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Jharkhand High Court · body

2001 DIGILAW 783 (JHR)

S. K. Pradhan v. State Of Jharkhand

2001-11-29

SUDHANSU JYOTI MUKHOPADHAYA

body2001
ORDER S.J. Mukhopadhaya, J. 1. The petitioner, a Class 1A Contractor, has challenged the order dated 18th August, 2001 passed by the Respondent-Engineer-in-Chief, Public Works (Road Construction) Department (for short PWD Roads), Government of Jharkhand, Ranchi, whereby and whereunder, he has been black listed. 2. The case of the petitioner is that he was registered as Class 1A Contractor with PWD (Roads) with Registration No. 251/85 and since then he has been working as such satisfactorily as a Class 1A contractor. He had been working even prior to that as a Contractor of other categories in this Department as also various other Departments of the State. 3. The dispute arose when a tender was floated by the Road Construction Department for strengthening and special repair of Ranchi - Daltonganj Road from KM 42 to 61 (phase 1) on the naxalite affected area of South Chotanagpur by HMP/double drum. The petitioner was found to be a successful tenderer and an agreement was reached and work order was thereafter executed between the department and the petitioner on 19th March, 1999. There were certain conditions of contract i.e. the works to be supervised by the Executive Engineer. According to the contract, the petitioner had to complete the work within a year. However, the condition of the road was such that the petitioner could not carry out the work, as there were large areas of the road which had pot holes and the flanks being in depression. The petitioner represented before the Executive Engineer concerned, who executed the agreement and thereafter the Department requested the petitioner to submit cross section, which the petitioner submitted and the department agreed that the condition of the road was not proper for the petitioner to carry out the work and Supplementary Part B agreement executed after 1-1/2 years by which it was decided that the Department would do the base road repairing i.e. repairing of pot holes, making the road base etc. But in absence of preparation of road base, the petitioner could not start the work. According to the agreement, the State was to supply Bitumin but it having not supplied, the petitioner brought the matter to the Respondents by representations dated 14th August99 and 8th September2000, in pursuance of which the Superintending Engineer, PWD (Roads) asked the Executive Engineer, PWD (Roads), Dhur-way Ranchi to make available the Bitumin as the work was hampering. According to the agreement, the State was to supply Bitumin but it having not supplied, the petitioner brought the matter to the Respondents by representations dated 14th August99 and 8th September2000, in pursuance of which the Superintending Engineer, PWD (Roads) asked the Executive Engineer, PWD (Roads), Dhur-way Ranchi to make available the Bitumin as the work was hampering. The Executive Engineer was held to be responsible for delay. 4. Further case of the petitioner is that because of anti - social elements and the area having infested with M.C.C. and Naxalite supporters, he represented the State to provide security vide letters dated 23rd May, 2000 and 20th December, 2000. Subsequently, the work was started. A meeting of senior officers of the Department took place on 18th December, 2000 in which petitioner also attended to discuss the work progress. The Minister in-charge of the Department inspected the road on 26th December. 2000. On such date, the Minister declared on the site that he has black listed the petitioner, which statement was also published in the local newspaper, vide Annexure 7 series. It is only thereafter, a show cause -notice was issued to the petitioner on 14th March, 2001 to which petitioner replied denying the allegations. whereinafter the impugned order dated 18th August, 2001 was issued by the Engineer-in-Chief, PWD (Roads), Govt. of Jharkhand. Ranchi, blacklisting the petitioner. 5. It is pleaded that in the meantime, on the request of petitioner, the Chief Engineer extended the period for completion of work without any penalty till 31st December, 2001 by his order dated 13th July, 2001 but, in the meantime, the impugned order was issued before completion of time as was allowed in favour of petitioner. The petitioner has further brought on record a letter written by Executive Engineer on 18th June, 2001, whereby it was intimated that the work was stopped during rains. Another letter issued by the Chief Engineer to Executive Engineer on 31st July, 2001 for supply of Bitumin in time to ensure that the work does not suffer. It is also stated that the petitioner has been regularly paid his bills after routine and special checks made by the authorities on the basis of Quality Control Report submitted by the Deptt. 6. Mr. It is also stated that the petitioner has been regularly paid his bills after routine and special checks made by the authorities on the basis of Quality Control Report submitted by the Deptt. 