M/S Prabhat Enterprises vs State Of Jharkhand
2021 Latest Caselaw 4435 Jhar

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          IN THE HIGH COURT OF JHARKHAND AT RANCHI
                             W.P.(C) No.7671 of 2013
         M/s Prabhat Enterprises, A Proprietorship Firm, through its sole
         Proprietor Prabhat Kumar Singh, Son of Ramayan Singh, Resident of
         T-Garden, Namkom, P.O. and P.S.-Namkom, District Ranchi.

                                                                 ... ... Petitioner
                                         Versus

      1. State of Jharkhand, through the Secretary/Principal Secretary,
         Building Construction Department, having its office at Project
         Building, P.O. and P.S. Dhurwa, Town and Distrist-Ranchi.

      2. Engineer-in-Chief, Building Construction Department, having its
         office at Project Building, P.O. and P.S. Dhurwa, Town and District-
         Ranchi.

                                                              ...... Respondents
                                        -------

CORAM: HON'BLE MR. JUSTICE SUJIT NARAYAN PRASAD

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      For the Petitioner          : Ms. Neha Bhardwaj, Advocate
      For the Respondents         : Mr. Rohan Kashyap, Advocate
                          ----------------------------

06/Dated 26th November, 2021

1. With the consent of the learned counsel for the parties, hearing of the matter is done through video conferencing.

2. The instant writ petition has been filed under Article 226 of the Constitution of India for quashing of the order dated 24.10.2013 passed by the respondent No.2 whereby and whereunder the writ petitioner has been blacklisted forever as also the registration has been cancelled.

3. The brief facts of the case as per the pleading made in the writ petition which is required to be enumerated, reads as hereunder:

The writ petitioner claims to be a registered contractor with the Building Construction Department, State of Jharkhand and he is a Class-1-B Contractor. The writ petitioner was allotted the work for construction of Jharkhand State Data Centre Building, Dhurwa, Ranchi, which, according to the petitioner, was executed to the full satisfaction of the concerned officials, who supervised the work. After execution of the work, the bills have been submitted for payment, however, some

payments were made but some of the payments have been withheld which comes to about Rs.8 lakhs.

The writ petitioner has made due representation before the concerned authority for disbursement of the aforesaid amount but the respondent-authorities has issued a show case on 24.07.2013 to explain as to why the petitioner be not blacklisted. The writ petitioner has responded to the said show cause on 06.08.2013 denying the allegation. The respondent authorities without considering the response in right perspective, has taken a decision as contained in letter dated 24.10.2013 whereby the writ petitioner has been blacklisted as also the registration of the writ petitioner has been cancelled. The writ petitioner being aggrieved with the same, approached to this Court by filing writ petitioner under Article 226 of the Constitution of India inter alia on the ground that the decision taken by the authority of blacklisting and cancellation of registration is without any application of mind and has been taken in arbitrary exercise of power because even though the writ petitioner has completed the work to the best of the satisfaction of the concerned authority and after taking into consideration, substantial amount has been paid but some of the payment of about Rs.8 lakhs has been withheld, therefore, the representation was submitted for disbursement of the aforesaid amount but instead of paying the same, the authorities have come out with a show cause leveling allegation against the writ petitioner about non-execution of the work in terms of the specification.

Learned counsel for the writ petitioner, however, in course of argument has submitted that since the writ petitioner now is questioning the order of blacklisting on the ground of order of blacklisting forever which has been deprecated by the Hon'ble Apex Court in Kulja Industries Limited vs. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Limited and Ors., (2014) 14 SCC 731, as such, the same is fit to be quashed and set aside also taking into consideration the fact that if the order of blacklisting will remain, which is for forever, it will be nothing but it will be in infringement of the fundamental right guaranteed to the writ petitioner as under Article

19(1)(g) of the Constitution of India, as such, the order of blacklisting may be quashed on this ground.

The further ground has been taken so far as it relates to cancellation of registration that no show cause has been issued before the cancellation of the registration, therefore, the order by which the registration of the writ petitioner has been cancelled, is in the teeth of the principles of natural justice and such decision has been taken without providing an opportunity of hearing, hence, the said order is also not sustainable in the eye of law.

4. Learned counsel for the State has contested the case by filing counter affidavit stating inter alia therein that the writ petitioner has not been able to perform the work as per the terms and conditions of the agreement as also as per the specification and parameters. However, some payment has been made but when the work performed by the writ petitioner has been scrutinized, some irregularity has been found in the work executed, therefore, a decision has been taken to blacklist the writ petitioner for which a show cause has been issued asking a reply as to why the writ petitioner be not blacklisted.

The aforesaid show cause has been responded and the authority after taking into consideration the due reply has taken a decision to blacklist the petitioner forever. It has further been contended that since the performance of the writ petitioner has not been found to be satisfactory, therefore, the authorities have also taken another decision to cancel the registration of the writ petitioner and accordingly, the registration has also been cancelled, therefore, the submission has been made by the learned State counsel that in view of the backdrop of the aforesaid facts, the decision taken by the administrative authority cannot be said to suffer from an error, accordingly, the writ petition is not fit to be allowed.

