D.K. JAIN J.

(1) RULE D.B.

(2). Having heard counsel for the parties exhaustively and having considered facts and circumstances involved herein we proceed to dispose of the writ petition at this stage itself.

(3). By this petition, filed under Articles 226 and 227 of the Constitution, petitioners seek a writ of mandamus against the respondents directing them to desist from giving effect to the decision, communicated to the petitioners vide letter dated 17 July 1991, banning business dealings of the petitioners and their allied/sister concerns with Indian Railways for a period of three years.

(4). Petitioner No. I, hereinafter referred to as the firm, is a partnership firm engaged in the import, export, sales and supplies of various kinds of engine parts. The firm and its sister concerns also represent various overseas manufacturers and- suppliers of various engine parts including engine valves fitted on locomotives. It is stated that the firm has been supplying various parts/spares for locomotives to respondents I to 3 against the global tenders floated by them.

(5). In the year 3988, Diesel Locomotives Works, Indian Railways, Varanasi (for short DLW), respondent No. 3 hersia, floated a tender (Tender No. 7021/10-100336;/ I 1571prodicit- 1) to be opened on I November 1988 for the supply of imported air and exhaust valves. It is stated that ,the tender stipulated payment in Indian rupees and the bidders had to impact valves against their own import licence. In response to the paid tender notice, the firm offered to supply the imported valves vide their letters dated 2s October 1988 and 4-April 1989. One of the terms of the said quotation was: "goods offered will be of either EATON/trw make made in USA". On acceptance of petitioners two quotations, two purchase orders dated 16 May 1989 and 17 May 1089 were placed by DLW for supply of 5000 pieces and 14000 pieces of the said valves respectively on the terms and conditions as stipulated in the purchase order for "air and exhaust valves Allocate No. 2231129 TRW/ EATON make DWL part No. . 10240494". Thus, admittedly the order stipulated that the valves were to be either of EATON or TRW make.

(6). Towards the said purchase orders, 1957 pieces were offered by the firm for inspection on 26 May 1989. These pieces were inspected by DLWs Inspector who submitted his inspection report along with his tour report. Copies of both the said documents are on record. The respondents have however placed before us from their records a report of the said DLWs Inspector which is not same as that produced by the petitioners. Counsel for the petitioners has not been able to tell us as to how and from where he got the- inspection report filed by him. However, the fact remains that both the reports mention about a work test certificate of M/s. TRW for 1957 pieces, which is alleged to have been produced and filed by the firm at the time of inspection. On this aspect of the matter, we will advert to a little later. It is alleged that DLW was not satisfied with the documents filed by the firm regarding the quality of the valves supplied inasmuch as the said work test certificate was undated and had some glaring interpolations. When these discrepancies were brought to the notice of the firm, it is alleged, another work test certificate, purportedly issued by M/,s TRW, on 13 May 1989, was filed along with the firms letter dated 8 June 1989. It is stated by the respondents that DLW got the genuineness of work test certificate, allegedly filed by the firm cross-checked from M/s. TRW International (for short TRW) who intimated DLW that no such certificate had been issued to the firm. It is further alleged that when the said transaction was being investigated, one of the partners of the firm, namely Shri J. Nath, appeared before the officials of DLW on 15 aud/or 16 June 1989 and filed a set of certificates entitled "certificate of Manufacture" purportedly issued by M/s. Carl M, Cummings Manufacturing Company of USA (for short CMC) on 18 May 1989, covering the supply in question of 1957 valves. The said certificates were filed in support of firms stand that the said valves were in fact manufactured by CMC at their plant which was formerly owned by TRW.

(7). Since the Railway Board, respondent No. 2 herein, was of the view that the firm had attempted to pass on the said valves as of TRW make to meet the ordered specification, on the basis of forged documents and had attempted to cheat the railways, a show cause notice in the form of a memorandum, dated 19 July 1990, along with statement of charges/misconduct was issued to the firm, calling for representation, if any, from the firm against the proposed action by the railways of banning business dealings with the firm and its sister concerns for a period of three years.

(8). The firm asked for copies of documents which were being relied against it. In response thereto, photo copies of some documents were supplied to the firm on 16 November, 1990. Not being satisfied the firm shot back another letter on 19 November 1990 asking tat authenticated copies of some documents. Some correspondence ensued between the firm and the Railway Board, the former insisting upon inspection of original documents. It appears that personal discussions also took place between the representative of the firm and the officials of the Railway Board. However, on 13 February 1991 the firm was finally granted 30 days time to reply to charge/allegations leveled against it in memorandum of 19 July 1990. From the documents placed before us, it appears that no reply was filed by the firm on merits and instead it insisted on inspection of original documents on the basis whereof the said memorandum had been issued. Having failed to get any specific reply on the said memorandum, respondent No. 2 took 2 final decision to ban business dealings with the firm for a period of three years. This decision was communicated to the firm by the Director, Railway Stores (IC), Railway Board, for and on behalf of President of India vide his letter dated 15 April 1991.

