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2018 DIGILAW 700 (JHR)

Shashi Kant Goplka v. State of Jharkhand

2018-04-02

RAJESH SHANKAR

body2018
ORDER The present writ petition has been filed for quashing memo no. 6010(S) dated 21.08.2015 passed by the respondent no. 2– the Principal Secretary, Road Construction Department, Government of Jharkhand, Ranchi, whereby the appeal preferred by the petitioner in the light of the direction of this Court in the matter of blacklisting has been dismissed without deciding the period of blacklisting. 2. The factual background of the case as stated in the writ petition is that pursuant to the order passed in a public interest litigation being W.P.(PIL) No. 803 of 2009, the Central Bureau of Investigation (CBI) made a preliminary enquiry vide P.E No. 03(A)/09-R. Thereafter, a First Information Report was lodged under Sections 420/467/468/471 r/w Section 120-B IPC and Section 13(2) r/w Section 13(1)(d) of the Prevention of Corruption Act, 1988 against Ram Nihora Prasad Singh, the then Executive Engineer, Road Construction Department, Giridih, M/s Pabscon and others. In course of investigation, the petitioner was also made accused with an allegation that the petitioner submitted false invoices of bitumen and got payments thereof in respect of a contract for construction of Govindpur-Tundi-Giridih Road vide Agreement No. 3-F2/2005-06. After the investigation, the CBI submitted charge-sheet against the petitioner and other accused including the engineers of the Road Construction Department. Thereafter, the respondent no. 3 – Engineer-in-Chief–cum–Registering Authority, Road Construction Department issued show-cause notice vide letter no. 4804(S) dated 16.05.2013 to the petitioner as to why its contractor’s registration be not cancelled and the petitioner firm be not put under blacklist. The petitioner filed its reply to the show-cause notice on 31.05.2013. However, the respondent no. 3, vide order contained in memo no. 6119(S) dated 28.06.2013 cancelled the contractor’s registration and placed the petitioner under blacklist. The petitioner filed a writ petition before this Court being W.P.(C) No. 4417 of 2013 against the order dated 28.06.2013 passed by the respondent no. 3. A Bench of this Court vide order dated 15.05.2015 disposed of the said writ petition remanding the matter to the respondent authority for taking a fresh decision on the question of quantum of penalty/period of debarment pursuant to the order of blacklisting with liberty to the petitioner to prefer an appeal under the rules before the respondent no. 2 – the Principal Secretary, Road Construction Department, Government of Jharkhand, Ranchi. However, the respondent no. 2 passed the impugned order dated 21.08.2015 rejecting the appeal preferred by the petitioner. 2 – the Principal Secretary, Road Construction Department, Government of Jharkhand, Ranchi. However, the respondent no. 2 passed the impugned order dated 21.08.2015 rejecting the appeal preferred by the petitioner. Aggrieved by the impugned order dated 21.08.2015, the petitioner has again approached this Court by filing the present writ petition. 3. The learned counsel for the petitioner submits that the impugned order dated 21.08.2015 passed by the respondent no. 2 mostly discusses the original order of blacklisting while the said order of blacklisting has already been affirmed by this Court vide order dated 15.05.2015 passed in W.P.(C) No. 4417 of 2013 and the case was remanded on the point of period of blacklisting/quantum of penalty. It is further submitted that the respondent no. 2 has also not considered the ratio laid down by the Hon’ble Supreme Court in the case of “M/s Kulja Industries Limited Vs. Chief Gen. Manager, W.T. Proj., BSNL & Ors.” reported in AIR 2014 SC 9 : 2013(4) JLJR (SC) 331, though relying on the said ratio, a Bench of this Court, vide order dated 15.05.2015 passed in W.P.(C) No. 4417 of 2013 directed the petitioner to prefer appeal before the respondent no. 2. It is also submitted that the petitioner has been blacklisted under Clause 10.1.12 and 10.1.13 of the Jharkhand Road Construction Contractors Registration Rules, 2008 (hereinafter referred to as “the Rules, 2008”), whereas Clause 10.1.14 of the said Rules provides for blacklisting of a contractor upon conviction in a criminal case. However, the petitioner has been blacklisted without awaiting the result of the criminal trial. The period of blacklisting/quantum of punishment ought to have been decided by the respondent no. 2, however, the same has not been done ignoring the observation of this Court made in W.P.