Case: M/S Kulja Industries Ltd Vs. Chief Gen.Manager W.T.Proj.Bsnl

Two tender notices for supply of Permanent Lubricated HDPE Pipe (Telecom Ducts) and Installation of O.F. Cable through Blowing Technique were issued by BSNL in the year 2004 and 2005. It is common ground that the appellant-company emerged successful in regard to both the tender notices. It is also not in dispute that several orders for supply of the material were placed with the appellant-company during the years 2004-2006 and that goods were supplied to various consignee units of BSNL pursuant to the same. Thecase is that aas issued in its favour after delivery of the goods and that bills for payment of the price of the goods were raised in triplicate to the Chief Controller of Accounts, WTP BSNL, Mumbai from time to time. Thefurther case is thatsingle account to receive 95% of the payment due from BSNL was maintained by it and since the amounts received from the respondent-BSNL by cheques did not carry any particulars of the consignment for which such payment was being made it could, in no way, discover excess payment, if any, released by BSNL against the bills sent by the appellant.4. Ther case is thaton gaining knowledge about the excess payments received by it, an offer for reconciliation of the accounts was made to the BSNL and since any such reconciliation was likely to take 30 to 45 days, the appellant offered to adjust the excess amount credited to its account towards the outstanding bills on an ad hoc basis. A letter dated 10th May, 2006 was, according to the appellant, addressed to the respondent-BSNL in that regard.5. The respondent-BSNL on the other hand has a different story to tell. According to it four of its officers had abused their official position and fraudulently generated voucher numbers on the duplicate and triplicate copies of the bills submitted by the appellant to facilitate payments as if the said bills were genuine thereby causing wrongful loss to the respondent-BSNL and a corresponding gain to the appellant. There was in this process an excess payment of Rs.7.98 crores made and credited to the account of the appellant by the accounts officer of respondent-BSNL.6. Taking note of the fraudulent payments made to the appellant, the BSNL lodged an FIR with CBI ACB Mumbai against one of its Senior Accounts Officers and a Director of the appellant-company alleging commission of offences punishable under Section 120B read with Section 420 Indian Penal Code and Section 13(2) read with Section 13(1)(d) of Prevention of Corruption Act, 1988. Investigation that followed has culminated in a charge-sheet filed before the Special Judge for CBI cases, Bombay in which four officials of the BSNL including D. Tripathi-Senior Accounts Officer, Laxman Dixit-Assistant Accounts Officer, Krishnakumari Patnaik-Junior Accounts Officer, Poolchand Yadav-Cashier and Lalit Gupta-Director and Bhavani Sharma-Consultant of the appellant-company have been arraigned as accused persons.7. What is important for the present is that by a letter dated 21st April, 2010, BSNL blacklisted the appellant permanently on the ground that the appellant had committed gross misconduct and irregularities by receiving excessive payments amounting to Rs.7,98,55,508/- from BSNL thereby wrongfully causing loss to the said company. The appellant denied these allegations, inter alia, contending that BSNL Policy/Manual did not provide for punitive action in the nature of blacklisting and that excess payment at best was an irregularity which had been cured by refund of the amount in question. The appellant also alleged that reconciliation of accounts revealed that the appellant was entitled to an amount, far in excess of the payments received by it. That assertion was repeated in a legal notice sent by the appellant-company but since BSNL took no corrective action in terms of the reconciliation, W.P. No.4536 of 2010 was filed before the High Court of Judicature at Bombay in which it assailed the blacklisting order. The High Court allowed the petition on the short ground that the appellant had not been afforded any opportunity of being heard before the blacklisting order was issued by the respondent. The High Court did not go into the merits of the dispute but reserved liberty to the appellant to raise all such contentions as were open to it if and when BSNL issued a show cause notice for blacklisting it again. The BSNL was left free to pass a fresh order and take a final decision in the matter within six weeks from the date of the issue of the show cause notice.8. A show cause notice was accordingly issued by BSNL on 4th November, 2010 to which the appellant filed a reply. The appellant was also called for a personal hearing in support of its reply to the show cause notice as directed by the High Court. By an order dated 15th January, 2011 BSNL once again directed the blacklisting of the appellant, inter alia, holding that the appellant had defrauded BSNL by using duplicate and triplicate copies of the bills that stood already cleared for payment. These bogus and fraudulent claims made under bogus and fabricated bills were then processed by some of the officers of the BSNL for payment resulting in double and at times triple payment in favour of the appellant. The relevant portion of the blacklisting order is to the followingthe supplier with a clear intention to defraud BSNL, WTP, Mumbai, have prepared duplicate and triplicate copies of bills already processed for payment and have again put up the same for payment with BSNL. Thus, in