Union Of India vs M/S Delhi Paper Products Pvt Ltd

S. No.,S.O.N & Date,Note No. and Date,Quantity,Amount Rs.,,

,"P.P.

83.01.1004.2

90516

dtd.21.3.01",DC-3933 IF 27.4.2001,1390 reams,"1,40,001",,

,"P.P.

83.01.1004.2

90516

dtd.21.3.01",DC-3934 IF 27.4.2001,2119 reams,"4,18,757",,

Payment by putting the signature and stamp of the concerned consignee on the inspection notes without supplying the material. The misconduct on the,,,,,,

part of the firm in grave and prejudicial to the interest of the Government.,,,,,,

Now, therefore, M/s Delhi Paper Products, New Delhi are hereby given an opportunity to show-cause when business dealings with them by the",,,,,,

Government in the non-statutory sphere should not be banned. Their reply if any, should reach this office within 21 days (twenty one days) of the issue",,,,,,

of this Notice failing which the matter will be decided on the basis of available evidence.,,,,,,

It may be noted that his notice applies mutate mutant is to all allied firms of M/s Delhi Paper Products New Delhi.,,,,,,

By order and in the name of the President.,,,,,,

Yours faithfully,,,,,,

(M.K. Anand),,,,,,

Dy. Secretary to the Govt. of India,,,,,,

Tel. No.3013960â€​,,,,,,

The Supplier filed its reply to the same. After considering the stand of the Supplier, the Ministry of Commerce & Industry issued banning order",,,,,,

dated 30th December, 2002. The banning order was issued based on the following findings: -",,,,,,

(1) The supplies made against the orders issued were duly inspected and rejected.,,,,,,

(2) Thereafter on the basis of forged inspection notes, claiming actual inspection and receipt of the supplies, payments were received by the Supplier.",,,,,,

(3) Upon being asked to return the amount so wrongly received, the Supplier returned the amounts. This resulted in closure of the case insofar as the",,,,,,

pending issue of payments were concerned.,,,,,,

(4) The Ministry of Commerce & Industry, however, examined the fact that the Supplier firm had received the advance payments fraudulently.",,,,,,

(5) The facts on the basis of which the inspection notes were forged by the Supplier were taken into consideration.,,,,,,

(6) The Ministry came to the conclusion that the Supplier had indulged in serious malpractice of taking fraudulent payments by forging the signature,,,,,,

and the stamp of the consignee i.e. the Controller of Stores (S&F), South Central Railways. In fact, the photocopier paper was never supplied.",,,,,,

(7) Upon this conduct being detected, the firm returned the 95% advance amount.",,,,,,

(8) That the factum of returning the money does not absolve the Supplier company of indulging in forgery.,,,,,,

In view of the above findings, the banning order was passed which reads as under: -",,,,,,

“Keeping the above facts in view. I hereby order that all Departments/Ministries/Offices of the Government of India are forbidden to have,,,,,,

commercial/business dealings with the firm and its subsidiaries, if any. The ban of commercial/business dealings with the firm by the Government in",,,,,,

the non-statutory sphere will be operative for a period of ten years commencing from the date of this order i.e. 30-12-2002.â€​,,,,,,

The said banning order was challenged by the Supplier company before the Delhi High Court vide CWP No.583/2003. A learned Single Judge of,,,,,,

this Court vide judgment dated 28th February, 2003 considered the stand of the Government that the return of the advance payment proved the",,,,,,

forgery committed by the Supplier firm. Accordingly, the learned Single Judge held that there is no force in the contention of the Supplier. The Court",,,,,,

held that the concerned authority had recorded its satisfaction objectively and on the basis of material on record. On 3rd April, 2003, the appeal (LPA",,,,,,

236/2003) was also withdrawn by the Supplier firm. The Supplier filed another writ petition in W.P.(C) 269/2004 which writ also came to be dismissed,,,,,,

with the following observations: -,,,,,,

“In my considered view, the writ petition is not maintainable. In so far as the issue of banning is concerned, the same has been dealt with in detail",,,,,,

by the learned Single Judge while dismissing the writ petition on 28.02.2003. The appeal filed against the said order has been withdrawn by the,,,,,,

petitioner and thus the order is final as passed by the learned Single Judge. The review order only says that no ground for review has been made out.,,,,,,

