Ms B K Construction vs. The Union Of INDIA And Ors

Facts

M/s B.K. Construction (the petitioner), a registered vendor with Indian Oil Corporation Limited (IOCL), was placed on IOCL's Holiday List for one year and removed from the approved vendor list via an order dated 22.01.2026. This order also directed the petitioner to refund Rs. 3,23,404.80 within seven days. The petitioner had executed a contract for constructing toilet and washroom facilities at IOCL's Dimapur LPG Bottling Plant, awarded via Purchase Order no. 27984726 dated 15.07.2022. A completion certificate was issued on 07.12.2022, certifying the work was executed as per specifications. On 07.10.2025, IOCL issued a show-cause notice alleging excess payment of Rs. 3,23,404.80 (excluding GST) due to execution of additional items not covered under the original purchase order, citing Holiday Listing Guidelines dated 19.01.2023. The petitioner replied, asserting that extra works were done on verbal instructions of IOCL officials due to site conditions and that an additional work order was assured. The petitioner denied excess payment and highlighted that measurements were jointly taken and verified.

Held

The Court held that the impugned Order dated 22.01.2026 was not sustainable in law due to a clear violation of the principles of natural justice. The Court found that IOCL arbitrarily denied the petitioner a real, meaningful, and effective opportunity of being heard before imposing the penalty of Holiday Listing. The non-disclosure of the findings in the Vigilance Report and the Joint Inspection Report to the petitioner, while relying on them to justify the drastic measure of Holiday Listing and recovery, was considered a direct contravention of natural justice principles. The Court also noted that the Holiday Listing Guidelines were applied retrospectively as they were issued after the concerned Purchase Orders. The Court relied on precedents like T. Takano vs. Securities and Exchange Board of India and Southern Painters vs. Fertilizers & Chemicals Travancore Ltd. to emphasize the necessity of disclosing material relied upon and providing an opportunity to respond. Consequently, the impugned order was set aside and quashed. The Court did not explicitly decide on the merits of the alleged excess payment or the necessity of the extra works, focusing solely on the procedural unfairness.

Key Issues

1. Whether the impugned Order dated 22.01.2026, placing the petitioner on the Holiday List and directing recovery of Rs. 3,23,404.80, is sustainable in law, considering the principles of natural justice? (Mixed question of law and fact) Petitioner's arguments: The petitioner contended that the action taken by IOCL was arbitrary and violative of natural justice. They argued that the Holiday Listing Guidelines dated 19.01.2023 were issued after the execution of the Purchase Orders, making their application retrospective. Crucially, the petitioner asserted that they were not provided with the Vigilance Report and Joint Inspection Report, which formed the basis of the allegations, thus denying them a meaningful opportunity to respond. They also argued that the extra works were executed on the verbal instructions of IOCL officials due to site conditions and that they were assured of an additional work order. Respondents' arguments: The respondents (IOCL) argued that the petitioner had executed additional items not covered under the original Purchase Order, leading to an excess payment of Rs. 3,23,404.80. They relied on their internal reports (Vigilance Report and Joint Inspection Report) to justify the action taken under the Holiday Listing Guidelines.