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2023 DIGILAW 353 (JHR)

Pankaj Kumar v. State of Jharkhand

2023-03-20

RAJESH SHANKAR

body2023
JUDGMENT : The present writ petition has been filed with following prayers: (i) For quashing letter no. 896 dated 11.06.2020 (Anneuxre-16 to the writ petition) issued by the Secretary-cum-Excise Commissioner, Department of Excise and Prohibition, Government of Jharkhand, whereby the petitioner’s application for renewal of licenses relating to retail shop of Foreign/country made liquor for the financial year 2020-21 has been rejected. (ii) For quashing the order as contained in memo no. 436 dated 27.04.2020 (Anneuxre-13 to the writ petition) issued by the Deputy Commissioner, Hazaribag (the respondent no. 4) whereby the petitioner’s application for renewal of licenses for the financial year 2020-21 being license nos. 013-FLX-HZB-19-20 and 011-CLX-HZB-19-20 issued for foreign liquor shop and country made liquor shop respectively at Katkamdag/Kud has been rejected by forfeiting all the deposited amount towards security money, excise transport duty, license fee etc. as well as he has been blacklisted with observation that after adjusting the forfeited amount with respect to amount due for the financial year 2019-20, certificate case would be initiated against him for recovery of remaining due amount. (iii) For renewal of the aforesaid licenses of the petitioner for the financial year 2020-21. (iv) For refunding the security amount along with statutory interest of 18% and to impose exemplary cost against the respondents for the financial loss caused to the petitioner. (v) For restraining the concern respondents from taking any coercive step against the petitioner as well as issuing license to others for the aforesaid liquor during pendency of the writ petition. 2. Mr. Mohan Kumar Dubey, learned A.C. to A.G. appearing on behalf of the respondents, at the very outset, submits that so far as the prayer no. (i) and part of prayer no. (ii) are concerned, the same have now become infructuous as the retail liquor licenses in question were granted to the petitioner for the financial year 2019-20. He also submits that so far as the impugned letter no. 896 dated 11.06.2020 is concerned, the petitioner’s application for renewal of licenses for the financial year 2020-21 has been rejected on the ground of dues against him pertaining to financial year 2019-20. Further vide order dated 27.04.2020, the respondent no. 4 has already rejected the petitioner’s application for renewal of aforesaid licenses and has forfeited the deposited security amount, excise transport duty, license fee etc. Further vide order dated 27.04.2020, the respondent no. 4 has already rejected the petitioner’s application for renewal of aforesaid licenses and has forfeited the deposited security amount, excise transport duty, license fee etc. as well as the petitioner has been put on blacklist with a further observation that the appropriate action would be taken by instituting a certificate case for realisation of balance due amount from him. 3. As against this, learned counsel for the petitioner submits that vide impugned order dated 27.04.2020, the petitioner has also been put on the blacklist by the respondent no. 4 without issuing any prior notice intending to take such action against him. Moreover, since the blacklisting of the petitioner is for indefinite period, he will not be able to apply for grant of license in future under the provisions of the Excise Act, 1915 and the rules/policy framed thereunder by the state government. Hence, the present writ petition may be heard on the aspect of blacklisting of the petitioner. 4. Considering the said submission of the counsel for the petitioner, the Court proceeds to hear the case on the aspect of blacklisting of the petitioner. 5. Though a counter affidavit has been filed on behalf of the respondents justifying the impugned order dated 27.04.2020, yet nothing has been stated as to whether any specific notice was issued to the petitioner intending to blacklist him for not depositing the amount of Rs.9,04,957/- which was due to be paid for the financial year 2019-20. 6. The Hon’ble Supreme Court in the case of UMC Technologies Private Limited Vs. Food Corporation of India & Another reported in (2021)2 SCC 551 , 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. 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. 25. The mere existence of a clause in the bid document, which mentions blacklisting as a bar against eligibility, cannot satisfy the mandatory requirement of a clear mention of the proposed action in the show-cause notice. The Corporation's notice is completely silent about blacklisting and as such, it could not have led the appellant to infer that such an action could be taken by the Corporation in pursuance of this notice. Had the Corporation expressed its mind in the show-cause notice to blacklist, the appellant could have filed a suitable reply for the same. Therefore, we are of the opinion that the show-cause notice dated 10-4-2018 does not fulfil the requirements of a valid show-cause notice for blacklisting. In our view, the order of blacklisting the appellant clearly traversed beyond the bounds of the show-cause notice which is impermissible in law. As a result, the consequent blacklisting order dated 9-1-2019 cannot be sustained.” 