(C) No. 4417 of 2013. 4. The learned counsel for the respondent-State submits that the respondent no. 2 has considered the matter thoroughly and has passed a detailed order contained in memo No. 6010 (S) dated 21.08.2015, wherein it has specifically been mentioned that there is no provision in the Rules, 2008 with regard to blacklisting of any contractor for limited period. 5. Heard the learned counsel for the parties and perused the materials available on record. 6. The petitioner, aggrieved by the order contained in memo No. 6119 (S) dated 28.06.2013 issued under the signature of the respondent no. 5. Heard the learned counsel for the parties and perused the materials available on record. 6. The petitioner, aggrieved by the order contained in memo No. 6119 (S) dated 28.06.2013 issued under the signature of the respondent no. 3, preferred a writ petition before this Court being W.P.(C) No. 4417 of 2013, whereby the petitioner’s registration as contractor of the Road Construction Department, Government of Jharkhand was cancelled and it was permanently blacklisted invoking Clause 10.1.12 and Clause 10.1.13 of the Rules, 2008. A Bench of this Court vide order dated 15.05.2015 while relying upon the judgment rendered by the Hon’ble Apex Court in the case of “M/s Kulja Industries Limited” (supra), disposed of the said writ petition with following observation: “In view of the aforesaid settled legal position on the subject the impugned order so far as it relates to blacklisting of the petitioner for indefinite period of time is no doubt harsh and in the nature of a permanent debarment. Learned counsel for respondents has also pointed out that there is a provision of appeal under the Rule 10.7 of 2008 where such a question can be reconsidered by competent authority/secretary of the department. Having regard to the aforesaid discussion made and the legal position noticed hereinabove, the matter is remanded to the respondent authority for taking a fresh decision on the question of quantum of penalty/period of debarment of petitioner pursuant to the order of blacklisting. The petitioner would prefer an appeal under the Rules before respondent no. 2, Principal Secretary, Road Construction Department, Govt of Jharkhand, Ranchi within a period of 2 weeks. Thereafter, the respondent no. 2 shall take a decision thereupon keeping into account all relevant materials facts and the legal position rendered by Hon’ble Apex Court on the point within a period of 10 weeks from the date of receipt/production of a copy of this order. Needless to say that any observation made hereinabove are confined to the issue relating to challenge to the order of de-registration and blacklisting of petitioner and shall not in any way prejudice the case of the petitioner in the criminal trial. Accordingly, the writ petition is disposed of in the aforesaid manner.” 7. In pursuance of the order dated 15.05.2015 passed by this Court in W.P.(C) No. 4417 of 2013, the petitioner preferred an appeal before the respondent no. Accordingly, the writ petition is disposed of in the aforesaid manner.” 7. In pursuance of the order dated 15.05.2015 passed by this Court in W.P.(C) No. 4417 of 2013, the petitioner preferred an appeal before the respondent no. 2, however, the same was rejected vide impugned order contained in Memo No. 6010 (S) dated 21.08.2015 (Annexure-8 to the writ petition). 8. On perusal of the impugned order dated 21.08.2015, it appears that so far as the issue of blacklisting/debarment of the petitioner is concerned, the respondent no. 2 has observed that there is no provision of blacklisting of a contractor for a limited period in the Rules, 2008. The said observation of the respondent no. 2 appears to be completely misconceived particularly for the reason that the order dated 15.05.2015 was passed by this Court in the earlier round of litigation in W.P.(C) No. 4417 of 2013 after considering the Rules, 2008 as well as the ratio laid down in the judgment rendered by the Hon’ble Supreme Court in the case of “M/s Kulja Industries Limited” (supra). It was clearly observed by this Court that the order of blacklisting of the petitioner for indefinite period is harsh which is in the nature of permanent debarment and also goes contrary to the ratio laid down by the Hon’ble Apex Court in the case of “M/s Kulja Industries Limited” (supra), wherein it has been categorically held that no order of blacklisting of a contractor can be made for an indefinite period. Admittedly, the order passed by this Court in W.P.