5. This Court has heard the learned counsel for the parties and perused the documents available on record. Since the learned counsel for the petitioner has argued to interfere with the order of blacklisting by considering it operative till today, therefore, this Court without going into the legality and propriety of the order of blacklisting, is now

considering the argument advanced on behalf of the writ petitioner by treating the order of blacklisting operative till today by taking into consideration the judgment rendered by Hon'ble Apex Court in Kulja Industries Limited vs. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Limited and Ors., (supra).

6. The admitted fact in this case is that the writ petitioner who was a registered contractor under the Building Construction Department, has been allotted with a work for construction of Jharkhand State Data Centre Building, Dhurwa, Ranchi. The said building has been constructed and thereafter the bills have been submitted for its disbursement, however, some of the amount has been paid but some of the payment has been withheld. The respondent-authorities, on scrutiny of the work performed by the writ petitioner, has found the work not to be satisfactory, therefore, a show cause has been issued for blacklisting the writ petitioner vide show cause dated 24.07.2013. The said show case has been responded by the writ petitioner denying the allegation but the said reply has been found to be not satisfactory and in consequence thereof, an order has been passed to treat the writ petitioner blacklisted forever as also the registration of the writ petitioner has been cancelled.

7. Ms. Neha Bhardwaj, learned counsel for the petitioner has submitted by referring to the judgment rendered by Hon'ble Apex Court in Kulja Industries Limited vs. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Limited and Ors., (supra) wherein the amount of the debarment of the contract forever has been deprecated.

Learned counsel for the petitioner relying upon the said judgment has submitted that here in the instant case also, the writ petitioner has been blacklisted forever, as such, in view of the ratio laid down by the Hon'ble Apex Court in Kulja Industries Limited vs. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Limited and Ors. (supra), the order impugned is fit to be quashed and set aside by treating the period of blacklisting to be a sufficient punishment even if any irregularity has been committed.

The aforesaid legal position has not been disputed by the learned State counsel.

8. This Court has appreciated the rival submissions on the issue as also considered the ratio laid down by the Hon'ble Apex Court in Kulja Industries Limited vs. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Limited and Ors. (supra) wherein at paragraph-28.2 it has been held which reads as hereunder:

28.2. Secondly, because while determining the period for which the blacklisting should be effective the respondent Corporation may for the sake of objectivity and transparency formulate broad guidelines to be followed in such cases. Different periods of debarment depending upon the gravity of the offences, violations and breaches may be prescribed by such guidelines. While it may not be possible to exhaustively enumerate all types of offences and acts of misdemeanour, or violations of contractual obligations by a contractor, the respondent Corporation may do so as far as possible to reduce if not totally eliminate arbitrariness in the exercise of the power vested in it and inspire confidence in the fairness of the order which the competent authority may pass against a defaulting contractor.

9. Herein, the respondents have blacklisted the writ petitioner forever which according to the considered view of this Court after taking into consideration the ratio laid down by the Hon'ble Apex Court in Kulja Industries Limited vs. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Limited and Ors. (supra) as also the judgment rendered by the Hon'ble Apex Court in another case, i.e., in Vetindia Pharmaceuticals Limited vs. State of Uttar Pradesh and Anr., 2020 SCC OnLine SC 912 wherein the Hon'ble Apex Court has considered the ratio laid down in Kulja Industries Limited vs. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Limited and Ors. (supra) and has quashed the part of the order of blacklisting of the contractor forever and therefore, herein also the order of blacklisting is required to be interfered with since the authorities have taken the decision of blacklisting the writ petitioner forever. Accordingly, the order of blacklisting is modified by making the order effective till today.

10. So far as the second issue pertaining to cancellation of registration is concerned, admittedly, the order of registration also confers a right upon the writ petitioner to participate in the bid but the same has also been cancelled without issuing any show cause notice, therefore, this Court is of the view that since the cancellation of registration confers a right to the writ petitioner to participate in the process of tender as per the provision made by the State Government since has been passed without issuance of notice upon the writ petitioner, therefore, the part of the order by which the registration of the writ petitioner has been cancelled is treated to be in violation of the principles of natural justice and hence, the same is also quashed.

11. The learned counsel for the petitioner has submitted that the direction may also be passed upon the concerned authority for payment of the rest of the amount but the said direction cannot be passed since this Court is not interfering with the order of blacklisting on its merit, therefore, the order of blacklisting has been interfered with only on the issue of quantum and it is settled that when any order is not interfered with on its merit rather on quantum no relief can be granted to the contractor in such circumstances pertaining to a direction for disbursement of the rest of the amount.

12. Accordingly, the writ petition stands allowed with the aforesaid observation and directions.

(Sujit Narayan Prasad, J.) Saurabh