Indian Oil Corporation LTD. And 3 Ors. vs. M/S B K Construction And Anr.

Held

The Court held that the respondent was denied a meaningful and effective opportunity of being heard before being placed on the Holiday List. It was also held that the Holiday Listing Guidelines, relied upon by IOCL, were issued long after the completion of the work and the Purchase Order, thus their retrospective application was questionable. Furthermore, the Court found that the non-disclosure of findings from the Vigilance Report and the Joint Inspection Report to the respondent, while relying on these reports to justify the Holiday Listing and recovery of alleged excess payment, constituted a clear violation of the principles of natural justice and fairness. The Court agreed with the reasoning of the learned Single Judge and found no perversity or fault in the impugned judgment.

Facts

The Indian Oil Corporation Ltd. (IOCL), the appellant, had awarded a rate contract worth approximately Rs. 25.00 Crores to M/s B K Construction, the respondent, for capital and revenue works. The respondent completed the work between August 24, 2022, and December 7, 2022, and received a Completion Certificate. Nearly three years later, on October 7, 2025, IOCL issued a Show Cause Notice alleging excess payment of approximately Rs. 3.23 Lakhs (excluding GST) for additional items not covered by the original Purchase Order. This notice invoked Clause 2.1(a) of the Holiday Listing Guidelines dated January 19, 2023. The respondent replied, stating that any modifications were based on verbal instructions from IOCL officials, and bills were jointly measured, verified, and paid. The respondent also argued that the allegations were unjust and arbitrary after the Defect Liability Period expired and the work was used for three years. On January 22, 2026, IOCL placed the respondent on the Holiday List for one year.

Key Issues

1. Whether the Holiday Listing Guidelines dated January 19, 2023, could be retrospectively applied to a contract work completed in 2022, thereby violating the principle of non-retrospectivity? The respondent argued that the guidelines were issued after the contract was completed and thus could not be applied. The appellant did not record specific arguments on this point, but relied on the guidelines. 2. Whether the respondent was denied a meaningful and effective opportunity of being heard before being placed on the Holiday List, and whether the non-disclosure of Vigilance and Joint Inspection reports violated the principles of natural justice? The respondent contended that the inspection was carried out without their intimation, the report was prepared behind their back, and they were not given an effective hearing. The appellant did not record specific arguments on this point, but their action of placing the respondent on the Holiday List implies a different view.