2017 (8) TMI 796 - HC - Indian Laws

The petitioner has been debarred from participating in the tender process or entering into any contract/sub contract for a period of three years by the Ministry of Finance - Held that - Since it is an admitted case that the petitioner had not deposited the complete dues of EPF till that date (and had deposited it on 05.11.2013), the respondent proceeded to pass the impugned order - A bare perusal of the letter dated 30.04.2013 indicates that there is no mention of blacklisting in the said letter. Thus, clearly the petitioner was not informed of any action such as blacklisting being contemplated against it. It is now trite law that an order of blacklisting has serious consequences on the party being blacklisted. In the present case, the letter dated 30.04.2013 did not indicate that any punitive measure was contemplated; the petitioner was called upon to provide certain details and was cautioned that any lapse on submission of details will be viewed as gross violation of Labour Laws/Service tax rules . Thus it is apparent in the facts of the present case that no show cause notice as required was issued by the respondent and, consequently, the impugned order is not sustainable - petition allowed - decided in favor of petitioner.

Summary

Issues:
Impugning an order debarring participation in tender process for non-compliance with EPF dues without a show cause notice.

Analysis:
The petitioner challenged an order debarring them from participating in tenders due to alleged non-compliance with EPF dues without a show cause notice. The petitioner had provided data entry operators and peons under a contract with the Ministry of Finance. Despite delays in EPF dues, the petitioner eventually paid all dues and informed the respondent. The respondent issued a letter in April 2013 demanding details and prompt payments, warning of labor law violations. The impugned order was passed due to incomplete EPF payments till November 2013.

The petitioner argued that the order lacked a show cause notice and that EPF dues were eventually paid, confirmed by EPF Organization. The respondent contended that default warranted the order and a notice was issued in the April 2013 letter. The court analyzed if a show cause notice was issued as required for blacklisting, citing precedents emphasizing fair play and consequences of blacklisting. Parameters for blacklisting decisions were outlined, including harm impact, prior history, corrective actions, and proportionality.

The court found that the April 2013 letter did not indicate punitive measures or blacklisting, failing to meet the requirements of a show cause notice for such severe actions. The absence of a proper notice rendered the impugned order unsustainable. The court refrained from assessing the merit of blacklisting, leaving it for the respondent to consider if necessary, with the petitioner having the opportunity to defend against any future show cause notice. Consequently, the impugned order was set aside, and the petition was disposed of with each party bearing its own costs.