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2025 DIGILAW 653 (TS)

Prashant Poultry Private Limited v. State of Telangana

2025-05-07

J.SREENIVAS RAO, SUREPALLI NANDA

body2025
ORDER : (Surepalli Nanda, J.) Heard Sri A.Venkatesh, learned Senior Designated Counsel appearing on behalf of the appellant/ petitioner and the learned Advocate General appearing on behalf of the respondents. 2. The appellant/ petitioner approached the Court seeking prayer as under: “….to allow the appeal and set aside the order dated 01.05.2025 in W.P.No.11034 of 2025, passed by the Hon’ble Court and consequently allow the Writ Petition. 3. The relevant portion of the order impugned, dated 01.05.2025 passed in W.P.No.11034 of 2025 in particular para Nos.16 & 17 are extracted hereunder:- 16) in the instant case, the impugned order dated 28.03.2025 is passed blacklisting the petitioner’s Company for the lapses of deficit supply, delay in supply, late hours supply, supply not in working hours, rotten and small eggs (less than 45 grams), etc. how ever, without specifying the period of blacklisting, which in the considered view of this Court is too harsh for the alleged lapses and therefore needs to be interfered with. 17) For the aforementioned reasons, while confirming the action of the respondents in blacklisting the petitioner’s Company, the impugned order dated 28.03.2025 is set aside to the extent of not indicating the period of blacklisting and the matter is remanded to the authorities for taking appropriate decision on the period for which the petitioner’s Company is to be blacklisted duly considering the law laid down by the Hon’ble Supreme Court in Panda Infra Projects (India) Private Limited (referred supra) as well as the gravity of lapses on the part of the petitioner. The entire exercise shall be completed within a period of four weeks from the date of receipt of a copy of this order. 4. Learned Senior Designated Counsel appearing on behalf of the appellant mainly puts-forth the following submissions:- i) The impugned order dated 01.05.2025 passed in W.P. No. 11034 of 2025 needs to be set aside on the ground that the appellant was not provided with an opportunity of personal hearing to put-forth the appellant’s case, before the 2 nd respondent prior to passing of the impugned order, dated 28.03.2025 by the 2 nd respondent and therefore, the present Writ Appeal needs to be allowed as prayed for. ii) The appellant is entitled for being provided with a reasonable opportunity of personal hearing for deciding the subject issue on merits and hence, the relief as prayed for by the appellant/writ petitioner in W.P.No.11034 of 2024 needs to be granted in favour of the appellant/writ petitioner. iii) Placing reliance on the judgment of the Apex Court in “M/s. Techno Prints Vs. Chhattisgarh Text Book Corporation and another” dated 12.02.2025 and also the judgment of this Court dated 24.3.2023 passed in W.P.No.518 of 2023 in support of appellant’s case, the learned senior designated counsel contends that the appellant/petitioner herein is entitled for the relief as prayed for in the present writ appeal. iv) The order impugned in W.P.No.11034 of 2025 passed by the 2 nd respondent, dated 28.03.2025 is unreasoned order passed in clear violation of principles of natural justice and hence, the order, dated 01.05.2025 passed in W.P.No.11034 of 2025 confirming the action of the respondents in blacklisting the petitioner’s company vide the said impugned order, dated 28.03.2025 of the 2 nd respondent has to be set-aside. Based on the aforesaid submissions, the learned senior designated counsel appearing on behalf of the appellant/ petitioner contends that the present Writ Appeal has to be allow ed as prayed for. 5. The learned Advocate General appearing on behalf of the respondents mainly puts-forth the follow ing submissions:- i) Despite the issuance of six notices to the appellant herein, the appellant failed to furnish any explanation. ii) Since the said notices clearly indicated that failure to submit a satisfactory explanation within the stipulated time from the date of issuance of the said notices would result in termination/forfeiture/blacklisting and despite the said intimation, the appellant/petitioner did not provide any explanation. Therefore, the relief sought for by the appellant in the present writ appeal cannot be granted. iii) Principles of natural justice are not a straight jacket formula and an opportunity of personal hearing need not be provided to the appellant/petitioner, since he had failed to respond to six (06) show-cause notices. Based on the aforesaid submissions, the learned Advocate General appearing on behalf of the respondents contends that the present Writ Appeal needs to be dismissed. DISCUSSION AND CONCLUSION:- 6. Based on the aforesaid submissions, the learned Advocate General appearing on behalf of the respondents contends that the present Writ Appeal needs to be dismissed. DISCUSSION AND CONCLUSION:- 6. A bare perusal of the order of this Court dated 01.05.2025 passed in W.P. No.11034 of 2025 clearly indicates that the impugned order dated 28.03.2025 was set aside to the extent that it did not specify the period of blacklisting which in the considered view of the Court admittedly was observed to be too harsh and the matter was remanded to the authorities for an appropriate decision regarding the period for which the appellant’s company is to be blacklisted duly examining the gravity of the lapses on the part of the appellant/petitioner. The entire exercise was further directed to be completed within four weeks from the date of receipt of a copy of the said order. 