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Saturday, May 16, 2015

There is no quarrel with the proposition that registration can be insisted upon by the State Government or its departments for purposes of allotment of works and participation in auctions relating thereto. There is also no difficulty in the State providing for production of a character certificate as one of the conditions of eligibility. Experience of the Contractor, if considered relevant for the purposes of such registration, could also be stipulated as one of the requirements to be satisfied by the applicants under the Rules or Regulations. That such regulation ought to ensure participation of only genuine contractors and prevent the mafia from hijacking the system cannot also be faulted. The question, however, is whether that purpose which is indeed laudable could be achieved by a side wind viz. by the District Magistrate denying a character certificate to an applicant. Our answer is in the negative. We say so because the very fact that a character certificate is issued does not mean that everyone who has such a certificate gets a vested right to be registered as a contractor. The District Magistrate did not have any authority under the rules stipulating registration of contractors to consider such requests for registration or to grant or refuse the same. It is the competent authority in the Irrigation Department concerned who has to take a call. Inasmuch as the District Magistrate took upon himself the duty of examining whether the appellant was suitable for registration, he went beyond the legitimate sphere of the jurisdiction vested in him which was limited to considering the request for issuance of a character certificate.

                                             REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION
                       CIVIL APPEAL NO. 4475  OF 2015
                  (Arising out of SLP (C) No.25607 of 2013


Manyata Devi                                       …Appellant

Vs.

State of U.P. & Ors.                               …Respondents











                               J U D G M E N T

T.S. THAKUR, J.

