IN THE HIGH COURT OF JUDICATURE AT PATNA
MOHIT KUMAR SHAH, J.
CWJC No.24388 of 2019
(4.3.2021)
M/s S. K. Traders through its
Proprietor Shankar Kumar ... Petitioner
vs.
Bihar School Examination Board
through its Chairman, Patna
& Ors. ... Respondents
Government Contract – Black-listing – Considering fact that no separate show cause notice was issued to petitioner prior to passing of blacklisting order, impugned order quashed, however with liberty to respondent-Board to proceed further in accordance with law. (Para 5)
Arbitration and Conciliation Act, 1996 – Section 11 – Appointment of Arbitrator – Black-listing – In case parties have decided to get the matter resolved through arbitral process, it will be open for them to agree on mode of appointment of Arbitrator as also they would be at liberty to take recourse to such other remedies as are available under Arbitration and Conciliation Act, 1996 for the purposes of appointment of Arbitrator. (Para 6)
ORDER
The present writ petition was initially filed seeking a direction upon the respondents to quash the work order, issued to the respondent no. 5, upon the petitioner being deprived of the same. During the interregnum period, an order dated 27.04.2020 has been passed by the respondent-Bihar School Examination Board, Patna, whereby and whereunder the petitioner has been blacklisted for two years.
2. The learned counsel for the petitioner, at the outset, seeks liberty to invoke Clause 22 of the N.I.T. in question, for the purposes of resolution of other disputes, except the issue of blacklisting. Liberty, so sought, is granted.
3. The learned counsel for the petitioner has assailed the order of blacklisting dated 27.04.2020 on the ground that no separate show cause notice was issued to the petitioner before passing the said order of blacklisting.
4. The learned counsel for the respondent-Board has submitted that it is true that no separate show cause notice was issued to the petitioner prior to passing of the blacklisting order dated 27.04.2020, hence the same be quashed and the matter be remanded back to the respondent- Board for passing of fresh orders.
5. Having regard to the facts and circumstances of the case and considering the fact that no separate show cause notice was issued to the petitioner prior to passing of the blacklisting order dated 27.04.2020, issued by the Joint Secretary-cum- Incharge Officer, Stores (Secondary Education), Bihar School Examination Board, the aforesaid order dated 27.04.2020 is quashed, however with liberty to the respondent-Board to proceed further in accordance with law.
6. At this juncture, the learned counsel for the petitioner has submitted that in view of the amendment made in the Arbitration and Conciliation Act, 1996 and in view of the judgment rendered by the Hon’ble Apex Court in the case of Voestalpine Schienen GMBF vs. Delhi Metro Rail Corporation Limited, reported in (2017) 4 SCC 665, it is evident that the Arbitrator cannot be an Official of the Bihar School Examination Board, Patna. In this regard, this Court would only observe that in case the parties have, in terms of Clause 22 of the N.I.T., decided to get the matter resolved through arbitral process, it will be open for them to agree on the mode of appointment of the Arbitrator as also they would be at liberty to take recourse to such other remedies as are available under the Arbitration and Conciliation Act, 1996 for the purposes of appointment of an Arbitrator.
7. The writ petition stands disposed of on the aforesaid terms.
Voestalpine Schienen GMBF vs. Delhi Metro Rail Corporation Ltd.
The authority to blacklist a contractor lies with the party privy to the contract, and any action taken without jurisdiction breaches natural justice.
Indefinite blacklisting without defined duration and proper procedural fairness is arbitrary, violating natural justice principles and requiring a clear basis for such action.
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.
Natural justice requires that prior notice be given before penalties such as blacklisting; however, if adequate opportunity and communication are established, decisions can stand.
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