Karnataka High Court
Sri Ashok Ballolli S/O Nagappa Ballolli vs The State Of Karnataka on 18 February, 2025
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
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NC: 2025:KHC-D:3242
WP No. 102538 of 2024
IN THE HIGH COURT OF KARNATAKA,
DHARWAD BENCH
DATED THIS THE 18TH DAY OF FEBRUARY, 2025
BEFORE
THE HON'BLE MR. JUSTICE M.NAGAPRASANNA
WRIT PETITION NO.102538 OF 2024 (GM-RES)
BETWEEN:
SRI ASHOK BALLOLLI S/O. NAGAPPA BALLOLLI,
AGE: 62 YEARS, OCC: CLASS-I
PWD CONTRACTOR,
R/AT: VEERABHADRESHWAR NAGAR,
TAWAREGERA, KOPPAL,
AT/PO: KOPPAL - 583 279,
DIST: KOPPAL.
...PETITIONER
(BY SRI VIJAYKUMAR B. HORATTI, ADVOCATE)
AND:
1. THE STATE OF KARNATAKA,
Digitally signed by
VISHAL NINGAPPA
PATTIHAL REPTD. BY ITS SECRETARY TO GOVT.,
Location: High
Court of Karnataka,
Dharwad Bench,
PUBLIC WORKS AND
Dharwad
PORTS AND IN LAND
WATER TRANSPORT )DEPT.
AND WATER RESOURCES
MINOR IRRIGATION,
VIDANSOUDHA, 3RD FLOOR,
BANGALURU - 560 001.
2. THE SECRETARY TO GOVERNMENT,
MINOR IRRIGATION
AND PWD DEPARTMENT,
VIKASA SOUDHA,
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NC: 2025:KHC-D:3242
WP No. 102538 of 2024
BENGALURU - 560 001.
3. THE CHIEF ENGINEER,
COMMUNICATIONS
AND BUILDING (SOUTH),
K R CIRCLE,
BENGALURU - 560 001.
4. THE CHIEF ENGINEER,
MINOR IRRIGATION
AND PWD (NORTH),
VIJAYAPURA - 586 101,
DIST: VIJAYAPURA.
5. THE SUPERINTENDENT ENGINEER
MINOR IRRIGATION DEPARTMENT,
KALABURGI - 585 101,
DIST: KALBURGI.
6. THE EXECUTIVE ENGINEER,
MINOR IRRIGATION AND PWD DIVISION,
KOPPAL - 583 231,
DIST: KOPPAL.
7. THE EXECUTIVE ENGINEER,
MINOR IRRIGATION,
KUSHTAGI - 583 277,
DIST: KOPPAL.
...RESPONDENTS
(BY SRI SHARAD V. MAGADUM, AGA)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA, PRAYING TO ISSUE WRIT IN THE
NATURE OF CERTIORARI BY QUASHING THE IMPUGNED ORDER
DATED 16/1/2024 BEARING NO.CBC/N.SA/BLACKLIST/CW-8/
2023-24 PASSED BY RESPONDENT NO.3 PRODUCED VIDE
ANNEXURE-A AND ETC.
THIS WRIT PETITION, COMING ON FOR PRELIMINARY
HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
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NC: 2025:KHC-D:3242
WP No. 102538 of 2024
ORAL ORDER
(PER: THE HON'BLE MR. JUSTICE M.NAGAPRASANNA)
The petitioner is before this Court seeking the
following prayer:
"a) To issue writ in the nature of certiorari by quashing
the impugned order dated 16/1/2024 bearing
no.CBC/N.Sa/Blacklist/CW-8/ 2023-24 passed by
Respondent no.3 produced vide Annexure-A.
b) To pass any other order, direction as deemed fit in the
circumstances of the case."
2. The petitioner was one of those persons against
whom an order of blacklisting is passed. One of the
persons against whom an order blacklisting was passed,
had called the same in question in W.P.No.101206/2024.
