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2021 Supreme(Raj) 423

IN THE HIGH COURT OF RAJASTHAN
Sangeet Lodha,Rameshwar Vyas, JJ.
M/s Mohan Traders - Appellant
Versus
Raj Rajya Sahkari Upbhokta Sangh Ltd - Respondent
Special Appeal Writ No. 1420 of 2019
Decided on : 01-04-2021

Advocates appeared:
N.M. Lodha, Advocate, V.D. Dadhich, Advocate, Dhanpat Choudhary, Advocate

The main legal point established in the judgment is the importance of following the principles of natural justice, particularly fair opportunity of hearing, before taking actions with civil consequences such as blacklisting. The judgment emphasizes that blacklisting a bidder should be preceded by a show cause notice and an opportunity for the person concerned to represent their case.

Headnote:

Blacklisting - Public Procurement - Rajasthan Transparency in Public Procurement Act, 2012 - Section 38 - The judgment discusses the principles of natural justice and fair opportunity of hearing in the context of blacklisting a bidder under the Rajasthan Transparency in Public Procurement Act, 2012. It highlights the importance of following the principles of natural justice before taking actions with civil consequences such as blacklisting. The court emphasizes the need for fair opportunity of hearing and the consequences of blacklisting on future business ventures.

Fact of the Case:

The appellant, a proprietorship concern, was awarded a contract by the Rajasthan Rajya Sahakari Upbhokta Sangh Limited ('CONFED') for supply of specified branded items. The appellant was later blacklisted and debarred from entering into business with CONFED for a period of three years based on allegations of submitting bills twice and withdrawing double payment.

Finding of the Court:

The court found that the order blacklisting the appellant was passed without affording a fair opportunity of hearing, violating the principles of natural justice. The court also emphasized that the availability of an alternative remedy does not bar the jurisdiction of the High Court under Article 226 of the Constitution of India.

Issues: The issues involved the legality of blacklisting the appellant without fair opportunity of hearing and the applicability of the alternative remedy under Section 38 of the Rajasthan Transparency in Public Procurement Act, 2012.

Ratio Decidendi: The court held that the order blacklisting the appellant without fair opportunity of hearing was violative of the principles of natural justice and not sustainable in the eyes of law. The court also clarified that the availability of an alternative remedy does not bar the jurisdiction of the High Court under Article 226 of the Constitution of India.

Final Decision: The special appeal succeeded, and the order impugned was set aside. The writ petition preferred by the appellant was allowed, and the order impugned in the writ petition was quashed. The respondents were directed to pass the order afresh after giving an opportunity of hearing to the appellant in accordance with the law.

JUDGMENT

Sangeet Lodha, J. - This intra-court appeal is directed against order dated 30.10.19 of the learned Single Judge of this court, whereby the writ petition preferred by the appellant questioning the legality of order dated 17.10.19 passed by the Managing Director, Rajasthan Rajya Sahakari Upbhokta Sangh Limited ('CONFED'), Jaipur, whereby while withdrawing the certificate of satisfactory completion of the work, the appellant has been blacklisted and debarred from entering into business with CONFED for a period of three years.

2. The relevant facts in nutshell are that the appellant, a proprietorship concern, engaged in sales and supply of grains, pulses and other commodities was awarded the contract by the CONFED for supply of specified branded items as per the bid conditions all over Rajasthan in hostels/residential schools of Social Justice & Empowered Department. The agreement was executed between the appellant and CONFED on 13.7.16 which was valid upto 15.7.17. The appellant was served with the notice dated 25.7.17 alleging that the appellant had submitted the bills of 13 challans for payment twice with intention to derive double benefit. Yet another notice dated 1.6.17 was issued with the similar allegation and explanation was sought. The appellant submitted the explanation vide communication dated 11.7.17. Thereafter, the term of the contract was extended upto 15.10.17. On 2.1.19, a certificate of satisfaction completion of supply in terms of the contract was issued to the appellant by the Managing Director, CONFED. Later, on the basis of the inquiry conducted in the back of the appellant, vide order dated 17.10.19 issued by the Managing Director, CONFED, the certificate of completion of satisfactory supply of the commodities issued as aforesaid was withdrawn and the appellant was debarred from entering into contract with the CONFED for a period of three years.

3. Aggrieved by the order dated 17.10.19, the writ petition preferred by the appellant has been dismissed by the learned Single Judge by the order impugned on the ground of availability of remedy of appeal, observing that the writ petition involve a horde of disputed question of fact and therefore, the Court is not inclined to exercise its extra ordinary jurisdiction under Article 226 of the Constitution of India.

4. Learned Senior counsel appearing for the appellant contended that the learned Single Judge has seriously erred in dismissing the appeal on the ground of availability of remedy of appeal. Drawing the attention of the Court to the provisions of Section 38 of Rajasthan Transparency in Public Procurement Act, 2012 (for short "RTPP Act"), learned Senior counsel submitted that the appeal as provided under Section 38 of the RTPP Act is available in respect of the dispute relating to initial bidding process and not in respect of the dispute that may arise after award of the contract in favour of the bidder or after completion of such contract. Learned Senior counsel submitted that the 'Bidder' is defined under Section 2 (ii) of the RTPP Act as 'any person participating in a procurement process with a procuring entity'. The role of the bidder comes to an end after expiry of the procurement process which ends on award of the contract or cancellation of the process. Learned Senior counsel submitted that once the certificate for satisfactory completion of supply was issued, there was no occasion for the respondents to initiate the penal action. Learned Senior counsel submitted that after issuing the notices seeking explanation, no notice was issued to the appellant proposing blacklisting and straight away after lapse of more than two years since issuance of the notice, the order impugned was passed by the respondent authority and thus, apparently, the order impugned passed without extending an opportunity of hearing to the appellant, is ex facie violative of principles of natural justice and thus, the learned Single Judge has seriously erred in dismissing the

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