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2021 DIGILAW 709 (GAU)

H. R. D. Commercial and Industrial Security Force Pvt. Ltd. v. Union of India, Ministry of Tourism, through Secretary, New Delhi

2021-11-18

MANISH CHOUDHURY

body2021
ORDER : 1. In this writ petition filed under Article 226 of the Constitution of India, the petitioner has assailed the impugned letter dated 14.02.2017 issued under the hand of the respondent no. 2, whereby, the petitioner company has been blacklisted and has sought for setting aside of the said decision of its blacklisting contained in the impugned letter dated 14.02.2017. 2. The petitioner is a private limited company incorporated under the provisions of the Companies Act, 1956 and it has projected that its main task is to recruit and train security personnel for the purpose of the providing security services to various institutions/ organizations. The respondent no. 2 is the Principal of the Institute of Hotel Management, Catering Technology and Applied Nutrition (‘the Institute’ for short), located in Guwahati, Assam. The Institute is a sponsored institute of the Government of India. 3. By a Notice Inviting Quotation for Security Guards (‘the NIQ’ for short) dated 01.06.2016, the Institute invited quotations for supply of security guards/personnel for watch and ward duty of the Institute for a period of 1 (one) year. In response to the NIQ, the petitioner submitted its quotation quoting its rates. The Institute accepted the quotation submitted by the petitioner and a work order dated 14.07.2016 was issued to that effect asking the petitioner to depute requisite number of security guards/personnel w.e.f. 01.08.2016 as per the terms and conditions mentioned in the said work order. On receipt of the work order, the petitioner submitted a posting letter dated 01.08.2016 by placing 8 (eight) nos. of security personnel for the watch and ward duty of the Institute wherein the names and addresses of those 8 (eight) security personnel were mentioned. 4. On 21.09.2016, the respondent no. 2 by its communication of even date had informed the petitioner that it had failed to depute security guards as per the agreement which resulted in compromising with the quality of performance. The petitioner was thereby asked to show cause as to why appropriate proceeding should not be drawn against it and was also informed to the effect that if the response was found unsatisfactory to the Management of the Institute, the Management would exercise the power to discontinue the agreement. The petitioner was thereby asked to show cause as to why appropriate proceeding should not be drawn against it and was also informed to the effect that if the response was found unsatisfactory to the Management of the Institute, the Management would exercise the power to discontinue the agreement. In response, the petitioner submitted its reply to the show cause notice on 27.09.2016 inter-alia stating the reasons for the lapses during the specific period and committing to serve the Institute sincerely as per the terms of the agreement thenceforth. It was on 25.01.2017, the respondent no. 2 served another letter to the petitioner, whereby, it was informed that the Institute had decided to blacklist the petitioner and treat it as per rules thenceforth. The petitioner was also directed to contact the Principal of the Institute on 27.01.2017. Pursuant to the said letter dated 25.01.2017, the petitioner submitted a representation before the respondent no. 2 on 28.01.2017 with the request to re-consider the decision of blacklisting. Thereafter, by the impugned letter dated 14.02.2017, the respondent no. 2 observing his dissatisfaction regarding the services provided by the petitioner and terming the quality of services as very poor because of not providing the requisite number of security personnel as per the agreement, had blacklisted the petitioner with the further intimation that there was no scope for further discussion. 5. Heard Mr. S. Sahu, learned counsel for the petitioner. Also heard Mr. S.K. Medhi, learned Central Government Counsel (CGC) for the respondent no. 1 and Mr. A. Thakur, learned counsel for the respondent no. 2. 6. Mr. Sahu, learned counsel for the petitioner has submitted that the decision on the part of the Institute to blacklist the petitioner is arbitrary, unjust and disproportionate. The impugned letter whereby the petitioner has been blacklisted was not preceded by a proper show-cause notice indicating precisely the alleged breaches and defaults the petitioner had purportedly committed. He has submitted that during the period from 11.09.2016 to 19.09.2016, there was shortage of security guards at the disposal of the petitioner which resulted in deployment of lesser number of security guards at the Institute. Regarding the said period from 11.09.2016 to 19.09.2016, the petitioner was already show-caused by the respondent no. 2 by its letter dated 21.09.2016 and a reply explaining the entire situation was submitted by the petitioner on 27.09.2016. Regarding the said period from 11.09.2016 to 19.09.2016, the petitioner was already show-caused by the respondent no. 2 by its letter dated 21.09.2016 and a reply explaining the entire situation was submitted by the petitioner on 27.09.2016. It was only after elapse of about 4 (four) months, the letter dated 25.01.2017 was served upon the petitioner. From the said letter, it is apparent that the decision to blacklist the petitioner was already tentatively taken by the respondent no. 2 on the purported ground of receipt of a number of complaints and unsatisfactory service. Thereafter, by the impugned letter dated 14.02.2017, the respondent no. 2 without taking into consideration the reply of the petitioner submitted on 28.01.2017 affirmed the decision to blacklist the petitioner. It is his contention that the petitioner was not given any kind of opportunity, not to speak of any reasonable and adequate opportunity, prior to taking the impugned decision to blacklist it. The procedure adopted by the respondent no. 2 to blacklist the petitioner, according to Mr. Sahu, is in violation of the laws regarding blacklisting and to buttress his such submissions, he has referred to a number of decisions, some of which would be referred to at the subsequent part of this order. 