(9). Being aggrieved, petitioners herein, preferred a civil writ petition in this Court, being C. W. P. No. 1369 of 1991, challenging the said order, inter alia, on the grounds that: (i) it was violative of principles of natural justice inasmuch as despite repeated requests, original document, on which reliance was placed by the respondents had neither been shown nor authenticated copies thereof had been furnished and (ii) if was malafide and based on contemporaneous material placed on record by firms business rivals in collusion with the General Manager of DLW. Although the writ petition was contested by the respondents and in their answer to the show cause notice it was categorically stated that the petitioners were given an opportunity to inspect all the documents which were available in the original files but, it appears, it was finally disposed of at the admission stage on 31 May 1991 with a direction to respondents to give inspection of the original documents asked for by the Firm vide its letter dated 19 November 1990 and hear the petitioner again on the show cause notice dated T9 July 1990. The Court, in fact, fixed the date and venue of inspection.

(10). It is pertinent to mention at this stage that in the said writ petition, the petitioners did not disclose that they had earlier filed another writ petition, being C. W. P. No. 3197190, wherein on receipt of memorandum of 19 July 1990, they had sought directions to the respondent to supply copies of original documents and inspection thereof before they were asked to file reply to the said memorandum. This Court while dismissing the writ petition had observed thus:

"from the memorandum of the charge-sheet supplied to the petitioner it is- clear that most of the documents are furnished by them and all other facts are in their personal knowledge. On the basis of the same petitioner can file reply to the show cause notice. We do not find any ground to interfere, Dismissed. "

(11). From firms letter dated 20 January 1991, Annexure X-1 to the present writ petition, it appears that. inspection of all the documents, which are available on the record, was allowed to the firms representative. It, however, appears that some of the documents so shown were not the originals. None the- less, in the same letter the firm gave a detailed reply to the memorandum of 19 July. 1990,-denying therein each and every charge vehemently, though mentioning that all the documents purportedly issued by TRW were placed on record by its competitors with the active connivance of General Manager of DLW, it also appears from the firms letter dated 3 July 1991 (Annexure Z-4) that a personal hearing was also granted to the firm on 1 July 1991.

(12). Not being satisfied with the explanation submitted on behalf of the firm the competent authority came to the conclusion that the firm had wilfully tried to supply the said. valves to DLW in contravention of contractual obligation, as the valves were not of TRW mark, on the strength of works test certificate of TRW which was not genuine. The Board found it to he gross misconduct on the part of the firm and, therefore, decided to ban the business dealings with the firm and its allied/sister concerns with the Indian Railways (including production) units for a period of three years. Hence the present petition.

(13). A common answer to the show cause notice was filed on behalf of all the respondents, to which petitioners filed their rejoinder. However, during the course of hearing on 25 September 1991 it was pointed out by the learned counsel for the petitioners that in the impugned order there was reference to the statements given by various officials which had been relied upon to prove that the firm had knowingly tried to pass on valves not manufactured by TRW by submitting fabricated documents. The counsel urged that the firm was not apprised of any such statements which amounted to violation of the rules of natural justice. Time was sought by the counsel for the respondents to verify this fact. In an additional affidavit filed on behalf of the respondents, it has now been averred that the words mentioned in para 2.) of the impugned order viz. "from the documents available on official file and statements given by various officials" refer to statements which had been recorded by the Director, Revenue Intelligence (DRI) in the course of inquiry, copies whereof had been supplied by the DRI to the firm along with its notice dated 6 February 1990. It is further stayed that a copy of the said notice along with enclosure of the documents, the list whereof was attached to the notice, was also received by the respondents from the office of DRI. It is further stated in the said affidavit that since the copies of the statements bad already been received by the petitioners directly through the office of DRI with the show cause notice dated 6 February 1990, it was not considered necessary to make available the same statements once again. It has further been categorically stayed in the said additional affidavit that no other statement of any of the officials or other witnesses had been recorded and the only statements to which a refcience was made in the impugned order were the statements recorded by the office of DRI, copies where of had already been supplied to the petitioners.

