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2022 DIGILAW 430 (JHR)

Nishant Prakash v. State of Jharkhand

2022-04-11

RAJESH SHANKAR

body2022
ORDER : 1. Though the present writ petition was filed for quashing the order as contained in memo no. 644 dated 09.09.2021 passed by the Special Rationing Officer, Ranchi-respondent no. 3, whereby the petitioner’s agreement with respect to providing block-wise doorstep delivery (transportation and handling) services of ration materials to the fair price shops located in urban areas and blocks of Ranchi district has been rescinded by blacklisting him from participating in all future transportation-cum-handling work of ration materials. 2. In course of argument, learned counsel for the petitioner confines the prayer to the extent of challenging the order of blacklisting only. 3. The factual matrix of the case, as stated in the writ petition, is that the petitioner participated in the tender invited by the Deputy Commissioner, Ranchi-respondent no. 2 for providing block-wise doorstep delivery (transportation and handling) services of ration materials from godown nos. I and II, Kadru, Ranchi of Jharkhand State Food Corporation (in short ‘JSFC’) to concerned PDS dealers. The petitioner participated in the said tender process and, on being found the lowest bidder, was selected for the said work for the financial years 2020-21 and 2021-22. Thereafter, the work order was issued to the petitioner vide memo no. 70 dated 03.02.2021 under the signature of the respondent no. 3. Subsequently, a show cause notice was issued to the petitioner vide memo no. 798 dated 28.07.2021 under the signature of the respondent no. 4, pointing out certain discrepancies relating to delay committed in transportation of food grains from the said godowns to the concerned PDS dealers, directing him to file reply within 24 hours as to why his agreement be not rescinded and he be not blacklisted by forfeiting his security amount. The petitioner replied the said show cause notice stating that he had lifted and transported food grains within 15 days. However, from the month of May, 2021, lifting of food grains under two allotments i.e. Priority House Holds (PHH)/Antyodaya Anna Yojana (AAY) and Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) were entrusted to the petitioner in which he had lifted food grains within the period of 24 days as against the permissible period of 30 days granted for lifting food grains under the aforesaid two allotments. Since on account of non-payment of his pending bills, he was facing difficulty in making arrangement of labourers, a request was made to ensure payment of pending bills and to drop the proposed action to be taken against him. However, a fresh show cause notice was issued to the petitioner vide memo no. 956 dated 01.09.2021 under the signature of the respondent no. 4, asking him to file reply within 24 hours as to why his service be not dispensed with and appropriate action be not taken against him for the delay committed in transportation and handling service of ration materials from the said godowns to the concerned PDS dealers. The petitioner filed reply to the said show cause notice on 02.09.2021 stating that the payment against his bills for the period from May, 2021 to August, 2021 was not made due to which he was facing acute financial crisis. Finally, an order as contained in memo no. 644 dated 09.09.2021 was passed by the respondent no. 3, whereby the petitioner’s contract was rescinded by blacklisting him with respect to executing all the works of transportation and handling. 4. Learned counsel for the petitioner submits that the said action of the respondent no3 in passing the impugned order dated 09.09.2021 is in violation of the principles of natural justice and is fit to be set aside. It is also submitted that from the contents of the final show cause notice dated 01.09.2021, it would be apparent that the same was not issued, intending to blacklist the petitioner for not providing doorstep delivery of food grains to the concerned PDS dealers within time. It is further submitted that the order of blacklisting is a serious penalty and casts a serious stigma on the contractor and has also the effect of rendering the petitioner ineligible for further contracts. Moreover, the period of blacklisting has also not been stated in the impugned order. It would appear from the NIT that there was a provision for imposition of pecuniary fine on the tenderers in case of their inability to transport the food grains. However, instead of invoking Clause 7.5 of the NIT, the respondents have taken an extreme step and have awarded the maximum punishment of rescinding the contract of the petitioner and blacklisting him. It is further submitted that in similar situation another transport agent was awarded penalty of Rs. However, instead of invoking Clause 7.5 of the NIT, the respondents have taken an extreme step and have awarded the maximum punishment of rescinding the contract of the petitioner and blacklisting him. It is further submitted that in similar situation another transport agent was awarded penalty of Rs. 1,14,142/- by the District Supply Officer, Ramgarh under Clause 7.5 of the NIT, whereby penalty was calculated @ Rs. 15/- per quintal (total 7609.48 quintals un-lifted quantity of food grains for the month of June, 2021) and, thus, the petitioner has been discriminated as against a similarly situated person. It is also submitted that non-transportation of food grains within time was also attributed to the concerned authorities of the State, who delayed in making payment of the petitioner’s bills, creating financial hardships to him, however, despite all hindrances, the petitioner carried out his tasks diligently. 5. On the contrary, learned counsel for the respondents submits that under the National Food Security Act, 2013 and Jharkhand State Food Security Scheme, it is mandatory for all the doorstep delivery agents to deliver ration materials such as wheat, rice, sugar and salt etc. to all public distribution system shops by 5th day of every month, so that distribution of food grains can be made among the beneficiaries in time, however, the petitioner did not comply the said condition. It is further submitted that the reply of the petitioner was not found satisfactory and as such the impugned order was passed rescinding his contract and also blacklisting him. It is further submitted that the petitioner was already warned in the meeting held on 16.06.2021 and 22.06.2021 that the allotted ration materials should be delivered to the concerned PDS dealers in time, however, by ignoring the said warnings, he performed job of doorstep delivery of ration materials in a casual manner. 