7. Mr. Thakur, learned counsel for the respondent no. 2 has submitted that the petitioner was chosen to perform watch and ward duty at the Institute for a period of 1 (one) year and as per the agreement, the petitioner was supposed to deploy a requisite number of security personnel for such duties round the clock. Lapses were noticed during the period from 11.09.2016 to 19.09.2016. During that period, the petitioner did not deploy the requisite number of security personnel as per the agreement and the security personnel who were doing the duties then, were doing double/triple shifts. It was in such situation, the petitioner was asked to show-cause as to why the agreement should not be discontinued. The reply submitted by the petitioner on 27.09.2016 was found unsatisfactory. He has submitted that the Institute had, in the meantime, received a number of complaints and was not satisfied with the services rendered by the petitioner. Hence, the decision to blacklist the petitioner was tentatively taken which was thereafter informed to the petitioner on 25.01.2017. An opportunity was, however, given to the petitioner by asking the Director to appear before the respondent no. Hence, the decision to blacklist the petitioner was tentatively taken which was thereafter informed to the petitioner on 25.01.2017. An opportunity was, however, given to the petitioner by asking the Director to appear before the respondent no. 2 on 27.01.2017. When a reply was received from the petitioner on 28.01.2017, the same was considered but due to poor quality of services rendered by the petitioner and due to receipt of a number of complaints, it was decided to affirm the decision to blacklist the petitioner by the impugned letter dated 14.02.2017. 8. Mr. Medhi, learned Central Government Counsel appearing for the respondent no. 1 has submitted that the matter pertains to the affairs of the Institute and the respondent no. 1 has no role in it. 9. I have duly considered the rival submissions advanced by the learned counsel for the parties and have also perused the materials brought on record by the parties through their respective pleadings. 10. By the NIQ dated 01.06.2016, the Institute invited quotations for supply of security guards including ex-servicemen for watch and ward duties of the Institute for a period of 1 (one) year w.e.f. 01.07.2016. The applicants were asked to submit a number of documents including a document of having at least 5 (five) years’ experience in the relevant field. In response to the NIQ, the petitioner submitted its quotation on 18.06.2016. The said quotation of the petitioner was accepted by the respondent no. 2 and by issuing the work order dated 14.07.2016, the petitioner was asked to deploy 8 (eight) nos. of security guards including 1 (one) security supervisor (ex-servicemen) w.e.f. 01.08.2016. In the work order, it was mentioned that the period of contract would be from 01.08.2016 to 31.07.2017. The work order had also laid down certain other terms and conditions. As per condition no. 7 therein, the duty hours of the security guards would be round the clock. It was further indicated that the contract may be terminated with a month’s notice by either party and the terms which were not covered in the work order would be negotiable by both the parties. Pursuant to the work order, the petitioner placed 1 (one) no. of security supervisor and 7 (seven) nos. of security guards at the disposal of the Institute for deployment by its posting letter dated 01.08.2016. Pursuant to the work order, the petitioner placed 1 (one) no. of security supervisor and 7 (seven) nos. of security guards at the disposal of the Institute for deployment by its posting letter dated 01.08.2016. The names and addresses of the security supervisor and the security guards, placed for deployment at the Institute, were mentioned therein. 11. In the show-cause notice dated 21.09.2016, the respondent no. 2 mentioned that during the period from 11.09.2016 to 19.09.2016, the petitioner failed to deploy the requisite number of security guards at the Institute as per the agreement and as a result, the security guards were doing double/triple shifts and the same resulted in adversely compromising the quality of performance. It was mentioned therein that during the period from 11.09.2016 to 13.09.2016, only 6 (six) nos. of security guards were present. On 14.09.2016, only 4 (four) nos. of security guards were present at the Institute. Similarly, there were lesser number of security guards during the period from 15.09.2016 to 19.09.2016. Indicating the above lapses, the petitioner was asked to show-cause as to why appropriate proceeding should not to be taken against the petitioner and it was informed that if the reply of the petitioner was found unsatisfactory, the Management of the Institute would take a decision to discontinue the agreement. In the reply furnished by the petitioner to the show-cause notice on 27.09.2016, the petitioner admitted that due to shortage of security guards during the period from 11.09.2016 to 19.09.2016, the requisite number of security guards could not be deployed at the Institute. It was stated that due to Eid-ul-Adha festival falling on 13.09.2016 and Viswakarma Puja falling on 17.09.2016, a few of the security guards went to their native places and the petitioner had failed to deploy the agreed 8 (eight) nos. of security guards during that period by providing substitutes for the absent security guards during the said period. It expressed its apologies with the assurance that such lapses would not happen in the subsequent period. 