6. Mr. S.S. Ray, learned Senior Counsel for the petitioner has challenged the impugned order dated 18th August, 2001, on the following grounds : (i) It has been passed by the authority not competent to do so; (ii) The grounds shown in the order dated 18th August, 2001 are non est; (iii) The order is arbitrary being violative of Article 14 of Constitution of India and infringes the fundamental right of petitioner guaranteed under Article 19(1)(g) read with Article 21 of Constitution of India. 7. In the impugned order dated 18th August. 2001, the Respondents have shown three grounds to black list the petitioner namely, (i) delay; (ii) irregularity in the matter of construction/repairing work; and (iii) supply of inferior materials. 8. According to the counsel for the petitioner, there was no delay on the part of the petitioner. The work order was not allotted for about a year and the base work which was to be done by the Department had not been done, which caused delay of another 1-1/2 years for which the petitioner cannot be blamed. Non-application of mind was alleged on the part of the Respondents, apart from the allegation that the order is unwarranted and arbitrary having not taken into consideration the fact that the Respondents themselves granted three extensions and according to that the work was to be completed by 31st December, 2001. 9. So far as irregularity is concerned, it is alleged that the allegation is vague, uncertain, as no details of irregularities given either in the show cause notice or in the impugned order dated 18th August, 2001. It was suggested that even in the show cause notice, there was no allegation made relating to any irregularity committed by the petitioner. 10. So far "as sub-scandard material is concerned, the counsel for the petitioner relied on Annexure-20 series attached to the supplementary affidavit to suggest that the grading of materials supplied for the work were found to be standard" by the Quality Control Wing of Road Construction Department, Ranchi. 11. Mr. 10. So far "as sub-scandard material is concerned, the counsel for the petitioner relied on Annexure-20 series attached to the supplementary affidavit to suggest that the grading of materials supplied for the work were found to be standard" by the Quality Control Wing of Road Construction Department, Ranchi. 11. Mr. Ray, learned senior counsel referred to Annexure-20 series, wherein permissible range and grading of materials supplied shown within the permissible range, as one of the examples, as given hereunder : GRADE __________________________________________________________________ 1 2 3 __________________________________________________________________ Salve size in M.M. % passing by W.T. permissible range of % passing by W.T. __________________________________________________________________ 45 M.M. 100% 100% 26.5 M.M. 95.4% 75-100% 22.4 M.M. 86.8% 60-95% 11.2 M.M. 36.2% 30-55% 5.6 M.M. 26.8% 15-35% 2.8 M.M. 19.8% 05-20% GOLE 4.7% 0-5% __________________________________________________________________ 12. It was submitted that if one of the essential grounds shown in the impugned order is bad, the Court should set aside. Reliance, in this connection, was placed on the Supreme Courts decisions in the cases of Pratap Singh v. State of Punjab, AIR 1964 SC 72 and State of Maharashtra v. B.K. Takkamore AIR 1967 SC 1353 . The Supreme Court decision reported in AIR 1955 SC 1057, was also cited in support of argument that the order was unwarranted, arbitrary, irrelevant and thereby fit to be set aside. 13. According to the counsel for the petitioner, the contract business is fundamental right of the petitioner. By blacklisting the petitioner for indefinite period, it has infringed the petitioners fundamental right under Article 19(1)(g), as also Articles 14 and 21 of the Constitution of India. The guidelines for registration of Contractor and black-listing of Contractor as made vide Notification No. 4009 dated 28th June, 1997 by the Road Construction Department of State of Bihar was no rule and not mandatory and it was pleaded that the guidelines not being a Rule/Act framed by the Legislature, the petitioners right to enter into any contract in future with the State Government cannot be taken away in pursuance of such guidelines dated 28th June, 1997. The guidelines were alleged to be unconstitutional, null and void in absence of Legislative approval and it was submitted that the State cannot take away fundamental right under Article 19(1)(g) of Constitution by an executive guidelines/ rules. The guidelines were alleged to be unconstitutional, null and void in absence of Legislative approval and it was submitted that the State cannot take away fundamental right under Article 19(1)(g) of Constitution by an executive guidelines/ rules. Reliance, in this connection, was placed on the decisions of the Supreme Court in the case of Krishnan Kakkanth v. Government of Kerala, reported in AIR 1997 SC 128 . 14. Alternative suggestion was made by the learned Senior Counsel for the petitioner that in any event the so called Rules 4 and 14 made, vide Notification dated 28th June, 1997 require to be declared ultra vires being vague, uncertain and no procedure laid down to black list a Contractor. Reliance, in this connection was made on the decisions of the Supreme Court in the cases of Liberty Oil Mills v. Union of India, AIR 1984 SC 1271 and Delhi Transport Corporation v. D.T.C. Mazdoor Congress, AIR 1991 SC 101 . 