{"id":207841,"date":"2004-03-19T00:00:00","date_gmt":"2004-03-18T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/delhi-development-authority-and-vs-uee-electrical-engg-p-ltd-and-on-19-march-2004"},"modified":"2018-11-29T22:27:39","modified_gmt":"2018-11-29T16:57:39","slug":"delhi-development-authority-and-vs-uee-electrical-engg-p-ltd-and-on-19-march-2004","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/delhi-development-authority-and-vs-uee-electrical-engg-p-ltd-and-on-19-march-2004","title":{"rendered":"Delhi Development Authority And &#8230; vs Uee Electrical Engg. (P) Ltd. And &#8230; on 19 March, 2004"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Delhi Development Authority And &#8230; vs Uee Electrical Engg. (P) Ltd. And &#8230; on 19 March, 2004<\/div>\n<div class=\"doc_bench\">Bench: S. Rajendra Babu, Arijit Pasayat, G.P. Mathur<\/div>\n<pre>           CASE NO.:\nAppeal (civil)  1725 of 2004\n\nPETITIONER:\nDELHI DEVELOPMENT AUTHORITY AND ANR.\n\nRESPONDENT:\nUEE ELECTRICAL ENGG. (P) LTD. AND ANR.\n\nDATE OF JUDGMENT: 19\/03\/2004\n\nBENCH:\nS. RAJENDRA BABU &amp; ARIJIT PASAYAT &amp; G.P. MATHUR\n\nJUDGMENT:\n<\/pre>\n<p>JUDGMENT<\/p>\n<p>2004(3) SCR 286<\/p>\n<p>The Judgment of the Court was delivered by<\/p>\n<p>ARIJIT PASAYAT, J. Leave granted in SLP (C) No. 23987\/2002.\n<\/p>\n<p>The Delhi Development Authority (herein after referred to as the &#8220;DDA&#8221;)<br \/>\ncalls in question the legality of the judgment rendered by a Division Bench<br \/>\nof the Delhi High Court whereby it has held that the act of the appellant<br \/>\nin not awarding contract to the respondent No. 1 M\/s UEE Electricals Engg.<br \/>\nP. Ltd. was not in accordance with law. Though the contract awarded to the<br \/>\nsecond respondent was not nullified, it was held by the High Court that the<br \/>\nfirst respondent who was deprived of its right was entitled to costs to be<br \/>\npaid by the appellant. Liberty was also granted to the respondent No.l  to<br \/>\nfile a suit for damages if it so thought appropriate.\n<\/p>\n<p>Background facts as projected by the appellant DDA which need to be noticed<br \/>\nare as follows:\n<\/p>\n<p>In March 2001, tenders were invited by the appellant for the supply and<br \/>\ninstallation of Clear Water Boosting Pumping Station at Command Tank No. 1<br \/>\nat Sector-7. Clause 10 of the Tender Notice indicated that the final<br \/>\ndecision, with respect to acceptance of the tender, rests with the Chief<br \/>\nEngineer (Electrical) and there was no compulsion to accept the lowest<br \/>\ntender. On 21.5.2001 Ashok Sehgal &#8211; a Director of the respondent no. 1 &#8211;<br \/>\ncompany went to the Division Office of the Authority, where one Mr. V.K.<br \/>\nKapoor was acting as the Assistant Engineer (Electrical), for clearance of<br \/>\nhis earlier dues. Aforesaid Mr. Ashok Sehgal insisted that the files should<br \/>\nbe handed over to him which was not done by Mr. V.K. Kapoor. Since the<br \/>\nfiles were not handed over, Mr. Ashok Sehgal physically assaulted Mr. V.K.<br \/>\nKapoor with a sharp weapon which caused an injury near the right eye. At<br \/>\nabout 3.45 P.M., an FIR was lodged by Mr. V.K. Kapoor for alleged<br \/>\ncommission of offences punishable under Sections 186, 353, and 332 of the<br \/>\nIndian Penal Code, 1860 (in short the &#8220;IPC&#8221;) before the Dabri Police<br \/>\nStation, Delhi. The matter was also referred for enquiry to the Executive<br \/>\nEngineer (Headquarter) of DDA. Mr. Ashok Sehgal submitted a letter to the<br \/>\nCommissioner of Police at about 8 P.M. on the same date making allegations<br \/>\nagainst officials of DDA. On 19.6.2001 Enquiry Officer submitted a report<br \/>\ninter alia observing that Mr. V.K. Kapoor&#8217;s version was correct and that<br \/>\nthe allegations made by Mr. Ashok Sehgal appear to be in retaliation. It<br \/>\nwas found that Mr. Ashok Sehgal had tried to support his case by producing<br \/>\na medical certificate issued by a Private Poly Clinic which was not valid<br \/>\nfor a Medico-legal case. The further allegation that Mr. V.K. Kapoor<br \/>\ndemanded bribe from Mr. Ashok Sehgal was found to be incorrect. The<br \/>\nallegation that Mr. Ashok Sehgal was physically beaten up by Mr. V.K.