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1986 Supreme(Mad) 11
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE NATARAJAN & THE HONOURABLE MR. JUSTICE NAINAR SUNDARAM
Preetam Pipes Syndicate - Appellant
Versus
T.N. Slum Clearance Board, Madras - Respondent
Case No : Writ Appeals Nos. 495 and 496 of 1980
Decided On : 07 January 1986
Blacklisting without notice and opportunity of hearing is void.
Headnote:
BLACKLISTING - PUBLIC CONTRACTS - PRINCIPLES OF NATURAL JUSTICE - NOTICE AND OPPORTUNITY OF HEARING - ESSENTIAL - BLACKLISTING WITHOUT NOTICE AND OPPORTUNITY TO BE HEARD IS VOID.
Fact of the Case:
The appellant, a registered and approved supplier of the respondent, was blacklisted without being given a notice or an opportunity to be heard. The appellant challenged the blacklisting orders in two writ petitions, which were dismissed by the High Court.
Finding of the Court:
The Supreme Court held that blacklisting has civil consequences and creates a barrier between the person blacklisted and the authorities in the matter of contractual transactions. The power to determine questions affecting the rights of citizens will certainly impose a limitation that the said determination should be exercised only in conformity with the principles of natural justice and fair play. Those principles do envisage that the person to be affected should be afforded an opportunity to represent his case before his rights are affected.
Issues: Whether blacklisting without notice and opportunity of hearing is valid.
Ratio Decidendi: The Supreme Court held that blacklisting without notice and opportunity of hearing is void. The Court relied on its earlier decisions in Erusian Equipment and Chemicals Ltd. v. State of West Bengal and Joseph Vilangandan v. The Executive Engineer, (P.W.D.) Ernakulam, in which it had held that blacklisting has civil consequences and creates a barrier between the person blacklisted and the authorities in the matter of contractual transactions. The Court held that the power to determine questions affecting the rights of citizens will certainly impose a limitation that the said determination should be exercised only in conformity with the principles of natural justice and fair play. Those principles do envisage that the person to be affected should be afforded an opportunity to represent his case before his rights are affected.
Final Decision: The Supreme Court allowed the writ appeals, set aside the common order of the High Court, and quashed the blacklisting orders. The Court made it clear that its judgment would not stand in the way of the respondent to initiate fresh action for blacklisting, if there is warrant for it, keeping in mind the principles of natural justice and fair play while prosecuting such process.
NAINAR SUNDARAM
The petitioner in W. P. Nos. 3252 and 3253 of 1980 is the appellant in these two writ appeals and the respondent in the writ petitions is the respondent in these two writ appeals. The appellant was in the list of registered and approved suppliers of the respondent and it had the benefit of an award of two contracts from the respondent. On 7-5-1980, the Superintending Engineer of the respondent addressed a communication to the petitioner as follows :-
Necessary work orders were issued to you in the reference first cited above and in the reference second cited you were requested by the C.E. to execute the agreement within 3 days on receipt of this letter. Apart from this in this office letter 3rd cited above also you were requested to execute the agreement with the Executive Engineer concerned. In spite of this you have not either deposited the additional security deposits or executed the agreement. Therefore you are hereby informed that as per clause 9 of the tender the E.M.D. paid by you for the above works are hereby forfeited, for the noncompliance in execution of the agreement. Further you have also not satisfactorily supplied the C.I. pipes and specials and G. I. Pipes and specials for M.G.R. Nagar scheme as per the agreement No.CR/48/78-79 and CR/42/78-79, respectively. This has caused much inconvenience to the department in the execution of the project. Under these circumstances you may substantiate with reasons if any as to why your firm should not be blacklisted for failure in effecting the supply of G.I. and C.I. pipes specials to M.G.R. Nagar and in the execution of agreement for the supply of C.I. pipes and specials for Ammani Ammal Thotam, Annai Sivagami Nagar and Sivagami Ammaiyar Nagar. Your reply in this matter should reach this office within 15 days from the date of this letter.
"As we could see from the above, the time given for offering the explanation was 15 days from the date of receipt of the communication. However, before the lapse of the 15 days reserved under the said communication, on 12-5-1980 the appellant was visited with an order from the Chief Engineer of the respondent the contents of which run as follows :" *
With reference to the above tender you are informed that you had tendered for the above work and the same was accepted. The work order has been issued to you vide reference third cited within the validity period of your tender (i.e.) before 26-3-79. The agreement between you and the Department has also been executed on 29-3-79.
As per agreement you had to complete the supply of entire quantity of pipes and specials stipulated in the agreement before 21-4-79. You have not supplied the full stipulated quantity in the agreement even within the extended period of supply sought by you. Further you have not given any reply or completed supply in response to the Board's reference fourth cited. Long after tendering and executing the agreement you have informed of your inability to complete supplies as your principals have not indicated any specific date to resume the operation of supplying the pipes and specials. This is not acceptable as tender conditions and agreement do not stipulate supply of any particular brand or make of pipes. It shows your inability to supply the pipes and specials at agreed rates.
As you have failed to supply the full quantity stipulated in the agreement within the agreement period, your contract is determined with forfeiture of EMD of Rs.7500 and additional security of Rs.8100/-. This is in addition to the fine of Rs.51,984/- under condition No.2 of the 'Conditions of Contract'.
As you have failed to complete supply of materials, as per tender and agreement conditions for most of the schemes viz. M.G.R. Nagar (C.I. and G.I. Pipes and specials) Annai Sivagamiammaiyar Nagar, Sivagamiammaiyar Nagar and Ammaniammal Thottam it is to be construed that you are not a reliable supplier. Hence you are blacklisted and your name removed from the list of regist