15. It was also submitted that even in State contractual matter, the competent authority and State are required to act, in accordance with law, and their action cannot be arbitrary or unreasonable. In support thereof, reliance was placed on the Supreme Courts decisions, reported in AIR 1990 SC 1031 ; AIR 1991 SC 536 ; (1995) 5 SCC and AIR 1997 SC 645 . 16. Further ground taken by the petitioner is that the order is without jurisdiction having not passed by the registering authority, as mentioned under Clause 14 of Rules notified on 28th June, 1997. 17. The learned Advocate General while opposed the prayer, submitted that the Minister of State has been wrongly made Respondent, no mala fide having alleged during argument. 18. Mr. S.S. Ray, learned Senior Counsel, in this respect, submitted that the petitioner is not pressing mala fide against the Minister I/C of the Department and for the said reason the Minister I/C of the department, though made party Respondent, by name, was not noticed, nor heard. 19. According to the Respondents, the petitioner was black listed on valid grounds after providing a show cause notice in terms with Rules known as "Bihar Thikedar Suchikaran Niamawali, 1996". While black listing the petitioner his past performance and the present performance in on going projects were considered. For example, special repair work in Ranchi - Hazaribagh Road. 19. According to the Respondents, the petitioner was black listed on valid grounds after providing a show cause notice in terms with Rules known as "Bihar Thikedar Suchikaran Niamawali, 1996". While black listing the petitioner his past performance and the present performance in on going projects were considered. For example, special repair work in Ranchi - Hazaribagh Road. K.M. 125 (part); 127 (p); 128(p); and 129(p) by Hot Mill Plant was not completed by the petitioner in time and after March. 2000 he abandoned the work. A report, in this respect dated 29th September, 2001 was relied upon. 20. So far as jurisdiction of Engineer-in-Chief is concerned referring 1996 Rules, it was pointed out that the Engineer-in- Chief was vested with power of registration on the advise of a Committee under Rule 14. It was submitted by the learned Advocate General that for the purpose of cancellation of contract or black-listing a Contractor, the Engineer-in-Chief being registration authority was competent and at that stage there was no requirement to obtain any suggestion of a Committee as was required at the time of registration. Reliance was also placed on show cause reply submitted by petitioner wherein the petitioner stated to have accepted that he supplied sub-standard materials. 21. At this stage, it is pertinent to mention that the aforesaid submission was opposed by the counsel for the petitioner, referring to the show cause reply dated 11th April, 2001, the learned Senior Counsel for the petitioner submitted that the Holders which were supplied were tested by the Quality Control Wing of Road Construction Department. In the show cause reply, it was merely pointed that the sub-standard materials as were found by Quality Control Wing were not utilised in the work which was brought to the notice of the Respondents in the show cause reply and thus the petitioner never accepted that the sub-standard materials were utilised. 22. So far as extension of time is concerned, the learned Advocate General submitted that the extension of time was granted by the Chief Engineer on the recommendation of Executive Engineer without taking into consideration the agreement as was reached between the petitioner and the Respondents and the last extension was granted by the Chief Engineer, though he had no such jurisdiction, a day prior to his retirement. The Court was informed that the State proposed to take action against such Engineer, including the Chief Engineer who illegally allowed extension of work upto 31st December, 2001. 23. So far as petitioners right under Article 19(1)(g) of Constitution of India is concerned, the learned Advocate General submitted that the right of petitioner to obtain contract work with any other person/organisation has not been curtailed and by impugned order, the State Government merely intended not to reach contract with the petitioner in future. It was submitted that the petitioner had no right to enter contract with the State Government to carry on the State Governments work; though he has right to carry on business with any other person. 24. The right to carry on trade or business as guaranteed under Article 19(1)(g)(6) and 298 of Constitution, fell for consideration before the Supreme Court in the case of Krishnan Kakkanath v. Government of Kerala, reported in (1997) 9 SCC 495 , as also in AIR 1997 SC 128 . 25. The apex Court held that a citizen has no fundamental right to insist on Government or any other individual to do business with him/her. The Government is entitled to enter into business with any person or class of persons to the exclusion of others. While doing so, if Government does not prohibit others to carry on their business. Articles 19(1)(g) is not violative. 