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2021 DIGILAW 954 (KER)

M. K. Jose v. Secretary, Public Works Department

2021-10-21

ANIL K.NARENDRAN, P.G.AJITHKUMAR

body2021
JUDGMENT : Anil K. Narendran, J. The appellant is the plaintiff in O.S.No.18 of 2018 on the file of Sub Court, Hosdurg, a suit to declare that the order dated 25.07.2013 of 3rd defendant Superintending Engineer (Roads and Bridges), Public Works Department, North Circle, Kozhikode, terminating the contract work, namely, “Stimulus Package Improvements to Kannavam – Idumba – Trikadipoyil Road from 0/000 kms to 6/100 kms”, at the risk and cost of the plaintiff, is illegal and void; declare that the plaintiff is entitled to realise an amount of Rs.4,50,68,048/-from the defendants; and a permanent prohibitory injunction restraining the defendants from enforcing the risk and cost condition against the plaintiff. 2. During the pendency of O.S.No.18 of 2018, the 3rd defendant issued Ext.A1 notice bearing No.F2-875/2021 dated 30.03.2021 in order to blacklist the plaintiff. The plaintiff filed I.A.No.7 of 2021, a petition under Order XXXIX, Rules 1 to 3, read with Section 151 of the Code of Civil Procedure, 1908, seeking temporary injunction restraining the defendants or their employees from blacklisting the plaintiff, in consequence of the proceedings No.F2-875/2021 dated 30.03.2021, till the final disposal of that suit. The respondents opposed the interim injunction sought for by filing counter affidavit. 3. After considering the rival contentions, the Court below by the impugned order dated 08.04.2021 dismissed I.A.No.7 of 2021. Paragraph 11 of that order reads thus; “11. The learned AGP submitted that this is a separate proceedings initiated by Vigilance and Anti Corruption Bureau. There is no connection with the relief sought in I.A.No.800 of 2018 with regard to Ext.A1 notice. The suit was earlier filed before the Sub Court, Thalassery, which was later transferred to this court. An interim injunction petition was earlier filed before that court in which one of the prayer was that respondent is to be restrained from taking any further action against the petitioner pursuant to the order of the 3rd respondent on 25.07.2016. In that petition, the Government Pleader submitted that revenue recovery proceedings will not be initiated till the disposal of the interlocutory application on merits. Recording the same, petition was disposed of by the learned Sub Judge. No relief was granted restraining the respondent from taking any further action against the petitioner in I.A.No.7800 of 2018. There is no relief in the suit seeking direction not to take any action against respondent. Recording the same, petition was disposed of by the learned Sub Judge. No relief was granted restraining the respondent from taking any further action against the petitioner in I.A.No.7800 of 2018. There is no relief in the suit seeking direction not to take any action against respondent. So the prayer herein is a new prayer arose on the subsequent incidents. Now, according to the Government Pleader as per the instruction of Vigilance and Anti Corruption Bureau, he has been instructed to appear before the 3rd respondent. There is no materials to show that steps were already taken to include him in blacklist. He could not substantiate that he is likely to get any contract in the near future which will be stalled due to the act of the 3rd respondent. The petitioner is at liberty to appear before the 3rd respondent and tender his explanation. The inclusion in blacklist is yet to be decided by the 3rd defendant. Since he has been issued with a notice, he can very well seek remedy with the PWD authorities itself by tendering his explanation and await for the culmination of proceedings. If he is blacklisted arbitrarily, definitely he can approach the court and the remedy is not at all exhausted. But as of now, except a mere apprehension, no positive steps were taken on the side of the 3rd respondent to include him in the black list, but he was invited to offer his explanation only. As contended by the Additional Government Pleader, it is a step taken by the 3rd respondent as per the instruction of Vigilance Department, which may be statutorily required for collecting materials. At any rate, it has no connection with the relief sought for in the suit. I do not think that any prima facie case is established by the petitioner that will affect the relief sought for in the suit even though subject matter in Ext.A1 arose from the subject matter of the suit. I do not think that any irreparable injury will be caused to the petitioner, if injunction is not granted. Needless to say that balance of convenience is also not in favour of the petitioner.” 4. Feeling aggrieved by the order dated 08.04.2021 of the court below in I.A.No.7 of 2021, the appellant is before this Court in this appeal filed under Order XLIII Rule 1(r) of the Code of Civil Procedure. 5. Needless to say that balance of convenience is also not in favour of the petitioner.” 4. Feeling aggrieved by the order dated 08.04.2021 of the court below in I.A.No.7 of 2021, the appellant is before this Court in this appeal filed under Order XLIII Rule 1(r) of the Code of Civil Procedure. 5. On 07.09.2021, when this appeal came up for admission, the learned Government Pleader sought time to get instructions. 6. Heard the learned counsel for the appellant-plaintiff and also the learned Special Government Pleader for respondents-defendants. 7. The issue that arises for consideration in this appeal is as to whether any interference is warranted in the order of the court below dated 08.04.2021 in I.A.No.7 of 2021, whereby the temporary injunction sought for restraining the defendants or their employees from including the plaintiff in the black list, in consequence of the proceedings No.F2-875/2021 dated 30.03.2021, till the final disposal of that suit, stands dismissed for the reason stated therein. 