon the judgments of the Hon’ble Supreme Court in the case of M/s Erusian Equipment & Chemicals Ltd. Vs. State of West Bengal & Anr. (1975) 1 SCC 70; Gorkha Security Services Vs. Government (NCT of Delhi) and Ors. (2014) 9 SCC 105 and Kulja Industries Ltd. Vs. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Ltd. and Anr. (2014) 14 SCC 731.

5. The petitioners’ counsel further submits that the enquiry report, on the basis of which the petitioners have been blacklisted, has been made on the basis of Clause 17.5.1.f of the Integrity Material Management Manual (IMMM), which is not a part of the documents which has to be considered as a part of the agreement executed between the parties.

6. The learned Sr. Counsel for the ONGC, on the other hand, submits that even though Clause 18 of the contract agreement executed between the parties is not applicable to the case in hand, there was no infirmity in blacklisting the petitioners in terms of Section 3 of the Integrity Pact. He submits that when there is no dispute with regard to the fact that there had been a manipulation of dates in the insurance certificate issued by the insurance company by an employee of the petitioners, the petitioners being vicariously liable for the acts of the employees, the fraud committed by the petitioners came within the provisions of Section 3 of the Integrity Pact. He also submits that though the petitioners have taken a stand that the enquiry report made by the ONGC ha