Jharkhand High Court
M/S Sri Sai Krishna Constructions vs The State Of Jharkhand on 5 June, 2025
Author: Rajesh Shankar
Bench: Rajesh Shankar
2025:JHHC:14485-DB
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P. (C) No. 40 of 2025
M/s Sri Sai Krishna Constructions, a registered partnership firm having its
office at 18-03-228, Srinivasa Village, Flat No.201, Yousufguda,
Hyderabad-500033 consisting of partners namely 1. G. Prathima, 2. G.
Yashwanth Reddy and 3. G. Sai Mounica Reddy, duly represented through
its authorized signatory Gunapati Murali Krishna Reddy, aged about 63
years, Son of Gunapati Adisesha Reddy, Resident of Plot No. 164, Road
No. 13A, Jubilee Hills, Shaikpet, P.O. & P.S. Jubilee Hills, Hyderabad,
Telangana 500033.
... Petitioner
Versus
1. The State of Jharkhand
2. The Engineer in Chief 1-cum-Registration Officer, Water Resource
Department, Nepal House Ground Floor, P.O.&P.S. Doranda, District
Ranchi.
3. The Chief Engineer, Water Resource Department, Jal Bhawan, 6th
Floor, P.O.&P.S. Doranda, District Ranchi.
4. The Joint Secretary-cum-Internal Financial Advisor, Water Resource
Department, Nepal House Ground Floor, P.O.&P.S. Doranda, District
Ranchi.
5. The Executive Engineer, Water Resource Department, Irrigation
Division, Bundu, P.O. & P.S. Bundu, District Ranchi
... Respondents
---------
CORAM: HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJESH SHANKAR
---------
For the Petitioner: Mr. L. Ravichander, Senior Advocate
Mr. Rajesh Kumar, Advocate
Mr. Mayur Mundra, Advocate
For the Respondents: Mr. Mohan Kumar Dubey, A.C. to A.G.
---------
Reserved on: 25.04.2025 Pronounced on: 5/06/2025
Per M.S. Ramachandra Rao, C.J.
1. The petitioner is a firm dealing in construction work.
2. The Water Resources Department of the State of Jharkhand floated
a tender notice dt. 25.01.2023 with regard to 'Renovation of Earthen Dam,
Canal Re-sectioning, Lining and Renovation of structures under Surangi
Reservoir Scheme'.
2025:JHHC:14485-DB
3. Petitioner also participated in the bid and was declared successful
and accordingly an agreement bearing Agreement No.SBD-01/2023-24
was executed with the respondents on 29.05.2023.
4. Petitioner alleges that on account of certain reasons not attributable
to it, there was a delay in progress of the work.
5. The 5th respondent sent a letter on 13.02.2024 to the petitioner
stating that the progress of the work was not as per schedule and the same
is delayed. Subsequently, 5th respondent issued another letter
dt. 07.05.2024 to the petitioner stating that the work program required as
per SBD Clause ITB-27 was not submitted by the petitioner till that date
and that it was creating hindrances to the progress of the work.
6. Petitioner however denies this allegation and contends that a
tentative work program, which was submitted by it at the time of
submission of the bid, cannot be treated as a work program; and the work
project has to be submitted as per the SBD Clause 27 and petitioner could
not submit it because there was a delay on the part of the respondents to
provide the necessary assistance/fulfill their obligations as per the SBD
like providing sufficient width on the I/P Side Drawing & Design, Fine
Coarse Aggregates, pertaining existing structure of reach-wise C.C. lining
drawing and also the data. Petitioner contends that the petitioner had
brought to the notice of the 5th respondent about his aspect in its letter
dt. 16.01.2024.
7. Petitioner also alleges that the Mining Department has not selected
any quarry from which the petitioner can extract Fine Coarse Aggregates
for the purpose of executing the Surangi Reservoir Project, though a list of
quarries has been provided.
2025:JHHC:14485-DB
8. Petitioner therefore alleges that the respondents were not correct in
complaining that the progress of the work was slow and that the
respondents are acting in an arbitrary and mala fide manner.
9. The 3rd respondent issued a letter dated 30.07.2024 proposing to
terminate the agreement allegedly on the ground of slow progress in the
execution of the work by the petitioner and appointed a Three-Member
Enquiry Committee headed by Superintending Engineer, Water Ways
Circle, Ranchi, with two other members, i.e., Engineer, Water Ways
Circle, Ranchi, and Estimating Officer, Water Ways Circle, Ranchi.
10. The said Enquiry Committee made a surprise visit on 07.06.2024 at
11:00 A.M. at the worksite and submitted their report dt. 08.06.2024 that
the work is going on in the Surangi Weir Scheme in the Left Main Canal,
Right Main Canal and Dam Body.
