THE HON'BLE SRI JUSTICE A.ABHISHEK REDDY
WRIT PETITION No. 23316 of 2019
ORDER:
The case of the petitioner is that he being Class-III Civil Contractor had participated in the e-tender Notification with tender ID No. 138226, vide tender Notice No. MCA/E/21/4/2019-20 for the repair works to underground drainage Sewer pipelines and manholes in Ameenpur Municipality. In all, three bidders, including the petitioner, were qualified in tender for approval to open price bid and they had also submitted the relevant hard copies. But, the respondent No. 3, the Ameenpur Municipality, with an erroneous observation that the tenderers had not submitted the hard copies, proceeded to recall the tender. However, in the process of making the entries in the computer record, instead of making the entries as 'recalling the tender', it is entered as the 'L1 bidder is blacklisted'. Thus, having noticed the mistake committed by the respondent No. 3 in blacklisting the petitioner's name, a request was made to the authorities to rectify the said mistake. As a result, the respondent No. 3 addressed a letter in Lr.No. E1/Digitalkey/2019-20, dated 11.10.2019 to the respondent No. 2, the Principal Secretary, Information Technology, Electronics and Communications Department with a request to delete the name of the petitioner from the blacklist and activate the petitioner's Digitalkey number and user ID. Complaining that no action has been taken so far, the present writ petition is filed by the petitioner.
Heard the learned counsel for the petitioner, the learned Government Pleader for Municipal Administration and Urban 2 Development for respondent Nos. 1 and 2, and Sri N.Praveen Kumar, the learned Standing Counsel for respondent No. 3. Perused the material available on record.
As seen from the record, the municipal officials themselves have withdrawn the tenders due to some technical defect. Due to the mistake committed by a technical staff, a wrong entry has been made and the respondent No. 3 has also addressed a letter to that effect. Even though the letter is addressed to the respondent No. 2 on 11.10.2019, still no action has been taken. This Court, time and again, has held that blacklisting of a contractor cannot be done at the drop of a hat, but it should be the last resort for punishing any contractor/tenderer.
The law with regard to blacklisting of any firm is well established by a catena of decisions. The Hon'ble Supreme Court in Erusian Equipment & Chemicals Ltd. v. State of West Bengal1, at para Nos. 12, 15 and 20, has held as under:
"12. ... The order of blacklisting has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is unable to enter into advantageous relations with the Government because of the order of blacklisting. A person who has been dealing with the Government in the matter of sale and purchase of materials has a legitimate interest or expectation. When the State acts to the prejudice of a person it has to be supported by legality.
15. ... The blacklisting order involves civil consequences. It casts a slur. It creates a barrier between the persons blacklisted and the Government in the matter of transactions. The black lists are instruments of coercion.
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 blacklist."
1 AIR 1975 SC 266 3 Similarly, the Apex Court in Raghunath Thakur v. State of Bihar2 struck down an order of blacklisting for future contracts on the ground of non-observance of the principles of natural justice. The relevant extract of the judgment in that case is as follows:
"4. ... 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 consequence 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 representations against the order."
In Gorkha Security Services v. Government (NCT of Delhi)3, the Hon'ble Supreme Court has described blacklisting as being equivalent to the civil death of a person because blacklisting is stigmatic in nature and debars a person from participating in government tenders thereby precluding him from the award of government contracts. It has been observed thus:
"16. It is a common case of the parties that the blacklisting has to be preceded by a show-cause notice. Law in this regard is firmly grounded and does not even demand much amplification. The necessity of compliance with the principles of natural justice by giving the opportunity to the person against whom action of blacklisting is sought to be taken has a valid and solid rationale behind it. With blacklisting, many civil and/or evil consequences follow. It is described as "civil death" of a person who is foisted with the order of blacklisting. Such an order is stigmatic in nature and debars such a person from participating in government tenders which means precluding him from the award of government contracts."
In the case on hand, as observed above, absolutely no reason, to blacklist the name of the petitioner, has been pointed out by the respondents. In fact, in the letter, dated 11.10.2019, addressed to the respondent No. 2, the respondent No. 3 clearly stated as under:-
"The tender is participated by their agencies. All their agencies are qualified in tender hence take approval to open price 2 1989 (1) SCC 229 3 (2014) 9 SCC 105 4 bid, and price bid is also named. Hard copies are not submitted by the agencies. So, we want to recall the tender by respecting the L1-Bidder. But in the place of recall the bidder went to block list.
Hence, we are requesting you to remove the concerned Agency from block list & activate the tenderer digital key No. AFSPD8834J, User ID:darpally."
(Verbatim reproduced) Thus, in the said letter, the municipal authorities have clearly admitted of their mistake while making the entries in the computer record. Having regard to the fact that the municipal authorities themselves have written a letter to the Government to the effect that the tenders were already withdrawn due to the technical glitch that has occurred, blacklisting the name of the petitioner, which is admittedly due to the erroneous feeding in the computer record, cannot be continued. In that view of the matter, if necessary changes are not carried out by the respondent No. 2, it will not only damage the reputation of the petitioner, but will also cause severe financial loss to the petitioner.
For the reasons recorded above, the writ petition is allowed. In light of the letter, dated 11.10.2019 addressed by the respondent No. 3, the respondent No. 2 is, hereby, directed to delete the petitioner's name from the blacklist and activate his digital key No.AFSPD8834J, and User ID:Darpally, to enable the petitioner to participate in the tenders. The entire exercise shall be completed within a period of two weeks from the date of receipt of a copy of this order.
The miscellaneous petitions pending, if any, shall stand closed. There shall be no order as to costs.
________________________ A.ABHISHEK REDDY, J Date : 17.03.2021 tsr 5