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2012 DIGILAW 745 (CAL)

TULSI ENTERPRISES v. ADMINISTRATOR

2012-08-07

SAMBUDDHA CHAKRABARTI, SOUMITRA PAL

body2012
JUDGMENT Dr. Sambhuddha Chakrabarti, J.: 1. The scope of the present appeal can be reduced to a Short compass. 2. Pursuant to an advertisement for doing certain jobs in the concerned Government department, the appellant No.1 participated in the tender process. His bid was found to be the lowest and the same was accepted. Bills raised by the appellants were partly paid and for non-payment of the balance amount, the appellants had filed a writ petition. 3. During the pendency of the writ petition, the respondents had published a notification in a local newspaper blacklisting the present appellant as a Government Supplier. This was challenged by a separate writ petition. The learned Single Judge by the order impugned in this appeal had dismissed the second writ petition inter alia, holding that the points raised in the writ petition could not be decided in a proceeding under Article 226 of the Constitution of India, as they were factual in nature. According to the learned Single Judge the factual disputes could only be resolved in a civil suit. The learned Single Judge accepted the stand taken by the respondents to the writ petition that the performance of the appellants was far from satisfactory and that there was a shortfall in the work executed as the real cause for blacklisting the appellant No.1 as a Government contractor. 4. The learned Single Judge also observed that previously also the petitioner filed a writ petition and that was also disposed of with direction to approach the appropriate forum. 5. We have heard the learned counsel for the appellant and the respondents, gone through the order impugned in the present appeal and the materials on record. We do net think that the judgment and order under appeal can be sustained. 6. The learned Single Judge while holding that the issues raised in the writ petition involved factual disputes has drawn an analogy with the earlier writ petition filed by the appellant which had also met with the same fate. This was done without appreciating that there was a very basic difference between the scope of the two writ petitions. 6. The learned Single Judge while holding that the issues raised in the writ petition involved factual disputes has drawn an analogy with the earlier writ petition filed by the appellant which had also met with the same fate. This was done without appreciating that there was a very basic difference between the scope of the two writ petitions. The first was concerned with the non-payment or partial payment of the bills raised by the appellant No.1 even after the execution of the work which as of necessity required the exploration of some factual aspects particularly in view of the dispute raised by the respondents regarding unsatisfactory execution of the work and shortfall in the total works executed by it. In a writ petition of that nature the decision of a fact finding Court upon evidence was imperative. The Writ Court could not enter into those factual aspects. 7. The present petition however, was directed against an order blacklisting the appellant no.1 without giving it an opportunity of being heard. Contrary to what the learned Single Judge has held the writ petition raised and consequently the appeal also, a question of law and it could be answered in a writ petition without entering into factual aspects at all. 8. The appellants herein had taken a point before the learned Single Judge that the authorities had issued an order blacklisting the appellant No.1 behind its back and thereby violated the principles of Natural Justice. The learned Single Judge has negatived this contention on the ground that the corruption alleged to have been committed by the appellant No.1 being a very grave one, as observed by the Anti Corruption Unit of A & N Administration, the respondent No.3 to the writ petition as well as in the present appeal, had taken a right step for preventing the loss to Government exchequer. 9. We consider this observation to be contrary to the settled principles of law. 10. We hold that the learned Single Judge in coming to the conclusion has committed a serious error in approaching the whole issue from the point of view of justifiability of the steps taken by the respondents to prevent the loss to Government exchequer. 11. But the issue goes deeper than that. 12. 10. We hold that the learned Single Judge in coming to the conclusion has committed a serious error in approaching the whole issue from the point of view of justifiability of the steps taken by the respondents to prevent the loss to Government exchequer. 11. But the issue goes deeper than that. 12. The issue involved in the writ petition as well as in the present appeal is whether in blacklisting of appellant No.1, the principles of Natural Justice were complied with. That the appellants were not given an opportunity of being heard before being blacklisted has not been disputed by Mr. Mandal, the learned Advocate appearing for the respondent authorities. 13. We have thus no hesitation in holding that the basic, inalienable, indispensable and indisputable requirement of law had been violated by the respondents authorities. 14. A Government contractor cannot be blacklisted without giving him an opportunity of being heard. This principle has long been settled by numerous judgments both of the Supreme Court as well as of different High Courts, Reference may be made to the case of M/s Eruslan Equipment & Chemicals Ltd. vs. Union of India and others, reported in (1975) 1 SCC 70 , wherein a three-Judge bench of the Supreme Court held that blacklisting had the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fundamentals of fair play required that the person concerned should be given an opportunity to represent his case before he is put on the blacklist. The principle of law, as further enunciated by the Supreme Court, is that the order of blacklisting has the effect of depriving a person of equality of opportunity in the matter of public contract. The person who has been dealing with the Government in the matter of sale and purchase of materials has a legitimate interest or expectation. 15. Further reference can be made to the case of Raghunath Thakur vs. State of Bihar and others, reported in (1989) 1 SCC 229, wherein also it has been held that blacklisting any person in respect of business venture has civil consequences for the future business of the person concerned. 15. Further reference can be made to the case of Raghunath Thakur vs. State of Bihar and others, reported in (1989) 1 SCC 229, wherein also it has been held that blacklisting any person in respect of business venture has civil consequences for the future business of the person concerned. Even if the rules do not express so, it is an elementary principle of Natural Justice that parties affected by any order should have a right of being heard and making representations against the order. 16. Again in the case of Southern Painters vs. Fertilizers & Chemicals Travancore Ltd. and another, reported in 1994 Supp (2) SCC 699, the Supreme Court was dealing with a case where the name of the appellant was deleted from the list of qualified contractors without notifying the reason for such deletion. The Supreme Court held that this deletion of the name of the appellant from the list of approved contractors on the ground that there were vigilance report against it could only be done consistent with and after complying with the principles of Natural Justice, 17. From what we have already discussed and in view of the settled principles of law, we have no manner of doubt that the authorities before issuing the notification had failed to comply with the basic principles of Natural Justice. Thus the appellants' right to trade as Government contractor has been closed based on certain reports of the respondents themselves. The appellants were not given any opportunity to controvert the allegations contained in those documents. Thus they were punished without a hearing and even without an opportunity to make a representation. The respondents have resorted to an arbitrary exercise of power in gross violation of the principles of Natural Justice. The notification issued by the respondents is liable to be set aside. 18. One more thing needs to be mentioned. It would have been one thing if the respondents had merely blacklisted the appellants. They went further and published the notification relating to the blacklisting in a widely circulated local English daily. This has a further effect of jeopardizing the reputation of the appellants in their business ventures. 18. One more thing needs to be mentioned. It would have been one thing if the respondents had merely blacklisted the appellants. They went further and published the notification relating to the blacklisting in a widely circulated local English daily. This has a further effect of jeopardizing the reputation of the appellants in their business ventures. This was not only a notice to the appellants but to the whole world about certain improper acts allegedly said to have been done by the appellant touching on their integrity as contractors without giving them any opportunity of being heard and meeting the same. If we cannot support the act done by the respondents in blacklisting the appellants behind their back we cannot call their subsequent act very praiseworthy. 19. The impugned notification bearing order No.4233 dated November 19, 2010 is hereby quashed. The judgment and order of the learned Single Judge is set aside and the appeal is allowed. 20. We, however, have to make one point clear. This order will not prevent the authorities from proceeding against the appellants afresh after complying with the principles of Natural Justice and other requirements of law governing the field. For that, their hands are never fettered. 21. There shall be, however, no order as to costs. Soumitra Pal, J.: I agree.