Back
2004 Supreme(Guj) 261
Gujarat High Court
Judgename :D.N.Patel, J.N.Bhatt
JAY FORMULATIONS LTD - Appellant
Versus
STATE OF GUJARAT - Respondent
S.C.A.1134 of 2004
Decided On : 04/13/2004
Headnote:(a) Govt. Contracts - Black-listing - Process is a serious phenomenon affecting adversely the civil consequences for future business of a concerned person - Principle of natural justice is attracted and such an order is open to judicial review - Procedure adopted by respondent-authority in the case while blacklisting the company appellant was in conformity with principles of natural justice - Contention that impugned order did not contain any reasons was invalid and not acceptable.
The blacklisting process is a serious phenomenon affecting adversely the civil consequences for future business of a concerned person, party or company. Person affected by such an order has a right of being heard and making representation against the order even though at times, rules do not provide so expressly. Principles of natural justice are sought, when a subject of the State cannot enjoy the freedom and liberty and equality-right, more so, in a democratic governance. Principles of natural justice, as it is said, were born with the man-kind and shall survive, so long as, man survives, for maintenance, sustenance and growth of a civilised society and regulated governance and more so, in Judicial Review.
It is not incumbent upon the respondent-authority to have supplied the material on the basis of which the charges against the errant party were based as it was not the requirement of the principles of `audi alteram partem. It was sufficient requirement of law that an opportunity of showing the cause was afforded, which was duly considered and observed before the company or Authority came to be black-listed. Further, the company-appellant was given an opportunity of showing cause and it did reply to the show-cause notice, which was duly considered by the State Government. Therefore, the procedure adopted by the respondent-authority, while blacklisting the company-appellant, was in conformity with the principles of natural justice. The contention was also advanced on the ground that the impugned order did not contain any reasons and, therefore, it should be declared invalid. Elaborate reasons like a judgment of the Court could not be said to be the requirement of the doctrine of `audi alteram partem. This decision, also, clearly propounds that the contention that as the impugned order of black-listing the company did not contain reasons, and, therefore, was invalid, was not accepted.
(b) Constitution of India, 1950 - Art. 226 - Jurisdiction - Scope of - Court is only required to consider whether the authority has acted fairly, reasonably and justly to the decision under challenge - Impleadly it means that Court has to consider the decision making process and examine as to whether it is in any way adulterated polluted or affected by extraneous considerations including bias, mala fide and unreasonableness unfairness and in violation of principles of Natural Justice.
What is required to be examined, analysed and evaluated upon a challenge placed on the anvil of judicial scrutiny under Art. 226 of the Constitution of India by the Court is required to consider whether the authority has acted fairly, reasonably and justly to the decision which is under challenge. It means that the Court has to consider the decision making process and examine as to whether it is in any way adulterated, polluted or affected by extraneous considerations, including bias, mala fide and unreasonableness, unfairness, and in violation of Principles of Natural Justice.
( 1 ) RULE. Service of notice of rule is waived by mrs. Harsha Devani, learned Assistant Government Pleader for the respondents.
( 2 ) BY this petition, the petitioner has sought relief and direction against the respondents by invocation of provisions of Article 226 of the constitution of India to the effect that the tender of the petitioner should be considered and to award the contract if the price quoted by the petitioner-Company is found competent, by quashing and setting aside the order dated 20-02-2004.
( 3 ) A skeleton projection of few material and relevant facts giving rise to this petition may be narrated at the first stage. The petitioner-Company was holding a Drugs Licence for manufacture of drugs and other pharmaceutical formulations, such as tablets and capsules, since the year 1993. Respondent No. 1 is the state of Gujarat and respondent No. 2 is the Director of central Medical Stores Organisation ("c. M. S. O. ", for short ). Respondent No. 2 is authorised to purchase medicines and other drugs from various suppliers for the purpose of supplying said goods and articles to various hospitals in the State of Gujarat is, also, in-charge of inviting tenders from the manufacturers.
( 4 ) PURSUANT to the tender-notice for the supply of goods to respondent No. 2 for the year 2001-2002, petitioner-Company had submitted its tender along with other documents. There was a Rate-Contract, which was valid upto, 31-03-2002, and thereafter, as per the terms and conditions of the tender, the petitioner had supplied the goods till May 2002.
( 5 ) A show-notice came to be issued by respondent no. 2, on 12-04-2002, for black-listing the petitioner-Company for the supply of medicines and drugs. Commissioner, Foods and Drugs Control Administration, upon investigation, found that the goods were manufactured in the company-premises of the petitioner. From the record maintained by the petitioner, same was found to be manufactured, with objectionable irregularities.
( 6 ) DURING the course of the proceedings of this petition, amendment came to be made since respondent no. 1-State, upon report and recommendation of respondent no. 2, passed the order dated, 20-01-2004, blacklisting the petitioner-Company. The said order was preceded by show-cause notice dated 12-04-2002. It was issued by respondent No. 2-Director. Reply to the show-cause notice was also tendered by the petitioner-Company, on 18-04-2002, followed by personal hearing to the petitioner-Company. The petitioner was explained about the allegations in the show-cause notice during the personal hearing. It will, also, be interesting to mention that the Commissioner of Foods and Drugs Control administration had also taken action against the petitioner-Company, directing it to close the factory and, as such, the factory was closed down from 14-02-2002 to 20-04-2002. The licence was kept under suspension from 10-05-2002 to 09-06-2002.
( 7 ) EARLIER, one writ petition at the instance of the petitioner-Company came to be filed, being Special Civil application No. 11573 of 2003, challenging the action of the respondents, wherein the statement came to be made by the respondents that the Committee shall consider the petitioners tender not being influenced by any submissions that may have been made in the affidavit-in-reply of the Deputy Director filed in that writ petition about the apprehension of the petitioner. The proceedings of the earlier writ petition came to be concluded on the basis of the said statement.
( 8 ) MR. Yatin Oza, learned Senior Counsel, has, seriously, and vehemently criticised the action of the respondent-Authority in placing the petitioner Companys name in the black list, whereby it is debarred from having any business relations or dealings with the State government for a period of 3 years with respondent Nos. 1 and 2, on the premise of breach of the terms and conditions, namely, Condition No. 13 of the tender-Contract and Condition No. 27 of Rate-Cont