12. The matter appeared to have rested in such position till 25.01.2017 as there appears to be no discernible action till 25.01.2017. of security guards during that period by providing substitutes for the absent security guards during the said period. It expressed its apologies with the assurance that such lapses would not happen in the subsequent period. 12. The matter appeared to have rested in such position till 25.01.2017 as there appears to be no discernible action till 25.01.2017. After receipt of the reply dated 27.09.2016 to the show-cause notice dated 21.09.2016 the Management of the Institute did not indicate its decision regarding continuance or discontinuance of the agreement by recording its view on the said reply as whether it was found satisfactory or unsatisfactory, as the case may be. None of the parties had adverted to what had happened during the interregnum period. The petitioner continued to provide security guards, in the meantime, for watch and ward duties at the Institute. 13. A perusal of the letter dated 25.01.2017 of the respondent no. 2 goes to show that a tentative decision to blacklist the petitioner was already taken before its issuance. The grounds cited in the said letter were that a number of complaints were received by the Institute and the Institute was not satisfied with the services rendered by the petitioner. Another reason cited therein was that the petitioner had failed to inform about the change of its office address and about its new office address. The petitioner was thereby asked to contact the Principal of the Institute on 27.01.2017. It is the case of the petitioner that on 27.01.2017, the authorized representatives of the petitioner went to meet the Principal of the Institute but despite waiting for the entire day, they could not meet the Principal of the Institute. Having failed to meet the Principal of the Institute on 27.01.2017, it submitted a representation on 28.01.2017 wherein the petitioner had submitted that they were providing their best services and there was no cause for any complaint. The petitioner had also replied about the allegation of change in address in its said reply. Thereafter by the impugned letter dated 14.02.2017, the respondent no. 2 had expressed its dissatisfaction with regard to the services provided by the petitioner which, according to it, was of poor quality because of non-deployment of requisite number of security guards as per the agreement and, thereby, intimated the decision of blacklisting. 14. Thereafter by the impugned letter dated 14.02.2017, the respondent no. 2 had expressed its dissatisfaction with regard to the services provided by the petitioner which, according to it, was of poor quality because of non-deployment of requisite number of security guards as per the agreement and, thereby, intimated the decision of blacklisting. 14. The procedure required to be followed leading to a decision of blacklisting and the consequences that ensue after such blacklisting have been observed in a large number of decisions of the Hon’ble Supreme Court of India and also of this Court. 15. In Gorkha Security Services vs. Government (NCT of Delhi) and Others, (2014) 9 SCC 105 , the Hon’ble Supreme Court of India has emphasized the necessity of compliance with the principles of natural justice by giving the opportunity to the person against whom action of blacklisting is contemplated. It has been held that the blacklisting has to be preceded by a show-cause notice in order to comply with the principles of natural justice. Explaining the rationale behind the necessity, it has been observed that with blacklisting many civil and/or evil consequences follow. Blacklisting has been 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 from participating in government tenders which means precluding him from the award of government contracts. It has been laid down that the fundamental purpose behind the serving of a show-cause notice is to make the noticee understand the precise case set up against 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 is the nature of action which is proposed to be taken for such a breach. That should be stated so that the noticee is able to point out that proposed action is not warranted in a given case, even if the breaches and defaults complained of are not satisfactory explained. Because blacklisting is the harshest possible action, such requirement becomes imperative. 16. That should be stated so that the noticee is able to point out that proposed action is not warranted in a given case, even if the breaches and defaults complained of are not satisfactory explained. Because blacklisting is the harshest possible action, such requirement becomes imperative. 16. In an earlier decision of the Hon’ble Supreme Court of India in Erusian Equipment Chemicals Ltd. vs. State of West Bengal, (1975) 1 SCC 70 , it has been observed that blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for the purpose of gains. The fact that a disability is created by the order 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 blacklist. 