In the appellate court the petitioner had withdrawn the appeal to take recourse to some other remedy in view of disputed questions of facts. Once the,,,,,,

petitioner himself admits that there are disputed question of facts and withdraws the appeal, there can be no question of filing of fresh petition on that",,,,,,

account.,,,,,,

In view of the aforesaid, the writ petition is dismissed.â€​",,,,,,

This order dated 13th January, 2004 was carried in appeal in RFA 148/2004 before the Division Bench which was again dismissed in the following",,,,,,

terms: -,,,,,,

“7. The appellant, after the dismissal of the Writ Petition has filed a review application. Since the appellant did not receive the response of the",,,,,,

review application, CW NO.7154/2003 seeking directions against the respondent to decide the review petition was filed. During the pendency of the",,,,,,

writ petition, review petition was dismissed and consequently on 2.12.2003 the CW No.7154/2003 was disposed of as infructuous. The petitioner",,,,,,

thereafter again filed WP(C) No.269/2004 impugning the orders of the blacklisting as well as the order by which the review petition has been,,,,,,

dismissed. The learned Single Judge observed that in so far as the issue of banning is concerned, the same has been dealt with in detail by the learned",,,,,,

single Judge by dismissing the writ petition on 28.2.2003 and appeal against that order was also withdrawn by the appellant and the order has become,,,,,,

final. The learned Single Judge observed that the appellant had withdrawn the appeal before the Division Bench to take recourse to some other,,,,,,

remedy in view of the disputed questions of fact. The learned Single Judge also observed that according to the appellant, there were disputed",,,,,,

questions there and he had withdrawn that appeal and, therefore, there is no question of filing of the fresh writ petition on that ground. The writ",,,,,,

petition was thus dismissed.,,,,,,

We have heard the learned counsel for the respondent at length and perused various orders issued by the authorities from time to time. In view of,,,,,,

the peculiar facts and circumstances, in our considered opinion, no interference is called for. The appeal being devoid of any merit is accordingly",,,,,,

dismissed.,,,,,,

CMS 1625, 1629/2004 are accordingly disposed of.â€​",,,,,,

The Supplier firm filed a SLP against this order of the Division Bench dated 15th April, 2004 which was dismissed. The said order reads: -",,,,,,

“Considering that disputed questions of fact are involved, the writ jurisdiction might not have been the proper course. We leave it open to the",,,,,,

Petitioner to file a Suit/Arbitration Petition if he so desires.,,,,,,

The Suit/Arbitration Petition will undoubtedly be decided without being influenced by any observations in these proceedings.,,,,,,

In view of this matter, we see no reason to interfere.",,,,,,

The Special Leave Petition is dismissed.â€​,,,,,,

Thus, the initial order of the learned Single Judge dated 28th February, 2003 was on merits. In the appeal against the said order, it was the",,,,,,

contention of the Supplier that there were some disputed questions of facts. This was not the finding given by any Court. This statement also formed,,,,,,

the basis of order dated 13th January, 2004 in the second writ petition as also in the Division Bench judgment dated 15th April, 2004.",,,,,,

The Supreme Court, however, permitted the Supplier firm to raise the disputed question of facts in a suit/arbitration petition as writ jurisdiction was",,,,,,

not the proper course of action. The Supreme Court also observed that the arbitration petition would be decided without being influenced by any,,,,,,

observations made in the said proceedings. Thus all the orders passed in the earlier two writ petitions, both by the Single Judge and the Division Bench",,,,,,

of this Court got merged and the final orders passed by the Supreme Court permitted the Supplier to agitate its disputes in arbitration proceedings.,,,,,,

The order of the Supreme Court is dated 11th October, 2004, however, the Supplier firm chose to invoke arbitration only in 2009. In Arbitration",,,,,,

Petition No. 282/2009, a learned Single Judge of this Court recorded the arguments of the Government that the arbitration was barred by limitation.",,,,,,

Learned Single Judge on this objection held that the blacklisting order had a recurring effect. The arbitration petition was then disposed of with the,,,,,,

following observations: -,,,,,,

“In the present case, petitioner’s plea is that the black listing order though passed in 2002 has a recurring effect as every time the petitioner",,,,,,

cannot participate in a fresh tender, its right to challenge the black listing order arises. Consequently, in my view the issue of limitation involves a",,,,,,

disputed question of fact which would have to be determined by the Arbitrator after allowing the petitioner to lead evidence that there was a tender,,,,,,

floated in the recent past in which the petitioner could not participate due to the impugned black listing order.,,,,,,

