Case Background
The petitioner is a retired military officer who started a private security agency under the name “M/s 3900 Nabi Ishrat Security Agency” (NISA). This agency was empanelled with the Director General Resettlement (DGR) under the Ministry of Defence. The empanelment certificate bears No. 3900 and is dated 03.12.2015.
The judgment explains the purpose of DGR. Many armed forces personnel retire at a relatively young age to keep the forces youthful. These ex-servicemen acquire special skills during their service and need re-employment or business opportunities after retirement. DGR helps such ex-servicemen by providing re-employment or entrepreneurship opportunities, especially through security service contracts with public sector undertakings (PSUs) and state-owned establishments.
After his empanelment, it is the petitioner’s own case that NISA was sponsored by DGR for several security contracts with Central PSUs. At the same time, the petitioner, along with his wife and younger brother, had already formed another company in 2013 named “SAM Security and Man Powers Services Private Limited” (SAM Security). This was separate from NISA, which alone was registered with DGR. The petitioner claimed he resigned as Managing Director of SAM Security on 01.07.2017.
One of the petitioner’s agencies, namely NISA, was later disempanelled through Memo No. 3900/Bihar dated 31.03.2020 issued by the Joint Director, Directorate Resettlement Zone (Central), Ministry of Defence (Respondent No. 3). The disempanelment was based on violation of para 5(e) of an Office Memorandum (OM) dated 09.07.2012 issued by DGR.
The petitioner approached the Patna High Court under its civil writ jurisdiction (CWJC No. 3666 of 2021) challenging this disempanelment order.
What the Court Examined and Decided
The Bench of Hon’ble Mr. Justice Chakradhari Sharan Singh and Hon’ble Mr. Justice Madhuresh Prasad heard the matter online on 15.02.2022 due to COVID-19 restrictions. The oral judgment was delivered by Hon’ble Mr. Justice Madhuresh Prasad.
The core dispute was whether the petitioner had violated para 5(e) of the DGR Office Memorandum dated 09.07.2012, leading to lawful disempanelment of NISA. Para 5(e), quoted in the judgment, lays down strict conditions for ex-servicemen whose agencies are empanelled with DGR.
Under para 5(e), an empanelled ex-serviceman:
- Should not have availed any other employment, self-employment or welfare benefits from DGR.
- Should not be re-employed with the armed forces, government, semi-government bodies, Central PSUs, public sector banks or in the private sector once awarded a DGR contract.
- Must give an undertaking at the time of registration of a DGR-sponsored contract that he will resign from any such job if he takes up the contract.
- Must later confirm in writing to DGR that he has resigned from such job after getting the contract.
- Is liable for cancellation of registration/sponsorship and even criminal prosecution if he gives any false declaration.
The authorities issued the first show-cause notice for disempanelment on 27.02.2019 under para 26(b) and (c) of the OM, alleging violation of para 5(e). The allegation was that although NISA was registered with DGR, the petitioner was also simultaneously operating SAM Security.
In his reply dated 14.03.2019, the petitioner admitted that SAM Security was registered on 02.09.2013 with four directors. He also stated that NISA was empanelled with DGR on 03.12.2015 and that the first DGR-sponsored contract was for supplying 17 security guards to the Food Corporation of India (FCI) in Bihar starting from 22.07.2017.
The petitioner asserted that he had resigned as Director from SAM Security with effect from 01.07.2017, i.e., before the FCI contract commenced. He further claimed that he had not taken any remuneration or salary from SAM Security, and therefore, in his view, there was no violation of the OM dated 09.07.2012. He requested that the show-cause be dropped and his agency be allowed to continue.
The authorities were not satisfied and found additional grounds of violation. They issued another show-cause notice dated 10.07.2019, supplementing the earlier notice of 27.02.2019. In this second notice, it was stated that SAM Security was shown with the petitioner’s name as “advisor” in a circular of the Confederation of Indian Industries dated 22.02.2019.
Because of this, the authorities did not accept the claim that he had resigned from SAM Security on 01.07.2017. They also noted that SAM Security’s address was the same as NISA’s address. Certain other violations were also alleged.
A third show-cause notice dated 19.09.2019 followed after scrutiny of the petitioner’s file. The authorities repeated earlier allegations and pointed out other lapses. These included:
- Non-participation by the petitioner in the tendering process.
- Form 26 under the Income Tax Act showing income from a private entity, namely “NABI Nagar Power Generating Company Limited”. The petitioner was asked to give details of any DGR sponsorship for this work.
