Court No. - 1
Case :- WRIT - C No. - 27281 of 2019 Petitioner :- M/S Rajvardhan H.U.F. Moti Bhawan Respondent :- State Of U.P. And 5 Others Counsel for Petitioner :- Keshav Dhar Tripathi Counsel for Respondent :- C.S.C.,Vashishtha Tiwari
Hon'ble Ramesh Sinha,J. Hon'ble Ajit Kumar,J.
1. We have heard Sri Keshav Dhar Tripathi, learned counsel for the petitioner, Sri Vashishtha Tiwari, learned counsel for respondent Nos.3, 4, 5 and 6, learned Standing Counsel for respondent No.1 and 2 and have perused the record.
2. By means of this petition filed under Article 226 of the Constitution of India, the petitioner has challenged the order dated 31.07.2019 which is, in fact, a communication order in respect of an order dated 30.07.2019 whereby a direction has been issued by the Municipal Commissioner to black list the firm of the petitioner. The ground taken in the order is that the petitioner has been guilty of not conducting the work as per the terms of the agreement and have further not furnished the work in time which has been instrumental in tarnishing the image of the Nagar Nigam in the minds of the people besides causing great hardship to the public at large who stood denied of potable water.
3. When the matter was initially heard on 19.08.2019, we questioned the counsel appearing on behalf of respondent as to why the copy of the order dated 30.07.2019 had not been supplied to the petitioner and the said order has been merely communicated, learned counsel sought time to have instructions in the matter and had assured the Court to place the order dated 30.07.2019 before this Court. Today the instructions have been placed before the Court by Sri Vashishtha Tiwari appearing on behalf of the respondent and the same are taken on record.
4. From the perusal of the instructions, that have been placed before this Court, we find that a number of show cause notice has been issued to the petitioner between 18.05.2019 and 31.07.2019 asking the petitioner to complete the work expeditiously otherwise stern action will be taken. However, in none of the notices there was any element of show cause to the petitioner requiring him to submit his reply, failing which his firm will be black listed. The report also placed along with the instructions shows that a committee consisting of as many as six members was continued and it reported that the petitioner was guilty for not completing the work in time and in spite of notices issued, the firm did not take interest and resultantly image of the Nagar Nigam has been tarnished. Accordingly, recommendation was made in the report for black listing the firm. We find further that this report itself was forwarded to the Municipal Commissioner, who has put a remark on the report "Accepted". So according to the counsel for the respondent, this is all about the proceedings conducted to black list the firm of the petitioner and submits that the petitioner having not replied to and complied with notices, the adverse report having been submitted, the petitioner's firm has been rightly black listed. However, on the question of show cause regarding black listing if ever issued to the petitioner, counsel for the respondent drew blank as he had not been supplied with any material of the kind along with instructions to demonstrate that any further notice except those that have been placed before this Court today, was ever issued.
5. The law of black listing of a contractor or a firm has now came to be well settled. Before an action is taken to black list a firm or a contractor, is required to be proceeded with service of a show cause notice, specifically mentioning therein of the proposed action of "black listing" and it is after the reply is submitted that an appropriate action should be taken for black listing a firm or a contractor. Besides above, the black listing also cannot be ad infinitum, instead, black listing is to be done only for a particular period. A Division Bench of this Court while dealing with the matter of black listing without a show cause notice has considered the law in detail in the case of Pramod Kumar Singh Vs. Managing Director State Warehousing Corporation and 2 others in Writ-C No.24215 of 2015 decided on 24.10.2017 and has held vide paragraphs 19, 20 and 21 as under:
"19. Court in Gorkha Security Services v. Government (NCT of Delhi) and Others, (2014) 9 SCC 105 has held that order of blacklisting is stigmatic in nature and debars such a person from participating in Government Tenders which means precluding him from the award of Government Contracts. While discussing the necessity of serving of show cause as reiterating principles of natural justice showing intention of proposed action, Court has held:
" 16. It is a common case of the parties that the blacklisting has to be preceded by a show-cause notice. Law in this regard if firmly grounded and does not even demand much amplification. The necessity of compliance with the principles of natural justice by giving the opportunity to the person against whom action of blacklisting is sought to be taken has a valid and solid rationale behind it. With blacklisting, many civil and/or evil consequences follow. It is described as "civil death" of a person who is foisted with the order of blacklisting. Such an order is stigmatic in nature and debars such a person form participating in government tenders which means precluding him from the award of government contracts."
