IN THE HIGH COURT OF MADHYA PRADESH
Vijay Kumar Shukla and Duppala Venkata Ramana, JJ
Archon Powerinfra India Ltd. v. State of M.P.
Writ Petition No. 39164 of 2024 (I); Decided on 20.12.2024*
Natural Justice -- termination of contract for construction of building -- reply to show cause notice not considered on ground of it being doubtful -- petitioner company blacklisted for indefinite period -- order of blacklisting passed in arbitrary manner and in violation of principles of natural justice -- quashed. (1975) 1 SCC 70, (1989) 1 SCC 229, (2005) 6 SCC 321, (2006) 11 SCC 548 and (2014) 12 SCC 731 referred to. [Paras 9 & 10]
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ORDER
Per: Justice Vijay Kumar Shukla
1. The present petition is filed under Article 226 of the Constitution of India, challenging the order of blacklisting dated 24.10.2024, whereby the petitioner has been blacklisted for the remaining period of his registration for which PWD Contractor registration certificate bearing No.PWD230067007 of the petitioner is valid i.e. till 4.9.2033.
2. This is second round of litigation. The petitioner earlier filed a Writ Petition No.16956/2024, challenging the order dated 7.6.2024 by which the contract awarded to the petitioner for construction of building of new District Court at Pipliyahana, Indore was terminated and the petitioner was blacklisted for indefinite period and the registration of the petitioner Company was cancelled. He further challenged NIT dated 26.7.2024 issued by respondent for construction of balance work of new District Court building at Pipliyahana, Indore. The said petition was entertained only in respect of challenge to the order of blacklisting and the order of blacklisting dated 24.10.2024 (Annexure P-22) was quashed. The petitioner was granted 15 days' time to submit reply to the show cause notice dated 12.6.2024 and competent authority was directed to consider the reply and after affording opportunity of hearing to the petitioner to pass appropriate order in accordance with the law.
3. Learned counsel for the petitioner submits that after the said judgment, the petitioner submitted a reply on 20.9.2024 from official e-mail of the Company to the respondent. He received a mail on 23.9.2024 vide Annexure P-33 from the respondent asking the petitioner to submit an explanation whether the reply submitted on 20.09.2024 from the petitioner Company is filed and signed by authorised representative of the Company or not. The petitioner sent reply through e-mail stating that reply is sent on the letter head and contains the seal of the company and is sent from the official mail ID of the Company. Hence, the reply has been filed with due authority. It is further argued that other mails of similar nature were also sent to the concerned respondent. However, respondent No.3 passed an ex parte order of blacklisting on 24.10.2024 for the remaining period of registration of the petitioner as contractor with the department. The said order has been passed without considering the reply filed by the petitioner on the ground that the petitioners have not clarified whether the reply has been submitted by authorised representative or not and no one appeared on behalf of the petitioner on the date fixed by the department.
4. Learned counsel for the respondent supported the impugned order and stated that after the mail sent on 20.9.2024, another mail was received on 21.9.2024 stating to consider this e-mail as a reply to the show cause notice and ignore the mail dated 20.9.2024 as there were clerical mistakes in it. Since the petitioner has neither filed a copy of the said e-mail nor made reply attached thereto in the instant petition, which amounts to material suppression. Thus on this ground, the petition deserves to be dismissed.
5. It is further argued that on the date fixed for hearing, no representative of the petitioner appeared, therefore, the competent authority proceeded ex parte and passed the impugned order of blacklisting of the petitioner.
6. After hearing learned counsel for the parties, it is pellucid that the petitioner had sent his reply to the official e-mail ID of the respondent on 20.9.2024, in compliance with the order of this Court, which is not disputed by the respondents. However, the respondents have taken a stand that they received an another mail i.e. on 21.09.2024 requesting them to consider it as the reply to the show cause notice and ignore the earlier mail sent on 20.9.2024, therefore, the authority without considering the reply, passed the order of blacklisting. A further stand has been taken that the petitioner did not clarify whether the reply was signed by the a
Indefinite blacklisting without defined duration and proper procedural fairness is arbitrary, violating natural justice principles and requiring a clear basis for such action.
Blacklisting or debarment cannot be permanent and must be preceded by a specific show cause notice, complying with the principles of natural justice.
The main legal point established in the judgment is the requirement for a fair hearing, specific show cause notices, and proportionate punishment before imposing blacklisting in government contracts.
The penalty of blacklisting must be proportionate to the offense and should not be imposed arbitrarily.
The requirement of specific show cause notice before imposing penalties such as blacklisting, and the need to follow principles of natural justice in taking adverse actions against entities.
The judgment emphasizes the importance of fair play, natural justice, non-discrimination, equality, reasonableness, and proportionality in the process of blacklisting, and the need for a valid, parti....
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