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SUPREME COURT OF INDIA
(From the High Court of Orissa at Cuttack)
M.R. Shah, B.V. Nagarathna, JJ.
State of Odisha & Ors. – Appellant(S)
VERSUS
M/s Panda Infraproject Limited – Respondent(S)
Civil Appeal No. 1083 of 2022 with Civil Appeal No. 1084 of 2022
Decided on : 24-02-2022
Blacklisting - Government Contracts - Orissa Public Works Department (OPWD) Code - [Construction of Flyover, Blacklisting, Natural Justice, Principles of Natural Justice, Inquiry Report, Show Cause Notice, Pre-determined, Serious Lapse, Omission and Commission, Safety Measures, Quality Assurance, Debarment, Guidelines] - The court discussed the principles of natural justice, the seriousness of the allegations against the contractor, and the appropriateness of the blacklisting order. It emphasized the importance of following due procedure and considering the gravity of the offense in determining the period of blacklisting.
Fact of the Case:
The contractor was blacklisted by the State of Odisha after a ten meter slab of a flyover collapsed during construction, resulting in loss of life and property. The High Court set aside the blacklisting order, stating it was in violation of principles of natural justice.
Finding of the Court:
The High Court's decision to set aside the blacklisting order was overturned. The court found that the blacklisting order was not predetermined and did not violate principles of natural justice. It emphasized the seriousness of the contractor's lapses and the need for appropriate disciplinary action.
Issues: The main issues were whether the blacklisting order was in violation of natural justice and whether the period of blacklisting was appropriate.
Ratio Decidendi: The court held that the blacklisting order was not predetermined and did not violate principles of natural justice. It emphasized the importance of following due procedure and considering the gravity of the offense in determining the period of blacklisting.
Final Decision: The High Court's decision to set aside the blacklisting order was quashed and set aside. The period of blacklisting was restricted to five years from the date of the original order.
JUDGMENT
M.R. Shah, J.
Feeling aggrieved and dissatisfied with the impugned judgment and order dated 23.03.2021 passed by the High Court of Orissa at Cuttack in W.P. (C) No. 26408 of 2017, by which the High Court has allowed the said writ petition and has quashed and set aside the order passed by the State, banning the respondent herein from participating or bidding for any work to be undertaken by Government of Odisha and transacting any business with Government of Odisha, either directly in the name of propriety bidder or indirectly under any different name or title, the State of Odisha has preferred the present C.A. No. 1083 of 2022.
2. Feeling aggrieved and dissatisfied with the subsequent consequential order passed by the High Court vide order dated 04.06.2021 in W.P. (C) No. 16723 of 2021 by which the High Court, in consequence of the earlier order dated 23.03.2021 passed in W.P. (C) No. 26408 of 2017, directed the State of Odisha to remove the name of the contractor -respondent herein from the list of blacklisted contractors, the State of Odisha has preferred the present C.A. No. 1084 of 2022.
3. That the respondent - contractor was awarded a contract for construction of a flyover over the railway level crossing at Bomikhal Junction in Bhubaneswar. That in pursuance of the said contract the respondent - contractor constructed the said flyover. In the year 2017, a ten meter slab of the flyover collapsed during concreting of the railway over bridge at the level crossing, which resulted in loss of life and property. One person died and eleven others were injured. A high-level inquiry was conducted by the Chief Engineer (Design) and Chief Engineer (DPI and Roads). The committee submitted a comprehensive report after a detailed inquiry and found the contractor -respondent herein guilty. It was found that the contractor did not submit the formwork design and adopted his own arrangement leading to collapse of such a huge structure during construction. It was also found that the contractor had not ensured adequate safety measures during the period of construction; otherwise such an unfortunate fatal accident could have been avoided. It was found that the quality assurance had not been maintained as stipulated in the codes and manuals and as per the agreement. It was found that there were a lot many deficiencies in workmanship that could affect the quality of work, as found in other formwork assemblies. Therefore, the committee found the contractor responsible for such a serious accident.
3.1 On the basis of such report the State Government took the matter very seriously and directed that immediate necessary action be taken for blacklisting the contractor following the procedure as per the Orissa Public Works Department (OPWD) Code. Thereafter, a show cause notice was issued to the contractor and the contractor was asked to show cause as to why it be not blacklisted for intentionally violating the relevant clauses of the Agreement No. 15-P1/2011-12. The respondent filed a detailed reply. That on considering the allegations in the said show cause notice and reply thereto, the Chief Engineer (DPI & Roads) Odisha issued an order dated 12.12.2017, whereby the respondent - contractor was blacklisted with immediate effect, for intentional violation of condition of the contract leading to injuries and loss of life. The respondent - contractor was banned from participating or bidding for any work to be undertaken by the Government of Odisha and the contractor was also banned from transacting business with Government of Odisha, either directly or indirectly.
3.2 Aggrieved by the order of blacklisting dated 12.12.2017, the contractor filed Writ Petition (C) No. 26408 of 2017 seeking quashing of the order of blacklisting and by the impugned judgment and order, the High Court has set aside the order of blacklisting mainly on the ground that the order of blacklisting is in violation of principles of natural justice. The impugned judgment and order
The main legal point established in the judgment is the importance of following due procedure and considering the gravity of the offense in determining the period of blacklisting.
Blacklisting of a contractor must adhere to the principles of natural justice, requiring a specific show cause notice containing proposed penalties. Furthermore, permanent or indefinite blacklisting ....
The impugned order of blacklisting a contractor must satisfy the requirements of law, including providing clear reasons for the blacklisting and not making the blacklisting permanent.
Blacklisting or debarment cannot be permanent and must be preceded by a specific show cause notice, complying with the principles of natural justice.
The decision to blacklist a contractor must be made with fairness, relevance, natural justice, non-discrimination, equality, and proportionality in mind. A fair hearing to the party being blacklisted....
The impugned actions of issuing the show cause notice and blacklisting the petitioner were arbitrary, unconstitutional, and violated principles of natural justice. The court emphasized the requiremen....
The Petitioner's suppression of a material fact and approach to the Court with unclean hands led to the dismissal of the Petition.
Blacklisting is a distinct administrative action from contract termination, carrying severe stigmatic and exclusionary consequences. It requires a specific, unambiguous show-cause notice and an indep....
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