This Court disposes the petition by an order dated 22nd
January 2025. The order of blacklisting passed against
several people. One of the persons is the present
petitioner and the other was the petitioner in the aforesaid
petition. This Court has held as follows :
NC: 2025:KHC-D:3242
1. The petitioner is before this Court calling in
question an order dated 16.01.2024, by which the
petitioner comes to be blacklisted.
2. Heard the learned counsel Smt. Vidyavati M.
Kotturshettar for the petitioner and the learned AGA Sri.
Sharad V. Magadum for the respondent-State.
The facts in brief germane are as follows:
3. The petitioner claims to be a Class I contractor,
working for various Government Departments with
requisite licence. It transpires that the petitioner had
undertaken certain development works that were
entrusted to him, in the year 2015-16. The claim is it
was without any deficiency in execution. Albeit the claim
that it was without any deficiency, a crime comes to be
registered against the petitioner in Crime No.317/2016
on 01.09.2016. The learned counsel for the petitioner
submits the proceedings are still pending before the
concerned Court and it has not culminated in any order
of conviction as on today.
4. When things to thus, a notice is said to have
been issued to the petitioner on 23.12.2016, as to why
the petitioner should not be blacklisted for the reason
that he has claimed the cheques without performing his
work. The petitioner then submits his reply on
31.12.2016. The reply is appended to the petition. There
is astounding silence for close to 7 years after the
NC: 2025:KHC-D:3242
submission of the reply. In the year 2023 i.e.,
07.09.2023 on the same cause of action, for the work
that the petitioner undertook, between October 2015 to
January 2016, a notice is issued as to why he should not
be blacklisted. The notice appears to be issued to
several persons whom the State wanted to blacklist. The
result of the said notice is a common order that is
passed on 16.09.2023, blacklisting several persons, all
of whom had performed their work in the year 2015-16,
the result of the aforesaid proceedings is the passage of
the impugned order. Passing of the impugned order has
driven the petitioner to this Court in the subject petition.
5. The learned counsel Smt.Vidyavati Kotturshettar,
would vehemently contend that the petitioner is not
given an opportunity as is necessary in law, to refute
the allegations that are made in the order that is
passed. The order did not precede with issuance of a
notice, the only notice and the reply that was
issued/submitted, was in the year 2016. For a reply
submitted in the year 2016, an order is passed in the
year 2024, 8 years thereafter, completely contrary to
law.
6. Per contra, learned AGA would seek to defend
the action on the score that the petitioner was issued
notice and reply was given 8 years ago and the order is
now passed reconsidering all those cases where
blacklisting had to be passed against those contractors,
NC: 2025:KHC-D:3242
who had faltered in execution of the work. The learned
AGA would submit that the earlier communications that
were issued, were all withdrawn, as they were passed
by incompetent Authorities. Now the competent
authority has passed the order and therefore this Court
should not interfere.
7. I have given my anxious consideration to the
argument advanced by the learned counsel appearing
for the petitioner and the learned AGA representing the
State.
8. The afore narrated facts are not in dispute, the
link in the chain of events, is as narrated hereinabove. It
is an admitted fact that certain development work was
entrusted to the petitioner for the year 2015-16. The
petitioner has undertaken those works. The manner in
which the petitioner has undertaken, has become the
bone of contention. A notice was issued at the outset, in
the year 2016, to the petitioner on 23.12.2016. This is
replied to by the petitioner. The reply reads as follows:
"EAzÀ,
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NC: 2025:KHC-D:3242
£ÉÆÃnøïUÉ GvÀÛgÀ
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¸À.¤Ã/«/PÉÆÃ/vÁ±Á/PÀ.¥À/2016- 17/1905 : 23.12.2016.
