M/S. NOVA STEEL (INDIA) LTD.versusM.C.D. AND ORS.

                         M/S. NOVA STEEL (INDIA) LTD.                                 A
                                        v.
  ~
                                M.C.D. AND ORS.

                                  JANUARY 6, 1995

               (K. RAMASWAMY AND N. VENKATACHALA, JJ,]                                B

            Mercantile Law-Contract : Contract between parties-Non-execution
...   of by party which agreed to supply certain materials-Show cause notice is-
      sued-No reply-Therefore party deba"ed for two years-Whether unwar-
      ranted or arbitrary-Held: No.                                                   c
             The petitioner had negotiated and agreed to supply 3000 Metric
      Tonnes of Tor Steel to the respondents, who had conveyed their accep-
      tance, but the petitioner had not executed the contract. Therefore, the
      petitioner was issued a show cause notice as to why it should not be
      black-listed or debarred from having any dealings with the respondents. D
r     Since the petitioner did not give any reply, it was debarred to enter into
      contract for a period of two years. The petitioner challenged the said order
      before the High Court, but was not successful. Bence this Special Leave
      Petition.

            Dismissing the petition, this Court                                       E

            HELD : The conduct of the petitioner constrained the respondents
      to pass the order of black-listing. The exercise of the power, therefore,
      cannot be said to be unwarranted nor arbitrary nor irrelevant. The High
      Court, therefore, is right in declining to interfere with the offending order   F
      in exercise of its discretionary power under Article 226 of the Constitution.
      There is no ground warranting interference under Article 136. [108-F]

           CIVIL APPELLATE JURISDICTION: Special Leave Petition No.
      22863 of 1994.
                                                                                      G
            From the Judgment and Order dated 28.9.94 of the Delhi High Court
      in C.W.P. No. 577 of 1994.
~'


            S.C. Gupta and R.K. Sharma for the Petitioner.

            The following Order of the Court was delivered :                          H
                                        107
    108                    SUPREME COURT REPORTS                   (1995) 1 S.C.R.

A           This special leave petition arises from the order of the Division
    Bench of the High Court of Delhi dated September 28, 1994. Admittedly,
    the petitioner had negotiated and agreed to supply 3000 MT of Tor Steel
    to the respondents. Pursuant thereto, the respondents wrote a letter on
    February 15, 1993 conveying their acceptance and requested the petitioner
    to enter into the contract and also to start the supply of the steel immedi-
B   ately. Admittedly, the petitioner had not executed the contract. Thereafter,
    on March 19, 1993, the notice was issued to the petitioner to show cause
    as to why he should not be black-listed or debarred from having any               .-'t
    dealings with the respondents. Even after the receipt of the notice, the
    petitioner had not giyen any reply. Consequently, on April 19, 1993, the
c   respm{dents had debarred the petitioner to enter into the contract for a
    period of two years. The petitioner challenged the same in CWP No.
    577/93. As stated earlier, the High Court refused to interfere with the
    order .

          . It is thus clear that the petitioner having negotiated with the respon-
D   dent to supply the iron and received the acceptance in that behalf, he was
    reqUired to enter into the contract and to start supply immediately, had
    not done the same. Despite receipt of the notice of show cause, no reply
    thereto was given .. The respondent necessarily has to take further action to
     get the supply of the required steel. Therefore, they exercised the power
E    and issued notice to the petitioner which would be consistent with the
    principles of natural justice and passed the offending order black-listing
    the petitioner for a period of two years. The conduct of the petitioner
    constrained the respondents to pass the order of black-li._sting. The exercise
    of the power, therefore, cannot be said to be unwarranted nor arbitrary
    nor irrelevant. The High Court, therefore, is right in declining to interfere
F   with the offending order in exercise of its discretionary power under
    Article 226 of the Constitution. We, therefore, find no ground warranting
    interference under Article 136. The S.L.P. is accordingly dismissed.

    G.N.                                                     Petitioner dismissed.