2013 (10) TMI 87 - HC - Indian Laws

De-Registration and Withdrawal of Registration - Deputy General Manager of PHHL directed de-registration of the petitioner company from the list of suppliers of PHHL and banned it from doing business dealings in future with PHHL - Held that - the petitioner has not disclosed the true state of affairs to the Court since it took the stand that it has no linkage with the Indian Company whereas the true state of affairs as reflected in the statement made by Mr. Santosh Kumar and various documents sent by the petitioner company to PHHL reflect otherwise and clearly indicate a close connection between the two companies. - petition dismissed.

Issues Involved:
1. Competency of Deputy General Manager to issue the show cause notice.
2. Deprivation of the right to a second appeal.
3. Justification of the misconduct charge against the petitioner company.
4. Excessiveness of the banning period.

Detailed Analysis:

1. Competency of Deputy General Manager to Issue the Show Cause Notice:
The petitioner argued that the Deputy General Manager was not competent to issue the show cause notice as per the guidelines on "Banning Business Dealings." However, it was contended by the respondent that these guidelines came into force after the transaction with the petitioner company and were applicable only to those who entered into an Integrity Pact with PHHL. The court found merit in the respondent's contention, noting that the petitioner did not enter into such a pact. Moreover, the guidelines only required the proposal to initiate banning to be approved by the Competent Authority, not that the show cause notice itself should be signed by them. The court concluded that the Deputy General Manager was competent to issue the notice since it was approved by the CMD of PHHL, a higher authority.

2. Deprivation of the Right to a Second Appeal:
The petitioner claimed deprivation of the right to a second appeal because the first appeal was heard by the Board of Directors. The court noted that the banning guidelines were not applicable to the petitioner, as they came into force later. Additionally, the court had directed an appeal to the Board of Directors, leaving no scope for a second appeal. The Board, being the second appellate authority, had considered the appeal, and thus, no prejudice was caused to the petitioner.

3. Justification of the Misconduct Charge Against the Petitioner Company:
The petitioner admitted to requesting the Indian Company to clear the consignment from Customs, making the Indian Company an agent of the petitioner. Mr. Santosh Kumar, an employee of the Indian Company, forged documents to clear the consignment. The court held that the petitioner, as the principal, could not escape liability for the agent's illegal acts, even if it was not criminally liable. The penalty imposed on PHHL due to the misconduct of Mr. Santosh Kumar, acting as an agent of the petitioner, brought a bad name to PHHL.

4. Excessiveness of the Banning Period:
The petitioner argued that the banning period was excessive and had already been in force for more than three years. The court permitted the petitioner to make a representation to the Board of Directors to reduce the banning period, but the Board decided against it. The court found no reason to interfere with the decision, considering the severity of Mr. Santosh Kumar's actions and the reasonable probability of senior management's involvement. The court also noted that the petitioner did not disclose its close connection with the Indian Company, which further justified the decision.

Conclusion:
The court found no merit in the petitioner's contentions and dismissed the petition, upholding the banning order. The decision was deemed fair, reasonable, and not arbitrary, with no orders as to costs.

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