Accordingly, I refer the matter to arbitration leaving the question of limitation open, to be determined by the arbitrator after allowing the parties to lead",,,,,,

evidence on the said issue.,,,,,,

Accordingly, the present petition is allowed and respondent is directed to appoint an arbitrator within a period of eight weeks from today.",,,,,,

With the aforesaid observations, present petition is disposed of.â€​",,,,,,

Learned Single Judge, however, did not go into the issue of limitation and left the same to be decided by the Arbitrator as it involved disputed",,,,,,

question of facts.,,,,,,

On 2nd February, 2010, Shri B.L. Chaudhary, Additional Legal Adviser to the Government of India was appointed as the Sole Arbitrator to decide",,,,,,

the disputes. Before the Arbitrator, various claims were raised. The findings of the Arbitrator are as under: -",,,,,,

(1) That the forging of the signatures is immaterial and unwarranted to make a claim for payment as the claim for payment is based on the dispatch,,,,,,

document and not on the basis of receipt.,,,,,,

(2) The findings of the Delhi High Court Single Judge and the Division Benches do not operate as res judicata.,,,,,,

(3) The jurisdiction of the Arbitrator is not concurrent with that of a writ court.,,,,,,

(4) That the Supplier was given a good conduct certificate on 4th September, 2002 just months before the banning order on 31st December, 2002.",,,,,,

(5) The banning order did not appreciate the entire evidence which was on record.,,,,,,

(6) That a joint investigation report dated 23rd July, 2001 showed a re-investigation of the stores which meant that the material was present in the",,,,,,

godown of the consignee.,,,,,,

(7) The Supplier firm did deliver the supply orders, which is clear from the fact that the material was in fact lifted back.",,,,,,

(8) The consignee vide letter dated 4th September, 2002 had informed the Supplier that it would withdraw its complaint but this was not considered at",,,,,,

the time of passing the banning order.,,,,,,

In view of these findings, the banning order was liable to be treated as withdrawn and the status quo prior to 30th December, 2002 ought to be",,,,,,

restored. Damages were also awarded by the Ld. Arbitrator.,,,,,,

The Supplier firm was a supplier of paper and paper products such as T.P. paper rolls, computer stationery, duplicating/typing/plain copier paper",,,,,,

etc. to various Ministries, Government Departments, Statutory Bodies and offices. It used to enter into annually renewed rate contracts with the",,,,,,

Directorate General of Supplies & Disposal through its Paper Directorate (DGS&D) for paper products. The rate contract dated 25th July, 2001",,,,,,

entered into by the Supplier reads as under: -,,,,,,

“Rate contract No.PP-3/RC-06011800/082001/D-0488/PP/COAD/1999 Dated 25.07.2001,,,,,,

Name of the firm: M/s. Delhi Paper Products Co.,,,,,,

Sl. No.,Date,Value (Rs.),,,,

P.P. 83.00.1130.90515,21.03.2001,"5,84,100/-",,,,

P.P. 83.01.1004.2.90516,21.03.2001,"1,37,610/-",,,,

P.P. 83.01.1132.2.90517,21.03.2001,"4,25,919/-",,,,

Claim No.2: Settlement of NPA accounts - Since the Supplier could not settle its NPA account due to the banning order, 50% of the amount claimed",,,,,,

i.e. to the tune of Rs.28,22,152/- was awarded.",,,,,,

Claim No.3: Accumulated losses from 2003 to 2007 - Nil Award.,,,,,,

Claim No.4: Losses from short closure - A large number of contracts were short closed and the value of loss of Rs.45 lakhs was awarded.,,,,,,

Claim No.5: Litigation expenses - 50% of the claimed amount i.e. Rs.12,24,238/- was allowed.",,,,,,

The operative portion of the award reads as under: -,,,,,,

“7. The Claimant has claimed an interest as per MSME Act 2006 on the complete claim amount of Rs.3,11,74,531.37 (Rs. Three Crore Eleven",,,,,,

Lacs Seventy Four Thousand Five Hundred Thirty One & Paise Thirty Seven). As per the mandate of MSME Act 2006 (27 of 2006) and the earlier,,,,,,

