IN THE HIGH COURT OF KARNATAKA AT BENGALURU
M. NAGAPRASANNA, J.
Krishi Infratech – Petitioner
Versus
Union of India Represented by its Secretary – Respondent
Writ Petition No. 20978 of 2022
Decided On : 01-12-2022
Blacklisting - Construction Contract - Code No. 1027, Code No. 1030 - The court found that the order blacklisting the petitioner and banning it for business for five years suffered from want of application of mind as it contained no reasons. The court emphasized the importance of a reasoned order when affecting civil or economic rights, and held that the lack of reasons rendered the order unsustainable. The court also highlighted the necessity of considering the petitioner's replies and affording an opportunity of hearing on all charges, ultimately quashing the impugned order and remitting the matter back to the respondent to pass appropriate orders in accordance with law.
Fact of the Case:
The petitioner, a partnership firm engaged in construction activities, was blacklisted by the Railways for alleged malpractices and substandard quality of works, resulting in a ban on business dealings for five years. The petitioner challenged the order, arguing that it lacked application of mind and contained no reasons, thus impacting its ability to participate in tenders.
Finding of the Court:
The court found that the impugned order lacked application of mind and reasons, emphasizing the importance of a reasoned order when affecting civil or economic rights. It also directed the respondent to reconsider the matter, consider the petitioner's justifications, and afford an opportunity of hearing on all charges.
Issues: The key issues included the lack of application of mind in the impugned order, the necessity of reasons in orders affecting civil or economic rights, and the requirement to consider the petitioner's replies and afford an opportunity of hearing on all charges.
Ratio Decidendi: The court held that an order affecting civil or economic rights must contain reasons to demonstrate application of mind, and emphasized the need to consider the petitioner's submissions and provide an opportunity of hearing on all charges. It also highlighted the importance of a reasoned order and the principles of natural justice.
Final Decision: The court allowed the writ petition in part, quashed the impugned order, and remitted the matter back to the respondent to pass appropriate orders in accordance with law, considering the petitioner's justifications and affording an opportunity of hearing on all charges.
ORDER :
1. The petitioners are before this Court calling in question order dated 17-10-2022 issued by the 2nd respondent blacklisting the 1st petitioner or any of its sister concerns or partners to have any business dealings with the 1st respondent/Union of India, Ministry of Railways. For the sake of convenience the petitioners would be referred to as the petitioner unless specifically referred to by their ranking and the respondents as Railways.
2. Heard Sri A.S. Ponnanna, learned senior counsel appearing for the petitioner and Sri M.B. Nargund, learned Additional Solicitor General of India appearing for the respondents.
3. Brief facts that leads the petitioner to this Court, in the subject petition, as borne out from the pleadings, are as follows:
4. The commencement of work had happened on 05-06-2015. The concerned authority notified an order of completion on 05-11-2018. After about 2 years of completion of construction work, statement of charges/misconduct against the petitioner comes to be issued on 10-08-2021 enclosing statement of charges directing the petitioner to submit its reply on or before 12-09-2021. The charges were four in number. The petitioner on 08-09-2021 submitted an elaborate reply on each of the charges. On 16-05-2022; a second reply and again on 17-06-2022 a third reply in greater detail and on 01-08-2022, the petitioner as insisted by the respondent/Railways informed that it would attend the office of the respondent on 04-08-2022 along with copies of detailed reply statements that were submitted from time to time. The petitioner claims to have attended the office and explained all the details. What comes about as a result of the said proceeding is the impugned order. The impugned order is dated 17-10-2022 which blacklists the petitioner/firm and bans it in any dealings with the Railways for a period of 5 years. Not stopping at that, on the very same day, a communication is sent to the Tender Inviting Authority and the Tender Inviting Authority rejects the bid of the petitioner on the ground that the petitioner has been blacklisted on 17-10-2022. It is these actions that are called in question in the subject petition.
5. The learned senior counsel appearing for the petitioners, though has urged several contentions, what would merit consideration for the present is the contention that the order which blacklists the petitioner bears no application of mind as it contains no reasons. It is his submission that the order blacklisting has serious consequence upon the petitioner and the immediate consequence is non-consideration of his case in the tender on the ground that he has been blacklisted. Therefore, he submits that the order that blacklists the petitioner is untenable and requires to be reconsidered. He would submit that in the event the Court would not be considering the issue with regard to non-application of mind in the impugned order, he would then make his submissions on merits of the matter.
6. The learned Additional Solicitor General representing the respondent/Railways would refute, on the threshold, the issue that is raised by the learned senior counsel for the petitioner with regard to non-application of mind on the pa
The main legal point established in the judgment is the requirement for a fair hearing, specific show cause notices, and proportionate punishment before imposing blacklisting in government contracts.
The requirement of giving reasons, adherence to principles of natural justice, and fairness in administrative actions, especially in cases of blacklisting or imposing penalties, is essential for a va....
The main legal point established in the judgment is that before blacklisting a person/entity, adequate notice and an opportunity to be heard must be provided, in accordance with the principles of nat....
Blacklisting or debarment cannot be permanent and must be preceded by a specific show cause notice, complying with the principles of natural justice.
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.
The main legal point established in the judgment is the requirement for a clear mention of the proposed blacklisting action in the show cause notice, as well as the need to adhere to principles of na....
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