(14). Mr. Arun Jaitley, Senior Advocate, learned counsel for the petitioners, has assailed before us the impugned action of the respondents and has canvassed three principal contentions, namely : (i) impugned order not based on any cogent material, (ii) denial of principles of natural justice, and (iii) exercise of power by the respondents for collateral purposes. While elaborating his arguments on the first two points, with more emphasis on the non-observance of principles of natural justice, the counsel has urged that action of the respondents in relying on the statements and documents of the DRI, without putting the petitioners to notice is per se bad. He further submits that respondents failure to show to the petitioners original documents and also non supply of authenticated copies thereof is a grave violation of the principles of natural justice which makes the impugned action of black listing the petitioners void ab initio. Relying on the judgment of the Supreme Court in the case of S. L. Kapur v. Jagmohan, AIR 1981 SC 136 [LQ/SC/1980/396] , (1) Mr. Jaitley has contended that the alleged supply of documents to the firm by the DRI officials does not satisfy the requirements of natural justice. In support of his third contention that the impugned action of the respondents is tainted with malafides, inasmuch as it was resorted to throw the film. out of business at the behest of his business rivals, the learned counsel has placed reliance on some documents suggesting some affinity between DLWs General Manager, R. C. Sethi and other persons in the trade. In his endeavour to counter the allegation of the firm fabricating documents, it is submitted that under the prevailing circumstances no prudent person would ever venture to fabricate the documents, namely airway bill and TRW works test report, of which the petitioners have been accused of, he has attempted to derive support from the documents, indicating that : (a) the respondents were aware that TRW and CMC valves were one and the same thing as in December 1987 TRW had entered into an agreement with CMC, whereby TRW had sold to CMC its industrial products business located in California and (b) the firm had already furnished CMCs certificate of manufacture on I June, 1989 and, therefore, submission of contrary documents with firms letter of 8 June, 1989, was highly improbable.

(15). Mr. K. T. S. Tulsi, learned Additional Solicitor General appearing for the respondents, in resistance to the above, has contended that there is ample material on record to show that the conduct of the petitioners was not fair and the material on record supports the impugned action of the respondents, and further that the entire material on which the impugned action is based was within the knowledge of the firm. He has also raised a preliminary objection that the present petition involves determination of disputed questions of fact which is beyond the ambit of Article 226 of the Constitution.

(16). We are not inclined to reject the petition on the preliminary objection raised by the learned Additional Solicitor General, as we have heard the parties at length and for decision in the writ petition we are only taking a prima facie view of the matter. Having perused the inspection file and tender file placed before us by the respondents, as also various other documents placed on record by both the parties and having considered the matter thoughtfully, we find it difficult to hold that the impugned action of the respondents cither suffers from the vice of arbitrariness or that there has been violation of principles of natural justice.

(17). As we have already noted, the very first term of the quotation for the supply in question that the valves offered will either be of EATON or TRW make despite firms full knowledge that CMC had taken over TRW and at the relevant time neither valves were being manufactured nor were these marketed by CMC under the trade name TRW, we feel, not only raises strong suspicion but is a clear indicator of the motive of the firm to pass on the valves to DLW of a make other than TRW. Our view gets further strengthened from the report of DLWs Inspector, Mr. S. A. Khan, which, as noted above, expressly records that "works test certificate of M/s. TRW for 1957 numbers" is attached thereto. Even assuming for the sake of arguments that the inspection report of Mr. S. A. Khan, available on respondents record, is not genuine, as submitted by the learned counsel for the petitioners, the fact remains that the inspection report which is placed on record by the petitioners themselves as genuine cne, also refers to TRWs work test report. Thus, in so far as the filing of TRWs work test report before Mr. Khan is concerned, both the inspection reports, one filed by the petitioners and the other placed before us by the respondents, are not materially different on this crucial point. We, however, hasten to add that we have otherwise no reason to disbelieve the inspection report available on the record of the respondents in its entirety. There is a presumption that official records maintained in the normal course of business are correct. This indicates that the firm attempted to pass on the valves not manufactured by TRW in our opinion, therefore, these two factors by themselves are sufficient to reject petitioners contention that the impugned action of black listing the firm, is not based on sufficient material.

(18). As regards the controversies with respect to furnishing of CMCs works test report on 1 June 1989 or on 15/16 June 1989 and filing of airway bill and certificates purportedly issued by TRW, with firms letter of 8 June 1989. apart from the fact that these are highly disputed questions of fact which cannot be adjudicated upon in proceedings under Article 226 of the Constitution, because of the view we have taken above, we do not consider it necessary to say any further on the subject.

(19). That brings us to the question as to whether the firm has not been confronted with the material which has been relied upon for black listing it and thus denied a fair opportunity of putting a proper and complete representation to the memorandum of 19 July 1990. In other words, have the principles of natural justice been contravened in the instant case, as alleged.