Delayed Payment Act to the SSI & AIU (32 Of 1993), the interest can only be levied on supply of goods and not on any other kind of receivables.",,,,,,

Accordingly, the interest provision as applicable to a SSI has been granted on Rs.5,63,529.00 toward supply of goods against the 2 orders which have",,,,,,

been in dispute and against which the payments were recovered from the claimant on 27.07.2002. This rate of interest cannot be awarded on the,,,,,,

other claims where the interests @18% (simple) has been awarded in accordance with the Arbitration & Conciliation Act, 1996. The claims allowed",,,,,,

above at S.No. 3,5 & 6 shall only carry an interest @18% per annum from the date of Award till the date of actual payment.â€​",,,,,,

The primary ground taken by the Government is that the Arbitrator had no power to go into the legality of the banning order. Thus, the Arbitrator",,,,,,

has mis-conducted himself. Further, the Government argues that arbitration is not the forum for deciding on issues related to fraudulent conduct of the",,,,,,

Supplier. The banning order was passed by an independent authority and did not arise from the rate contracts which were entered into. The banning,,,,,,

order can only be challenged in a court of law and not in arbitration proceedings. The Government further submits that the claims are barred by,,,,,,

limitation. The Supplier having played serious fraud, the ban imposed was proportionate. The Arbitrator has failed to consider crucial evidence.",,,,,,

Damages also have been awarded on the basis of hypothetical claims.,,,,,,

On behalf of the Supplier, it is submitted that the banning order had serious consequences as majority of the supplies made by the Supplier were to",,,,,,

the Government. The banning order had an immediate effect of stopping the entire business of the Supplier. The claims were not barred by limitation,,,,,,

and no interference is called for.,,,,,,

The following four issues arise for consideration: -,,,,,,

(1) Whether the claim petition was barred by limitation?,,,,,,

(2) Whether the Arbitrator could have gone into the issue of fraud / forgery?,,,,,,

(3) Whether the banning order was justified in the facts?,,,,,,

(4) Whether the Supplier was entitled to claims for damages for losses?,,,,,,

Issue No.1: Whether the claim petition was barred by limitation?,,,,,,

The banning order admittedly was issued on 30th December, 2002. The order was extremely broad and wide. The Government and all its",,,,,,

Departments, Ministries and offices were banned/forbidden from having any commercial/business dealings with the Supplier including its subsidiaries.",,,,,,

This ban was to be operative for a period of ten years from 30th December, 2002 to 29th December, 2012. The award was passed on 6th June, 2012",,,,,,

i.e. six months before the effect of the ban order was coming to an end. The order of the Supreme Court permitting the Supplier to invoke arbitration,,,,,,

was passed on 11th October, 2004 but the arbitration itself was invoked only in 2009 i.e. after a period of five years. At the time when the arbitration",,,,,,

was invoked, the ban order was still in operation.",,,,,,

The nature of a banning order or a blacklisting order is very well known. The Supreme Court has in fact termed such an order as ‘civil,,,,,,

death’ to a company. The order was operational in respect of every tender which may have been floated by all Government Departments,",,,,,,

Ministries and offices, for storing papers/paper products which the Supplier could have supplied. Every new tender which was floated from which the",,,,,,

Supplier was banned, gave a new cause of action to the Supplier. Any order which continuously affects the business of a company or any entity",,,,,,

constitutes a continuing cause of action or a recurring cause of action. In the case of a continuing cause of action, limitation is to be viewed",,,,,,

differently.,,,,,,

On the issue of limitation, the Arbitrator had framed a preliminary issue on 11th March, 2010. Pursuant to which, affidavits and pleadings were",,,,,,

filed by the parties. On 5th January, 2011, the Arbitrator records that the Supplier is facing a continuous injury. The Arbitrator notes several tenders",,,,,,

floated by the Government of Himachal Pradesh, Government of Punjab and Government of Madras etc. where the Supplier could not participate. In",,,,,,

fact, the Supplier was not even issued the login Id and password by the DGS&D tender management system which disabled them from participating in",,,,,,

the various tenders. The Arbitrator holds that “in view of the above discussion, its appears that there appears to be continuing injuryâ€. This finding",,,,,,

of the Arbitrator is as per law. Section 22 of the Limitation Act, 1963 clearly provides that a fresh period of limitation begins to run every time the",,,,,,

injury continues. For the sake of ready reference, Section 22 is set out herein below: -",,,,,,