11. According to the petitioner, the said Committee recommended in
the report that the termination of the contract would cause unnecessary
extra expenditure to the State and instead of cancelling the agreement, the
Department may continue with the petitioner and try to complete the work
within time. Report of the Enquiry Committee is Annexure-11.
12. Petitioner contends that in an arbitrary manner, Respondents 1 to 3,
without complying with the principles of natural justice, held a meeting on
22.07.2024 and recommended termination of the agreement entered into
by the respondents with the petitioner.
13. Thereupon, the 5th respondent on the basis of recommendation of
the Department Tender Committee dt. 22.07.2024 rescinded the agreement
between the parties and issued a letter dt. 03.08.2024 invoking Clause 59
of the said agreement.
2025:JHHC:14485-DB
14. According to the petitioner, thereafter, a show-cause notice dt.
24.10.2024 was issued to the petitioner calling upon the petitioner to come
to the office of the 2nd respondent on 12.11.2024; that the petitioner's
representative appeared before the said respondent along with counsel on
the said date and also submitted a reply to the show-cause notice dt.
12.11.2024. But without considering the contention of the petitioner, the
2nd respondent blacklisted the petitioner for three years through letter dt.
03.12.2024 (Annexure-16).
15. Petitioner contends that the action of the respondents in blacklisting
the petitioner for the said period under Annexure-16 dt. 03.12.2024
violates the rights guaranteed to the petitioner under Articles 19 and 300A
of the Constitution of India.
16. Therefore, the petitioner sought for the following relief:-
"For issuance of an appropriate writ(s), order(s),
direction(s) particularly writ of certiorari for quashing the
decision dated 03.12.2024 as contained in Memo No. 7 fo-'kk-
@fuc&16&02@2024 t-la- 7036 (Annexure - 16) whereby and
whereunder the Respondent No.2 has blacklisted the
petitioner's firm for next three years."
17. Counter affidavit has been filed on behalf of the respondents by the
Executive Engineer of the Irrigation Division, Bundu, refuting the said
contentions of the petitioner and reiterating the stand taken in the
impugned order.
Consideration by the Court
18. We have noted the contentions of the parties and also perused the
impugned order blacklisting the petitioner.
2025:JHHC:14485-DB
Re: Ground No.1
19. The first ground on which the blacklisting order has been passed is
that the execution of the work was not being done by the original
contractor, but the work has been subcontracted without departmental
permission and this is a violation of Clause 4.3(k) of ITB of SBD.
20. In the impugned order (Annexure-16), it is mentioned that none of
the Key Personnel, details of whom were submitted by the petitioner along
with the Tender Document, were present at the worksite and statement of
one Md. Tasin (shareholder of Md. Yasin Construction Pvt. Ltd.) present
at the worksite was recorded that he was executing the work. On this basis
it is contended that there has been subcontracting of the work to the said
Md. Tasin without departmental permission.
21. But, in the Minutes of the Meeting dt. 22.07.2024, referring to the
said "Squad Visit" it is mentioned that the name of the person found at the
worksite was Md. Yasin and there was no mention of Md. Tasin and there
is also no mention that he was a shareholder of the Md. Yasin
Construction Pvt. Ltd. It was basing on this document (Annexure-12 dt.
22.07.2024) which was the Minutes of the Meeting of the Committee
consisting of Respondents 1 to 3, that the blacklisting order was passed.
22. How the respondents can incorrectly mention facts and on that basis
blacklisting the petitioner is inexplicable.
Ground No.2
23. The second ground on which the blacklisting order was passed was
that the work done was not as per the specification.
24. Petitioner's specific contention was that the design, drawing and
estimate had not been furnished to him in spite of several requests and
those letters have been filed by the petitioner (Annexure-1 dt. 27.01.2023).
2025:JHHC:14485-DB
25. Though in paragraph 17 of the counter affidavit filed by the
respondents, it is stated that the approved drawings were served upon the
representative of the petitioner, but no proof of such handing over (in the
form of an acknowledgement of receipt of the drawing) appears to have
been obtained from the petitioner regarding supply of the drawings, etc. It
cannot be disputed that unless the design/drawings are furnished to the
petitioner, the respondents cannot expect the petitioner to proceed with the
work at a fast pace.
26. No document has been filed by the respondents showing that they
did reply to the Annexure-1 letter written by the petitioner enclosing the
drawings. Therefore, it is not permissible to blacklist the petitioner on this
ground.
Ground No.3
27. The third ground on which the blacklisting order has been passed
against the petitioner is that though the agreement was entered into by the
respondents with the petitioner on 29.05.2023, work was not immediately
commenced by the petitioner.