2) PÁAiÀÄð¤ªÁðºÀPÀ EAf¤AiÀÄgÀgÀÄ EzÀgÀ M¥ÀàAzÀ ¥ÀvæÀ ¸ÀASÉå : 1101
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¥ÀnÖUÉ ¸ÉÃj¸ÀĪÀ PÀæªÀĪÀÅ ¤AiÀĪÀÄ ¨Á»gÀªÁzÀÄzÁVgÀÄvÀÛzÉ.
¸ÀzÀj «µÀAiÀÄzÀ°è £Á£ÀÄ PÁªÀÄUÁjAiÀÄ£ÀÄß ¤ªÀ𻹠©¯ï£ÀÄß ¥ÀqÉ¢gÀĪÀÅzÀjAzÀ £À£Àß
ºÉ¸ÀgÀ£ÀÄß PÀ¥ÀÅà ¥ÀnÖUÉ ¸ÉÃj¸ÀĪÀ ¥ÀæªÉÄÃAiÀĪÉà §gÀĪÀÅ¢®è ºÁUÀÆ CAvÀºÀ PÀæªÀĪÀ£ÀÄß
PÉÊUÉƼÀî¨ÁgÀzÉAzÀÄ F ªÀÄÆ®PÀ ¤ªÀÄä°è «£ÀAw¹PÉƼÀÄîvÉÛãÉ."
9. In the reply, the petitioner has categorically
denied that he has taken any cheque for the work that
NC: 2025:KHC-D:3242
he has not performed. This reply is not acted upon. 7
years passed by, correspondence between the
departments galore for 7 years, as to who is the
competent authority, finally it appears that the State
itself has found who is its competent authority, and on
07.09.2023, another notice is issued to the petitioner.
The learned counsel submits the said notice is not
received at his end. Nonetheless no reply is sought for
and a proceeding is drawn on 19.12.2023, 7 years after
the works that have taken place in the year 2015-16
and the petitioner along with others are blacklisted. The
issue is whether it is in consonance with law.
10. Admittedly, reply to the notice was 8 years ago.
The order is passed in 2024. The reply is not even
looked into by the respondent while passing the order. It
is a common order blacklisting several people, therefore
there cannot be a common consideration of each of the
cases, as it would be in blatant violation of principles of
natural justice. Blacklisting a contractor has civil and
economic consequences, if any action which ensues civil
or economic consequences, it cannot be passed, without
compliance with principles natural justice.
11. In the light of what is narrated hereinabove, the
unmistakable inference that can be drawn against the
State is that the action is in blatant violation principles
of natural justice. In identical circumstances, this Court
though notice has been issued and opportunity was
NC: 2025:KHC-D:3242
afforded to the said contractors, had held that it would
not suffice in the eye of law. This Court has held as
follows:
"The issue now is whether it would be in consonance
with the principles of natural justice
10. As observed hereinabove, Section 14A(2) clearly
holds that opportunity of being heard should be
granted prior to the order of debarment. The
petitioner participates in the proceedings for its
debarment which would not mean that no notice
seeking such debarment should be issued prior to
passing the said order of debarment. Debarment of
a contractor has serious civil and economic
consequences apart from the Firm being termed
black everywhere. The debarment is notified on the
website of the Government. The petitioner is
debarred from participating in any Government
tender. The bills for the tender that the Firm has
completed, will also be withheld. Therefore, it has
serious civil and economic consequences. Such being
the consequence, a notice in the least, as mandated
in proviso to Section 14A(2), ought to have been
issued to the petitioner. It is admittedly not issued.
Show cause notice earlier issued was seeking a
clarification. Thus, in the considered view of the
Court, the earlier show cause notice would not be
enough compliance with the principles of natural
justice, more so, in the light of the fact that fresh
bank guarantees are sought by the respondents and
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time to complete the contract on accepting the fresh
bank guarantees is granted in favour of the
petitioner. The respondents have blown hot and
cold.
11. It becomes germane to notice the judgments of
the Apex Court and this Court rendered on the issue.
