CWP No. 506 of 2011 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No. 506 of 2011 Date of Decision: 30.8.2011 M/s Tarpaulins India Tarp (P) Ltd. and another ....Petitioners. Versus State of Haryana and others ...Respondents. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL, ACTING CHIEF JUSTICE. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. P.S. Jammu, Advocate for the petitioners. Mr. Vinod S. Bhardwaj, Additional Advocate General, Haryana, for respondents No.1 and 2. AJAY KUMAR MITTAL, J. 1. In this petition filed under Articles 226/227 of the Constitution of India, the petitioner has prayed for setting aside the order dated 5.10.2010 (Annexure P-8) passed by respondent No.1 vide which the petitioners and respondent No.3, i.e. firm and the directors of the firm, have been blacklisted permanently from doing the business with the Haryana Government. 2. Petitioner No.1-firm is a manufacturer of tarpaulins and are supplying the tarpaulins to various Government Undertakings. 90% business of the petitioners are based on tenders of the Government Undertaking as the tarpaulins are being used by the godowns to cover CWP No. 506 of 2011 -2- the wheat and rice. Respondent No.2 published a tender notice for supply of tarpaulins in the State of Haryana. In pursuance thereof, the petitioners submitted the tender along with earnest money. The petitioners' firm was selected as tenderer but no intimation was given to them and, therefore, they could not comply with the conditions of the tender including the deposit of security. However, on 31.3.2008, the petitioners received a letter from the respondents informing that they had failed to deposit security within the stipulated time and, therefore, the security paid by way of earnest money was forfeited. The petitioners filed reply to the said letter praying therein that the security amount be not forfeited. Thereafter, the firm received a show cause notice dated 20.5.2008 for blacklisting the firm on account of non- depositing of the security. The petitioners filed a detailed reply to the said show cause notice. The petitioners vide letter dated 11.8.2008 requested the respondents for a date of meeting. Respondent No.1 vide impugned order dated 5.10.2010 without affording an opportunity of hearing blacklisted petitioner No.1-firm as well as petitioner No.2 and performa respondent No.3 in their personal capacity permanently from doing the business with Haryana Government. Hence, the present writ petition. 3. The claim of the petitioners has been controverted by the respondents by filing a written statement. It was pleaded that the first three lowest valid bidders including the petitioners' firm were requested to depute their representatives for negotiations before the High Powered Purchase Committee (HPPC) scheduled for 11.3.2008 through fax dated 7.3.2008. As per the HPPC, the acceptance letter CWP No. 506 of 2011 -3- was issued to the firm of the petitioners vide registered letter dated 18.3.2008 asking them to deposit security amounting to Rs.7,20,000/- within 10 days from the date of issuance of letter. It was also mentioned in the said letter that on failure to deposit the security, the earnest money would be forfeited by the Government as per the terms and conditions of the tender. Having failed to deposit the security within the stipulated period by the petitioners, the earnest money was forfeited vide letter dated 31.3.2008. Subsequently, letter dated 18.3.2008 which had been issued to the petitioners was received back on 4.4.2008 with the remarks “unclaimed window delivery”. According to the State, the petitioners had intentionally and deliberately avoided the receipt of the acceptance letter. Having failed to deposit security amount, respondent No.2 moved to respondent No.1 recommending blacklisting of the firm along with its directors. Thereafter, respondent No.1 issued a show cause notice dated 23.7.2008 to the petitioners to explain their position within 15 days from the date of issue of the letter as to why penal action of permanently blacklisting their firm along with its Directors from doing business with the Haryana Government be not taken against them. The firm vide its letter dated 1.8.2008 submitted its reply to the State Government. Accordingly, impugned order dated 5.10.2010 declaring petitioner No.1-firm as well as petitioner No.2 and respondent No.3, Directors of the firm as blacklisted permanently from doing the business with the Haryana Government was passed by respondent No.1. 4. We have heard learned counsel for the parties. 5. Learned counsel for the petitioners submitted that the CWP No. 506 of 2011 -4- blacklisting of a commercial firm has a serious civil consequences and at the same time it affects the reputation of the firm. The State is expected to proceed with care and responsibility before blacklisting any firm as it is a drastic step to be taken against a person. By blacklisting, the petitioners' right has been taken away arbitrarily to submit tenders in future without any fault. According to the learned counsel, the order dated 5.10.2010 permanently blacklisting the petitioners and respondent No.3 was in violation of principles of natural justice as no opportunity of hearing had been provided to them. Moreover, as per doctrine of proportionately which is a facet of fair procedure and non arbitrariness, period of blacklisting has to be proportionate to alleged default and permanent blacklisting can only be for extreme default. Since there is no consideration on this aspect, the matter may be remitted for reconsideration. 6. Faced with this submission, learned counsel for the State stated that the respondents shall pass a fresh order after considering view point of the petitioners on this aspect. 7. In view of the above and without expressing any opinion on the merits of the case, we dispose of the writ petition with a direction to respondent No.1 to pass a fresh order in accordance with law after affording an opportunity of hearing to the petitioner within a period of two months from the date of receipt of a certified copy of this order. (AJAY KUMAR MITTAL) JUDGE August 30, 2011 (ADARSH KUMAR GOEL) gbs ACTING CHIEF JUSTICE