Jaishiv Construction Pvt. Ltd vs The State Of Jharkhand & Others
2021 Latest Caselaw 3649 Jhar

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IN THE HIGH COURT OF JHARKHAND AT RANCHI
                  (Civil Writ Jurisdiction)
                 W.P. (C) No. 3243 of 2016
                   ........
Jaishiv Construction Pvt. Ltd.          ....  ..... Petitioner
                               Versus
The State of Jharkhand & Others         ....  ..... Respondents

CORAM: HON'BLE MR. JUSTICE KAILASH PRASAD DEO
                       (Through : Video Conferencing)
                             ............
For the Petitioner                        : Mr. Piyush Chitresh, Advocate.
For the Respondent No. 1                  : Mr. Jagdeesh, A.C. to
                                            Mr. Rahul Saboo, S.C.-I.
                   ........
07/28.09.2021.
      Heard, learned counsel for the petitioner, Mr. Piyush Chitresh
and learned counsel for the respondent / State, Mr. Jagdeesh, A.C. to
Mr. Rahul Saboo, S.C.-I.
      Learned counsel for the petitioner has submitted that the writ
petition has been filed for quashing the order dated 29.09.2015
contained in Memo No. 5106 issued under the signature of Deputy
Secretary to the Government (Engg.), Department of Water
Resources, Government of Jharkhand, whereby the petitioner -
company has been blacklisted for indefinite period.
      Learned counsel for the petitioner has submitted that the
petitioner being aggrieved with part of the order, whereby the
petitioner Company Jaishiv Construction Pvt. Ltd. through its
Director Yatindra Nath Singh, son of Late Jinish Prasad Singh,
resident of Banu Manzil Road, P.O. - G.P.O., P.S. - Sukhdeo Nagar,
Ranchi has been put under blacklist for indefinite period contrary to
the established principle of law as enunciated by the Apex Court in
the case of M/s Kulja Industries Limited Vs. Chief General
Manager, Western Telecom Projet, Bharat Sanchar Nigam Limited
& others reported in (2014) 14 SCC 731.                 Para-25 of the aforesaid
judgment may profitably be quoted hereunder: -
            "Suffice it to say that 'debarment' is recognized and often used
            as    an      effective        method     for    disciplining   deviant
            suppliers/contractors who may have committed acts of omission
            and commission or               frauds   including   misrepresentations,
            falsification of records and other breaches of the regulations
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             under which such contracts were allotted. What is notable is that
             the 'debarment' is never permanent and the period of debarment
             would invariably depend upon the nature of the offence
             committed by the erring contractor."

       Learned counsel for the petitioner has further submitted that
this view has been reiterated by the Apex Court in the case of
VetIndia Pharmaceuticals Limited Vs. State of Uttar Pradesh &
Another reported in (2021) 1 SCC 804 wherein the Apex court has
again taken note of the judgment of Kulja Industries Limited
(Supra) at Para-13 and relied upon para-14, which has been
profitably quoted herein:-
             "Since the order of blacklisting has been found to be
             unsustainable by us, and considering the long passage of time,
             we are not inclined to remand the matter to the authorities. In
             M/s Daffodills Pharmaceuticals Ltd. & Anr. Vs. State of U.P. &
             Anr. [reported in (2020) 8 SCC 550], relied upon by the
             appellant, this court has observed that an order of blacklisting
             beyond 3 years or maximum of 5 years was disproportionate."