6. Heard the learned counsel for the parties and perused the materials available on record. The petitioner was awarded the work for supply of ration materials to fair price shops located in urban areas and the blocks of Ranchi district, however, the said contract was rescinded by the respondent no. 3 vide impugned order as contained in memo no. 644 dated 09.09.202, blacklisting the petitioner from participating in transportation and handling work in future, alleging that he violated the terms and conditions of the work order. 7. 3 vide impugned order as contained in memo no. 644 dated 09.09.202, blacklisting the petitioner from participating in transportation and handling work in future, alleging that he violated the terms and conditions of the work order. 7. Learned counsel for the petitioner has confined the prayer made in the writ petition only to the extent of quashing the order of blacklisting and has submitted that the said order has been passed in violation of the principles of natural justice as well as the same is not in conformity with the settled principle of law. 8. In the case of Kulja Industries Ltd. vs. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Limited and Others, (2014) 14 SCC 731 , the Hon’ble Supreme Court has held 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. 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 precondition 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. 25. Suffice it to say that “debarment” is recognized 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. 25. Suffice it to say that “debarment” is recognized 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.” 9. In the case of UMC Technologies Private Limited vs. Food Corporation of India and Another, (2021) 2 SCC 551 , the Hon’ble Supreme Court has held as under: “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, particularised and unambiguous show-cause notice is particularly crucial due to the severe consequences of blacklisting and the stigmatisation 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 take 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.” 10. In the aforesaid judgments, the Hon’ble Supreme Court has held that blacklisting involves civil consequences. 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. The freedom to contract or not to contract is unqualified in the case of private parties. In the aforesaid judgments, the Hon’ble Supreme Court has held that blacklisting involves civil consequences. 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. The freedom to contract or not to contract is unqualified in the case of private parties. However, any such decision is subject to judicial review when the same is taken by the State or any of its instrumentalities. Any such decision is open to scrutiny not only on the ground of the principles of natural justice but also on the doctrine of proportionality. It has been held that a show-cause notice should contain the grounds of taking the action as well as the penalty/action which is proposed to be taken. It has further been held that the order of blacklisting should not be permanent. 11. In the present case, the petitioner was served with a show cause notice dated 28.07.2021 alleging that he did not deliver total allotted food grains from the concerned godowns to all the entrusted fair price shop dealers due to which the beneficiaries of National Food Security Act (NFSA)/Pradhan Mantri Garib Kalyan Anna Yojna (PMGKAY) could not be given the food grains in time, reflecting that he was trying to jeopardise very important public welfare schemes run by the Government. The petitioner was directed to file reply to the show cause notice within 24 hours towards the allegations levelled therein as also to show cause as to why the agreement be not rescinded and an order of blacklisting be not passed against him by forfeiting the bank guarantee. The petitioner replied the said show cause notice, however, second show cause notice was issued to the petitioner on 01.09.2021 alleging that despite seeking clarification from him several times with respect to not delivering the allotted ration materials to PDS dealers in time by way of doorstep delivery, he did not show his interest in executing the said work, which was violative of the terms and conditions of the work order. The petitioner was directed to submit his reply to the final show cause notice within 24 hours failing which further action was to be taken by terminating the agreement with immediate effect. Thereafter, on receipt of reply to the final show cause notice, the impugned order was passed by the respondent no. The petitioner was directed to submit his reply to the final show cause notice within 24 hours failing which further action was to be taken by terminating the agreement with immediate effect. Thereafter, on receipt of reply to the final show cause notice, the impugned order was passed by the respondent no. 3, however, the said final show cause notice did not propose an order of blacklisting. On perusal of the impugned order, it also appears that the penalty of blacklisting has been imposed in combination with the order of termination of the agreement that too without specifying the period of blacklisting which is in teeth of the judgment rendered by the Hon’ble Supreme Court in the case of Khulja Industries Ltd. (Supra.). 12. For the reasons as discussed above, this Court is of the considered view that the impugned order has been passed in violation of the ratio laid down by the Hon’ble Supreme Court in the aforesaid judgments and thus the same is liable to be set aside to the extent of blacklisting the petitioner. So far as the rest part of the impugned order is concerned, there is no need to make any comment on the same having not been challenged by the petitioner. 13. Thus, the impugned order as contained in Memo No. 644 dated 09.09.2021 (Annexure-6 to the writ petition) passed by the respondent no. 3 to the extent of blacklisting the petitioner from participating in future tender relating to all the works of transportation and handling is hereby quashed. 14. The writ petition is, accordingly, partly allowed.