IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE TWENTY SIXTH DAY OF MARCH TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE NOOTY RAMAMOHANA RAO WRIT PETITION NO : 4505 of 2008 Between: M/s. V.L.N. Fabricators, rep. by its Proprietor Mr. D.V.V. Satyanarayana, S/o. D. Ramakrishna, R/o. D.No.27-3-94, Official Colony, Srinagar, Gajuwaka, Visakhapatnam-26. ..... PETITIONER AND 1 Hindustan Ship Yard Limited, a Government of India undertaking, rep. by its Managing Director, Gandhigram, Visakhapatnam-530 005. 2 The Executive Engineer (i/c CM), Yard Civil Main Department, Hindustan Ship Yard Limited, Gandhigram, Visakhapatnam. .....RESPONDENTS 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 issue writ order or direction more particularly one in the nature of writ of mandamus, to declare the impugned order dt. 27.11.2007 bearing No.SE(M)/CONT/8398 on the file of the 2nd respondent in terminating the contract work and black listing the petitioner firm as illegal, arbitrary, unconstitutional and violative of the principles of natural justice and consequently set aside the same by directing the respondents to settle the claim of the petitioner firm, and to grant such other relief or reliefs Counsel for the Petitioner:MR.CH.SHASHI BHUSHAN Counsel for the Respondents: MR.P.NAGESWAR SREE The Court made the following : O R D E R: Though this writ petition has been instituted seeking to question the validity of the orders passed on 27-11-2007 by the second respondent terminating the contract awarded in favour of the writ petitioner-firm and simultaneously blacklisting it, but a memo on behalf of the writ petitioner-firm has been moved on 04-03-2008 restricting the relief sought for in the writ petition to the extent of blacklisting the writ petitioner-firm through the impugned order. The facts, to the extent they are not in dispute, are that: The writ petitioner-firm had been awarded a work by the first respondent-Hindustan Ship Yard Limited for execution and certain disputes between the parties have arisen with regard to the time span of the execution of the work as well as the quality of execution thereof. A notice has been issued on 10-11-2007 calling upon the writ petitioner to commence the balance of work which remained unexecuted and complete all the pending works within 15 days failing which the Hindustan Ship Yard will be constrained to determine the contract and get the rectification works and balance works executed at the risk and cost of the writ petitioner and other consequences provided in the contract. But, however, through the impugned order dated 27-11-2007 while determining the contract, the first respondent had proposed to get the balance works executed at the risk and cost of the writ petitioner and the writ petitioner-firm is also straightaway blacklisted. Heard Sri Ch.Shashi Bhushan, learned counsel for the writ petitioner and Sri P.Nageswar Sree, learned Standing Counsel for the Hindustan Ship Yard Limited. In view of the memo filed on 04-03-2008 by the learned counsel on behalf of the writ petitioner, the only question that requires to be considered by this Court is whether the first respondent-Hindustan Ship Yard Limited is justified in blacklisting the writ petitioner-firm through the impugned order without providing any opportunity whatsoever for it to offer its explanation or its side of the story in that regard. The law on this aspect has been fairly settled and crystallized through the judgments rendered by the Supreme Court in a catena of cases including the cases in Erusian Equipment & Chemicals Limited vs. State of West Bengal[1], Joseph Vilangandan vs. The Executive Engineer, (PWD), Ernakulam[2] and Raghunath Thakur vs. State of Bihar[3]. It is only appropriate to notice what the Supreme Court has pointed out in paragraph 18 of the judgment rendered in Joseph Vilangandan’s case (2 supra), which reads:- “This being the position, the rule in Erusian Equipment’s case (ibid) 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 into a contract with him, this Court observed (in the said case) (SCC p.75, para 20): Blacklisting 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.” This principle enunciated by the Supreme Court holds good in its entirety in the present case. The impugned order to the extent of blacklisting the writ petitioner-firm cannot be sustained and consequently to that extent it is liable to be set aside and accordingly it is set aside. The writ petition stands allowed to the extent indicated above. No costs. ________________________ NOOTY RAMAMOHANA RAO,J Dated 26th March, 2008 Note: Issue C.C by tomorrow (b/o) vrn .... REGISTRAR // TRUE COPY // SECTION OFFICER To 1 Hindustan Ship Yard Limited, a Government of India undertaking, rep. by its Managing Director, Gandhigram, Visakhapatnam-530 005. 2 The Executive Engineer (i/c CM), Yard Civil Main Department, Hindustan Ship Yard Limited, Gandhigram, Visakhapatnam. 3 2CD copies Form-NIC-OGS/WP{MSN} [1] (1975) 1 Supreme Court Cases 70 [2] (1978) 3 Supreme Court Cases 36 [3] (1989) 1 Supreme Court Cases 229