26. In the light of aforesaid pronouncement of highest Court of law, if the petitioner has been black listed for entering into contract with Government in future. It cannot be held to be violative of Article 19(1)(g) and (6) of Constitution of India. 27. So far as judicial review of impugned order dated 18th August, 2001 is concerned, normally, a Court is not supposed to do so unless the Government policy or order is arbitrary, capricious, irrational, discriminatory or violative of constitutional or statutory provisions. In absence of the aforesaid infirmities, the Court is not supposed to struck down such policy or an order passed by the competent authority. 28. So far as blacklisting a Contractor is concerned, the competent authority/ Government has right to do so. The only procedure to be followed is the rules of natural Justice i.e. a show cause notice to be given to the Contractor showing therein the grounds and intention to black list the Contractor. 28. So far as blacklisting a Contractor is concerned, the competent authority/ Government has right to do so. The only procedure to be followed is the rules of natural Justice i.e. a show cause notice to be given to the Contractor showing therein the grounds and intention to black list the Contractor. In this connection, one may refer to the Supreme Courts decision in E.E. & C. Ltd. v. State of W.B., AIR 1975 SC 266 , wherein the Supreme Court held that before placing the name of a person on black list, such person is entitled to be heard as it has the effect of preventing a person from privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. The fundamental of fair play requires that the person concerned should be given an opportunity to represent his case before he is put on the black list. Similar view was taken by the Supreme Court in J. Vilangandan v. Executive Engineer (PWD), Eranakulam, reported in AIR 1978 SC 930 . That was a case of default for which the Contractor was debarred from taking further contract under the division. The Court held that the fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the blacklisting. "The black-listing has the effect of preventing a person from the privilege and advantage of entering into the lawful relationship with the Government for the purposes of gains. The fact that a disability is created by the order of black-listing indicates that the relevant authority is to have an objective satisfaction. The fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the black-listing." The aforesaid finding was given by the Supreme Court in Erusian Equipments, case ( AIR 1975 SC 266 ). 29. In view of authoritative pronouncement made by the highest court of law, it is clear that law does not deny to the individual the freedom of contract, including the freedom to carry with or not to carry with or not to enter into a contract. 29. In view of authoritative pronouncement made by the highest court of law, it is clear that law does not deny to the individual the freedom of contract, including the freedom to carry with or not to carry with or not to enter into a contract. The aforesaid plea as advanced on behalf of the petitioner is thereby rejected, 30. So far as "Bihar Thikedar Suchikaran Niamawali, 1996 notified on 28th June, 1997 is concerned, the power to put a Contractor in black list is stipulated under Rule 14, Provision made therein to give a show cause notice before taking final decision to black list a Contractor by a competent authority. Rule 13 of 1996 Rules stipulates the grounds on which a Contractor can be black listed, such as (i) for misbehaviour with any officer or employee of the concerned department; (ii) for non-completion of work as per contract and work order; (iii) if it creates law and order problem at the time of obtaining or submitting lender papers or to perform any act in connection with such submission of tender; (iv) for submitting contract by Contractor to another Contractor/or to any other person; (v) if any officer or employee is attacked or is compelled to do some act on the dictates; (vi) if the Government materials such as cement, steel arid bitumen etc. are sold by the Contractor; and (vii) if the Contractor submits wrong information or document or security money for obtaining contract. 31. Though there are different circumstances mentioned under Rule 13 to black list a Contractor, but the circumstances and the case in which a Contractor to be blacklisted for a specified period or permanently has not been laid down therein. The discretion seems to have been left open to the competent authority to determine the penal action to be taken on the facts and circumstances of each of the case. There the question of objective satisfaction of the competent authority comes into play before passing a penal order. 