Ashoka Buildcon Limited & Anr. v. Union of India & Ors.

1. This hearing has been done through hybrid mode.

2. The present petition has been filed by the Petitioners challenging the impugned show cause notice dated 24th January, 2023 issued by Respondent No.2- Ministry of Road Transport and Highways of India (hereinafter ‘MoRTH’).

3. The present petition has been filed by Petitioner No.1- Ashoka Buildcon Limited and its Chief Operating Officer, Mr. Anil Gandhi- Petitioner No.2 challenging the show cause notice dated 24th January, 2023 issued by Respondent No.2- MoRTH. The case of the Petitioners is that the notice which has been issued is completely lacking in jurisdiction and the proceedings pursuant to the show cause notice deserve to be set aside/quashed.

4. The background of this case is that a contract was entered into by Petitioner No.1 on 26th October, 2020 with the NHAI for ‘four laning of Pararia to Mohania section of NH-319 (Old NH-30) from Km 54+530 to Km 115+330 (Design Chainage) in the State of Bihar’ (hereinafter ‘the project’). Contemporaneously with the contract, an Integrity Pact was also signed between the parties.

5. Petitioner No.1 was issued a notice on 22nd November, 2022 by the NHAI asking it show cause as to why the said Petitioner ought not to be debarred, due to violation of the Integrity Pact. The Petitioner filed its reply with the NHAI on 28th November, 2022. The submission of Mr. Savla, ld. Senior Counsel for the Petitioners is that NHAI has not proceed further in respect of the said show cause notice till date.

6. According to the Petitioners, Petitioner No.1 was served with the impugned show cause notice dated 24th January, 2023 by MoRTH asking it to show cause against the violation of the Integrity Pact in respect of the project. The impugned show cause notice further requested Petitioners to appear before the Additional Secretary (Highways & LA), MoRTH on 27th January,

2023.

7. According to ld. Senior Counsel, Mr. Savla, reasonable time was not granted to the Petitioners to file a reply. On the date when the official of the Petitioner No.1 appeared before the Additional Secretary on 27th January, 2023, the matter was merely adjourned to 1st February, 2023 at 3:00 p.m. i.e., today. It is submitted by ld. Senior Counsel that the impugned notice is lacking in jurisdiction as it is only the ‘Principal’ under the Integrity Pact, who is entitled to proceed under Rule 151 of the General Financial Rules (GFR). It, therefore, not MoRTH, but only the NHAI which can issue a show cause notice to the Petitioners. Thus, the Union of India’s jurisdiction to issue the notice is under challenge.

8. It is also submitted by the ld. Senior Counsel for the Petitioners that the concerned authority is proceeding in a predetermined manner which is also evident from the fact that oral instructions were issued to NHAI not to award any tender to the Petitioners via phone call in the presence of the officer of the Petitioners on 27th January, 2023. It is his submission that under similar circumstances, in W.P.(C) 15460/2022 titled Dilip Buildcon Ltd. v. NHAI, a ld. Single Judge of this Court has directed the stay of the impugned order of debarment.

9. On behalf of MoRTH, ld. Counsel submits that a perusal of the Integrity Pact shows that the Principal, as defined in the said pact, is the President of India through MoRTH represented by NHAI. Thus, the argument of lack of jurisdiction is not tenable. He further submits that the sufficient opportunity has been given to the Petitioners to file a reply.

10. On behalf of NHAI, it is submitted that the show cause notices against the Petitioners were issued due to a CBI case which was registered as per which, the officials of Petitioner No.1 were apprehended while seeking to bribe NHAI officials. An FIR is stated to have been filed by the CBI being RC0232022A0010 dated 23rd September, 2022.

11. Insofar as the allegation that the Additional Secretary had given oral instructions for non-award of any tender is concerned, ld. Counsel submits that the said allegation is `imaginary’.

12. Heard. A perusal of the Integrity Pact shows that the ‘Principal’ is defined as under: “President of India through Ministry of Road Transport & Highways, Government of India represented by NATIONA L HIGHWAYS AUTHORITY OF INDIA, established under the National Highways Authority of India Act 1988, represented by its Chairman and having its principal offices at G·5 & 6, Sector 10, Dwarka, New Delhi·110075, (hereinafter referred to as the "Principal/Owner" which expression shall, unless repugnant to the context or meaning thereof, include its administrators, successors and assigns).”

13. Thus, the fundamental argument raised on behalf of the Petitioners that the NHAI is the ‘Principal’ may not hold good, inasmuch as NHAI is described as the representative of the President of India through MoRTH.

14. Insofar as the GFR is concerned, Rule 151 reads as under: “(i) A bidder shall be debarred if he has been convicted of an offence- (a) under the Prevention of Corruption Act, 1988; or (b) the Indian Penal Code or any other law for the time being in force, for causing any loss of life or property or causing a threat to public health as part of execution of a public procurement contract.