(20). Principles of natural justice cannot be put in a strait jacket. These rules are not embodied rules and the question whether the requirement of these principles have been met in a given case depends to a great extent on the facts and circumstances of each case. What is to be seen is whether the affected persons knows for certain as to what is the accusation against him and has been given a fair opportunity to explain it. What is a fair opportunity, is again essentially a question of fact in each case. We are quite conscious of the fact that the black listing creates a barrier between the persons black listed and the Government in the matter of transactions and may even result in a civil death of an undertaking but, even under these circumstances what the principle of natural justice demands is that the authority concerned should have recorded an objective satisfaction and given an opportunity to the person concerned to represent his case before putting him oh the black list. Nothing more is required. In this regard it will be advantageous to refer to a judgment of the Supreme Court in Mahabir Auto Stores v. Indian Oil Corp. and others, 1990 SCC 752. In this judgment the Supreme Court while dealing with the rights and obligations of both the parties under Article 298 of the Constitution of India held that the decision of the State or its instrumentality, engaged in commercial transactions is an administrative decision and can be impeached on the ground that the decision is arbitrary or violative of Article 14 of the Constitution of India on any of the grounds available in public law field. However, on the question as to how far the State or its instrumentality has to got to comply with the requirements of natural justice. , the Court held as under :--

"therefore it is necessary to reiterate that even in the field of public law, the relevant persons concerned are to be affected, should be taken into confidence. Whether and in what circumstances that confidence should be taken into consideration cannot be laid down on an" strait racket basis. It depends on the nature of the right involved and nature of the power sought to he exercised in a particular situation. It is true that there is discrimination between power and right but whether the State on the instrumentality of a State has the right to function in public field or private field is a matter which, in our opinion, depends upon the facts and circumstances of the situation, but such exercise of power cannot be dealt with by the State or the instrumentality of the State without informing and taking into confidence, the party whose rights and powers are affected or sought to be affected, into confidence. "

(21). The Court further observed that in cases where the instrumentality of the State enters the contractual field, it should. be governed by the incidence of the contract and held that in the field of this nature, it may not be necessary to give reasons, but fairness must be to the parties concerned.

(22). Applying the principles laid down in Mahabirs case (supra) we are of the considered opinion that in the present case the petitioner had been duly taken into confidence before the impugned action had been taken against them. From the material which has come on record, we are satisfied that the firm knew all about the evidence which was proposed to be used against it. As noted above, it has been stated in the additional affidavit that all the incriminating documents, including the statements recorded by DRI officials, had either been shown or copies thereof had been given to the representatives of the firm. It has been further stated that all the material documents, namely (i) TRWs lest certificate as handed over by the firm to DLWs Inspector at the time of inspection on 26 May 1989, (ii) original covering letter dated 8 June, 1980, alleged to have been sent to DLW alongwith accompanying Airway bill etc. , (iii) original telex message received from TRW etc. were shown to firms representative on 14 June. 1991 in compliance with this Courts directive on 31 May, 1991 in CWP No. 1365191. We have no reason to disbelieve the same. In fact, there is no denial of this fact but what is alleged to be wanting is the inspection of some more original documents and supply of authenticated copies thereof. We are satisfied from the contents of DLWs letter dated 26 June, 1991, (Annexure Z-1), addressed to the firm, that all the original documents, available on the records of the respondents, have been shown to the representative of the firm. In our view, on the facts and the circumstances of the case firms further insistence on inspection of some more original documents or supply of authenticated copies thereof is only an empty formality. The firm is fully aware of the contents of all the documents which have been relied upon against it. Therefore, we do not read any violation of the principles of natural justice in this case.

(23). Furthermore, we find from the record that the firm has also received fair treatment when it has been given personal hearing by Mr. H. S. Suri, Executive Director, Railway Stores at Rail Bhavan, New Delhi. Firms request for personal hearing with Member (Mechanical) Railway Board was also acceded to. In our opinion, therefore; requirements of natural justice have been fully met in the present case. Mr. Jaitleys reliance on S. L. Kapurs case (supra), in our view, is misplaced inasmuch as in the instant case the firm was fully put to notice the elements on which action against it was sought to be taken and we feel on the fact, and circumstances of the case, nothing more was to be done.

(24). Lastly, it is urged by Mr. Jaitley that the principles of natural justice demand that an opportunity should be given to the petitioners to cross-examine Mr. S. A. Khan, DLWs Inspector, to elicit the truth as to which of the two inspection reports is genuine. We do not feel persuaded to do so. As is observed by the Supreme Court in State of Jandk and others v. Bakshi Gulam Mohammmad and anr. , AIR 1967 SC 122 [LQ/SC/1966/139] , a right of hearing does not include a right to cross-examine and the right to cross-examine must depend upon the circumstances of each case. As already observed, there is no difference in both the reports on the crucial point of filing of TRWs works test certificate, which is sufficient to support respondents action.

(25). In view of the above, we would not like to interfere in writ jurisdiction. The writ petition is dismissed with costs. Counsel fee Rs. 2,500/ -. Rule is discharged and all interim orders made earlier are hereby vacated.