28. The petitioner's response to this was that there was an order passed
by the NGT prohibiting excavation of sand and other materials during the
monsoon period. It is also contended by the petitioner that there was non-
availability of materials at the quarry site also and much correspondence
for allotment of a quarry made by the petitioner with the Mining
Department of the State of Jharkhand have been filed.
29. It appears that only on 07.02.2024 - long gap since agreement was
executed, the Executive Engineer, Irrigation Division, Bundu, had
addressed the letter to the District Mining Officer giving a list of materials
such as sand, stone chips, etc which the petitioner needs to complete the
2025:JHHC:14485-DB
work and directing the District Mining Officer, Seraikela-Kharsawan to
grant permission to use the said materials in the work.
30. When the respondents themselves have delayed in convincing the
Mining Department to give such permission for eight months and when
the work was to be completed by 28.11.2024, they cannot blame the
petitioner for the slow progress of work and cannot demand that the
petitioner complete the work by disobeying/ committing contempt of the
NGT order prohibiting in the monsoon period excavation of sand from
river-beds and also on account of lack of other materials from the quarry
site.
Ground No.4
31. The fourth ground on which the blacklisting was done is that the
contractor had given a list of certain persons who were the key personnel
but they were not found at the site and, that two other persons by name
Nagarjuna Reddy and Shahil Ansari were present who introduced
themselves as Contractor's Site Incharge and Contractor's Site Engineer.
32. The Supreme Court in the case of Blue Dreamz Advertising Pvt.
Ltd. Vs. Kolkata Municipal Corporation1 has held that blacklisting is a
drastic remedy and the orders passed for blacklisting should be subjected
to rigorous scrutiny; the debarment as a remedy is to be invoked in cases
where there is harm or potential harm for public interest particularly in
cases where the person's conduct has demonstrated that debarment as a
penalty alone will protect public interest; where the case is of an ordinary
breach of contract and the explanation offered by the person concerned
raises a bona fide dispute, blacklisting/debarment as a remedy ought not to
be resorted to.
2024 INSC 589
2025:JHHC:14485-DB
33. Therefore, the frivolous ground that the petitioner had not put at the
site the personnel which he promised to do so, cannot be made a basis for
blacklisting the petitioner for three years.
Ground No.5
34. The fifth ground is that they did not give utilization certificate in
respect of the mobilization advance and had violated Clause 51 of the
Conditions of the Contract of SBD.
35. Petitioner contends herein that the mobilization advance was given
to the petitioner against two tranches. The first tranche worth Rs.Two
Crores was released on 23.06.2023 and the second advance was released
on 29.08.2023.
36. According to the petitioner, the utilization certificate for the first
payment was made on 01.06.2023 along with photographs of the proof of
mobilization and utilization of mobilization advance and this fact is
suppressed by the respondents. It is, however, admitted that the petitioner
had not given utilization certificate for the second payment made.
37. However, it is pointed out that under Clause 51 of the Agreement,
advance payment has to be demonstrated to have been used by supplying
copies of invoices and other documents; it is for the Executive Engineer
Incharge to come to the site and verify whether the mobilization advance
is duly utilized or not and then report to the Department that the amount in
question paid for mobilization was duly utilized or not. Petitioner contends
that to the best of the knowledge of the petitioner, the Executive Engineer
Incharge had already submitted the report after inspecting the site and
taking photographs and, therefore, this dispute was not raised on the
earlier occasions.
2025:JHHC:14485-DB
38. For the aforesaid reasons, we are of the opinion that, without having
any valid reason to blacklist the petitioner for a period of three years, the
respondents had proceeded and passed the impugned order on 03.12.2024
(Annexure-16) blacklisting the petitioner for a period of three years; and
conduct of the petitioner in the instant case did not warrant the passing of
such an order having serious consequences on the business activity of the
petitioner as held in the judgment of Blue Dreamz Advertising Pvt. Ltd.
(supra).
39. We may point out that there is a recommendation of the Inspection
Committee dt. 07.06.2024 that no payment had been made for the work to
the petitioner till that day in spite of ongoing work being done by the
petitioner, that more than 20% of the work had been completed by the
petitioner, that in the public interest it is necessary to get the work which
is ongoing completed within the stipulated time, instead of cancelling the
agreement, which would require retendering at increased rates putting
additional financial burden on the Government. This aspect has not been
considered by the respondents. This also shows that the conduct of the
respondents is not bona fide and they were adamant in blacklisting the
petitioner.
40. For the aforesaid reasons, the writ petition is allowed and the
impugned order dated 03.12.2024 (Annexure-16) passed by the 2nd
respondent blacklisting the petitioner for a period of three years is set
aside. No costs.
(M.S. Ramachandra Rao, C.J.)
(Rajesh Shankar, J.)
N.A.F.R.
Manoj/-