“22. Continuing breaches and torts â€" In the case of a continuing breach of contract or in the case of a continuing tort, a fresh period of limitation",,,,,,

begins to run at every moment of the time during which the breach or the tort, as the case may be, continues.â€​",,,,,,

On the basis of the decision of the Supreme Court in Bengal Waterproof Limited vs. Bombay Waterproof,,,,,,

Manufacturing Company and Ors. (1997) 1 SCC 99, it is clear that the Supplier faced continuous injury and was hence entitled to invoke arbitration",,,,,,

even after the lapse of five years. Since the invocation was during the period when the ban order was continuing, it cannot be held that the claims",,,,,,

were barred by limitation.,,,,,,

Issue No.2: Whether the Arbitrator could have gone into the issue of fraud / forgery?,,,,,,

The Supreme Court vide its order dated 11th October, 2004 had clearly relegated the parties to arbitration on the ground that the disputes involved",,,,,,

questions of fact. The question that arises is as to whether the allegation of the inspection notes having been forged is of such a nature that could not,,,,,,

be determined by the Arbitrator.,,,,,,

The allegations are of forgery on the inspection notes and of wrong endorsement on the reverse of the inspection notes. The said allegations were,,,,,,

to be considered by the Arbitrator in the chronology of events that took place based on the documents on record. The issue did not involve allegations,,,,,,

of criminality or adjudication thereof. The Supreme Court, in the judgment of A. Ayyasamy v. A. Paramasivam and Others (2016) 10 SCC",,,,,,

386 held that the categories of non-arbitrable subject matter are devised by Courts and unless there are very serious allegations of fraud, bordering on",,,,,,

a criminal offence or where the allegations are very complicated in nature, it can be held that the dispute is not arbitrable.",,,,,,

“18. When the case involves serious allegations of fraud, the dicta contained in the aforesaid judgments would be understandable. However, at the",,,,,,

same time, mere allegation of fraud in the pleadings by one party against the other cannot be a ground to hold that the matter is incapable of settlement",,,,,,

by arbitration and should be decided by the civil court. The allegations of fraud should be such that not only these allegations are serious that in normal,,,,,,

course these may even constitute criminal offence, they are also complex in nature and the decision on these issues demand extensive evidence for",,,,,,

which civil court should appear to be more appropriate forum than the Arbitral Tribunal. Otherwise, it may become a convenient mode of avoiding the",,,,,,

process of arbitration by simply using the device of making allegations of fraud and pleading that issue of fraud needs to be decided by the civil court.,,,,,,

The judgment in N. Radhakrishnan does not touch upon this aspect and said decision is rendered after finding that allegations of fraud were of serious,,,,,,

nature.,,,,,,

In view of our aforesaid discussions, we are of the opinion that mere allegation of fraud simpliciter may not be a ground to nullify the effect of",,,,,,

arbitration agreement between the parties. It is only in those cases where the Court, while dealing with Section 8 of the Act, finds that there are very",,,,,,

serious allegations of fraud which make a virtual case of criminal offence or where allegations of fraud are so complicated that it becomes absolutely,,,,,,

essential that such complex issues can be decided only by civil court on the appreciation of the voluminous evidence that needs to be produced, the",,,,,,

Court can sidetrack the agreement by dismissing application under Section 8 and proceed with the suit on merits. It can be so done also in those cases,,,,,,

where there are serious allegations of forgery/fabrication of documents in support of the plea of fraud or where fraud is alleged against the arbitration,,,,,,

provision itself or is of such a nature that permeates the entire contract, including the agreement to arbitrate, meaning thereby in those cases where",,,,,,

fraud goes to the validity of the contract itself of the entire contract which contains the arbitration clause or the validity of the arbitration clause itself.,,,,,,