       Learned counsel for the petitioner has thus submitted that the
petitioner is only assailing the part of the order with regard to the
order of blacklisting, passed on 29.09.2015, for indefinite period, as
more than six years have elapsed, as such, this court may set aside
the said portion of the order in the view of the aforesaid judgment
passed by the Hon'ble Apex Court.
       Learned counsel for the State, Mr. Jagdeesh, A.C. to Mr.
Rahul Saboo, S.C.-I has submitted that since this principle with
respect to the blacklisting for indefinite period has already been
settled by the Apex Court, as such, the order of blacklisting for
indefinite period is bad in law and may be set aside.
       After hearing the learned counsels for the parties, this court
has asked the counsel for the state that if the principle has already
been settled in the year 2014, what was impediment for the State in
not re-calling or reviewing that part of the order, which has been
passed on 29.09.2015 by the State Government and why the State
Counsel has also not suggested or advised the Government of
Jharkhand not to pass such order, which is contrary to the judgment
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passed by the Apex Court in the case of M/s Kulja Industries
(Supra) and in the case of VetIndia Pharmeceuticals Limited
(Supra).
       In reply, no answer has been given by the State Counsel.
       From perusal of record, it further appears that contract was
entered into between the State and petitioner company with regard to
construction of work of C.D. Work at 0.20 Km of left Main Canal
and Spill Way Canal from 180 M to 400 M under the Upper Shankh
Reservoir. The project is with regard to Rs. 6,64,16,133/-, out of
which 95% work has been done and payment has been made.
       It appears that security money of Rs. 19,92,500/- deposited by
the petitioner company, was forfeited by the respondent authorities
because of the reason assigned in the impugned order that work was
done by the Contractor against the direction of the State, which was
not proper and the irrigation work could not be done with the
aforesaid project and thus agreement was resiled and security money
was forfeited.
       Accordingly, the writ petition is partly allowed, setting aside
part of the order, whereby the petitioner company has been put under
blacklist for indefinite period, in view of the judgment passed by the
Apex Court as more than five years have elapsed, but recovery shall
be done by the State in accordance with law.
       The Hon'ble Apex court in the case of LDA v. M.K. Gupta
reported in (1994) 1 SCC 243 has held that socio-economic outlook
and action of public functionary should be for the sake of society.
The Hon'ble Apex Court laid that the oppressive acts of public
servant or officials in performing its official duty causing harassment
and agony to common man and renders the state or its
instrumentality liable to pay damages from the public fund and the
state or its instrumentality is duty bound to later recover the amount
of compensation so paid from the public servant or official
concerned. The relevant paragraphs of the judgement are profitably
quoted hereunder:
                 8. Having examined the wide reach of the Act and jurisdiction
           of the Commission to entertain a complaint not only against
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business or trading activity but even against service rendered by
statutory and public authorities the stage is now set for determining
if the Commission in exercise of its jurisdiction under the Act could
award compensation and if such compensation could be for
harassment and agony to a consumer. Both these aspects specially
the latter are of vital significance in the present-day context. Still
more important issue is the liability of payment. That is, should the
society or the tax payer be burdened for oppressive and capricious
act of the public officers or it be paid by those responsible for it. The
administrative law of accountability of public authorities for their
arbitrary and even ultra vires actions has taken many strides. It is
now accepted both by this Court and English Courts that the State is
liable to compensate for loss or injury suffered by a citizen due to
arbitrary actions of its employees. In State of Gujarat v. Memon
Mahomed Haji Hasam [AIR 1967 SC 1885 : (1967) 3 SCR 938] the
order of the High Court directing payment of compensation for
disposal of seized vehicles without waiting for the outcome of
decision in appeal was upheld both on principle of bailee's 'legal
obligation to preserve the property intact and also the obligation to
take reasonable care of it ... to return it in the same condition in
which it was seized' and also because the Government was, 'bound
to return the said property by reason of its statutory obligation or to
pay its value if it had disabled itself from returning it either by its
own act or by act of its agents and servants'. It was extended further
even to bona fide action of the authorities if it was contrary to law
in Lala Bishambar Nath v. Agra Nagar Mahapalika, Agra [(1973) 1
SCC 788 : AIR 1973 SC 1289] . It was held that where the
authorities could not have taken any action against the dealer and
their order was invalid, 'it is immaterial that the respondents had
acted bona fide and in the interest of preservation of public health.
Their motive may be good but their orders are illegal. They would
accordingly be liable for any loss caused to the appellants by their
action.' The theoretical concept that King can do no wrong has been
abandoned in England itself and the State is now held responsible
for tortuous act of its servants. The First Law Commission
constituted after coming into force of the Constitution on liability of
the State in tort, observed that the old distinction between sovereign
and non-sovereign functions should no longer be invoked to
determine liability of the State. Friedmann observed:
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       "It is now increasingly necessary to abandon the lingering
   fiction of a legally indivisible State, and of a feudal conception
   of the Crown, and to substitute for it the principle of legal
   liability where the State, either directly or through incorporated
   public authorities, engages in activities of a commercial,
   industrial or managerial character. The proper test is not an
   impracticable distinction between governmental and non-
   governmental function, but the nature and form of the activity in
   question."
Even Kasturi Lal Ralia Ram Jain v. State of U.P. [AIR 1965 SC 1039
: (1965) 1 SCR 375 : (1966) 2 LLJ 583] did not provide any
immunity for tortuous acts of public servants committed in discharge
of statutory function if it was not referable to sovereign power. Since
house construction or for that matter any service hired by a
consumer or facility availed by him is not a sovereign function of the
State the ratio of Kasturi Lal [AIR 1965 SC 1039 : (1965) 1 SCR
375 : (1966) 2 LLJ 583] could not stand in way of the Commission
awarding compensation. We respectfully agree with Mathew, J.

