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2023 Supreme(Ori) 398

ORISSA HIGH COURT: CUTTACK
B.R.SARANGI, MURAHARI SRI RAMAN, JJ.
M/s Ecometrix Consultants Pvt. Ltd. and another - Petitioners
Versus
Bhubaneswar Development Authority, BBSR and others - Opp. Parties
W.P.(C) No. 33871 of 2022
Decided On : 08-08-2023

Advocate Appeared:
For the Petitioners:Ms. Mamata Tripathy, Advocate
For the Opp. Parties :M/s. Sanjib Swain and A.K. Mishra, Advocates

Blacklisting without notice constitutes a violation of the principles of natural justice, requiring fair opportunity for the affected party to present their case.

Headnote:(A) Orissa Development Authorities Act, 1982 - Article 14 of the Constitution of India - Principles of natural justice - Blacklisting of a company - Cancellation of Letter of Award on grounds of failure to fulfill conditions - Action found arbitrary and unreasonable as no notice was issued to the petitioner company; the order of blacklisting lacks justification and was passed without any execution of agreement. (Paras 27 and 34)

(B) Principles of Natural Justice - The duty to act fairly - Essential requirement that parties be given an opportunity to defend themselves before being blacklisted or banned from participation in future contracts. (Paras 9 and 36)

Facts of the case:
The petitioner company, engaged in professional services, was selected as the Survey Agency for BDA’s project but failed to sign the agreement or submit requisite performance security within stipulated time. As a result, they were blacklisted without notice.

Findings of Court:
The court ruled that the blacklisting of the petitioner was arbitrary and violated principles of natural justice, given that no agreement was executed and no notice of show cause was provided prior to the blacklisting.

Issues: The court addressed whether the authority’s action was justified and whether principles of natural justice were violated in blacklisting the petitioner without notice.

Ratio Decidendi: The court held that a party must be given a fair chance to respond before actions resulting in blacklisting are taken, reaffirming the necessity of adhering to natural justice even in administrative decisions.

Result: Writ petition allowed; blacklisting order quashed.

Table of Content
1. background of the petitioners and the rfp process. (Para 1 , 2)
2. petitioner argues against arbitrary cancellation and blacklisting. (Para 3 , 4)
3. court reviews procedural fairness and principles of natural justice. (Para 5 , 6 , 7 , 8)
4. natural justice principles in administrative actions. (Para 9 , 19)
5. court emphasizes need for proportionality in administrative actions. (Para 25 , 26 , 27 , 28)
6. court discusses necessity of show cause notice prior to blacklisting. (Para 31 , 33)
7. court quashes illegal blacklisting and restores contract. (Para 34)

Judgment :

DR. B.R. SARANGI, J.

M/s Ecometrix Consultants Pvt. Ltd., a company registered under the Companies Act, 2013, as petitioner no.1, and the Manager (Finance) of the said company, as petitioner no.2, have filed this writ petition seeking to quash the letter dated 21.10.2022 under Annexure-5, by which the Letter of Award for selection of Survey Agency issued in favour of the petitioner no.1- company, vide letter dated 13.09.2022, has been cancelled/terminated, since petitioner no.1-company failed to fulfill the terms and conditions, as mentioned in sl. nos.3 and 4 of the above Letter of Award along with the conditions stipulated in Clause-13 of the Request for Proposal (RFP), within stipulated date and time, and the petitioner no.1-company has been blacklisted and banned for at least 3 years to be employed anywhere in the authority works with a warning not to submit any proposal, as Survey Agency, with Bubaneswar Development Authority (BDA) in future, otherwise the same would be rejected.

2. The factual matrix of the case, in a nutshell, is that petitioner no.1, as a consulting company, was established in the year 2015 for providing professional services in GIS, ITES, Water, Environmental and Social Sectors and, as such, petitioner no.1-company has adequate knowledge and experience in providing the same. Therefore, it is empanelled with Odisha Remote Sensing Space Application Centre (ORSAC) and Maharastra Remote Sensing Space Application Centre (MRSAC) along with other Government bodies, such as, Town and Country Planning Authority, Rural Water Supply and Sanitation Organization, Odisha Public Health Engineering Department, Odisha, Bhubaneswar Development Authority, Odisha, etc. and being engaged in various projects of different organizations, the petitioner no.1-company has completed the assignments/ works in time. Apart from the same, many of the works are ongoing in different organizations.

2.1 Opposite party no.1-BDA, which was constituted under the Orissa Development Authorities Act, 1982, and functioning under the control and supervision of the Department of Housing and Urban Development, Govt. of Odisha, issued a Request for Proposal (RFP) on 29.07.2022. In response to the same, the petitioner no.1-company applied for selection of Survey Agency for survey and field verification of land parcels for land demarcation of various plots of land with BDA. Such RFP contained two bid systems, viz., technical and financial. As per the RFP, the date of availability of RFP document was 20.08.2022, the date and time of pre- bid meeting was fixed to 03.08.2022 at 4.00 P.M. in the Conference Room, BDA, Akash Shobha Building, Sachivalaya Marg, Bhubaneswar, the last date and time for receipt of proposals was fixed to 22.08.2022 till 3.00 P.M., place of submission of proposals was before the Secretary, BDA, Akash Shobha Building, Sachivalaya Marg, Bhubaneswar and the date and time for opening of technical proposal was fixed to 24.08.2022 at 4.00 P.M. In adherence to the conditions of the RFP, petitioner no.1- company submitted its bid, which was considered and intimation was sent to the petitioner no.1-company, vide letter dated 13.09.2022, that it was selected as L-1 to undertake survey work as per RFP dated 29.07.2022 and was issued with Letter of Award (LoA) of even date along with format of performance guarantee agreement. Thereafter, the petitioner no.1-company

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