(C) No. 4417 of 2013 was not challenged by the State of Jharkhand and the same has attained finality on the said issue. The ratio laid down by the Hon’ble Supreme Court in the case of “M/s Kulja Industries Limited” (supra), is thus required to be reiterated which reads as under: “17. That apart the power to blacklist a contractor whether the contract be for supply of material or equipment or for the execution of any other work whatsoever is in our opinion inherent in the party allotting the contract. There is no need for any such power being specifically conferred by statute or reserved by contractor. That is because 'blacklisting' simply signifies a business decision by which the party affected by the breach decides not to enter into any contractual relationship with the party committing the breach. There is no need for any such power being specifically conferred by statute or reserved by contractor. That is because 'blacklisting' simply signifies a business decision by which the party affected by the breach decides not to enter into any contractual relationship with the party committing the breach. Between two private parties the right to take any such decision is absolute and untrammelled by any constraints whatsoever. The freedom to contract or not to contract is unqualified in the case of private parties. But any such decision is subject to judicial review when the same is taken by the State or any of its instrumentalities. This implies that any such decision will be open to scrutiny not only on the touchstone of the principles of natural justice but also on the doctrine of proportionality. A fair hearing to the party being blacklisted thus becomes an essential pre-condition for a proper exercise of the power and a valid order of blacklisting made pursuant thereto. The order itself being reasonable, fair and proportionate to the gravity of the offence is similarly examinable by a writ Court. The legal position on the subject is settled by a long line of decisions rendered by this Court starting with Erusian Equipment and Chemicals Ltd. v. State of West Bengal and Anr. (1975) 1 SCC 70 : ( AIR 1975 SC 266 ) where this Court declared that blacklisting has the effect of preventing a person from entering into lawful relationship with the Government for purposes of gains and that the Authority passing any such order was required to give a fair hearing before passing an order blacklisting a certain entity. This Court observed: "20. Blacklisting has the effect of preventing a person from the 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. Fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the blacklist." 24. Suffice it to say that 'debarment' is recognised 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. Suffice it to say that 'debarment' is recognised 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. 25. In the case at hand according to the respondent-BSNL, the appellant had fraudulently withdrawn a huge amount of money which was not due to it in collusion and conspiracy with the officials of the respondent-corporation. Even so permanent debarment from future contracts for all times to come may sound too harsh and heavy a punishment to be considered reasonable especially when (a) the appellant is supplying bulk of its manufactured products to the respondent-BSNL and (b) The excess amount received by it has already been paid back. 26. The next question then is whether this Court ought to itself determine the time period for which the appellant should be blacklisted or remit the matter back to the authority to do so having regard to the attendant facts and circumstances. A remand back to the competent authority has appealed to us to be a more appropriate option than an order by which we may ourselves determine the period for which the appellant would remain blacklisted. We say so for two precise reasons. Firstly, because blacklisting is in the nature of penalty the quantum whereof is a matter that rests primarily with the authority competent to impose the same. In the realm of service jurisprudence this Court has no doubt cut short the agony of a delinquent employee in exceptional circumstances to prevent delay and further litigation by modifying the quantum of punishment but such considerations do not apply to a company engaged in a lucrative business like supply of optical fibre/HDPE pipes to BSNL. Secondly, because while determining the period for which the blacklisting should be effective the respondent-Corporation may for the sake of objectivity and transparency formulate broad guidelines to be followed in such