20. Court has further held in Gorkha Security Services (Supra) :
21) The central issue, however, pertains to the requirement of stating the action which is proposed to be taken. The fundamental purpose behind the serving of Show Cause Notice is to make the noticee understand the precise case set up against him which he has to meet. This would require the statement of imputations detailing out the alleged breaches and defaults he has committed, so that he gets an opportunity to rebut the same. Another requirement, according to us, is the nature of action which is proposed to be taken for such a breach. That should also be stated so that the noticee is able to point out that proposed action is not warranted in the given case, even if the defaults/ breaches complained of are not satisfactorily explained. When it comes to blacklisting, this requirement becomes all the more imperative, having regard to the fact that it is harshest possible action.
22) The High Court has simply stated that the purpose of show cause notice is primarily to enable the noticee to meet the grounds on which the action is proposed against him. No doubt, the High Court is justified to this extent. However, it is equally important to mention as to what would be the consequence if the noticee does not satisfactorily meet the grounds on which an action is proposed. To put it otherwise, we are of the opinion that in order to fulfil the requirements of principles of natural justice, a show cause notice should meet the following two requirements viz:
i) The material/ grounds to be stated which according to the Department necessitates an action;
ii) Particular penalty/action which is proposed to be taken. It is this second requirement which the High Court has failed to omit.
we may hasten to add that even if it is not specifically mentioned in the show cause notice but it can be clearly and safely be discerned from the reading thereof, that would be sufficient to meet this requirement.
21. From the pleadings of present case and the show cause notice brought on record, it is clear that there was no show cause notice for proposed action of blacklisting and therefore, there was a deliberate attempt to circumvent the well established norms and procedure in matters of blacklisting as discussed above. Apart from this, we do not find anywhere in the entire tender agreement or contract or in the averments raised in the counter affidavit that there can be a permanent blacklisting of contractor. Thus action impugned is result of an arbitrary exercise of power besides being contrary to the principles of natural justice."
6. Again considering the issue of black listing for an indefinite period, the Division Bench held it to be not permissible in law vide para 22, the Court relied upon the judgment of the Apex Court and observed thus:
"22. It is also well settled law that blacklisting even if can be imposed against indiscipline deviant contractors for their acts of omission or commission, such blacklisting cannot be for all time to come. Court Kulja Industries Ltd. V Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Ltd. And Others. (2014) 14 SCC 731 has held:
"20 It is also well settled that even though the right of the writ petitioner is in the nature of a contractual right, the manner, the method and the motive behind the decision of the authority whether or not to enter into a contract is subject to judicial review on the touchstone of fairness, relevance, natural justice, non discrimination, equality and proportionality. All these considerations that go to determine whether the action is sustainable in law have been sanctified by judicial pronouncements of this Court and are of seminal importance in a system that is committed to the rule of law. We do not consider it necessary to burden this judgment by a copious reference to the decisions on the subject "
"25 Suffice it to say that "debarment" is recognized and often used as an effective method for disciplining deviant suppliers/contractors who may have committed acts of omission and commission or frauds including misrepresentations, falsification of records and other breaches of the regulations under which such contracts were allotted. What is notable is that the "debarment" is never permanent and the period of debarment would invariably depend upon the nature of the offence committed by the erring contractor."
7. We have examined the facts of the present case from the above legal angle and find that in this case not only there was no show cause notice issued prior to passing of the order dated 30.07.2019 nor, even otherwise the order dated 30.07.2019 can pass the test of Article 14 of the Constitution, but also from the bare reading of the report which has been approved by the Municipal Commissioner under the order dated 30.07.2019, it is revealed that it virtually recommends black listing the petitioner for indefinite period which cannot be approved of. The Municipal Commissioner while exercising his power in black listing the petitioner, has virtually not applied his mind and in such view of matter even on the point of administrative decision making an order which is sans reason is liable to be held bad. In the case of T. P. Senkumar Vs. Union of India (2017) 6 SCC 801 it has been held by the Apex Court that "administrative order must be judged by the reasons mentioned therein and cannot be supplemented by other reasons through an affidavit or otherwise in subsequent Court proceedings".
8. In view of the above, the orders passed by the Municipal Commissioner dated 30.07.2019 placed before the Court and the consequential order passed by the Assistant Engineer, (Jal) Nagar Nigam, Mathura, Vrindavan dated 31.07.2019 are hereby quashed. It is, however, left open for respondents to proceed afresh in accordance with law, if so advised.
9. The writ petition, thus, stands allowed.
Order Date :- 22.8.2019 Nitin Verma (Ajit Kumar, J.) (Ramesh Sinha, J.)