<br \/>\nKapoor was also found to be not correct in view of the statements given by<br \/>\nsome eyewitnesses. It was, therefore, recommended that necessary action<br \/>\nshould be taken by the competent authority.\n<\/p>\n<p>On 23.7.2001 the price bid, so far as the tender in question, was opened<br \/>\nand the respondent no. 1 was declared to be a successful bidder. However,<br \/>\non 28.8.2001 the Project Manager (Electrical) wrote to the Secretary,<br \/>\nContractor Registration Board requesting for appropriate action against the<br \/>\nrespondent No. 1- company in the light of the Enquiry Report referred to<br \/>\nabove. It appears that subsequently action was taken by the Contractor<br \/>\nRegistration Board in terms of the Rule 22.3(k) of the Enlistment Rules of<br \/>\nDDA.\n<\/p>\n<p>On 25.10.2001 the Works Advisory Board decided that the tender of<br \/>\nrespondent No. 1 should not be considered since show cause notice was being<br \/>\nissued to it. Therefore, other tenderers were called for negotiations to<br \/>\nlower the rates offered. It was also decided that in case the rates were<br \/>\nnot lowered, fresh tender was to be issued.\n<\/p>\n<p>On 8.11.2001, after consideration of the lowered rates offered the work was<br \/>\nawarded to respondent no. 2 (respondent No. 3 in the writ petition before<br \/>\nthe High Court).\n<\/p>\n<p>Show cause notice was issued to respondent No. 1 on 5.12.2001 requiring it<br \/>\nto show cause why it should not be blacklisted by the appellant-Authority.<br \/>\nReply to the show cause notice was submitted on 13.12.2001. A Writ Petition<br \/>\nwas filed by the respondent No. 1 questioning award of the contract to<br \/>\nrespondent no. 2. By the impugned judgment, the High Court, inter alia,<br \/>\nheld that the Director of the Company and the Company itself are two<br \/>\nseparate legal entities and even if any unbecoming act was done by the<br \/>\nDirector, that should not stand in the way of the contract being awarded to<br \/>\nthe respondent No. 1- company. Therefore the Writ Application was disposed<br \/>\nof with the directions as noted above.\n<\/p>\n<p>It appears that subsequently on 14.8.2002 the Contractor Registration Board<br \/>\ndebarred the respondent No. 1 &#8211; company and its Director for a period of<br \/>\nfive years. A Writ Petition was filed before the Delhi High Court<br \/>\nchallenging the order passed by the Contractor Registration Board. Learned<br \/>\nSingle Judge quashed the order of the Contractor Registration Board keeping<br \/>\nin view of the impugned judgment dated 12.7.2002. However, liberty was<br \/>\ngiven to the Appellant-Authority to issue a detailed and reasoned order. It<br \/>\nappears that subsequently on 3.1.2003 a fresh order, debarring the<br \/>\nrespondent no. 1 &#8211; company and its Director for a period of five years, has<br \/>\nbeen passed. That is the subject matter of challenge in WP(C) 156 of 2003.\n<\/p>\n<p>In support of the appeal, learned counsel for the appellant &#8211; DDA submitted<br \/>\nthat the approach of the High Court is clearly erroneous. The scope of<br \/>\njudicial review of administrative action is very limited. Unless there is a<br \/>\nflaw in the decision-making process, there is no scope of any interference.