1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH JAIPUR ORDER S.B.CIVIL WRIT PETITION NO.3789/2001 M/s.Sikander Ali Zolawat Versus The State of Rajasthan and others DATE OF ORDER --- April 15,2010 PRESENT HON’BLE MR.JUSTICE PREM SHANKER ASOPA Mr.Ashok Mishra, for the petitioner Mr.Shyam Arya, for the Municipal Corporation Mr.K.K.Chhawal on behalf of Mr.SR Surana, for the Intervener BY THE COURT (1) By this writ petition, the petitioner has challenged the order dated 12.6.2001 (Anx.10) whereby the petitioner has been black-listed by the Municipal Corporation, Jaipur. (2) Briefly stated, the facts of the case, are that after completion of the tender process for transportation and lifting the garbage in Hawamahal Zone, Jaipur, the petitioner firm was given work order dated 3.7.2000 (Anx.1), for a period of one year, on the terms and conditions mentioned in the tender notice, out of which one was that the period of the work contract could be extended by another one year. The period of the work order given to the petitioner was to expire on 3.7.2001. However, the same was curtailed to 15.9.2000, against which the petitioner filed a civil suit in the court of Additional Civil Judge (Junior Division) No.4, Jaipur City, Jaipur, wherein interim injunction was passed in favour of the petitioner. It is also stated in the writ petition that the Municipal Corporation issued a show cause notice dated 26.5.2001 to the petitioner on the ground that the petitioner was not removing the garbage in time with the further notice that its name would be black listed and the work will be got done at the risk and cost of the petitioner. The petitioner submitted 2 reply to the said show cause notice denying the allegations made therein and further stated that the notice was vague and it had not been mentioned as to which clause of the terms and conditions of the tender has been violated. The petitioner further submitted that payment of the bills for five months had been withheld and on 28.5.2001 inspection was carried out and it was found that the garbage had been removed and there was no violation of any terms and conditions of the contract. The petitioner also referred to the grant of injunction in the civil suit. The petitioner then mentioned the fact that it had discharged its contractual obligation with honesty, labour and truthfulness, with the further prayer that its bills may be released. Subsequently, the Ward Members have also found that there was no negligence on the part of the petitioner in the matter of removing the garbage. The said documents are on record of the writ petition. It is then stated in the writ petition that the order of back listing the petitioner has been passed without providing the petitioner an adequate opportunity of hearing and without giving any reason, therefore, the same is violative of the principles of natural justice and arbitrary. (3) Municipal Corporation has filed reply to the writ petition and affirmed the contents of the notice with the further averment that the work of the petitioner was not satisfactory. (4) This Court passed interim order on 7.8.2001 whereby it was directed that the operation of the order dated 12.6.2001 shall remain stayed. (5) Counsel for the petitioner stated at the Bar that during the pendency of the aforesaid interim order, the petitioner has also performed other work order of the Municipal Corporation satisfactorily. (6) Submission of counsel for the petitioner is that the petitioner was not provided adequate opportunity and the Municipal Corporation has also not taken into consideration the letters of the Ward Members wherein they have expressed their satisfaction and further in the order of black listing the 3 petitioner, no reason has been assigned. In support of his submissions, counsel for the petitioner placed reliance on the following judgments: 1. Joseph Vilangandan V. The Executive Engineer & others AIR 1978 SC 930 Para 17 2. Raghunath Thakur V. State of Bihar and others (AIR 1989 SC 620) Para 4 3. M/s.Southern Painters V. Fertilizers & Chemicals Travancore Ltd. and another AIR 1994 SC 1277 Para 9 (7) Submission of counsel for the respondents is that the petitioner was negligent in due performance of the contract and there is no document except the notice on which the petitioner has been blacklisted. (8) I have gone through record of the writ petition and further considered the rival submission of counsel for the parties. (9) Before, proceeding further, it is relevant to reproduce the relevant paras of the aforesaid judgments. The same are as under: Joseph Vilangandan V.The Executive Engineer & others AIR 1978 SC 930 Para 17 “17. The majority judgment of the Kerala High Court, inasmuch as it holds that a person is not entitled to a hearing, before he is blacklisted, must be deemed to have been overruled by the decision of this Court in Erusian Equipment (AIR 1975 SC 266) (ibid) wherein it was held (at page 269): "fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the blacklist." Controversy in the instant case, therefore, narrows down into the issue, whether such an opportunity was given to the appellant. Answer to this question will turn on an interpretation of the notice, dated April 17, 1968 (Ex. P-8) given by the Executive Engineer to the appellant. This notice has