in Shyam Sunder v. State of Rajasthan [(1974) 1 SCC 690] that it is not necessary, 'to consider whether there is any rational dividing line between the so-called sovereign and proprietary or commercial functions for determining the liability of the State' (SCC p. 695, para

20). In any case the law has always maintained that the public authorities who are entrusted with statutory function cannot act negligently. As far back as 1878 the law was succinctly explained in Geddis v. Proprietors of Bann Reservoir [(1878) 3 AC 430] thus:

"I take it, without citing cases, that it is now thoroughly well established that no action will lie for doing that which the Legislature has authorised, if it be done without negligence, although it does occasion damage to anyone; but an action does lie for doing what the Legislature has authorised, if it be done negligently."

Under our Constitution sovereignty vests in the people. Every limb of the constitutional machinery is obliged to be people oriented. No functionary in exercise of statutory power can claim immunity, except to the extent protected by the statute itself. Public authorities acting in violation of constitutional or statutory provisions oppressively are accountable for their behaviour before authorities created under the statute like the commission or the courts entrusted with responsibility of maintaining the rule of law. Each hierarchy in

the Act is empowered to entertain a complaint by the consumer for value of the goods or services and compensation. The word 'compensation' is again of very wide connotation. It has not been defined in the Act. According to dictionary it means, 'compensating or being compensated; thing given as recompense;'. In legal sense it may constitute actual loss or expected loss and may extend to physical, mental or even emotional suffering, insult or injury or loss. Therefore, when the Commission has been vested with the jurisdiction to award value of goods or services and compensation it has to be construed widely enabling the Commission to determine compensation for any loss or damage suffered by a consumer which in law is otherwise included in wide meaning of compensation. The provision in our opinion enables a consumer to claim and empowers the Commission to redress any injustice done to him. Any other construction would defeat the very purpose of the Act. The Commission or the Forum in the Act is thus entitled to award not only value of the goods or services but also to compensate a consumer for injustice suffered by him.

10. Who should pay the amount determined by the Commission for harassment and agony, the statutory authority or should it be realised from those who were responsible for it? Compensation as explained includes both the just equivalent for loss of goods or services and also for sufferance of injustice. For instance in Civil Appeal No. ... of 1993 arising out of SLP (Civil) No. 659 of 1991 the Commission directed the Bangalore Development Authority to pay Rs 2446 to the consumer for the expenses incurred by him in getting the lease-cum-sale agreement registered as it was additional expenditure for alternative site allotted to him. No misfeasance was found. The moment the authority came to know of the mistake committed by it, it took immediate action by alloting alternative site to the respondent. It was compensation for exact loss suffered by the respondent. It arose in due discharge of duties. For such acts or omissions the loss suffered has to be made good by the authority itself. But when the sufferance is due to mala fide or oppressive or capricious acts etc. of a public servant, then the nature of liability changes. The Commission under the Act could determine such amount if in its opinion the consumer suffered injury due to what is called misfeasance of the officers by the English Courts. Even in England where award of exemplary or aggravated damages for insult etc. to a person has now been held to be punitive, exception

has been carved out if the injury is due to, 'oppressive, arbitrary or unconstitutional action by servants of the Government' (Salmond and Heuston on the Law of Torts). Misfeasance in public office is explained by Wade in his book on Administrative Law thus:

