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IN THE HIGH COURT OF JUDICATURE AT PATNA
Chakradhari Sharan Singh, J.
Ramanand Rai - Appellant
Versus
The State Of Bihar & Ors. - Respondent
Civil Writ Jurisdiction Case No. 12736 of 2021
Decided On : 07-09-2021
Government Contract – Debarment – Bihar Registration of Contractors Rules (Rural Works Department), 2007 – Clause 4 (c) – Alleged default in completion of work – Impugned order does not indicate any provision conferring power on Chief Engineer to issue nature of order which has apparently effect of denying petitioner, opportunity to participate in any future tender process – Impugned order/communication does not indicate issuance of any prior show-cause notice, before a decision was taken to debar petitioner from participating in future tender processes – Reason which has been assigned in impugned letter for taking penal action against petitioner and other similarly situated contractors, is that they did not accomplish work within stipulated time in accordance with terms and conditions of respective agreements – There is no reference in impugned order/communication to clause(s) of agreement which petitioner has breached – Source of power for Engineer-in-Chief to issue order of debarment has not been disclosed in impugned communication – There is no power vested in any authority even under Rules of 2007 to debar a contractor from participating in any future tender process for an indefinite period – Seriousness/gravity of consequence of blacklisting/debarment, which is penal in nature, mandates strict adherence to principles of natural justice before such action is taken. (Paras 9, 14 and 20)
Bihar Registration of Contractors Rules (Rural Works Department), 2007 – Clause 4 (c) – Before blacklisting or demoting or suspending any contractor, he should be given an opportunity to show cause – Requirement of giving an opportunity to show cause, as stipulated in Clause 11 (c) of Rules, is not an empty formality and mere issuance of show-cause notice before passing a blacklisting order cannot satisfy requirement of principles of natural justice – Any decision of blacklisting will be open to scrutiny not only on touchstone of principles of natural justice but also on doctrine of proportionality – A fair hearing to party being blacklisted is an essential precondition for a proper exercise of power and a valid order of blacklisting made pursuant thereto – It is a requirement of principles of natural justice that person against whom action is proposed must be informed of charges against him, so that he may take his defence and prove his innocence – Impugned letter deserves interference on two counts – Firstly, it is in clear breach of principles of natural justice and secondly, order of debarment in any case cannot be for an indefinite period – Elaborate directions issued. (Paras 21, 22, 31, 32 and 33)
JUDGMENT
1. This matter has been taken up for hearing online because of COVID-19 pandemic restrictions.
2. This writ application has been filed seeking quashing of a letter no. 1908 dated 05.07.2021 issued under the signature of the Engineer-in-Chief, Rural Works Department, Government of Bihar whereby the petitioner, among several other contractors, has been debarred from participating in any tender process in future, by one stroke of pen, on the ground of them having defaulted in completing the works in question as contractors, as stipulated under the respective terms of the contract agreements. The impugned order which has been brought on record by way of Annexure-6 to the writ application does not refer to any provision under which the same has been issued.
3. The petitioner is admittedly a registered Class-I contractor under the provisions of Bihar Contractor Registration Rules, 2007 issued by the Rural Works Department, Government of Bihar. Pursuant to the notices inviting tender issued by the Rural Works Department, Government of Bihar, the petitioner was awarded two work contracts and two agreements in relation to construction works were entered into between him and the State of Bihar. The details of the said agreements have been given in paragraph 4 of the writ application, which are as under:-
"(a) Agreement no. 03/PMGSY- SBD/2017-18 for construction of road and 5 years maintenance thereof from TO2 to Ruidhasa package no. BR18R183 for a total value of Rs. 1,82,82,319.00 inclusive of 5 years maintenance. The letter of acceptance being 10.06.2017 and agreement entered on 05.07.2017. The period of completion being 12 months.
(b) Agreement no. 19/PMGSY- SBD/2017-18 for construction of road and 5 years maintenance thereof from to 4 to Tatpowa to Muslim Tola (Track-17), package no. BR18R228 for a total value of Rs. 54,70,719.00 inclusive of 5 years maintenance. The letter of acceptance and letter to proceed with the work being 05.12.2017 and agreement entered on 14.12.2017. The period of completion being 12 months. "
4. It is the petitioner's case that he completed the works and payments were also made without any penalty. It is the further case of the petitioner that he was doing maintenance works also, as per the agreements and he was demanding payment of maintenance cost, which was due. Instead of making payment of the due amount against maintenance cost, the department came out with the impugned order, without giving the petitioner any opportunity of being heard, alleges the petitioner. It has been specifically stated in the writ petition that no notice was ever issued either by the concerned Executive Engineer or the Engineer-in-Chief alleging any default on the petitioner's part and that none of the conditions provided under Rule 11 of the Bihar Contractor Registration Rules, 2007 is attracted in the present case. It is accordingly the petitioner's case that the impugned order, to the extent it relates to petitioner is without jurisdiction.
5. A counter affidavit has been filed on behalf of the State of Bihar wherein it has not been disputed that the work was completed within 12 months, as per the terms of agreement. It is admitted that payment of construction cost was also made to the petitioner. It has, however, been stated that after completion of construction work, the petitioner, though had started maintenance work, he suddenly stopped the same. It has further been stated that the Executive Engineer, Rural Works Department, Works Division, Kishanganj-II vide his letter no. 1481 dated 12.12.2020 and letter no. 1482 dated 12.12.2020 had sent notices to the petitioner directing him to get the maintenance work completed within 15 days and to send a report to the office in this regard. The Executive Engineer, Rural Works Department, Works Division, Kishanganj-II vide his letters dated 25.02.2021 had informed the petitioner that steps were being taken to put him in the list of debarred contractors. A reference has been made
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 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 requirement for a fair hearing and a specific show cause notice before imposing the severe civil consequence of blacklisting, and the need for the authority to determine the period of punishment ....
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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