7. This Court in its order, dated 01.05.2025 passed in W.P.No.11034 of 2025 observed that the judgmentS, relied by the learned senior designated counsel in Erusian Equipment and Chemicals Ltd., Raghunath Thakur, Gorka Security Services and UMC Technologies are not applicable to the case on hand and are distinguishable as the appellant/petitioner had not submitted its explanation to the show-cause notices issued to it by the respondent Authorities, but however, this Court in its order, dated 01.05.2025 in W.P.No.11034 of 2025 failed to take note of an important fact borne on record that respondent Nos.2 & 3 entered into agreement, dated 07.02.2023 with the appellant/petitioner company for supply of Eggs as per the terms and conditions of the agreement for a period of two years in the districts of Medchal-Malkajgiri, Ranga Reddy, Sangareddy and Vikarabad in Zone-VI, Charimnar Zone commencing from 01.03.2023 and the said period concluded even before passing of the impunged proceedings, dated 28.03.2025 by the 2 nd respondent on 01.03.2025 itself, therefore, this Court opines that the order impugned of the 2 nd respondent, dated 28.03.2025 after conclusion of period of contract had been passed hastily without providing an opportunity of personal hearing to the petitioner without application of mind and hence, an adverse inference can be drawn that the 2 nd respondent acted malafidely to prohibit the appellant/petitioner from participating in future tenders. 8. 8. This Court opines that the plea as put-forth by the learned Advocate General appearing on behalf of the respondents that the appellant/ petitioner having failed to submit explanation for ‘6’ show -cause notices cannot be provided w ith an opportunity of personal hearing and further the plea that principles of natural justice are not a straight Jacket formula to be extended to a person w ho is not diligent and prompt in furnishing his explanation to the show -cause notices are not tenable and hence, rejected since this Court opines that failure on the part of the appellant/ petitioner to submit explanation to the various show -cause notices issued to the petitioner w ould not be sufficient to shut the doors of this Court on the appellant/ w rit petitioner w hen appellant/ petitioner is subjected to Blacklisting vide the impugned order, dated 28.03.2025 of the 2 nd respondent unilaterally after the period of contract had been concluded w ith the respondent Authority on 01.03.2025 itself, and since admittedly, the order of blacklisting w ould eventually put appellant/ petitioner’s right to life and right to occupation itself at stake. 9. The Apex Court in its several judgments observed in express terms that it is an implied principles of the rule of law that any order having civil consequence should be passed only after follow ing the principles of natural justice. I t has to be realised that blacklisting any person in respect of business ventures has civil consequence for the future business of the person concerned in any event. Even if the rules do not express so, it is an elementary principle of natural justice that parties affected by any order should have right of being heard and making representations against the order. Even if the rules do not express so, it is an elementary principle of natural justice that parties affected by any order should have right of being heard and making representations against the order. Therefore, in that view of the matter, this Court opines that the order impugned, dated 28.03.2025 of the 2 nd respondent in blacklisting the appellant/ petitioner company w ith immediate effect restricting and barring the appellant/ petitioner company from participating in any future contracts tenders or procurement processes w ith WD and CW Department on the ground that appellant/ petitioner failed to submit explanation to the show -cause notices issued to the appellant/ petitioner observing that the same indicates negligence and unw illingness to adhere to the terms of the contract w hen the contract of the appellant/ petitioner company w ith the respondents itself expired on 01.03.2025 itself is not only harsh for the alleged lapses, but is also a clear example of colourable exercise of pow er by the 2 nd respondent herein. 10. This Court opines that blacklisting a bidder is a mode of pre-emptively disqualifying him or her from participating in any future contractual relationship, hence blacklisting can be resorted to only after putting the affected party to notice and only after affording an opportunity to be heard, w hich is a rudimentary principle of natural justice. 