"Even where there is no ministerial duty as above, and even where no recognised tort such as trespass, nuisance, or negligence is committed, public authorities or officers may be liable in damages for malicious, deliberate or injurious wrong- doing. There is thus a tort which has been called misfeasance in public office, and which includes malicious abuse of power, deliberate maladministration, and perhaps also other unlawful acts causing injury." (p. 777) The jurisdiction and power of the courts to indemnify a citizen for injury suffered due to abuse of power by public authorities is founded as observed by Lord Hailsham in Cassell & Co. Ltd. v. Broome [1972 AC 1027 : (1972) 1 All ER 801] on the principle that, 'an award of exemplary damages can serve a useful purpose in vindicating the strength of law'. An ordinary citizen or a common man is hardly equipped to match the might of the State or its instrumentalities. That is provided by the rule of law. It acts as a check on arbitrary and capricious exercise of power. In Rookes v. Barnard [1964 AC 1129 : (1964) 1 All ER 367, 410] it was observed by Lord Devlin, 'the servants of the government are also the servants of the people and the use of their power must always be subordinate to their duty of service'. A public functionary if he acts maliciously or oppressively and the exercise of power results in harassment and agony then it is not an exercise of power but its abuse. No law provides protection against it. He who is responsible for it must suffer it. Compensation or damage as explained earlier may arise even when the officer discharges his duty honestly and bona fide. But when it arises due to arbitrary or capricious behaviour then it loses its individual character and assumes social significance. Harassment of a common man by public authorities is socially abhorring and legally impermissible. It may harm him personally but the injury to society is far more grievous. Crime and corruption thrive and prosper in the society due to lack of public resistance. Nothing is more damaging than the feeling of helplessness. An ordinary citizen instead of complaining and fighting succumbs to the pressure of undesirable functioning in offices instead of standing against it. Therefore the award of

compensation for harassment by public authorities not only compensates the individual, satisfies him personally but helps in curing social evil. It may result in improving the work culture and help in changing the outlook. Wade in his book Administrative Law has observed that it is to the credit of public authorities that there are simply few reported English decisions on this form of malpractice, namely, misfeasance in public offices which includes malicious use of power, deliberate maladministration and perhaps also other unlawful acts causing injury. One of the reasons for this appears to be development of law which, apart, from other factors succeeded in keeping a salutary check on the functioning in the government or semi-government offices by holding the officers personally responsible for their capricious or even ultra vires action resulting in injury or loss to a citizen by awarding damages against them. Various decisions rendered from time to time have been referred to by Wade on Misfeasance by Public Authorities. We shall refer to some of them to demonstrate how necessary it is for our society. In Ashby v. White [(1703) 2 Ld Raym 938] the House of Lords invoked the principle of ubi jus ibi remedium in favour of an elector who was wrongfully prevented from voting and decreed the claim of damages. The ratio of this decision has been applied and extended by English Courts in various situations. In Roncarelli v. Duplessis [(1959) 16 DLR 2d 689] the Supreme Court of Canada awarded damages against the Prime Minister of Quebec personally for directing the cancellation of a restaurant- owner's liquor licence solely because the licensee provided bail on many occasions for fellow members of the sect of Jehovah's Witnesses, which was then unpopular with the authorities. It was observed that, 'what could be more malicious than to punish this licensee for having done what he had an absolute right to do in a matter utterly irrelevant to the Alcoholic Liquor Act? Malice in the proper sense is simply acting for a reason and purpose knowingly foreign to the administration, to which was added here the element of intentional punishment by what was virtually vocation outlawry.' In Smith v. East Elloe Rural District Council [1956 AC 736 : (1956) 1 All ER 855] the House of Lords held that an action for damages might proceed against the clerk of a local authority personally on the ground that he had procured the compulsory purchase of the plaintiff's property wrongfully and in bad faith. In Farrington v. Thomson [1959 UR 286] the Supreme Court of