Reverse position thereof would be that where there are simple allegations of fraud touching upon the internal affairs of the party inter se and it has no,,,,,,

implication in the public domain, the arbitration clause need not be avoided and the parties can be relegated to arbitration. While dealing with such an",,,,,,

issue in an application under Section 8 of the Act, the focus of the Court has to be on the question as to whether jurisdiction of the Court has been",,,,,,

ousted instead of focusing on the issue as to whether the Court has jurisdiction or not. It has to be kept in mind that insofar as the statutory scheme of,,,,,,

the Act is concerned, it does not specifically exclude any category of cases as non-arbitrable. Such categories of non-arbitrable subjects are carved",,,,,,

out by the Courts, keeping in mind the principle of common law that certain disputes which are of public nature, etc. are not capable of adjudication",,,,,,

and settlement by arbitration and for resolution of such disputes, Courts i.e. public fora, are better suited than a private forum of arbitration. Therefore,",,,,,,

the inquiry of the Court, while dealing with an application under Section 8 of the Act, should be on the aforesaid aspect viz. whether the nature of",,,,,,

dispute is such that it cannot be referred to arbitration, even if there is an arbitration agreement between the parties. When the case of fraud is set up",,,,,,

by one of the parties and on that basis that party wants to wriggle out of that arbitration agreement, a strict and meticulous inquiry into the allegations",,,,,,

of fraud is needed and only when the Court is satisfied that the allegations are of serious and complicated nature that it would be more appropriate for,,,,,,

the Court to deal with the subject-matter rather than relegating the parties to arbitration, then alone such an application under Section 8 should be",,,,,,

rejected.,,,,,,

When we apply the aforesaid principles to the facts of this case, we find that the only allegation of fraud that is levelled is that the appellant had",,,,,,

signed and issued a cheque of Rs.10,00,050/- dated 17-06-2010 of “Hotel Arunagiri†in favour of his son without the knowledge and consent of",,,,,,

the other partners i.e. the respondents. It is a mere matter of accounts which can be looked into and found out even by the arbitrator. It does not,,,,,,

involve any complex issue. If such a cheque is issued from the hotel account by the appellant in favour of his son, it is easy to prove the same and then",,,,,,

the onus is upon the appellant to show as to what was the reason for giving that amount from the partnership firm to his son and he will have to,,,,,,

account for the same. Likewise, the allegation of the respondents that daily collections are not deposited in the bank accounts is to be proved by the",,,,,,

respondents which is again a matter of accounts.,,,,,,

We, therefore, are of the opinion that the allegations of purported fraud were not so serious which cannot be taken care of by the arbitrator. The",,,,,,

Courts below, therefore, fell in error in rejecting the application of the appellant under Section 8 of the Act. Reversing these judgments, we allow these",,,,,,

appeals and as a consequence, application filed by the appellant under Section 8 in the suit is allowed thereby relegating the parties to the arbitration.â€​",,,,,,

A similar view has been taken by a Single Judge of this Court in Indian Statistical Institute vs. A2Z Constructions Arb. A. 38/2015 (decided on,,,,,,

09.04.2018),,,,,,

In Kulja Industries Limited v. Chief Gen. Manager W.T. Proj. BSNL and Ors. (2014) 14 SCC 731 the Supreme Court while considering the,,,,,,

principles applied for banning orders held as under: -,,,,,,

“21. The guidelines also stipulate the factors that may influence the debarring official’s decision which include the following:,,,,,,

(a) The actual or potential harm or impact that results or may result from the wrongdoing.,,,,,,

(b) The frequency of incidents and/or duration of the wrongdoing.,,,,,,

(c) Whether there is a pattern or prior history of wrongdoing.,,,,,,

(d) Whether contractor has been excluded or disqualified by an agency of the Federal Government or have not been allowed to participate in State or,,,,,,

local contracts or assistance agreements on a basis of conduct similar to one or more of the causes for debarment specified in this part.,,,,,,

(e) Whether and to what extent did the contractor plan, initiate or carry out the wrongdoing.",,,,,,

(f) Whetherthe contractor has accepted responsibility for the wrongdoing and recognized the seriousness of the misconduct.,,,,,,

(g) Whether the contractor has paid or agreed to pay all criminal, civil and administrative liabilities for the improper activity, including any investigative",,,,,,

or administrative costs incurred by the government, and have made or agreed to make full restitution.",,,,,,

(h) Whether contractor has cooperated fully with the government agencies during the investigation and any court or administrative action.,,,,,,

(i) Whether the wrongdoing was pervasive within the contractor’s organization.,,,,,,

S. No.,S.O. No/Dt,"I/Note No: and

date",Description,Qty. details,Pay details,Amount Rs.

,PP.,DC-,Photocopier,1390,PA039,

,"83.01. 10042.