7. In the case of Vetindia Pharmaceuticals Limited Vs. State of Uttar Pradesh & Another reported in (2021) 1 SCC 804 , the Hon’ble Supreme Court has held as under: “8. There is no dispute that the injection was not supplied to the respondents by the appellant. Yet the show-cause notice dated 21-10-2008 referred to further action in terms of the tender for supplying misbranded medicine to the appellant. Furthermore, the show-cause notice did not state that action by blacklisting was to be taken, or was under contemplation. It only mentioned appropriate action in accordance with the rules of the tender. The fact that the terms of the tender may have provided for blacklisting is irrelevant in the facts of the case. Furthermore, the show-cause notice did not state that action by blacklisting was to be taken, or was under contemplation. It only mentioned appropriate action in accordance with the rules of the tender. The fact that the terms of the tender may have provided for blacklisting is irrelevant in the facts of the case. In the absence of any supply by the appellant, the order of blacklisting dated 8-9-2009 invoking Clauses 8.12 and 8.23 of the tender is a fundamental flaw, vitiating the impugned order on the face of it reflecting non-application of mind to the issues involved. Even after the appellant brought this fact to the attention of the respondents, they refused to pay any heed to it. Further, it specifies no duration for the same. 11. If the respondents had expressed their mind in the show-cause notice to blacklist, the appellant could have filed an appropriate response to the same. The insistence of the respondents to support the impugned order [Vetindia Pharmaceuticals Ltd. v. State of U.P., 2019 SCC OnLine All 6734] by reference to the terms of the tender cannot cure the illegality in the absence of the appellant being a successful tenderer and supplier. We therefore hold that the order of blacklisting dated 8-9-2009 stands vitiated from the very inception on more than one ground and merits interference.” 8. The Hon’ble Supreme Court in the case of Kulja Industries Limited Vs. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Limited & Others reported in (2014) 14 SCC 731 , has held that 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. The freedom to contract or not to contract is unqualified in the case of private parties. However, if such decision is taken by the State or any of its instrumentalities, the same is subject to judicial review. This implies that 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. 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. It has further been held that 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 Gorkha Security Services Vs. Government (NCT of Delhi) & Others reported in (2014) 9 SCC 105 , the Hon’ble Supreme Court has held as under: “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. 22. The High Court has simply stated that the purpose of show-cause notice is primarily to enable the noticee to meet the grounds on which the action is proposed against him. No doubt, the High Court is justified to this extent. However, it is equally important to mention as to what would be the consequence if the noticee does not satisfactorily meet the grounds on which an action is proposed. To put it otherwise, we are of the opinion that in order to fulfil the requirements of principles of natural justice, a show-cause notice should meet the following two requirements viz: (i) The material/grounds to be stated which according to the department necessitates an action; (ii) Particular penalty/action which is proposed to be taken. It is this second requirement which the High Court has failed to omit. It is this second requirement which the High Court has failed to omit. We may hasten to add that even if it is not specifically mentioned in the show-cause notice but it can clearly and safely be discerned from the reading thereof, that would be sufficient to meet this requirement.” 10. Thus, the decision of blacklisting is open to scrutiny on the touchstone of fairness, relevance, natural justice, non-discrimination, equality, reasonableness and proportionality. Serving of show cause notice specifying the grounds on which the action is proposed to be taken and the action under contemplation is a mandatory requirement so as to enable the noticee to answer the case before passing the order of blacklisting/banning which has not only long lasting civil consequence, but it also tarnishes the blacklisted person’s reputation. The issuance of show cause notice cannot be excused on mere ground that there is a stipulation about blacklisting in the bid document on violation of any of the terms and conditions of the tender. The blacklisting otherwise cannot be permanent. 11. Since the petitioner has been blacklisted for indefinite period, that too, without issuance of prior notice to him, the same is held to be arbitrary and illegal. Accordingly, the order dated 27.04.2020 passed by the respondent no. 4 to the extent of putting the petitioner on the blacklist is quashed and set aside. 12. The writ petition is allowed in part. 13. I.A. No. 4960 of 2020 also stands disposed of accordingly.