been extracted in a foregoing part of this judgment. The material sentence therein is: "You are, therefore, requested to show cause .... why the work may not be arranged otherwise at your risk and loss, through other agencies after debarring you as a defaulter.......”The crucial words are those that have been underlined. They take their color from the context. Construed along with the links of the sentence which precede and succeed them, the words "debarring you as a defaulter", could be understood as conveying no more than that an action with reference to the contract in question, only was under contemplation. There are no words in the notice which could give a clear intimation to the addressee that it was proposed to debar him from taking any contract, whatever, in future under the. department. A perusal of the appellant's reply (Ex. P-7), dated May 20, 1968, sent to the Executive Engineer, also appears to show that 4 by the word "debarring" mentioned in the Executive Engineer's letter dated April 17, 1968 (Ex. P-6), he understood as debarring him from executing the contract in question after declaring him a defaulter, and then getting the same work done by other agencies, at his risk and loss. All that has been said in Ex. P-7 by the appellant is directed to justify that the non-execution of the contract was not due to his fault, but due to the delay on the part of the department in handing over the building to him for starting the work within the time specified in the agreement, and consequently, if any loss would be incurred by the department in getting the work done through any other agency, he would not be liable to make good the same. In short, the letter (Ex.P-6) dated April 17, 1968 from the Executive Engineer, did not give any clear notice to the appellant that action to debar him from taking in future any contract, whatever, under the department or its Ernakulam Division was in contemplation. The appellant was thus not afforded adequate opportunity to represent against the impugned action. This being the position, the rule in Erusian Equipment's case (ibid) (AIR 1975 SC 266) will be attracted with full force. While conceding that the State can enter into contract with any person it chooses and no person has a fundamental right to insist that the Government must enter a contract with him, this Court observed (in the said case at p.269): "Black-listing has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the black list." (emphasis supplied) Raghunath Thakur V.State of Bihar and others (AIR 1989 SC 620) Para 4 “4.Indisputably, no notice had been given to the appellant of the proposal of blacklisting the appellant. It was contended on behalf of the State Government that there was no requirement in the rule of giving any prior notice before blacklisting any person. In so far as the contention that there is no requirement specifically of giving any notice is concerned, the respondent is right. But it is an implied principle of the rule of law that any order having civil consequences should be passed only after following the principles of natural justice. It has to be realised that blacklisting any person in respect of business ventures has civil consequences for the future business of the person concerned in any event. Even if the rules do not express so, it is an elementary principle of natural justice that parties affected by any order should have right of being heard and making representation against the order. In that view of the matter, the last portion of the order in so far as it directs blacklisting of the appellant in respect of future contracts, cannot be sustained in law. In the premises, that portion of the order directing that the appellant be placed in the blacklist in respect of future contracts under the Collector is set aside....” 5 M/s.Southern Painters V.Fertilizers & Chemicals Travancore Ltd. and another AIR 1994 SC 1277 Para 9 “9. The deletion of the appellant's name from the list of approved contractors on the ground that there were some vigilance report against it, could only be done consistent with and after the compliance of the principls of natural justice. That not having been done, it requires to be held that withholding of the tender form from the appellant was not justified. In our opinion, the High Court was not justified in dismissing the writ petition.” (10) A perusal of the aforesaid judgments would reveal that adequate opportunity of making representation is to be given to the contractor before black listing him and the principle of natural justice would also apply. (11) In this particular case, the petitioner denied the allegations for black listing it. Moreover, explanation of the petitioner was not considered nor the dis-satisfaction was expressed in the black-listing order dated 12.6.2001, and further the report of the Ward Members was also not considered, therefore, the order of black-listing dated 12.6.2001 is arbitrary and the same is violative of the principles of natural justice. Therefore, the same is liable to be quashed and set aside. Since the period of the contract is over, therefore, no purpose will be served in remanding the case. (12) Accordingly, the writ petition is allowed and the impugned order dated 12.6.2001(Anx.10) is quashed and set aside. (Prem Shanker Asopa) J. गोpa ल