17. It has been observed by the Hon’ble Supreme Court of India in UMC Technologies Private Limited vs. Food Corporation of India and Another, (2021) 2 SCC 551 , that specifically, in the context of blacklisting of a person or an entity by the State or a State Corporation, a valid, particularized and unambiguous show-cause notice is particularly crucial due to the severe consequences of blacklisting and the stigmatization that accrues to the person/entity being blacklisted. In case of blacklisting, furnishing of a valid show-cause notice is critical and a failure to do so would be fatal to any order of blacklisting. 18. It is also no longer res integra that an order of blacklisting is never permanent. Thus, it is of utmost importance that a person against whom any action of blacklisting is contemplated whereby his rights and interest are going to be affected, should be given a reasonable opportunity to defend himself. Such a reasonable opportunity means an adequate, informed and meaningful opportunity to show-cause against his possible blacklisting by precisely and specifically pointing out the alleged breaches and/or defaults which he appeared to have committed while discharging his duties, responsibilities and obligations undertaken by him towards the authority or the employer. From the above decisions, it has clearly emerged that strict adherence to the principles of natural justice whenever an entity is sought to be blacklisted is a sine qua non. From the above decisions, it has clearly emerged that strict adherence to the principles of natural justice whenever an entity is sought to be blacklisted is a sine qua non. A party who has been sought to be blacklisted must be served with a show-cause notice. Such show-cause notice must contain the precise case set up against it detailing out the alleged breaches and/or defaults it had allegedly committed during the time when it was discharging the duties, responsibilities and obligations undertaken by it. It should contain the statement of imputations. 19. Reverting back to the facts of the case, it is already noticed that after the reply dated 27.09.2016 in response to the show-cause notice dated 21.09.2016, the matter rested in that position between the parties, without any decision on the alleged warning about discontinuance of the agreement. The show-cause notice only indicated that if the reply to the show-cause notice was found unsatisfactory then the Management of the respondent no. 2 might exercise its power to discontinue the agreement between the parties. It did not indicate that any action like blacklisting was contemplated. 20. A perusal of the letter dated 25.01.2017 goes to show that the decision to blacklist the petitioner had already been tentatively taken in view of receipt of a number of complaints and unsatisfactory service rendered by the petitioner. No details were mentioned therein apprising the petitioner what were complained in the complaints received against the petitioner and as to why the respondent no. 2 had found the services rendered by the petitioner unsatisfactory. Mere non-intimation of the change of address and shifting to new address of the petitioner cannot be comprehended, by any stretch, to be a sufficient ground to blacklist the petitioner. The petitioner had explained the reasons by its reply dated 27.01.2017 but the respondent no. 2 did not at all deal with those reasons and it was absolutely silent in its letter dated 14.02.2017 on that aspect. The impugned letter dated 14.02.2017 had merely affirmed the decision of the respondent no. 2 to blacklist the petitioner, which had already been tentatively taken earlier. The petitioner was, thus, not served with any valid show-cause notice indicating the precise case set up against it by intimating to it the alleged breaches and defaults and when, where and how those alleged breaches and defaults had occurred and/or committed. 2 to blacklist the petitioner, which had already been tentatively taken earlier. The petitioner was, thus, not served with any valid show-cause notice indicating the precise case set up against it by intimating to it the alleged breaches and defaults and when, where and how those alleged breaches and defaults had occurred and/or committed. Bald imputations to the effect that the Institute had received a number of complaints without throwing any light about the nature of complaints and/or furnishing copies or those complaints and the Institute was not satisfied with the service of the petitioner do not meet the standards required to be met by a show-cause notice which precedes a decision of blacklisting. The petitioner is, thus, found to have not been given the due opportunity to show-cause as to whether there were breaches and/or defaults on its part in terms of the agreement entered into with the respondent no. 2. In such backdrop, the Court is of the unhesitant view that the petitioner has been denied the adequate opportunity of hearing prior to the decision taken by the Institute to blacklist it and the same has been found to be in violation of the principles of natural justice. 21. In the light of the principles laid down in the aforesaid decisions, mentioned hereinabove, and in view of the discussions made above, this Court is of the view that the decision of the respondent no. 2 to blacklist the petitioner is not sustainable in law being violative of the principles of natural justice and the same is liable to be set aside and quashed. It is accordingly ordered. Thus, the impugned decision taken by the respondent no. 2 Institute to blacklist the petitioner, which was communicated by the letter dated 14.02.2017, is set aside and quashed. Consequently, the writ petition stands allowed. There shall, however, be no order as to cost.