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Judgment
K.P. Sivasubramaniam, J.—The petitioner prays for a Certiorari to call for the records relating to the order of the respondent dated
28.3.2000.
The petitioner is a Security Bureau/ Proprietorship Firm offering security services. On 6.4.98, the petitioner entered into an agreement with the
respondent for providing security personnel to safeguard the assets of the defaulting industrial units where such assets have been taken over by the
respondent/SIPCOT in the Districts of Salem, Dharmapuri, Nilgiris, Periyar and Coimbatore and to safeguard the properties of the SIPCOT
Industrial Complex at Hour. The period of contract commenced from 31.3.1999. In terms of the contract, the contract was terminable on one
month''s notice at the option of SIPCOT without assigning any reason.
The petitioner further contends that the unit belonging to M/s.Shankar Paper and Board Mills Pvt. Ltd. was taken over by the respondent on
16.7.98 in exercise of the powers conferred on the respondent u/s 29 of the State Financial Corporation Act. At the time of taking over of the
assets, SIPCOT also took over three vehicles including one Tata Estate bearing Registration No.TN 28-H-4599. On 1.5.99, one of the security
guards sent a letter to the Project Officer of SIPCOT informing him of the dubious and suspicious movements of one Arthanariswamy, Ex-
Promoter and Managing Director of M/s.Shankar Paper and Board Mills (Pvt.) Ltd. It was alleged that he had unauthorized entered into the
premises and was threatening the security guards. SIPCOT was also informed that the Ex-Promoter was trying to take away the Tata Estate car.
But, there was no response from the Project Officer/respondent. Thereafter, on 4.5.99, some of the representatives of the Ex-Promoter came
along with 8 or 9 persons claiming to be the financiers of the vehicle and forcibly took away the vehicle in spite of the best efforts of the security
guards, who were two in number during the shift. The vehicle was forcibly seized by them and taken away and the security guards were not in a
position to resist the action of the said individuals. Immediately, a telegram was also sent by the security guard to the Project Officer about the
removal of the car on 4.5.99. The Manager of the respondent also filed a complaint before the Molasi Police Station on 6.5.99 stating that the
vehicle has been removed forcibly by Muthu, financier, along with Arthanariswamy, after overpowering the security guards.
However, a subsequent notice was issued by the respondent to the petitioner seeking to cancel the contract as well as to blacklist the petitioner
in view of the alleged violation of the terms of the contract and that the security guards have allowed the financier to remove the vehicle without the
permission of the respondent. It is not necessary to deal with the prior notices and the letters sent by the petitioner in reply. It is sufficient to refer to
the notice of the respondent dated 22.12.99 and the reply sent by the petitioner on 3.1.2000. In reply to the notice seeking to blacklist the
petitioner, a detailed reply was sent by the petitioner dated 3.1.2000. In that reply, the petitioner has mainly raised two defenses namely that in
spite of prior warning, no steps were taken by the SIPCOT to protect the vehicle and that on the day of the incident, the security guards were
overpowered by more than 8 or 9 persons. It is further pointed out that in the first information report filed by the respondent itself, it is clearly
stated that the security guards were overpowered. A further defense has also been taken by the petitioner to the effect that the Tata Estate car was
not one of the properties/assets hypothecated to SIPCOT and therefore, there was no violation of the terms of agreement between the petitioner
and the respondent. However, the impugned order came to be passed blacklisting the petitioner without considering any of the reasons stated in
the explanation of the petitioner. Hence, the above writ petition.
The learned counsel for the petitioner referred to the communication of the petitioner to the respondent dated 1.5.99, in which the petitioner has
brought to the notice of the respondent about the attempted interference by Arthanariswamy and his attempts to remove the said vehicle. This is
followed by a communication on 4.5.99 informing the respondent about the incident. Reference was also made to the first information report filed
by the respondent themselves and the detailed reply given by the petitioner on 3.1.2000. The learned counsel contends that none of the reasons
have been considered by the respondent.
I have also heard Mr.Subbaiah, learned counsel appearing for the respondent, who contends that the issue being purely contractual, no
interference was sought for under Article 226 of the Constitution of India. Reliance is placed on the judgment of the Supreme Court in Bareilly
Development Authority and Another Vs. Ajay Pal Singh and Others, . It is further contended that the duty of the security was to protect the entire
premises and it was not open to the petitioner to contend that the property, which was removed, was not hypothecated with the respondent.
Reliance is also placed on the statement of Arthanariswamy before the police informing the police that the vehicle was removed with the permission
of the security guards. Therefore, the statement of the said Arthanariswamy clearly establishes that the vehicle was removed only with the
permission of the petitioner and hence, in view of the violation of the terms of the agreement, the impugned order has been rightly passed.
I have considered the submissions of both sides. The objection as regards the maintainability of the writ petition cannot be upheld. The decision
relied on by the learned counsel relates to termination of the contract on the alleged violation of the terms of the contract. In the impugned order,
the issue is not in relation to any breach of contract or any termination of contract and is one which relates to blacklisting of the petitioner.
Blacklisting of a contractor by a public body like the respondent is sure to result in adverse consequences namely, the petitioner being disqualified
and blacklisted by the other public and private firms. Therefore, the petitioner is entitled to maintain the above writ petition.
Now, coming to the facts and circumstances under which the petitioner was blacklisted, the letter dated 1.5.99 from the petitioner clearly
discloses that SIPCOT was fairly forewarned even earlier about the clandestine attempts on the part of Arthanariswamy to remove the vehicle. In
spite of the said warning, nothing was done by the respondent. On 4.5.99, the incident had occurred whereby the petitioner contends that the two
security guards were overpowered by more than 8 or 9 persons. In fact, the fact that the security men were overpowered is admitted by the
respondent themselves in their first information report to the police. In the explanation by the petitioner dated 3.1.2000, the extract from the first
information report has been given in quotation marks, namely, ""The resistance put up by the Security Guards, was over-powered by the Financier,
the Promoter and their men.
Considering that there were only two security guards, who were required to guard the premises and that they were overpowered by more than
8 or 9 men, there is no justification to blame the petitioner for the alleged illegal removal of the car. It is true that it may not be open to the
petitioner to raise the contention that the car was not one of the hypothecated items. But the circumstances under which the vehicle was forcibly
removed from the premises by overpowering the security guards should have been properly considered by the respondent. The respondent
themselves, having informed the police that the security guards were overpowered, cannot now take the stand that the petitioner had willingly
allowed the Ex-Promoter to remove the vehicle by relying on the self-serving statement of the said Arthanariswamy. The said individual being an
accused is bound to make it appear as though he has not violated any of the rules or regulations and that he has removed the vehicle only with the
permission given by the security guards. No reliance can be placed on such self-serving statement of the said Arthanariswamy. Apart from the
aforesaid reasons, it is also seen that the petitioner has filed a detailed explanation by his letter dated 3.1.2000 running to more than three pages in
which several details relating to the occurrence has been given. But, in the impugned order, without assigning any reasons and without discussing
any of the points raised by the petitioner, the petitioner has been blacklisted by merely stating that the reply furnished by the petitioner was found to
be not convincing and was viewed as breach of contract.
Therefore, for all the aforesaid reasons, the petitioner is entitled to succeed. The consequences of blacklisting the petitioner are very serious in
nature and considering the reasons aforesaid, the impugned order cannot be sustained and the writ petition is allowed. No costs.