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2022 DIGILAW 285 (CHH)

Hope Enterprises v. Chhattisgarh Textbook Corporation

2022-06-30

P.SAM KOSHY

body2022
ORDER : 1. The instant writ petition has been filed assailing the order dated 6.5.2020 Annexure P-1. Vide the said impugned order the respondents have blacklisted the petitioners establishment from being awarded any further work with the respondents. 2. On the previous date of hearing, this Court had directed the counsel for the respondents Chhattisgarh Textbook Corporation to seek instructions particularly as to whether any show cause notice was issued to the petitioner before issuance of impugned order Annexure P-1. 3. Primary contention of the petitioners itself was that the impugned order has been passed in blatant violation of principles of natural justice as also the settled legal position where minimum that was expected from the respondents was to give an opportunity of hearing to the petitioner before imposing of an order like blacklisting which otherwise amounts to a capital punishment. 4. Mr. Arjit Tiwari appearing for learned counsel for respondent Chhattisgarh Textbook Corporation today enters appearance and submits that in fact taking into consideration the developments that had taken place at that point of time particularly the rampant irregularities and illegalities committed by the petitioner establishment the Authorities were compelled to issue the impugned order. It is the further contention of the Respondents that the matter is already being investigated by the Anti Corruption Bureau in respect of the irregularities and illegalities committed by the petitioner in the course of execution of the Contract awarded to the petitioner and which also was one of the strong grounds on which respondents had issued the impugned order. 5. However, on a specific query being put to the learned counsel for the respondent Corporation, he fairly concedes that from perusal of records and pleadings and instructions that he has received, there was no specific proceedings initiated by the respondents in respect of blacklisting of the petitioner establishment. That is to say, before issuance of the impugned order Annexure P-1 dated 6.5.2020 there was no show-cause notice issued to the petitioner nor was there any specific opportunity of hearing given to the petitioner before imposition of the said order of blacklisting. 6. Plain perusal of the impugned order Annexure P-1 would reveal that it was an order imposing the blacklisting for all times to come. It was not for any specific period or for particular tenure after which the status of the petitioner would have got restored. 7. 6. Plain perusal of the impugned order Annexure P-1 would reveal that it was an order imposing the blacklisting for all times to come. It was not for any specific period or for particular tenure after which the status of the petitioner would have got restored. 7. The law so far as blacklisting of an establishment is concerned by now well settled by the Hon’ble Supreme Court more particularly in two of the recent decisions, the first being that of Gorkha Security Services vs. Government (NCT of Delhi) and Others, (2014) 9 SCC 105 . 8. Hon’ble Supreme Court in the said judgment in paragraph 16 referring to an earlier decision of the Hon’ble Supreme Court has held as under: Necessity of serving show cause notice as a requisite of the Principles of Natural Justice: 16. It is a common case of the parties that the blacklisting has to be preceded by a show cause notice. Law in this regard is firmly grounded and does not even demand much amplification. The necessity of compliance with the principles of natural justice by giving the opportunity to the person against whom action of blacklisting is sought to be taken has a valid and solid rationale behind it. With blacklisting many civil and/ or evil consequences follow. It is 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. 9. The law laid down in the said judgment has been recently reiterated by the Hon’ble Supreme Court again in the case of UMC Technologies Private Limited vs. Food Corporation of India and Another, (2021) 2 SCC 551 , wherein again Hon’ble Supreme Court in paragraph 13, 14, 19 and 21 has held as under: 13. At the outset, it must be noted that it is the first principle of civilised jurisprudence that a person against whom any action is sought to be taken or whose right or interests are being affected should be given a reasonable opportunity to defend himself. The basic principle of natural justice is that before adjudication starts, the authority concerned should give to the affected party a notice of the case against him so that he can defend himself. The basic principle of natural justice is that before adjudication starts, the authority concerned should give to the affected party a notice of the case against him so that he can defend himself. Such notice should be adequate and the grounds necessitating action and the penalty/action proposed should be mentioned specifically and unambiguously. An order travelling beyond the bounds of notice is impermissible and without jurisdiction to that extent. This Court in Nasir Ahmad vs. Assistant Custodian General, Evacuee Property, Lucknow and Another, has held that it is essential for the notice to specify the particular grounds on the basis of which an action is proposed to be taken so as to enable the noticee to answer the case against him. If these conditions are not satisfied, the person cannot be said to have been granted any reasonable opportunity of being heard. 14. Specifically, in the context of blacklisting of a person or an entity by the state or a state corporation, the requirement of 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. Here, it may be gainful to describe the concept of blacklisting and the graveness of the consequences occasioned by it. Blacklisting has the effect of denying a person or an entity the privileged opportunity of entering into government contracts. This privilege arises because it is the State who is the counterparty in government contracts and as such, every eligible person is to be afforded an equal opportunity to participate in such contracts, without arbitrariness and discrimination. Not only does blacklisting takes away this privilege, it also tarnishes the blacklisted person’s reputation and brings the person’s character into question. Blacklisting also has long-lasting civil consequences for the future business prospects of the blacklisted person. 19. In light of the above decisions, it is clear that a prior show cause notice granting a reasonable opportunity of being heard is an essential element of all administrative decision-making and particularly so in decisions pertaining to blacklisting which entail grave consequences for the entity being blacklisted. In these cases, furnishing of a valid show cause notice is critical and a failure to do so would be fatal to any order of blacklisting pursuant thereto. 21. In these cases, furnishing of a valid show cause notice is critical and a failure to do so would be fatal to any order of blacklisting pursuant thereto. 21. Thus, from the above discussion, a clear legal position emerges that for a show cause notice to constitute the valid basis of a blacklisting order, such notice must spell out clearly, or its contents be such that it can be clearly inferred therefrom, that there is intention on the part of the issuer of the notice to blacklist the noticee. Such a clear notice is essential for ensuring that the person against whom the penalty of blacklisting is intended to be imposed, has an adequate, informed and meaningful opportunity to show cause against his possible blacklisting. 10. Relying upon the aforesaid two judgments of the landmark decisions of the Hon’ble Supreme Court this Court also very recently in W.P. (C) No. 15 of 2022 in the case of Shri Krishna Infra Developers vs. State of Chhattisgarh and Others vide its judgment dated 13.01.2022 had allowed the writ petition under similar set of facts. Similar view have also been taken by this Court in case of R.P. Bhojanwala vs. State of Chhattisgarh and Others, W.P. (C) No. 2828/2007 which stood allowed on 31.08.2016 relying upon the principle and ratio laid down by the Hon’ble Supreme Court in the case of Gorkha Securities (Supra). 11. Given the aforesaid settled legal position and judicial precedents of the recent past, this Court has no hesitation in holding that the impugned order Annexure P-1 dated 6.5.2020 is apparently in contravention to the settled legal position. The said impugned order admittedly has been issued without compliance of the basic principles of natural justice as the petitioner was unheard before being inflicted with the order of blacklisting. The said order therefore in the given factual backdrop and legal position is not sustainable and same deserves to be and is accordingly set aside/quashed with consequences to follow. 12. It is made clear that since the impugned order is being interfered by this Court only on the technical ground of it being violative of principles of natural justice, the right of the respondent stands reserved for taking appropriate steps and action if at all if they intend to after due compliance of principles of natural justice. 13. The writ petition accordingly stands allowed and disposed off.