8. The appellant-plaintiff filed O.S.No.18 of 2018 seeking a declaration that the order dated 25.07.2013 of the 3rd defendant, terminating the contract in question, at the risk and cost of the plaintiff, is illegal and void and for other consequential reliefs. During the pendency of that suit, the 3rd defendant initiated proceedings to blacklist the plaintiff, by issuing Ext.A1 notice dated 30.03.2021. In such circumstances, the appellant moved I.A.No.7 of 2021 seeking temporary injunction restraining the defendants or their employees from including the plaintiff in the black list, in consequence of the proceedings No.F2-875/2021 dated 30.03.2021, till the final disposal of that suit 9. The plaintiff had earlier challenged the order of termination of contract before this Court by filing in W.P. (C) No.22541 of 2013. That writ petition ended in dismissal. The plaintiff filed W.A.No.1912 of 2013. The Division Bench, by the judgment dated 24.02.2014, allowed that writ appeal. The Division Bench, on the basis of the report of the Advocate Commission, came to the conclusion that the order of termination was founded on erroneous facts, inasmuch as the competent authority had opined that more than 50% of the work remained to be done. The Division Bench opined that as there was a factual defect, which was evident from the Report of the Advocate Commission, the order of termination of contract was accordingly quashed. The Division Bench opined that as there was a factual defect, which was evident from the Report of the Advocate Commission, the order of termination of contract was accordingly quashed. Thereafter, the Division Bench directed the Superintending Engineer, Public Works Department (Roads and Bridges) to consider and dispose of the matter afresh after affording the Contractor an opportunity of being heard. It also directed that the Commission's report and the Engineer's report and the accounts shall be produced by the Contractor before the competent authority, who shall take the same into account before taking final decision in the matter. 10. The State and the official respondents took up the matter before the Apex Court and the Apex Court in State of Kerala v. M.K. Jose [ (2015) 9 SCC 433 ], after referring to the law laid down in Jain Plastics and Chemicals Ltd. [ (2002) 1 SCC 216 ] and Ganga Enterprises [ (2003) 7 SCC 410 ], reiterated that a writ court should ordinarily not entertain a writ petition under Article 226 of the Constitution of India, if there is a breach of contract involving disputed questions of fact. 11. In M.K. Jose [ (2015) 9 SCC 433 ] the Apex Court noticed that, in ABL International Ltd. v. Export Credit Guarantee Corporation of India Ltd. [ (2004) 3 SCC 553 ] a Two-Judge Bench after referring to various judgments as well as the pronouncement in Gunwant Kaur v. Municipal Committee, Bhatinda [ (1969) 3 SCC 769 ] and Century Spinning and Manufacturing Company Ltd. v. Ulhasnagar Municipal Council [ (1970) 1 SCC 582 ] granted the relief as the facts were absolutely clear from the documentary evidence brought which pertain to interpretation of certain clauses of contract of insurance. The issue that had arisen in ABL International was that an instrumentality of a State was placing a different construction on the clauses of the contract of insurance and the insured was interpreting the contract differently. The Court thought it apt merely because something is disputed by the insurer, it should not enter into the realm of disputed questions of fact. In fact, there was no disputed question of fact, but it required interpretation of the terms of the contract of insurance. Similarly, if the materials that come on record from which it is clearly evincible, the writ court may exercise the power of judicial review. 12. In fact, there was no disputed question of fact, but it required interpretation of the terms of the contract of insurance. Similarly, if the materials that come on record from which it is clearly evincible, the writ court may exercise the power of judicial review. 12. In M.K. Jose [ (2015) 9 SCC 433 ] the Apex Court was dealing with a case in which the High Court has appointed a Commission to collect the evidence, accepted the same without calling for objections from the respondent, and quashed the order of termination of contract. The Apex Court observed that, the procedure adopted by the High Court is quite unknown to exercise of powers under Article 226 in a contractual matter. Accordingly, the plaintiff filed O.S.No.18 of 2018 before the Sub Court, Hosdurg seeking the aforesaid reliefs. 13. The learned counsel for the appellant would contend that since the proceedings initiated by the 3rd defendant, vide Ext.A1 notice dated 30.03.2021, to blacklist the appellant is also based on the order of termination of contract dated 25.07.2013, which is under challenge in O.S.No.18 of 2018, the said proceedings is liable to be kept in abeyance during the pendency of O.S.No.18 of 2018, otherwise, the appellant will be put to irreparable injury and hardship. 14. Per contra, the learned Special Government pleader for respondents would contend that the proceedings to blacklist the appellant was initiated at the recommendation of the Vigilance and Anti Corruption Bureau. It is a separate proceedings by the Vigilance and Anti Corruption Bureau. The intention of the appellant is only to avoid appearance before the Vigilance and Anti Corruption Bureau. The appellant can always explain all facts before PWD authorities, as directed in the notice dated 30.03.2021. 15. In Kulja Industries Limited v. Chief General Manager, W.T. Project, BSNL [ (2014) 14 SCC 731 ] the Apex Court held that 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 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 examinable by a writ court. The legal position on the subject is settled by a long line of decisions rendered by the Apex Court starting with Erusian Equipment and Chemicals Ltd. v. State of West Bengal [ (1975) 1 SCC 70 ] where the Apex 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. 16. Therefore, the remedy open to the appellant-plaintiff against the proceedings initiated by the 3rd defendant, by the issuance of Ext.A1 notice dated 30.03.2021, is to invoke the writ jurisdiction of this Court under Article 226 of the Constitution of India, at appropriate stage, with proper parties in the party array. In the above view of the matter, we find no reason to interfere with the impugned order dated 08.04.2021 of the Sub Court, Hosdurg, dismissing I.A.No.7 of 2021 filed by the appellant/plaintiff in O.S.No.18 of 2018. In the result, this appeal fails and the same is accordingly dismissed. No order as to cost.