The Delhi High Court has set aside the defence ministry’s much-publicised June 2009 order that blacklisted seven firms to check corruption in the supply of arms and equipment.
On petitions filed by three of the firms — R.K. Machine Tools Ltd, HYT Innovative Projects Pvt Ltd and Bipromasz Bipron Trading S.A. (from Poland), Justice S. Muralidhar quashed the government order putting on hold all acquisition cases and projects with them.
The court held that the order was bad in law as the defence ministry violated the principles of natural justice by not giving the firms an opportunity to be heard and not assigning any reason for the blacklisting.
“The more sensitive the case, the greater the requirement for complying with the natural justice. After all, every person accused of an offence has to know what the basis of the allegation is,” the court said.
The defence ministry said it had only “put on hold” dealings with these firms and a final decision would be taken only after completion of the CBI probe. It further said the order should not be interfered with because it was “an extremely grave and sensitive case”.
The petitioners had contended that interruption of the supply of parts and components would seriously jeopardise not only the defence production of the country but also the ability of the defence establishment to maintain critical T-72 and T-90 tanks. The firms said they had made huge investments for production of the equipment to be supplied to the government.
Counsel for the petitioners, Siddharth Dave, VN Koura and Darpan Wadhwa had argued that the government could not blacklist a firm without issuing notice to them and giving them an opportunity to clear the air.
The court also rejected defence ministry’s contention that the FIR itself should be treated as show cause notice.
“…an FIR can hardly constitute a show cause notice,” the court said, pointing out that the ministry was not sure if the firms had copies of the FIR.
The court, however, said it was open to the government to proceed against the firms “in a time bound manner” and in accordance with law.