LI Network
Published on: 10 September 2023 at 09:30 IST
The Delhi High Court has directed the Central Government to issue a well-reasoned show cause notice, accompanied by pertinent evidence, to Defsys Solutions, a supplier of defense equipment.
This action follows the suspension of business dealings with the company by the government due to an ongoing CBI investigation related to the AgustaWestland VVIP helicopter case.
While addressing a petition filed by the company challenging the December 9, 2022 suspension order issued by the Ministry of Defense, the court emphasized that the suspension, based solely on the fact that the business pertained to defense procurement, was not justified without a prior show cause notice.
The court ordered that the petitioner be granted an opportunity to respond before a reasoned decision is made by the competent authority within three months.
Additionally, the court underscored that the suspension should not be indefinite and must adhere to due process for either banning or revoking it.
Justice Prathiba M Singh, in an order dated September 5, stated, “A show cause notice shall be issued to the petitioner within a period of 2 weeks from today setting out the reasons for suspension. Any relevant material in respect of allegations against the petitioner shall be put to the petitioner along with the show cause notice. An opportunity to reply shall be afforded to the petitioner and if a hearing is sought, the same shall be granted. After affording a hearing, a reasoned order shall be passed within 3 months.”
The court acknowledged that the principles of natural justice might be set aside when national security concerns outweigh the need for fairness. However, it emphasized that there must be a valid justification for this, rather than merely citing national security considerations.
The court added that the suspension must be reviewed every six months by the authorities, and if they decide to impose a ban on the entity or individual, the duration of the ban should consider the time already spent under suspension.
The court expressed concern over the lack of clarity regarding the nature of allegations and the progress of the investigation in this case.
It noted that the suspension order was primarily based on CBI’s intimation letters regarding an investigation against one of the ex-directors of the petitioner and his companies, with no prior notice, response, or hearing.
In conclusion, the court ruled that in this case, the suspension order could not be considered justified solely because it involved defense procurement. It stressed the importance of issuing a show cause notice within a reasonable timeframe.
The court also clarified that the existing contracts of the petitioner would continue as per the interim arrangement in place.
The case relates to a CBI investigation into an alleged Rs 3,600-crore scam in the purchase of 12 VVIP helicopters from AgustaWestland, with the agency alleging a loss of approximately 398.21 million euros (about Rs 2,666 crore) to the exchequer.
The petitioner contended that it had no connection with the AgustaWestland case and had not been called for investigation, making the suspension order a surprise.
The government argued that suspensions could be ordered without notice in cases involving national security.