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2024 Supreme(Ori) 214

ORISSA HIGH COURT: CUTTACK
B.R.SARANGI, ACJ., MURAHARI SRI RAMAN, JJ.
Kalinga Warriors - Petitioner
Versus
The Orissa Minerals Development Co. Ltd., Keonjhar and others.  - Opp. Parties
AFR W.P.(C) NO. 28472 of 2023
Decided On : 05-02-2024 

Advocates Appeared:
For the petitioner:M/s P.C. Rath and S.S. Rath, Advocates
For the opp. parties :Mr. P.K. Parhi, DSGI along with Mr. S.S. Kashyap, Central Government Counsel, Mr. Subham Sharma, Advocate

Blacklisting an entity without providing notice and an opportunity for hearing violates the principles of natural justice and renders the decision invalid.

Headnote:(A) Contract Law - Principles of Natural Justice - The order blacklisting the petitioner without notice and opportunity to be heard is violative of natural justice principles. The authority must provide reasons for such significant decisions, thereby ensuring fairness in administrative actions. Relevant cases cited include Union of India v. Mohan Lal Capoor and Gorkha Security Services v. Government of NCT of Delhi. (Paras 7, 12, 19)

(B) Writ Jurisdiction - Judicial Review - The decision to blacklist without following due procedure allows for judicial review due to grave implications on the contractor's rights. Public orders must be made transparently and fairly regarding the parties' rights. (Paras 18, 20)

Facts of the case:
The petitioner was blacklisted from participating in future tenders by the Orissa Minerals Development Company Limited after declining to accept a Letter of Acceptance for contract violation without an opportunity for a hearing or a reasoned order. After participating in a public tender, the petitioner faced blacklisting based solely on actions taken without due process.

Findings of Court:
The court found the blacklisting order was passed without reason and without providing the petitioner an opportunity to present their case. This violates principles of natural justice and necessitates the quashing of the order.

Issues: The key issues addressed were the validity of the blacklisting procedure and the necessity of providing a fair hearing before imposing such significant penalties.

Ratio Decidendi: The court ruled that administrative decisions, especially those affecting rights detrimentally, must follow principles of natural justice by providing notice and opportunity to respond. The absence of these leads to a lack of legitimacy in the decision-making process.

Result: The order dated 10.08.2023 is quashed; the case is remitted for reconsideration with an opportunity for a hearing.

Table of Content
1. petition to quash blacklisting order (Para 1 , 2)
2. arguments on procedural fairness in tender process (Para 3 , 4)
3. court's observations on reasoned decisions (Para 5 , 6)
4. requirement for reasoning in administrative decisions (Para 7 , 8 , 9 , 10)
5. emphasis on principles of natural justice in blacklisting (Para 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19)
6. final decision quashing non-reasoned order (Para 20 , 21)

JUDGMENT :

B.R. SARANGI, ACJ.

1. The petitioner, by means of this writ petition, seeks to quash the order dated 10.08.2023 passed by opposite party no.3 under Annexure-1 in blacklisting and debarring the petitioner from participating in the future tenders to be floated by the Orissa Minerals Development Company Limited for a period of one year.

2. The facts leading to filing of this writ petition, in a nutshell, are that the Orissa Mineral Development Company (OMDC) Limited invited public tender, vide tender call notice dated 17.03.2023 under Annexure-2, from the experienced agencies for “Maintenance of Security Services at Thakurani Colony and Office premises of OMDC, Barbil in the district of Keonjhar” with various terms and conditions. As per the tender conditions, the security personnel deployment will be made by the successful agency and further duties and responsibility of the security personnel engaged by the agency are independent, as stipulated in the tender documents. Pursuant to the above tender call notice, the petitioner participated in the process of tender by submitting all required documents. The bid of the petitioner was accepted by opposite party no.2.Thereafter, the Letter of Acceptance (LoA) was issued, vide letter no.OMD/Pers/2023/533 dated 29.04.2023, in favour of the petitioner. But due to violation of terms of the tender, the petitioner declined to accept the LoA vide letter dated 29.04.2023 under Annexure-4. Thereafter, vide letter dated 03.05.2023 under Annexure-5, the petitioner intimated opposite party no.2 regarding discussion in the meeting with regard to violation of terms of the tender. After receiving the letter dated 03.05.2023 from the petitioner, opposite party no.2, without considering the discussion in the meeting, cancelled the LoA vide order dated 19.05.2023 under Annexure-6. Thereafter, opposite party no.3, without issuing notice of show cause and granting opportunity of hearing to the petitioner, passed the order of blacklisting dated 10.08.2023 under Annexure-1 and debarred the petitioner from participating in future tenders to be floated by Orissa Minerals Development Company Limited for a period of one year. Hence, this writ petition.

3. Mr. P.C. Nayak, learned counsel appearing for the petitioner contended that the order under Annexure-1 is non-speaking one and has been passed by the authority without providing opportunity of hearing to the petitioner. In the said order, it has only been indicated that the petitioner has been blacklisted from participating in future tender of OMDC for a minimum period of one year from the date of issue of the letter in accordance with sub-clause (d) of clause 11 of Chapter-II of the NIT, which has been placed on record at page-28. It is further contended that while blacklisting the contractor, OMDC ought to have followed the procedure and given opportunity of hearing to the petitioner. But without doing so the order under Annexure-1 has been passed which also non-speaking one.

4. Mr. Subham Sharma, learned counsel appearing for opposite party no.3 contended that opposite party-OMDC issued the tender notice under Annexure-2 in company’s website on 17.03.2023 and also published the same in daily English Newspaper “The Times of India” and Odia Daily “The Samaj” for maintenance of security services at different premises of OMDC. The petitioner was declared as L-1 bidder in all the five tenders for a contract period of one-year with effect from 01.05.2023. The present writ petition relates to Tender Notice No. OMD/Mines/Pers./

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