The Apex Court in the case of GORKHA SECURITY
SERVICES v. GOVERNMENT (NCT OF DELHI)1
has held as follows:
"Contents of the show-cause notice
21. The central issue, however, pertains to
the requirement of stating the action which is
proposed to be taken. The fundamental purpose
behind the serving of show-cause notice is to
make the noticee understand the precise case
set up against him which he has to meet.
This would require the statement of
imputations detailing out the alleged breaches
and defaults he has committed, so that he gets
an opportunity to rebut the same. Another
requirement, according to us, is the nature of
action which is proposed to be taken for such a
breach. That should also be stated so that the
noticee is able to point out that proposed action
is not warranted in the given case, even if the
defaults/breaches complained of are not
satisfactorily explained. When it comes to
blacklisting, this requirement becomes all the
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more imperative, having regard to the fact that it
is harshest possible action.
27. We are, therefore, of the opinion that it
was incumbent on the part of the Department to
state in the show-cause notice that the
competent authority intended to impose such a
penalty of blacklisting, so as to provide adequate
and meaningful opportunity to the appellant to
show cause against the same. However, we may
also add that even if it is not mentioned
specifically but from the reading of the show-
cause notice, it can be clearly inferred that such
an action was proposed, that would fulfil this
requirement. In the present case, however,
reading of the show-cause notice does not
suggest that noticee could find out that such an
action could also be taken. We say so for the
reasons that are recorded hereinafter.
28. In the instant case, no doubt the show-
cause notice dated 6-2-2013 was served upon
the appellant. Relevant portion thereof has
already been extracted above (see para 5). This
show-cause notice is conspicuously silent about
the blacklisting action. On the contrary, after
stating in detail the nature of alleged defaults
and breaches of the agreement committed by
the appellant the notice specifically mentions
that because of the said defaults the appellant
was "as such liable to be levied the cost
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accordingly". It further says "why the action as
mentioned above may not be taken against the
firm, besides other action as deemed fit by the
competent authority". It follows from the above
that main action which the respondents wanted
to take was to levy the cost. No doubt, the notice
further mentions that the competent authority
could take other actions as deemed fit. However,
that may not fulfil the requirement of putting the
defaulter to the notice that action of blacklisting
was also in the mind of the competent authority.
Mere existence of Clause 27 in the agreement
entered into between the parties, would not
suffice the aforesaid mandatory requirement by
vaguely mentioning other "actions as deemed
fit". As already pointed out above insofar as
penalty of blacklisting and forfeiture of earnest
money/security deposit is concerned it can be
imposed only, "if so warranted". Therefore,
without any specific stipulation in this behalf, the
respondent could not have imposed the penalty
of blacklisting."
(Emphasis supplied)
Later, the Apex Court in the case of KULJA INDUSTRIES
LIMITED v. CHIEF GENERAL MANAGER, WESTERN
TELECOM PROJECT BHARAT SANCHAR NIGAM LIMITED
has held as follows:
17. That apart, the power to blacklist a contractor
whether the contract be for supply of material or
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equipment or for the execution of any other work
whatsoever is in our opinion inherent in the party
allotting the contract. There is no need for any such
power being specifically conferred by statute or
reserved by contractor. That is because "blacklisting"
simply signifies a business decision by which the party
affected by the breach decides not to enter into any
contractual relationship with the party committing the
breach. Between two private parties the right to take
any such decision is absolute and untrammelled by any
constraints whatsoever. The freedom to contract or not
to contract is unqualified in the case of private parties.
But any such decision is subject to judicial review when
the same is taken by the State or any of its
instrumentalities. This implies that any such decision
will be open to scrutiny not only on the touchstone of
the principles of natural justice but also on the doctrine
of proportionality. A fair hearing to the party being
blacklisted thus becomes an essential precondition for
a proper exercise of the power and a valid order of
blacklisting made pursuant thereto. The order itself
being reasonable, fair and proportionate to the gravity
of the offence is similarly examinable by a writ court.