Victoria awarded damages for exercising a power the authorities knew they did not possess. A licensing inspector and a police officer ordered the plaintiff to close his hotel and cease supplying liquor. He obeyed and filed a suit for the resultant loss. The Court observed:

"Now I take it to be perfectly clear, that if a public officer abuses his office, either by an act of omission or commission, and the consequence of that is an injury to an individual, an action may be maintained against such public officer." In Wood v. Blair [ The Times, July 3, 4, 5, 1957 (Hallet J and Court of Appeal)] a dairy farmer's manageress contracted typhoid fever and the local authority served notices forbidding him to sell milk, except under certain conditions. These notices were void, and the farmer was awarded damages on the ground that the notices were invalid and that the plaintiff was entitled to damages for misfeasance. This was done even though the finding was that the officers had acted from the best motives.

11. Today the issue thus is not only of award of compensation but who should bear the brunt. The concept of authority and power exercised by public functionaries has many dimensions. It has undergone tremendous change with passage of time and change in socio-economic outlook. The authority empowered to function under a statute while exercising power discharges public duty. It has to act to subserve general welfare and common good. In discharging this duty honestly and bona fide, loss may accrue to any person. And he may claim compensation which may in circumstances be payable. But where the duty is performed capriciously or the exercise of power results in harassment and agony then the responsibility to pay the loss determined should be whose? In a modern society no authority can arrogate to itself the power to act in a manner which is arbitrary. It is unfortunate that matters which require immediate attention linger on and the man in the street is made to run from one end to other with no result. The culture of window clearance appears to be totally dead. Even in ordinary matters a common man who has neither the political backing nor the financial strength to match the inaction in public oriented departments gets frustrated and it erodes the credibility in the system. Public administration, no doubt involves a vast amount of administrative discretion which shields the action of administrative authority. But where it is found that exercise of discretion was mala fide and the complainant is entitled to compensation for mental and physical harassment then

the officer can no more claim to be under protective cover. When a citizen seeks to recover compensation from a public authority in respect of injuries suffered by him for capricious exercise of power and the National Commission finds it duly proved then it has a statutory obligation to award the same. It was never more necessary than today when even social obligations are regulated by grant of statutory powers. The test of permissive form of grant is over. It is now imperative and implicit in the exercise of power that it should be for the sake of society. When the court directs payment of damages or compensation against the State the ultimate sufferer is the common man. It is the tax payers' money which is paid for inaction of those who are entrusted under the Act to discharge their duties in accordance with law. It is, therefore, necessary that the Commission when it is satisfied that a complainant is entitled to compensation for harassment or mental agony or oppression, which finding of course should be recorded carefully on material and convincing circumstances and not lightly, then it should further direct the department concerned to pay the amount to the complainant from the public fund immediately but to recover the same from those who are found responsible for such unpardonable behaviour by dividing it proportionately where there are more than one functionaries.

Further, the Apex Court in the case of Keshav Baljee Vs. Bangalore Development Authority reported in (2010) 14 SCC 398 and in the case of Delhi Artitech services(P) Ltd Vs. State of U.P reported in (2011) 9 SCC 354 , has also imposed cost and directed the state to recover the same from of the concerned erring officials.

In the aforesaid view, the Chief Secretary, Government of Jharkhand is directed to look into the matter and initiate proceeding for recovery of the loss caused to the State from the erring Officers within a period of six months in accordance with law, as the public money of Rs. 6,64,16,133/- has been mis-utilized by these officers of the State of Jharkhand causing loss to the State and only security money has been forfeited.

Let a copy of this order be communicated to the Chief Secretary, Government of Jharkhand.

(Kailash Prasad Deo, J.) Sunil/-