1.    Leave granted.
2.    This appeal arises of out an order dated 2nd April,  2013,  passed  by
the High Court of Judicature at Allahabad whereby Writ Petition No.17398  of
2013 filed by the appellant has been dismissed and the order passed  by  the
District Magistrate, Basti, refusing to issue  a  character  certificate  in
favour of the appellant upheld.
3.    The appellant appears to  have  applied  to  the  District  Collector,
Basti, for a  character/enlistment  certificate  in  her  favour,  which  it
appears is  one  of  the  requirements  prescribed  for  registration  as  a
contractor under the Irrigation Department of the State  of  Uttar  Pradesh.
The appellant,  as  proprietor  of  M/s  Krishna  Construction  was  already
registered as a contractor but since the said registration  was  valid  only
for a period three years ending 31st June, 2009, a fresh  character/solvency
certificate was necessary for renewal of her registration.
4.    The application made  by  the  petitioner  appears  to  have  remained
unattended for some time forcing her to file Writ Petition No.17945 of  2010
which was disposed of by the High Court by its order dated 5th  April,  2010
directing the  District  Magistrate,  Basti,  to  consider  and  decide  the
application of the appellant within a period  of  six  weeks.  The  District
Magistrate in compliance with the said order issued a  solvency  certificate
in favour of the appellant on 24th May,  2010  but  deferred  the  grant  of
character certificate till such time the Superintendent of  Police  inquired
into the matter and submitted a report. On receipt of the  report  from  the
Superintendent of Police, the District  Magistrate  passed  an  order  dated
15th June,  2010  declining  to  issue  the  character  certificate  to  the
appellant on the solitary ground that  her  husband  was  involved  in  four
criminal cases during the past.
5.    Aggrieved by the refusal of the character certificate in  her  favour,
the appellant filed Writ Petition No.9875 of  2011  before  the  High  Court
which was disposed of by the High  Court  on  14th  February,  2012  with  a
direction that the appellant should  approach  the  Commissioner  in  appeal
against  the  order  passed  by  the  District  Magistrate.  The   appellant
accordingly preferred an appeal before  the  Commissioner,  Basti,  who  set
aside the order passed by the District Magistrate and  remitted  the  matter
back to him for appropriate orders with the  observation  that  the  request
for grant of a character certificate must be considered on the basis of  the
personal character of the person applying  for  the  same  and  not  of  her
family members. Notwithstanding  that  direction,  the  District  Magistrate
once again passed an order dated 12th December, 2012  rejecting  the  prayer
for the  issuance  of  a  character  certificate  on  the  ground  that  the
appellant did not have any knowledge of  contract  works  which  works  were
being got executed by her through her son and other persons.  The  appellant
challenged the said order before the High Court in  Writ  Petition  No.17398
of 2013 which came to be dismissed by the High Court by its order dated  2nd
April, 2013. Hence the present appeal.
6.    We have heard learned counsel for the parties at  length  and  perused
the orders passed by the District Magistrate and the Commissioner and  those
passed by the High Court. The material facts are not in dispute. It  is  not
in dispute that  the  appellant  is  the  sole  proprietor  of  M/s  Krishna
Construction.   It  is  also  not  in  dispute  that  the  appellant  was  a
registered contractor with the Irrigation Department of  the  Government  of
U.P.  for  executing  civil  works.  It  is  also  not  disputed  that   the
registration was earlier granted in favour of the appellant  pursuant  to  a
solvency and character certificate issued in  her  favour  by  the  District
Magistrate, Basti.  It  is  common  ground  that  the  registration  of  the
appellant remained valid upto 31st June, 2009, whereafter the same  required
a renewal based on a fresh solvency certificate and a character  certificate
according to the applicable norms prescribed by the  Irrigation  Department.
That a solvency certificate was issued in favour of the  appellant  is  also
not in dispute. So also there is  no  dispute  that  the  appellant  is  not
involved in any criminal case or activity of any  objectionable  kind.  That
being the position, the District Magistrate  should  have  simply  certified
her character because that was  the  only  question  which  the  former  was
called  upon  to  examine  while  dealing  with  the  request  made  by  the
appellant. The District Magistrate, however, appears to have been swayed  by
considerations wholly extraneous to the question whether the  appellant  had
a good moral character.  In the first order of refusal  passed  by  him,  he
opined that since the appellant’s  husband  had  criminal  cases  registered
against him, she was disentitled from claiming a certificate of  good  moral
character. Apart from the  fact  that  the  cases  against  the  appellant’s
husband to which the District Magistrate appears to be referring  had  ended
in  his  acquittal,  it  is  difficult  to  appreciate  how  criminal  cases
registered against the husband of the appellant could possibly  deny  her  a
certificate  of  good  moral  character.  The   Commissioner,   Basti   was,
therefore, perfectly justified in setting aside  the  order  passed  by  the
District Magistrate and directing him to consider the request for the  issue
of a certificate based on  the  character  of  the  applicant  and  not  her
relative or member of the family.  Since there  was  nothing  adverse  about
the appellant, one would have expected the District Magistrate to issue  the
requisite certificate in favour of the appellant. Instead of doing  so,  the
District Magistrate appears to have invented fresh reasons for denial  of  a
certificate.  This  time,  the  certificate  was  denied  not  because   the
appellant or anyone in her family was implicated in any  criminal  case  but
on the ground that she had no  experience  in  getting  the  contract  works
executed. We have not been  able  to  appreciate  as  to  how  the  District
Magistrate could have brought in the question of the appellant’s  capability
as a contractor or her experience in executing works to bear upon  her  good
moral character.  Even when the appellant may  have  had  no  experience  in
getting government works executed she could still  claim  that  she  bore  a
good moral character. The reasoning given by  the  District  Magistrate  was
wholly irrelevant to say the least.  Inasmuch  as  the  District  Magistrate
ignored the order passed by the Commissioner  and  the  considerations  that
would go into grant or refusal of the character certificate, he committed  a
mistake that is palpable on the face of record.
7.    It was argued  on  behalf  of  the  respondent-State  that  since  the
appellant had no experience of executing contracted works, the refusal of  a
character certificate was only meant to prevent her from getting  registered
as  a  contractor  with  the  department.  It  was  also  argued  that   the
registration of a contractor was necessary and unless such registration  was
granted only in deserving cases, the very purpose of the registration  would
stand defeated. There was, according to learned counsel for the  respondent,
a “contractors  mafia”  operating  in  the  State  of  Uttar  Pradesh  which
demanded that registration is granted only to people who  have  no  criminal
background so that  genuine  contractors  are  not  prevented  from  winning
contracts from the Government and competing for allotment of works.  It  was
argued that since  the  husband  of  the  appellant  could  not  himself  be
registered on account of his criminal background, the  appellant  was  being
projected for such a registration only to make it possible for  the  husband
to carry out the works in  the  name  of  his  wife.   Registration  of  the
appellant, in such a situation, would defeat the very  purpose  behind  such
registrations, argued the learned counsel.
8.    There is no quarrel with the  proposition  that  registration  can  be
insisted upon by the State Government or its  departments  for  purposes  of
allotment of works and participation in auctions relating thereto. There  is
also no difficulty in the State providing  for  production  of  a  character
certificate as one of the conditions  of  eligibility.   Experience  of  the
Contractor, if considered relevant for the purposes  of  such  registration,
could also be stipulated as one of the requirements to be satisfied  by  the
applicants under the Rules or Regulations. That  such  regulation  ought  to
ensure participation of only genuine contractors and prevent the mafia  from
hijacking the system cannot also be  faulted.   The  question,  however,  is
whether that purpose which is indeed laudable could be achieved  by  a  side
wind viz. by the District Magistrate denying a character certificate  to  an
applicant.  Our answer is in the negative. We say so because the  very  fact
that a character certificate is issued does not mean that everyone  who  has
such a certificate gets a vested right to be  registered  as  a  contractor.
The  District  Magistrate  did  not  have  any  authority  under  the  rules
stipulating registration  of  contractors  to  consider  such  requests  for
registration or to grant or refuse the same. It is the  competent  authority
in the Irrigation Department concerned who has to take a call.  Inasmuch  as
the District Magistrate took upon himself the duty of examining whether  the
appellant was suitable for  registration,  he  went  beyond  the  legitimate
sphere of the jurisdiction vested in him which was  limited  to  considering
the request for issuance of a character certificate.
9.    Having said so, we must add that copy  of  the  rules  regulating  the
registration of contractors has not been  produced  by  the  State.  It  is,
therefore, difficult for us to  say  whether  the  rules  are  comprehensive
enough to disentitle persons who do not have any experience in execution  of
the contract works from claiming registration. But there  is  no  manner  of
doubt that, if the ground  situation  in  the  State  of  Uttar  Pradesh  so
requires, the department concerned can and indeed ought  to  strengthen  the
registration procedure by framing new rules or amending the  existing  rules
on the subject making registration possible only upon satisfaction  of  such
conditions as may be  prescribed  by  such  rules  including  experience  in
executing contracts as one such condition.
10.   In the result we allow this appeal, set aside the order passed by  the
High Court and direct the District Magistrate to reconsider the  matter  and
dispose of the application for grant of a character certificate  keeping  in
view the observations made herein. We make  it  clear  that  even  when  the
character certificate is issued by the District Magistrate in favour of  the
appellant, the Competent Authority shall be free to examine the  prayer  for
registration or  renewal  in  accordance  with  law  having  regard  to  the
requirements that already exist or may be prescribed on the subject  by  the
authority       competent       to       do       so.        No       costs.



                                                      ……………………………………….…..…J.
                                                               (T.S. THAKUR)





                                                      ……………………………………….…..…J.
                                                     (ROHINTON FALI NARIMAN)




                                                      ……………………………………….…..…J.
                                                          (PRAFULLA C. PANT)
New Delhi
May 15, 2015

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