The central legal point established in the judgment is the requirement for a fair hearing, proportionality, and the stigmatic nature of blacklisting in administrative actions.

JUDGMENT :

SANJAY KAROL, J.

1. On the oral request of Sri. S.D. Sanjay, learned counsel for the petitioner, Engineer-in-Chief, Rural Works Department, Government of Bihar, Patna, be impleaded as party respondent no. 2(a).

2. Registry to make necessary correction in the cause title of the petition, both in the physical as also the digital file.

3. Heard learned counsel for the parties.

4. Petitioner has prayed for the following reliefs:

“(i) For quashing of the impugned order of Blacklisting the Petitioner Company for a period of 10 years by Respondent No. 3 vide Memo No. 2076 dated 15.07.2021 for alleged non-completion of the road project awarded to the Petitioner Company vide Agreement No. 62 SBD/2008-09 as the same has been passed without issuance/service of any Show-Cause Notice and hence, being in violation of Principles of Natural justice.

(ii) For holding that non-service of the impugned order of blacklisting the Petitioner and uploading the same on the official web-site of the Respondent is completely arbitrary act on part of the Respondents as the same must not have been uploaded on the website before service of the same upon the Petitioner Company.

(iii) For holding that the passing of the impugned order of blacklisting is in violation of principles of Natural justice for being passed without issuance of any show-cause notice upon the petitioner proposing blacklisting muchless proposing any action against the Petition in the year 2021 admittedly after closure/completion of contract way back in the year 2016 and/or for any other reliefs for which the Petitioner may be found entitled to in the facts and circumstances of the present case.”

5. We are of the considered view that the impugned order dated 15th of July 2021 needs to be quashed on two grounds:

(a) Petitioner was never served upon the notice calling upon him to show cause as to why he be not blacklisted in terms of the Bihar Contractor Registration Rules, 2007 of Rural Works Department in accordance with law as stipulated in law.

(b) That in any event, the order, blacklisting the petitioner for a period of 10 years, is assailable on the ground of disproportionality.

6. On both counts, we are of the considered view that the petition needs to be allowed, for the order of blacklisting entails civil consequences, inasmuch as, inter-alia, petitioner stands debarred from participating in fresh tenders:

11. Learned Counsel appearing for the petitioner, invites our attention to the decisions rendered by Hon'ble Apex Court in State of Orissa and Others vs. Balram Sahu, (2009) 2 SCC 652, Patel Engineering Limited vs. Union of India and Another, (2012) 11 SCC 257, Gorkha Security Services vs. Government (NCT of Delhi) and Others, (2014) 9 SCC 105, and Kulja Industries Limited vs. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Limited and Others, (2014) 14 SCC 731.

12. The principles enunciated in the said decisions can be summarized as under:

(a) The effect of blacklisting is to exclude a person from entering into a lawful relationship with the government for a gainful purpose.

(b) The power of the State and the Union under Article 298 of the Constitution extends to carrying on any form of trade, the acquisition, holding or disposal of property and entering into any related contracts. Such exercise of power may be with or without a law, on the books, subjected of course to Part-III of the Constitution, including Article 14 and 21.

(c) Public contracts are subject to equality of opportunity. The State's right to trade must be executed with due observance of equality.

(d) An individual may choose to or not to deal with a particular person but the government does not have such Liberty. It cannot discriminate similarly situated person.

(e) Blacklisting deprives a person of equality of opportunity in a public contract, disabling them from participating, in spite of eligibility. A person transacting business with the State possesses a legitimate expectation that any act done