The petitioner replied to this notice on 06.01.2020. The High Court focused particularly on paragraph 3 of this reply, where the petitioner explained the licence position regarding SAM Security under the Private Security Agencies (Regulation) Act, 2005 (PSARA).
According to his own admission, the PSARA licence for SAM Security was first issued on 29.01.2014 and renewed on 26.07.2017. He stated that his name appeared on the licence because he was managing director when the renewal application was made on 20.12.2016. He further said that his name had “subsequently” been removed from the Home Department records for SAM Security, though no date was mentioned.
The Court treated this admission as significant. The renewal of the PSARA licence on 26.07.2017 happened after the first DGR-sponsored FCI contract began on 22.07.2017. This meant that, despite his claim of resignation from SAM Security on 01.07.2017, his name still figured on the licence when it was renewed after the DGR contract had already started.
The Court noted that the petitioner had not stated the date on which his name was removed from the Home Department records, nor had he produced material to corroborate this. This weakened his case.
The Bench then returned to the requirements of para 5(e). For an ex-serviceman to be empanelled and to hold a DGR-sponsored contract, he must:
- Not hold private sector employment or similar engagement; and
- Give a prior undertaking, and later a written confirmation, that he has resigned from any such job.
The Court examined the writ petition and the petitioner’s replies to all show-cause notices. It found no mention of any undertaking having been submitted to DGR that he would resign from SAM Security upon receiving a DGR contract. It also found no written confirmation to DGR that he had in fact resigned after obtaining the contract.
According to the Court, the authorities only discovered the existence of SAM Security and the petitioner’s continuing connection with it later, which led to the show-cause notices. There was no earlier intimation from the petitioner about resigning from this private engagement, as required by para 5(e).
The Court also expressed doubt about the petitioner’s claim that he had resigned in July 2017. The company was formed by him along with his wife and younger brother. In such a closely held company, the Court found it “highly improbable and unacceptable” that he would not know whether his resignation had been accepted, especially when he produced no details or documents showing such acceptance.
On this basis, the Bench concluded that the respondents’ finding of violation of para 5(e) was justified. The Court held that the authorities’ conclusion that the petitioner had breached clause 5(e) was “irresistible” on the face of the materials supplied by the petitioner himself.
Under para 26 of the same OM, violation of para 5(e) could lead to cancellation or disempanelment. Since the clause was found violated, the consequential action of disempanelling NISA through Memo No. 3900/Bihar dated 31.03.2020 did not require interference.
The Court therefore held that the writ petition lacked merit and dismissed it. As a result, the disempanelment of NISA by DGR stands confirmed, and no relief was granted to the petitioner.
Why This Judgment Matters
This judgment has practical importance for ex-servicemen who seek to benefit from DGR schemes. It shows that the Patna High Court will strictly enforce conditions attached to DGR empanelment.
Any ex-serviceman running a DGR-sponsored security agency must be transparent about other jobs or private businesses. They must give the required undertakings and confirmations in writing and must actually sever conflicting links once they accept DGR contracts.
The case also highlights that authorities can rely on records such as PSARA licences, income tax forms and public circulars to check whether an ex-serviceman is continuing a private engagement despite claiming resignation. Vague claims that one’s name has been removed from records, without clear dates or documents, are not enough.
For agencies depending on DGR sponsorship, this decision is a warning that non-compliance can lead to cancellation of registration and loss of government work, and that courts may not interfere if the record itself shows violation.
Legal Issues and Answers
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Issue: Whether the disempanelment of the petitioner’s DGR-registered security agency for violation of para 5(e) of the Office Memorandum dated 09.07.2012 was lawful.
Answer: Yes. The Court held that the petitioner had violated para 5(e) by continuing association with another private security company and by failing to submit the required undertaking and written confirmation of resignation, so the disempanelment required no interference.
Cases Cited by the Court
- No previous judgments or case law have been cited or relied upon in the text of this decision.
Case Details
Case Number: Civil Writ Jurisdiction Case No. 3666 of 2021
Case Title: Lt. Col. Ishrat Nabi (Retd.) vs. Union of India & Ors.
Citation: 2022 (3) PLJR 92
Coram: Hon’ble Mr. Justice Chakradhari Sharan Singh and Hon’ble Mr. Justice Madhuresh Prasad
Advocates:
- For the Petitioner: Mr. Rajesh Ranjan, Advocate
- For the Union of India: Dr. K. N. Singh, Additional Solicitor General, with Mr. Tuhin Shankar, Central Government Counsel
Nature of the Case: Writ petition under civil writ jurisdiction challenging DGR disempanelment order.
Date of Judgment: 15.02.2022
Link to Judgment: Click here to read the full Patna High Court judgment
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