IN THE HIGH COURT OF JUDICATURE AT PATNA
Ashutosh Kumar, J.
Rishi Builders India Pvt. Ltd. ,represented - Appellant
Versus
State of Bihar - Respondent
Civil Writ Jurisdiction No. 3601 of 2020
Decided On : 07-01-2021
Bihar Contractors Registration Rules, 2007 – Rule 11(d) – Black-listing – Petitioner's firm has been blacklisted for ten years and excess amount which is said to have been paid to petitioner/company for work which was never executed, has been directed to be recovered – Notice to petitioner/company did not at all indicate contemplated action in case explanation was to be found unsatisfactory – Document demanded by petitioner/company, viz., report of Flying Squad has not been furnished to petitioner/company – There does not appear to be any discussion or rationale in impugned order with respect to blacklisting of petitioner/company for ten years – Purpose of show-cause notice is primarily to enable noticee to meet grounds on which an action is proposed against it – Absence of any stipulation regarding contemplated action in case explanation is not found to be satisfactory does not make notice ambiguous and does not render it open to assail – It is important to mention in notice regarding action which is proposed to be taken – When a harsh penalty like blacklisting is imposed, such contemplated action, in the event of explanation not being found to be satisfactory, is required to be stated with clarity in notice and absence of same would make notice incomplete. (Paras 12, 13 and 17)
Government Contract – Black-listing – A very long duration of blacklisting, prima facie, does not satisfy conscience of Court – An order of blacklisting operates to prejudice of a commercial person not only in praesenti, but also is highly stigmatic and an echoes death-knell of institution – Petitioner/company be allowed a fresh opportunity of explaining his cause – Respondent/Road Construction Department, Govt. of Bihar, Patna directed to furnish a fresh show-cause notice to petitioner/company, intimating proposed course of action to be taken, in case explanation/reply of petitioner/company will be found to be satisfactory and also make available to petitioner/company documents which have been relied upon for primarily coming to opinion that action need be taken against petitioner/company, within a period of four weeks. (Paras 18, 20, 21 and 22)
JUDGMENT
Ashutosh Kumar, J. - Heard the learned counsel for the parties.
2. The petitioner/company, which is a Class-I contractor, has challenged the order dated 27.01.2020 passed by the Engineer-in-Chief, Road Construction Department, Govt. of Bihar, Patna, whereby the petitioner's firm has been blacklisted for ten years and the excess amount, which is said to have been paid to the petitioner/company for the work which was never executed, has been directed to be recovered.
3. The matter was heard on 18.02.2020 and this Court recorded as follows:
"2. It appears from the records that a tender was bagged by the petitioner for widening and strengthening of road for the year 2017-18. Certain anomalies were found by the Flying Squad with respect to the work executed by the petitioner/company and, therefore, a notice was issued to the petitioner/company on 06.08.2019, indicating such anomalies and the petitioner/company was directed to furnish his explanation within seven days of the receipt of such notice as to why the agreement with the petitioner/company be not cancelled. It further appears from the records that the petitioner/company sought certain documents for effectively replying to the notice especially the report of the Flying Squad which was never supplied to the petitioner/company.
3. From the order impugned, it appears that the report of the Flying Squad was analyzed by a Special Committee under the Chairmanship of the Chief Engineer of the Road Construction Department, which then recommended for serious action against the petitioner/company for having received payment without execution of actual work for which only the petitioner/company was held to be responsible. Considering such recommendation by the Committee referred to above, the petitioner/company has been blacklisted for ten years and the amount which is stated to have been paid in excess of the work, which was actually carried out by the petitioner/company, is directed to be recovered.
4. Learned counsel for the petitioner has challenged the aforesaid order on two grounds, namely, (i) that the notice which was served upon the petitioner/company did not indicate the action to be taken in case the explanation of the petitioner was not found to be satisfactory and (ii) that the Flying Squad report was never made available to the petitioner/company. Apart from this, it has also been urged that blacklisting the petitioner for ten years without adverting to the explanation which could have been offered by the petitioner, is much too harsh in comparison to the anomalies which have been pointed out by the Flying Squad.
5. Over and above, learned counsel for the petitioner has raised a grievance that without quantification of the amount which is said to have been received by the petitioner/company without the actual work having been carried out, the order of recovery is bad."
4. On the same day, i.e., on 18.02.2020, this Court directed the State to file counter affidavit in the matter and stayed the recovery from the petitioner/company.
5. In the counter affidavit, it has been stated that the relevant record of the work allotted to the petitioner/company was verified and it was found that there were huge inconsistencies in the actual work done and the entries made in the measurement book.
6. On the basis of the aforesaid analysis, a memo of charge, containing six charges, were framed and a show-cause notice was asked from the petitioner/company on 06.08.2019. When no reply to the show-cause notice was received in the office of the respondents, a reminder was sent to the petitioner/company on 24.10.2019. In the meanwhile, the entire records were sent to the Special Technical Committee which submitted its report on 14.11.2019, clearly stipulating that excess payment against carriage and VAT/GST was also found.
7. It has further been submitted that since the Special Technical Committee's report was not available when the first show-cause notice was issued to the petitioner/company,
Erusian Equipment & Chemicals Ltd. vs. State of West Bengal
Gorkha Security Services vs. Government (NCT of Delhi) & Ors.;
Kulja Industries Ltd. vs. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Ltd.
The necessity of a specific show cause notice for blacklisting and the requirement to state the proposed action.
It is a settled position of law that a fair hearing to the party being blacklisted is an essential pre-condition for a proper exercise of the power and a valid order of blacklisting made thereto.
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....
Blacklisting or debarment cannot be permanent and must be preceded by a specific show cause notice, complying with the principles of natural justice.
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