short these were bogus and/or fraudulent claims made on the basis of forged and/or fabricated bills/documents. Thereafter, by joining hands with some of the erring officers of BSNL, the supplier has got the afore mentioned duplicate and triplicate copies of bills processed for payment and have fraudulently received double/triple payment(s) for supplying material only once.Therefore, by not only claiming but also receiving double and/or triple payment on the basis of forged/fabricated/duplicate and triplicate copies of same bills, the supplier has committed gross fraud on the public exchequer. The fraudulent act on the part of supplier got completed by not only claiming such bogus payments but also by receiving the same from BSNL. Moreover, by letter dated 10th May, 2006, the supplier has not only acknowledged but have also accepted the fact of claiming as also accepting aforesaid bogus payments and hence the supplier had agreed for reconciliation of same after deducting such bogus payments. If the accounts would not have reconciled, the supplier would have caused huge losses to the public exchequer.Hence, there is every apprehension that if the supplier is allowed to deal in any manner with the BSNL in future, the supplier will venture into committing same and/or similar fraud (s) on the public exchequer and therefore, it is not at all in the interest of public exchequer that the supplier continues to be authorised supplier of BSNL.Hence, in view of the all the above facts and circumstances and the entire record and proceedings of this case, it is possible for this organisation to take a view to permanent banning and impose penalty upon the supplier so as to prevent the supplier from dealing with entire BSNL, throughout the country in any manner, consequently stopping all the future business transactions of entire BSNL with the supplier.Hereby M/s. Kulja Industries Ltd., Solan (Himachal Pradesh) is permanently banned and is consequently prevented from having any business dealing with entire BSNL through the country.This is issued with the approval of the competent authority.Sd/-AGM (MM) 15.1.2011O/o CGM, WTP,Aggrieved by the above order the appellant once again approached the High Court in W.P. No. 2289 of 2011 which was heard and dismissed by a Division Bench of the High Court in terms of the order impugned in this appeal. The High Court was of the opinion that reconciliation of the account had proved that the appellant had received payment twice over for the supplies made by it and that merely because the excess payment received had been subsequently refunded by the appellant did not obliterate the act of misconduct and fraud. The High Courtthe order impugned, the Authority has stated that on the reconciliation of the account, it was found as a fact that the Petitioner has received payment twice for the supply of the same material, because the supply was ongoing and the amount was found to be payable to the Petitioner, that was paid to him. Mere payment of the amount does not wipe out the fact that the Petitioner had submitted the Bills claiming double payment. In our opinion, in view of this finding, no interference is called for in the order impugned. The Petition is rejected. No

Court's reasoning:
In the case at hand according to the respondent-BSNL, the appellant had fraudulently withdrawn a huge amount of money which was not due to it in collusion and conspiracy with the officials of the respondent-corporation. Even so permanent debarment from future contracts for all times to come may sound too harsh and heavy a punishment to be considered reasonable especially when (a) the appellant is supplying bulk of its manufactured products to the respondent-BSNL and (b) The excess amount received by it has already been paid back.26. The next question then is whether this Court ought to itself determine the time period for which the appellant should be blacklisted or remit the matter back to the authority to do so having regard to the attendant facts and circumstances. A remand back to the competent authority has appealed to us to be a more appropriate option than an order by which we may ourselves determine the period for which the appellant would remain blacklisted. We say so for two precise reasons. Firstly, because blacklisting is in the nature of penalty the quantum whereof is a matter that rests primarily with the authority competent to impose the same. In the realm of service jurisprudence this Court has no doubt cut short the agony of a delinquent employee in exceptional circumstances to prevent delay and further litigation by modifying the quantum of punishment but such considerations do not apply to a company engaged in a lucrative business like supply of optical fibre/HDPE pipes to BSNL. Secondly, because while determining the period for which the blacklisting should be effective the respondent-Corporation may for the sake of objectivity and transparency formulate broad guidelines to be followed in such cases. Different periods of debarment depending upon the gravity of the offences, violations and breaches may be prescribed by such guidelines. While, it may not be possible to exhaustively enumerate all types of offences and acts of misdemeanour, or violations of contractual obligations by a contractor, the respondent-Corporation may do so as far as possible to reduce if not totally eliminate arbitrariness in the exercise of the power vested in it and inspire confidence in the fairness of the order which the competent authority may pass against a defaulting contractor.