32. For example, there are provisions laid down. In the contract itself to rescend/cancel the contract if any terms and conditions of agreement or work order is violated. It is one of the grounds (Ground No. ii stipulated under Rule 13 to put a Contractor in the black list. 32. For example, there are provisions laid down. In the contract itself to rescend/cancel the contract if any terms and conditions of agreement or work order is violated. It is one of the grounds (Ground No. ii stipulated under Rule 13 to put a Contractor in the black list. Thus, the competent authority has two options; to either to rescend the contract as per terms of agreement or to take other action as per agreement or to put the Contractor in the black list as per Rule 14 read with Rule 13(ii). 33. Similarly, some of the grounds to put a Contractor in the black list as shown under Rule 13 are grave, in nature, whereas certain other grounds are not so grave. For example, misbehaviour with officer or employee of the concerned Deptt. or to attack the concerned officer or employee, as shown under Rule 13(i) and (v) are much grievous than the general violation of terms and conditions of agreement or work order, as stipulated under Rule 13(ii). These are the situations in which it is left to the competent authority to determine whether to put a Contractor in black list for a specified period or permanently. 34. In the present case of petitioner, it has not been disputed that the initial agreement was reached on 19th March, 1999 and work was to be completed by 31st March, 2000. Admittedly, the work order was not issued for about a year, the ground work of completion of repair of pot holes by the Department having note made for which a Part II Agreement was reached between the parties on 30th September, 2000 i.e. much after the period by which the initial work was to be completed. In the said Part II Agreement, extension was granted upto 31st December, 2000. Thus, even if it is accepted that the Chief Engineer, wrongly extended the period of execution of work upto 31st December. 2001, the authorities failed to take into consideration the fact that the ground work of repair of pot holes were to be completed by the Department before execution of carpeting work by petitioner and it was only on 14th December, 2000, the Department agreed to repair the pot holes in its meeting held with the petitioner. 2001, the authorities failed to take into consideration the fact that the ground work of repair of pot holes were to be completed by the Department before execution of carpeting work by petitioner and it was only on 14th December, 2000, the Department agreed to repair the pot holes in its meeting held with the petitioner. It is only 13 (thirteen) days thereafter, on 27th December, 2000, the Minister made spot enquiry, which followed by a show cause notice given on 14th "March, 2001. 35. The aforesaid circumstances seems to have not been taken into consideration by the Engineer-in-Chief who issued the impugned orders on 18th August, 2001, nor the authority made clear either in the show cause notice or in the Impugned order as to what irregularity the petitioner committed. Further, the competent authority appears to have not made objective satisfaction before permanently blacklisting the petitioner to determine whether in the facts and circumstances action to be taken rescinding the contract as per agreement or to black list the petitioner for a specified period or permanently. 36. In the facts and circumstances, while this Court is of the view that the Engineer-in-chief has jurisdiction to black list a Contractor and black-listing of Contractor is not violative of Article 19(1)(g) of the Constitution, but the competent authority having not properly applied its mind, the matter requires reconsideration. 37. Accordingly, the impugned order dated 18th August, 2001 is set aside. The case is remitted to the Secretary. Public Works (Road Construction) Department, Government of Jharkhand, Ranchi to decide within a month from the date of receipt/production of a copy of this order, the issue as to what action to be taken if the petitioner has failed to perform the work as per terms and conditions of contract. It is open to the authorities to take steps for cancellation of contract and to take other steps as per terms and conditions laid down in the agreement and/or to put the Contractor (petitioner) in black list in terms with Rule 13(ii) of 1996 Rules. If for one or other reason, the Secretary feels to put the petitioner in the black list, it will determine the issue whether such black listing will be for a specified period or permanently for which grounds to be recorded. 38. If for one or other reason, the Secretary feels to put the petitioner in the black list, it will determine the issue whether such black listing will be for a specified period or permanently for which grounds to be recorded. 38. As the Secretary concerned has been directed to decide the issue within a month aforesaid, the petitioner cannot claim any right to perform work as per agreement/ work order or to obtain any such contract by taking part in future, till final decision is taken by the Secretary, Public Works (Road Construction) Department, Government of Jharkhand, Ranchi. 39. The writ petition stands disposed of with the aforesaid observations and directions. 40. Writ petition stands disposed of.