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2021 Supreme(Ker) 877
IN THE HIGH COURT OF KERALA AT ERNAKULAM
ANIL K.NARENDRAN, P.G. AJITHKUMAR, JJ.
M. K. Jose – Petitioner
Versus
The Secretary, Public Works Department and ors. – Respondents
FAO NO. 55 OF 2021
Decided On : 21-10-2021
Advocate Appeared:
For the Petitioner: Jawahar Jose, Cissy Mathews, Jaison Antony, Fathimath Hiba A.K, Advs.
For the Respondent: Sri. K.V.Manoj Kumar, Spl. Government Pleader
Point of Law: Blacklisting of Contractor - blacklisting has the effect of preventing a person from entering into lawful relationship with the Government for purposes of gains and that the authority passing any such order was required to give a fair hearing before passing an order blacklisting a certain entity.
Headnote:
Code of Civil Procedure, 1908 - Order XXXIX, Rules 1 to 3, read with Section 151 -Contract of Stimulus Package Improvements to Kannavam – Idumba – Trikadipoyil Road – Termination of Contract - Power to blacklist a contractor - Suit for realizing amount and permanent prohibitory injunction restraining the defendants from enforcing the risk and cost condition against the plaintiff - whether any interference is warranted in the order of the court below, whereby the temporary injunction sought for restraining the defendants or their employees from including the plaintiff in the black list, in consequence of the proceedings till the final disposal of that suit, stands dismissed for the reason stated therein.
Finding of the Court: Power to blacklist a contractor whether the contract be for supply of material or equipment or for the execution of any other work whatsoever is inherent in the party allotting the contract. There is no need for any such power being specifically conferred by Statute or reserved by contractor. That is because ‘blacklisting’ simply signifies a business decision by which the party affected by the breach decides not to enter into any contractual relationship with the party committing the breach. Between two private parties the right to take any such decision is absolute and untrammelled by any constraints whatsoever. The freedom to contract or not to contract is unqualified in the case of private parties. But any such decision is subject to judicial review when the same is taken by the State or any of its instrumentalities. This implies that any such decision will be open to scrutiny not only on the touchstone of the principles of natural justice but also on the doctrine of proportionality. A fair hearing to the party being blacklisted thus becomes an essential pre-condition for a proper exercise of the power and a valid order of blacklisting made pursuant thereto- remedy open to the appellant-plaintiff against the proceedings initiated by the 3rd defendant, by the issuance of notice, is to invoke the writ jurisdiction of this Court under Article 226 of the Constitution of India, at appropriate stage, with proper parties in the party array.
Result: Appeal dismissed
JUDGMENT :
Anil K. Narendran, J.
The appellant is the plaintiff in O.S.No.18 of 2018 on the file of Sub Court, Hosdurg, a suit to declare that the order dated 25.07.2013 of 3rd defendant Superintending Engineer (Roads and Bridges), Public Works Department, North Circle, Kozhikode, terminating the contract work, namely, “Stimulus Package Improvements to Kannavam – Idumba – Trikadipoyil Road from 0/000 kms to 6/100 kms”, at the risk and cost of the plaintiff, is illegal and void; declare that the plaintiff is entitled to realise an amount of Rs.4,50,68,048/-from the defendants; and a permanent prohibitory injunction restraining the defendants from enforcing the risk and cost condition against the plaintiff.
2. During the pendency of O.S.No.18 of 2018, the 3rd defendant issued Ext.A1 notice bearing No.F2-875/2021 dated 30.03.2021 in order to blacklist the plaintiff. The plaintiff filed I.A.No.7 of 2021, a petition under Order XXXIX, Rules 1 to 3, read with Section 151 of the Code of Civil Procedure, 1908, seeking temporary injunction restraining the defendants or their employees from blacklisting the plaintiff, in consequence of the proceedings No.F2-875/2021 dated 30.03.2021, till the final disposal of that suit. The respondents opposed the interim injunction sought for by filing counter affidavit.
3. After considering the rival contentions, the Court below by the impugned order dated 08.04.2021 dismissed I.A.No.7 of 2021. Paragraph 11 of that order reads thus;
“11. The learned AGP submitted that this is a separate proceedings initiated by Vigilance and Anti Corruption Bureau. There is no connection with the relief sought in I.A.No.800 of 2018 with regard to Ext.A1 notice. The suit was earlier filed before the Sub Court, Thalassery, which was later transferred to this court. An interim injunction petition was earlier filed before that court in which one of the prayer was that respondent is to be restrained from taking any further action against the petitioner pursuant to the order of the 3rd respondent on 25.07.2016. In that petition, the Government Pleader submitted that revenue recovery proceedings will not be initiated till the disposal of the interlocutory application on merits. Recording the same, petition was disposed of by the learned Sub Judge. No relief was granted restraining the respondent from taking any further action against the petitioner in I.A.No.7800 of 2018. There is no relief in the suit seeking direction not to take any action against respondent. So the prayer herein is a new prayer arose on the subsequent incidents. Now, according to the Government Pleader as per the instruction of Vigilance and Anti Corruption Bureau, he has been instructed to appear before the 3rd respondent. There is no materials to show that steps were already taken to include him in blacklist. He could not substantiate that he is likely to get any contract in the near future which will be stalled due to the act of the 3rd respondent. The petitioner is at liberty to appear before the 3rd respondent and tender his explanation. The inclusion in blacklist is yet to be decided by the 3rd defendant. Since he has been issued with a notice, he can very well seek remedy with the PWD authorities itself by tendering his explanation and await for the culmination of proceedings. If he is blacklisted arbitrarily, definitely he can approach the court and the remedy is not at all exhausted. But as of now, except a mere apprehension, no positive steps were taken on the side of the 3rd respondent to include him in the black list, but he was invited to offer his explanation only. As contended by the Additional Government Pleader, it is a step taken by the 3rd respondent as per the instruction of Vigilance Department, which may be statutorily required for collecting materials. At any rate, it has no connection with the relief sought for in the suit. I do not think that any prima facie case is established by the petitioner that will affect the relief sought for