<br \/>\nIn the instant case all the relevant aspects were taken by the Authority<br \/>\ninto account and thereafter the tender submitted by the respondent No. 1 &#8211;<br \/>\ncompany was rejected. The High Court proceeded on the erroneous premises by<br \/>\nobserving that no action for blacklisting the respondent No.l &#8211; company was<br \/>\ntaken. This is factually incorrect. In fact the Works Advisory Board took<br \/>\nnote of the fact that already recommendation had been made by the<br \/>\nContractor Registration Board in the matter of blacklisting the respondent<br \/>\nNo. 1 &#8211; company. The High Court proceeded is if there were mala fides<br \/>\ninvolved and that the action of the Director of respondent No. 1- company<br \/>\nin assaulting an employee of the Appellant-Authority and causing serious<br \/>\ninjuries was not sufficient to take action against the respondent No. 1 &#8211;<br \/>\nCompany. Respondent No. 1 -Company being an incorporate body who acts<br \/>\nthrough its Directors, when the act of a Director of the Company itself was<br \/>\nfound to be objectionable, attracting criminal action, there was nothing<br \/>\nwrong in the Appellant-Authority deciding not to accept the tender offered<br \/>\nby the respondent No.l -Company. The High Court was not justified in<br \/>\ninterfering with the action taken.\n<\/p>\n<p>Per contra, learned counsel appearing for the respondent No. 1 -Company<br \/>\nsubmitted that it has been rightly observed by the High Court that the<br \/>\nrespondent No. 1 &#8211; Company and its Directors are separate legal entities.<br \/>\nEven if it is accepted for the sake of argument that a director of a<br \/>\ncompany had done some objectionable act, that could not have been<br \/>\nconsidered as a ground to refuse acceptance of the tender submitted by the<br \/>\nrespondent No. 1 &#8211; Company particularly when the prices offered were<br \/>\nlowest.\n<\/p>\n<p>One can conveniently classify under three heads the grounds on which<br \/>\nadministrative action is subject to control by judicial review. The first<br \/>\nground is &#8220;illegality&#8221; the second &#8220;irrationality&#8221;, and the third<br \/>\n&#8220;procedural impropriety&#8221;. These principles were highlighted by Lord Diplock<br \/>\nin Council of Civil Unions v. Minister for the Civil Service, [1984] 3<br \/>\nA1I.ER. 935, (commonly known as CCSU Case).\n<\/p>\n<p>Courts are slow to interfere in matters relating to administrative<br \/>\nfunctions unless decision is tainted by any vuinerability such as, lack of<br \/>\nfairness in procedure, illegality and irrationality. Whether action falls<br \/>\nwithin any of the categories has to be established. Mere assertion in that<br \/>\nregard would not be sufficient.\n<\/p>\n<p>The famous case Associated Provincial Picture Houses Ltd. v. Wednesbury<br \/>\nCorpn. (KB at p. 229: All ER p. 682) commonly known as &#8216;The Wednesbury&#8217;s<br \/>\ncase&#8221; is treated as the landmark so far as laying down various basic<br \/>\nprinciples relating to judicial review of administrative or statutory<br \/>\ndirection.\n<\/p>\n<p>The law is settled that in considering challenge to administrative<br \/>\ndecisions courts will not interfere as if they are sitting in appeal over<br \/>\nthe decision.\n<\/p>\n<p>These principles have been noted in aforesaid terms in <a href=\"\/doc\/107483\/\">Union of India and<br \/>\nAnr. v. G. Ganayutham,<\/a> [1997] 7 SCC 463 and <a href=\"\/doc\/777136\/\">Indian Railway Construction Co.<br \/>\nLtd. v. Ajay Kumar,<\/a> [2003] 4 SCC 579. In essence, the test is to see<br \/>\nwhether there is any infirmity in the decision making process and not in<br \/>\nthe decision itself.