90516 dated

21.3.2 001","39331F of

27.4.01",Paper,"reams 9.01

(1000)",,"1,40,001

,"PP.

83.00.

1132.2

.90517

Dated

21.3.2001","DC39341F of

27.4.01","Photocopier

Paper","2119 PAO39

reams",PA039,"4,18,757

File Ref. HYD/Compt/GE/279,Dated:20/23.7.2001,,,,,

Name of office/circle which carried out inspection of

stories","Director (GA), Delhi Circle",,,,,

Name and address of the consignee,"ACOS, SIF, SCRly, Secunderabad",,,,,

Name and address of the form,"M/s Delhi Paper Products Co. Pvt. Ltd., 19

IGI, Gurgaon Road, KapasheraMarg, New

Delhi 110037",,,,,

Contract Number & date (In case of R/C supply

Order No. also to be stated)","R/CNo. PP3/RC06011800/Photocopier Paper

2000-2001/D0488/DPPC/158dt8/9/2000

COS,SC Rly S/oNO PP 83.00.1130.90515

dt.21/3/2001",,,,,

Description of stores with specification drg. No. of

approved sample if any","Photocopier Paper 210x297mm (A.4)GSM 80

±3%.Specification as per R/C",,,,,

Quantity rejected,"5900 Reams (590 Cartons Each Carton

contains 10 Reams)""",,,,,

were in fact made. The finding of the arbitrator reads:,,,,,,

“20. The documents so exhibited by respondent show a joint investigation report dated 23.07.2001 showing a quality re-inspection of stores at,,,,,,

consignees godown, there by establishing the presence of stores in consignees godown. A question so arises as to how the supplies can be taken up",,,,,,

for joint investigation once the supply order has been cancelled on 13.07.2001 and the claimant has been asked to lift back the supplies. Further facts,,,,,,

so established on appreciating the evidence on record the fact that the receipt portion of the Inspection No (Advance Payment Copy) reflects a similar,,,,,,

receipt an all the three I/Note of the three supply orders i.e. 90515, 90516 & 90517â€​",,,,,,

This is a complete perversity when seen in light of the show cause notice and the inspection report. The show cause notice is clear. It alleges that,,,,,,

no supplies were made against supply orders 90516 and 90517. Any supply made against supply order 90515, with which the Inspection report was",,,,,,

concerned, was wholly irrelevant and alien to the issue at hand. The inferences drawn by the Arbitrator are clearly contrary to the letter dated 20 th",,,,,,

August, 2002 of the South Central Railways as also the letters dated 24th January, 2002 and the cancellation orders.",,,,,,

The cancellation of the supply orders having been placed on record by the Supplier and there being no explanation as to how it can claim that the,,,,,,

supplies were actually made, the findings of the Arbitrator are clearly contrary to the record. In fact in paragraph 12 of the claim petition, it is only a",,,,,,

plea of the Supplier that it was forced to lift back the materials and in support thereof it relies on a self-serving letter dated 7th August, 2002, which it",,,,,,

claims to have written to the Commercial Taxes Department at Bhoraj, Adilabad. This letter is not a confirmation by the consignee that supplies were",,,,,,

made and were lifted back. Thus, it is quite clear that the stand of South Central Railways and the letter written by it having been completely ignored",,,,,,

by the Arbitrator, the award suffers from a patent illegality. The Supplier having indulged in claiming payments against fraudulent supplies, was rightly",,,,,,

banned/blacklisted.,,,,,,

The ban order is accordingly upheld. Any person who indulges in such fraudulent practices does not deserve to be viewed sympathetically. The,,,,,,

ban order was valid for a period of ten years and the time has already lapsed and has come to an end in December, 2012.",,,,,,

The Supplier is, however, permitted to participate in future tenders without any reference to the ban order inasmuch as the Supplier cannot be",,,,,,

punished perpetually. By applying the doctrine of proportionality, the tenure of the ban is upheld, however, the Supplier is no longer required to be",,,,,,

punished for all times to come and is permitted to bid in future tenders without any reference to the ban order.,,,,,,

Issue No.4: Whether the Supplier was entitled to claims for damages for losses?,,,,,,

Since the banning order is being upheld, none of the claims of the Supplier are liable to be allowed. The award of damages on various counts is",,,,,,

accordingly set aside.,,,,,,

The OMP is allowed in the above terms.,,,,,,