11. I n Gorkha Security Services v. State (NCT of Delhi) [ (2014) 9 SCC 105 ], the Honourable Supreme Court has described blacklisting as being equivalent to the civil death of a person because it is stigmatic and debars a person from participating in government tenders. 12. The Apex Court in its judgment (2020) 18 SCC 550 in Deffodills Pharmaceuticals Limited and Another vs. State of Uttar Pradesh and Another in its head note observed as under: A. Government Contracts and Tenders Blacklisting - Effect of Hearing concerned person prior to blacklisting Essentially of Passing of adverse order based on assumption, that too w ithout complying w ith principles of natural Justice-I mpermissibility of - Unilaterally passing adverse order against appellant for certain actions of its erstwhile Director who had left company long back-On facts held, order preventing procurement from appellant was of indefinite duration and disproportionate as it was passed on basis of assumption w ithout hearing appellant - Considering long duration of operation of adverse order. Supreme Court itself decided matter without remanding matter to original authorities, and quashed the adverse order - Held, blacklisting has the effect of preventing a person from privilege and advantage of entering into lawful relationship with Government for purposes of gains - The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction - Fundamentals of fair play require that person concerned should be given an opportunity to represent his case before he is put on the blacklist. The Apex Court in the aforesaid Judgment, in particular, at Para 14 observed as under : 14. The decisions in Erusian Equipment & Chemicals Ltd. v. State of WB and Raghunath Thakur v. State of Bihar as well as later decisions have now clarified that before any executive decision-maker proposes a drastic adverse action, such as a debarring or blacklisting order, it is necessary that opportunity of hearing and representation against the proposed action is given to the party likely to be affected. This has been stated in unequivocal terms in Raghunath Thakur as follows: (Erusian Equipment & Chemicals case. SCC p. 75. para 20) “20. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. 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." 13. The severity of the effects of blacklisting and the need for strict observance of the principles of natural justice were laid down by the Honourable Supreme Court in Erusian Equipment & Chemicals Ltd. v. State of W.B [ (1975) 1 SCC 70 ] in the following terms: “12. … The order of blacklisting has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is unable to enter into advantageous relations with the Government because of the order of blacklisting. A person who has been dealing with the Government in the matter of sale and purchase of materials has a legitimate interest or expectation. A person who is on the approved list is unable to enter into advantageous relations with the Government because of the order of blacklisting. A person who has been dealing with the Government in the matter of sale and purchase of materials has a legitimate interest or expectation. When the State acts to the prejudice of a person it has to be supported by legality. *** 15. … The blacklisting order involves civil consequences. It casts a slur. It creates a barrier between the persons blacklisted and the Government in the matter of transactions. The blacklists are “instruments of coercion”. *** 20. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. 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 14. The Apex Court in its judgment in Kulja Industries Ltd., vs. BSNL reported in (2014) 14 SCC 731 , very clearly held that before proposing to pass a black listing order or debarring orders the parties had to be given hearing follow ed by an appropriate reasoned order. In the present case, on hand admittedly as borne on record and even as admitted by the learned Advocate General appearing on behalf of the respondents, the appellant/ petitioner had not been provided w ith a reasonable opportunity of personal hearing prior to passing of the order impugned, dated 28.03.2025 by the 2 nd respondent herein nor the order impugned passed by the 2 nd respondent, dated 28.03.2025 is a reasoned order passed on merits. 15. The Apex Court emphasized the need of assigning reasons in administrative, quasi-judicial and judicial proceedings in the case of Kranti Associates (P) Ltd. v. Masood Ahmed Khan reported in (2010) 9 SCC 496 . The relevant portion reads as under: “12. The necessity of giving reason by a body or authority in support of its decision came up for consideration before this Court in several cases. The relevant portion reads as under: “12. The necessity of giving reason by a body or authority in support of its decision came up for consideration before this Court in several cases. Initially this Court recognised a sort of demarcation between administrative orders and quasijudicial orders but with the passage of time the distinction between the two got blurred and thinned out and virtually reached a vanishing point in the judgment of this Court in A.K. Kraipak v. Union of India [ (1969) 2 SCC 262 ]. 