\n<\/p>\n<p>Doubtless, he who seeks to invalidate or nullify any act or order must<br \/>\nestablish the charge of bad faith, an abuse or a misuse by the authority of<br \/>\nits powers. While the indirect motive or purpose, or bad faith or personal<br \/>\nill-will is not to be held established except on clear proof thereof, it is<br \/>\nobviously difficult to establish the state of a man&#8217;s mind, for that is<br \/>\nwhat the employee has to establish in this case, though this may sometimes<br \/>\nbe done. The difficulty is not lessened when one has to establish that a<br \/>\nperson apparently acting on the legitimate exercise of power has, in fact,<br \/>\nbeen acting mala fide in the sense of pursuing an illegitimate aim. It is<br \/>\nnot the law that mala fide in the sense of improper motive should be<br \/>\nestablished only by direct evidence. But it must be discernible from the<br \/>\norder impugned or must be shown from the established surrounding factors<br \/>\nwhich preceded the order. If bad faith would vitiate the order, the same<br \/>\ncan, in our opinion, be deduced as a reasonable and inescapable inference<br \/>\nfrom proved facts. (See S. Pratap Singh v. The State of Punjab, [1964] 4<br \/>\nSCR 733. It cannot be overlooked that burden of establishing mala fides is<br \/>\nvery heavy on the person who alleges it. The allegations of mala fides are<br \/>\noften more easily made than proved, and the very seriousness of such<br \/>\nallegations demands proof of a high order of credibility. As noted by this<br \/>\nCourt in <a href=\"\/doc\/1327287\/\">E.P. Royappa v. State of Tamil Nadu and Anr., AIR,<\/a> (1974) SC 555.\n<\/p>\n<p>Though in a legalistic sense an incorporated body like a company and its<br \/>\nDirectors are separate entities for certain purposes, in many companies<br \/>\nthey act as alter ego. For the acts of the Director, the concept of<br \/>\nvicarious and constructive liabilities operates so far as the company is<br \/>\nconcerned. The acts of the company are done primarily through the Directors<br \/>\nor the employees. In a case like the one at hand, the stand of respondent<br \/>\nNo. 1 &#8211; Company that even if one of its Directors has assaulted an employee<br \/>\nof the appellant-Authority, yet it is of no consequence when deciding the<br \/>\ntender, application. The strained relationship between a contractor and the<br \/>\ncontractee can have its implications in working out the contract.\n<\/p>\n<p>This is not a case where the appellant-Authority can be said to have acted<br \/>\nin a mala fide manner or with oblique motives. If the Authority felt that<br \/>\nin view of the background facts, it would be undesirable to accept the<br \/>\ntender, the same is not open to judicial review in the absence of any<br \/>\nproved mala fide or irrationality. The impugned judgment of the High Court<br \/>\nis indefensible and is set aside. The appeal is allowed. Costs made easy.\n<\/p>\n<p>W.P.(C) No.156 of 2003 has been filed by the Company questioning the<br \/>\ndecision taken by the Authority to blacklisting it.\n<\/p>\n<p>Learned counsel for the writ petitioner submitted that the petition was<br \/>\nfiled in this Court because of the pendency of the SLP. Since we have<br \/>\nseparately dealt with the SLP, we do not think it to be a fit case where<br \/>\nthe writ petition can be entertained directly in this Court. The Writ<br \/>\nPetition is transferred to the High Court, so that it can be registered as<br \/>\na Writ Petition to be dealt with and disposed of in accordance with law.<br \/>\nOrdered accordingly.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Delhi Development Authority And &#8230; vs Uee Electrical Engg. (P) Ltd. And &#8230; on 19 March, 2004 Bench: S. Rajendra Babu, Arijit Pasayat, G.P. Mathur CASE NO.: Appeal (civil) 1725 of 2004 PETITIONER: DELHI DEVELOPMENT AUTHORITY AND ANR. RESPONDENT: UEE ELECTRICAL ENGG. (P) LTD. AND ANR. DATE OF JUDGMENT: 19\/03\/2004 BENCH: [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-207841","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Delhi Development Authority And ... vs Uee Electrical Engg. (P) Ltd. 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