Delhi High Court
M/S Maan Builders Pvt. Ltd. vs Union Of India And Ors on 8 November, 2024
Author: Prateek Jalan
Bench: Prateek Jalan
$~4
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Decided on: 08.11.2024
+ W.P.(C) 16377/2023 & CM APPL. 65939/2023
M/S MAAN BUILDERS PVT. LTD. .....Petitioner
Through: Mr. Vishal Gupta, Advocate.
versus
UNION OF INDIA AND ORS .....Respondents
Through: Mr. Farman Ali, SPC with Ms.
Usha Jamnal, Advocate along with
Mr. Manoj Kumar Yadav,
ASO/CE-I, RB, Mr. Siri Krishnan,
CLA/C, Kashmere Gate, Delhi and
Mr. Tarun Kumar, Office
Superintendent, CA O/C office,
Kashmere Gate, Northern
Railways.
CORAM:
HON'BLE MR. JUSTICE PRATEEK JALAN
PRATEEK JALAN, J. (ORAL)
1. The petitioner has filed this petition, under Article 226 of the
Constitution, against the order dated 17.02.2023, by which the petitioner
and its allied/sister firms were debarred for a period of two years from
dealing with the Indian Railways and its production units. The principal
ground of challenge is that the impugned order does not disclose any
reasons.
2. The impugned order reads as follows:
"No.2022/CE-I/CBL/I/Maan Builders (3409117) New Delhi, Dated
:17.02.2023
As per list attached.
Sub: Banning of business dealings with M/s Mann Builders , SC0-44, 2nd
floor, Sector-12, Panchkula, Haryana-134112 and its allied/sister
concerns.
M/s Maan Builders was served with a Memorandum and Statement of
charges/Misconduct for banning of business dealings with them for
concealing of information/submitting incorrect information by deviating
from the contractual agreement with malafide intention,
2. Reply to the Memorandum submitted by M/s Maan Builders
through Northern Railway has been considered in detail by the Competent
Authority, who has concluded that M/s Maan Builders has concealed
information/submitting incorrect information with malafide intention
violating general conditions of contract.
3. It has therefore, been decided by Ministry of Railways (Railway
Board) to ban business dealing with M/s Maan Builders, SCO-44, 2nd
floor, Sector-12, Panchkula, Haryana-134112 and also with their
allied/sister concerns/and partners for a period of 02 (two) years
commencing with immediate effect on Indian Railways and Production
Units etc. Zonal Railways/Production Units shall ensure to deactivate
the login ID of M/s Maan Builders, SCO-44, 2nd floor, Sector-12,
Panchkula, Haryana-134112 and its allied/sister firms for above-
mentioned period.
4. Receipt of this letter may please be acknowledged."1
3. Mr. Vishal Gupta, learned counsel for the petitioner, submits that
the impugned order does not contain any reasons whatsoever, for
imposition of a harsh penalty of debarment/backlisting upon the
petitioner. Mr. Farman Ali, learned counsel for the respondents, on the
other hand, has produced the record in support of the contention that the
petitioner's representation was duly considered and the petitioner was
also granted a personal hearing.
4. As far as a decision to debar businesses from contracts with
government or public sector undertakings is concerned, the courts have
emphasized adherence to the requirement of natural justice. The recent
Emphasis supplied.
judgment of a Coordinate Bench in Oasis Projects Ltd. vs. National
Highway and Infrastructure Development2 considers the decisions of the
Supreme Court inter alia in Kulja Industries Ltd. v. Western Telecom
Project BSNL3, UMC Technologies (P) Ltd. v. Food Corpn. of India4, and
of this Court in Diwan Chand Goyal v. National Capital Region
Transport Corporation5, and summarises the law thus:
"29. The law on blacklisting or banning or debarring is very clear
and has been fully settled by Supreme Court almost a decade ago in
Kulja Industries Ltd. v. Western Telecom Project BSNL, (2014) 14
SCC 731 that blacklisting, debarring, suspension are all similar
terminologies. There could be various grounds for debarment or
blacklisting, in such cases the compliance of principles of natural
justice is of utmost importance.......
30. Similarly, in Diwan Chand Goyal v. National Capital Region
Transport Corporation, 2020 : DHC : 2685, the Court summarized
all the general principles with respect to blacklisting, in the
following terms:
45. Upon a reading of the aforesaid judgments cited on
behalf of both the parties, the general principles, which
emerge, with respect to blacklisting are;
(a) Principles of natural justice have to be complied with
before the order of blacklisting is passed;
(b) Natural justice or audi alteram partem does not
always require a hearing to be granted. Serving of show
cause notice and affording an opportunity to reply to the
same, is considered as being adequate opportunity and
is sufficient adherence to the principles of natural
justice;
(c) Blacklisting constitutes civil death and has
extremely grave consequences. Thus, the same is
amenable the judicial review if the same is by
(2024) SCC OnLine Del 2549
(2014) 14 SCC 731
(2021) 2 SCC 551
W.P.(C) 3301/2020 decided on 02.09.2020
governmental authorities;
(d) Any order of blacklisting ought to contain proper
reasons. The reasons need not be detailed or elaborate.
It is sufficient to be brief, pithy and concise;
(e) Reasons should be supplied to the affected party;
(f) Decision taken ought not to be arbitrary or
discriminatory.
(g) Blacklisting orders being amenable to judicial
review can be judged on the standard of proportionality.
Thus, the period of blacklisting as also terms and
conditions thereof have to be proportionate to the
irregularities or conduct of the bidder."6
5. The drastic repercussion of an order of blacklisting on the business
of a contracting party has been characterised as a "civil death"7. The
adequacy of the reasons contained in the impugned order must be
determined, keeping in mind the effect of the order.
6. It is clear from the impugned order that, while the respondents have
referred to the show cause notice issued to the petitioner and the reply
received, no reasons have been stated for rejecting the representation of
the petitioner. The recitation of the conclusion cannot be a substitute for
providing reasons. Looked at from any angle, the impugned order is
inadequate to inform the petitioner of the reasons which weighed with the
respondents.
7. The order dated 17.02.2023 is therefore set aside.
8. While issuing notice in this petition on 19.12.2023, interim orders
were not pressed, in view of the lapse of time since the impugned order
Emphasis supplied.
Gorkha Security Services v. Govt. (NCT of Delhi) [(2014) 9 SCC 105]; Blue Dreamz Advertising (P)
Ltd. v. Kolkata Municipal Corpn. [2024 SCC OnLine SC 1896]
was issued. Unfortunately, the petition was not taken up thereafter till
30.09.2024. Resultantly, as of today, a period of almost one year and nine
months, out of the debarment period of two years, has elapsed. While
setting aside the order dated 17.02.2023, it is directed that if the Union of
India considers it necessary to impose the debarment for the balance
period, it will communicate its decision and reasons in writing to the
petitioner, and will not implement the order for a period of two weeks
thereafter, to enable the petitioner to take legal recourse, if so advised.
9. The writ petition, alongwith pending application, is disposed of in
these terms.
PRATEEK JALAN, J
NOVEMBER 8, 2024
aj/
