IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) SATURDAY, THE SIXTH DAY OF SEPTEMBER TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE GODA RAGHURAM WRIT PETITION NO : 15709 of 2008 Between: M/s.New Hyderabad Medak Transport Fleet Owners & Transport Contractors, A Partnership Firm having their address at Shop No.5-2-200/A/51,New Osman Gunj Hyderabad, rep.by Managing partner Sri Md.Jaweed Ahmed ..... PETITIONER AND 1 The Government of AP., rep.by the Secretary (Civil Supplies) Dept., secretariat, Hyderabad 2 The AP STate Civil Supplies Corpn.Ltd., Regd.office at 6-3- 655/1/A, CS Bhavan, Somajiguda, Hyderabad rep.by the Vice Chairman and Managing Director .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Aﬃdavit ﬁled herein the High Court will be pleased to to issue a writ order or a direction in the nature of mandamus or otherwise declaring the action of the 2nd respondent in proceeding to forfeit the E.M.D. amount of Rs.2.50 lakhs deposited by the petitoner and also blacklisting the petitioner vide his proceedings bearing No.PDS.8/MOVGT (P.Oil).5(9)/6179/2008-09 dated 11.6.2008 as illegal, arbitrary, one sided unreasonable unjust discriminatory and as such declare the same as unenforcebale and set aside the same and be pleased to pass Counsel for the Petitioner:MR.MPAPA REDDY Counsel for the Respondent No.: GP FOR CIVIL SUPPLIES The Court made the following : THE HON’BLE SRI JUSTICE GODA RAGHURAM W.P.No. 15709 of 2008 Oral Order: Heard the learned counsel for the petitioner, the learned Government Pleader for Civil Supplies Corporation for 1st respondent and Sri D. Linga Rao, the learned standing counsel for the 2nd respondent- Corporation. The writ petition is ﬁled assailing the proceedings of the 2nd respondent dated 11-06-2008 whereby and whereunder, in purported exercise of the entitlement under Clauses 6 and 10 of the orders appointing the petitioner as the handling and transport contractor of Palmolien Oil Pouches in Cartons from Kakinada to various MLS Points in the Districts in Zone-8 for the year 2008-09, the 2nd respondent forfeited the sum of Rs.2,50,000-00 furnished by the petitioner at the time of ﬁling tender and has also blacklisted the petitioner and its partners from participating in the tenders of the A.P. State Civil Supplies Corporation Limited in future. The 2nd respondent notiﬁed calling for tenders for awarding of contracts for transporting Palmolien Oil Pouches in cartons to various MLS points in the districts in the State, zone wise for the year 2008-09 for the period 01-06-2008 to 31-05-2009. Responding to such notiﬁcation, the petitioner submitted its tender. After negotiations, the petitioner agreed on 02-06-2008 to a rate at Rs.1,091-00 per KL on par with the Lorry Union Rates at Kakinada, to transport the Palmolien Oil Pouches and to execute the contract. The 2nd respondent by the proceedings dated 06-06-2008 appointed the petitioner herein as a Transport Contractor for the Districts of Zone VIII, for the year 2008-09. The petitioner was required under the terms of appointment to enter into an agreement in the prescribed form within three days by furnishing R.C. Books for six (6) vehicles and a bank guarantee for a sum of Rs.14,00,000-00 in the speciﬁed format, within fourteen (14) days from the date of receipt of the order of appointment. According to the petitioner, the proceedings dated 06-06-2008 appointing the petitioner were issued after an abnormal increase of the prices of ‘diesel’. As the petitioner found it inconvenient to execute the contract in view of the increase in the price of ‘diesel’, it addressed a representation dated 07-06-2008 to the 2nd respondent. In reply thereto, the 2nd respondent by the letter dated 10-06-2008 informed the petitioner that if the petitioner fails to enter into the agreement by 5-00 P.M. on 10-06-2008, the award of the contract would be cancelled besides forfeiture of the Earnest Money Deposit, collection of liquidated damages and blacklisting the ﬁrm along with the partners without any further notice. A day later, on 11-06-2008, the impugned order was issued. Whether under the terms of the agreement which led to the issuance of the appointment order dated 06- 06-2008 by the 2nd respondent, the A.P. State Civil Supplies Corporation may forfeit the Earnest Money Deposit and whether the circumstances of the case justify such forfeiture are issues that do not fall within the domain of public law, as the disputes pertain to interpretation of the terms of a non-statutory contract v ide M/s. Radhakrishna Agarwal v. State of Bihar1. These disputes are more appropriately resolved within the architecture of an arbitration clause which exists in the contract entered into between the parties. Insofar as the order of blacklisting is concerned, the impugned order has been issued on 11-06-2008. The petitioner was denied adequate and reasonable opportunity for responding to the proposal to blacklist vide the show cause notice dated 10-06-2008. Blacklisting impacts the petitioner with adverse civil consequences over an extended period of time and disentitles the petitioner to enter into a meaningful contractual relationship with the 2nd respondent which is a State within the meaning of Article 12 of the Constitution of India. No such deprivation of the beneﬁts of a relationship with an Instrumentality of the State could be visited on a citizen or an institution without following the due process of law which involves the aﬀording of a reasonable opportunity in compliance with the well settled principle of natural justice – audi alteram partem. The law in this regard is settled by a decision of the Supreme Court in E.E. & C. Ltd., v. State of W.B. 2. In the light of the law declared, the decision of the 2nd respondent contained in the impugned order dated 11-06-2008 to the extent the petitioner-ﬁrm is blacklisted and barred from participating in any tenders of Andhra Pradesh State Civil Supplies Corporation Limited in future is declared invalid. The 2nd respondent’s order dated 11-06-2008 is accordingly set aside to the extent the order directs blacklisting of the petitioner/ﬁrm and bars the petitioner/ﬁrm from participating in any future tenders of the A.P. State Civil Supplies Corporation Limited. In respect of the forfeiture of the Earnest Money Deposit and cancellation of the contract, since they are presumptively in terms of the contractual conditions entered into between the parties; since the contract is non-statutory in character; and since the petitioner has a remedy by way of an arbitral process, the petitioner is relegated to pursue such remedies or any other remedies available under law, other than under Article 226 of the Constitution of India. Granting such a liberty, the writ petitioner is disposed of reiterating that the order of the 2nd respondent dated 11-06-2008 to the extent the petitioner-ﬁrm is blacklisted is unsustainable and quashed. No costs. ____________________ GODA RAGHURAM, J Dated: 06-09-2008 Pvks 1 AIR 1977 SC 1496 2 AIR 1975 SC 266