13… 14. The expression “speaking order” was first coined by Lord Chancellor Earl Cairns in a rather strange context. The Lord Chancellor, while explaining the ambit of the writ of certiorari, referred to orders with errors on the face of the record and pointed out that an order with errors on its face, is a speaking order. 15. This Court always opined that the face of an order passed by a quasi-judicial authority or even an administrative authority affecting the rights of parties, must speak. It must not be like the “inscrutable face of a sphinx”. 47. Summarising the above discussion, this Court holds: (a) In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially. (b) A quasi-judicial authority must record reasons in support of its conclusions. (c) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well. (d) Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi- judicial or even administrative power. (e) Reasons reassure that discretion has been exercised by the decision-maker on relevant grounds and by disregarding extraneous considerations. (f) Reasons have virtually become as indispensable a component of a decision-making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. (g) Reasons facilitate the process of judicial review by superior courts. (h) The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the lifeblood of judicial decision-making justifying the principle that reason is the soul of justice. (g) Reasons facilitate the process of judicial review by superior courts. (h) The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the lifeblood of judicial decision-making justifying the principle that reason is the soul of justice. (i) Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants' faith in the justice delivery system. (j) Insistence on reason is a requirement for both judicial accountability and transparency. (k) If a judge or a quasi-judicial authority is not candid enough about his/her decision-making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism. (l) Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or “rubber-stamp reasons” is not to be equated with a valid decision-making process. (m) It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision-making not only makes the judges and decisionmakers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor [(1987) 100 Harvard Law Review 731-37] .) (n) Since the requirement to record reasons emanates from the broad doctrine of fairness in decision-making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See Ruiz Torija v. Spain [(1994) 19 EHRR 553] EHRR, at 562 para 29 and Anya v. University of Oxford [2001 EWCA Civ 405 (CA)] , wherein the Court referred to Article 6 of the European Convention of Human Rights which requires, “adequate and intelligent reasons must be given for judicial decisions”. (o) In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of “due process. 16. (o) In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of “due process. 16. TAKING INTO CONSIDERATION: a) The aforesaid facts and circumstances of the case, b) The submissions made by the learned senior designated counsel appearing on behalf of the appellant and the learned Advocate General appearing on behalf of the respondents. c) The observations of the Apex Court in the judgments:(referred to and extracted above) and enlisted below : i) (2014) 9 SCC 105 ii) (2014) 14 SCC 731 iii) (2010) 9 SCC 496 iv) (1975) 1 SCC 70 d) In the light of the discussion and conclusion arrived at para Nos.6 to 15 of the present judgment The Writ Appeal is allowed, the order impugned, dated 01.05.2025 passed in W.P.No.11034 of 2025 is set- aside and the action of the respondents, particularly respondent No.2 in issuing the proceedings bearing No.4879/ SNP-3/ 2024, dated 28.03.2025, by blacklisting the poultry firm of the petitioner i.e., M/ s Prashant Poultry Private Limited with immediate effect is declared as illegal, arbitrary, contrary to law and the said proceedings, dated 28.03.2025 of the 2 nd respondent is set-aside. The respondents are directed to receive and process the tender to be submitted by the petitioner company online as per the w ebsite of the respondent department, dated 30.03.2025 inviting state level Zonal Tender for procurement and supply of Eggs(hen) as per the AGMARK SPECIFICATIONS and other processing/ grading conditions as mentioned in the tender for a period of one year (April, 2025-March, 2026) to the beneficiaries under the flagship of Arogya Lakshmi and Supplementary Nutrition Program for Zone-1, 2, 3, 4, 5, 6 and 7 and approve the tender subject to terms of tender conditions as per law . It is how ever observed that it is open to the respondents to take appropriate action against the petitioner if the respondents intend to do so, but strictly in accordance to law in conformity with principles of natural justice duly taking into consideration the observations of the Apex Court in the various judgments(referred to and extracted above). How ever, there shall be no order as to costs. Miscellaneous applications, if any, pending shall stand closed.