cases. Different periods of debarment depending upon the gravity of the offences, violations and breaches may be prescribed by such guidelines. Secondly, because while determining the period for which the blacklisting should be effective the respondent-Corporation may for the sake of objectivity and transparency formulate broad guidelines to be followed in such cases. Different periods of debarment depending upon the gravity of the offences, violations and breaches may be prescribed by such guidelines. While, it may not be possible to exhaustively enumerate all types of offences and acts of misdemeanour, or violations of contractual obligations by a contractor, the respondent-Corporation may do so as far as possible to reduce if not totally eliminate arbitrariness in the exercise of the power vested in it and inspire confidence in the fairness of the order which the competent authority may pass against a defaulting contractor.” 9. Article 142 of the Constitution of India mandates that any law declared by the Hon’ble Supreme Court of India becomes the law of the land. Thus, if the existing Rules, 2008 goes contrary to the ratio laid down by the Hon’ble Supreme Court in the case of “M/s Kulja Industries Limited” (supra) with regard to the issue of permanent blacklisting/debarment of a contractor, the said rules should have been suitably amended by the State Government. However, it was not open to the respondent no. 2 to ignore the law declared by the Hon’ble Supreme Court under Article 142 of the Constitution of India as well as the order passed in earlier round of litigation by this Court and to insist that there is no provision in the Rules, 2008 for blacklisting of a contractor for a limited period. The respondent no. 2 has further observed in the impugned order dated 21.08.2015 that a criminal case was lodged against the petitioner by the CBI being R.C. No. 22(A)/2009(R) which is still pending for trial and, therefore, it cannot be said to be exonerated from the allegations. This Court in the order dated 15.05.2015 passed in W.P.(C) No. 4417 of 2013, has also dealt with the said issue having observed as under: “I have considered the rival submission of parties in the light of aforesaid relevant factual details noticed hereinabove. This Court in the order dated 15.05.2015 passed in W.P.(C) No. 4417 of 2013, has also dealt with the said issue having observed as under: “I have considered the rival submission of parties in the light of aforesaid relevant factual details noticed hereinabove. It is to be observed that the petitioner has been found to furnish Invoices which were either fake or antedated or used twice to raise the bill, during the course of investigation by C.B.I. in a case popularly known as Bitumen Scam, for undertaking construction of Gobindpur-Tundi-Giridih Road under the Contract 2F2 of 2005-06. ............ However, while the respondent department is well within its right to cancel the registration of contractor on such misconduct having been established, the blacklisting of petitioner by the impugned order would operate not only vis-à-vis the department but against any other organization, department or company where the petitioner may have opportunity to undertake business. The order of blacklisting is not for any definite period of time but appears to be of permanent nature. Such a course adopted by an instrumentality or a corporation, however, cannot be justified though the breach which is of a serious nature cannot be ignored or be allowed to go unpunished………..” 10. Thus, the said observation of the respondent no. 2 that the petitioner has not yet been exonerated from the allegations levelled against him in the criminal case, also appears to be outplaced. 11. In view of the aforesaid discussion, the impugned order as contained in Memo No. 6010 (S) dated 21.08.2015 issued by the respondent no. 2- the Principal Secretary, Road Construction Department, Government of Jharkhand, Ranchi, cannot be sustained in law and the same is accordingly quashed and set-aside. The matter is again remanded to the respondent no. 2 to take a fresh decision on the point of the period of debarment of the petitioner in view of the ratio laid down by the Hon’ble Supreme Court in the case of “M/s Kulja Industries Limited” (supra) and the observation made by this Court in the order dated 15.05.2015 passed in W.P.(C) No. 4417 of 2013. The said decision must be taken by the respondent no. 2 within a period of twelve weeks from the date of receipt/production of a copy of this order. 12. The writ petition is accordingly disposed of.