22. The guidelines also stipulate the factors that
may influence the debarring official's decision which
include the following:
(a) The actual or potential harm or impact that
results or may result from the wrongdoing.
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(b) The frequency of incidents and/or duration of
the wrongdoing.
(c) Whether there is a pattern or prior history of
wrongdoing.
(d) Whether the contractor has been excluded or
disqualified by an agency of the Federal Government or
has not been allowed to participate in State or local
contracts or assistance agreements on the basis of
conduct similar to one or more of the causes for
debarment specified in this part.
(e) Whether and to what extent did the contractor
plan, initiate or carry out the wrongdoing.
(f) Whether the contractor has accepted
responsibility for the wrongdoing and recognized the
seriousness of the misconduct.
(g) Whether the contractor has paid or agreed to
pay all criminal, civil and administrative liabilities for
the improper activity, including any investigative or
administrative costs incurred by the Government, and
has made or agreed to make full restitution.
(h) Whether the contractor has cooperated fully
with the government agencies during the investigation
and any court or administrative action.
(i) Whether the wrongdoing was pervasive within
the contractor's organization.
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(j) The kind of positions held by the individuals
involved in the wrongdoing.
(k) Whether the contractor has taken appropriate
corrective action or remedial measures, such as
establishing ethics training and implementing programs
to prevent recurrence.
(l) Whether the contractor fully investigated the
circumstances surrounding the cause for debarment
and, if so, made the result of the investigation
available to the debarring official."
(Emphasis supplied)
The Apex Court in the case of DAFFODILLS
PHARMACEUTICALS LIMITED v. STATE OF UTTAR
PRADESH has held as follows:
15. In the present case, even if one assumes that
Surender Chaudhary, the accused in the pending
criminal case was involved and had sought to indulge
in objectionable activities, that ipso facto could not
have resulted in unilateral action of the kind which the
State resorted to against Daffodills, which was never
granted any opportunity of hearing or a chance to
represent against the impugned order. If there is one
constant lodestar that lights the judicial horizon in this
country, it is this : that no one can be inflicted with an
adverse order, without being afforded a minimum
opportunity of hearing, and prior intimation of such a
move. This principle is too well entrenched in the legal
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ethos of this country to be ignored, as the State did, in
this case."
(Emphasis supplied)
Long before the afore-quoted judgments, the Apex Court in
the case of ERUSIAN EQUIPMENT AND CHEMICALS v.
STATE OF WEST BENGAL has held as follows:
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."
(Emphasis supplied)
The afore-stated are the judgments of the Apex Court. This
Court in a judgment rendered in M/s SRIMAULI
BUILDERS v. BANGALORE WATER SUPPLY AND
SEWERAGE BOARD has held as follows:
26. Much ice has melted in the Himalayas since
the date of acceptance of tender in the year 2003 by
the Board and to say in the year 2005 that too after
much of the work has been completed by the
appellant-firm, that the tender is invalid, is like waking
up when the horse has bolted out of the stable. If the
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tender itself was not valid, nothing prevented the
Board from stopping the allotment of work to the
appellant, at the initial stage itself. But, having allowed
the appellant-firm to continue to do the work till the
end of 2004 and that too after accepting the
subsequent Bank guarantees furnished by it as proper,
the Board cannot now turn around and contend before
the Court that the Bank guarantee furnished is invalid
and therefore, the termination of contracts is justified.
As already pointed out by us supra, that is not the
reason for the Board to terminate the contracts. The
Board cannot approbate and reprobate.
27. It is not expected of the Board, which is
an instrumentality of the State, to take such
inconsistent and diametrically opposite stand in
the matter of termination of the contracts, value
of which runs into crores of rupees. The Board
itself is not sure as to what prompted it to
rescind the contract. If it is due to abandonment
of work, there is no material to support the said
decision, but on the other hand, there is
overwhelming material placed by the appellant-
firm to show that it has completed substantial
portions of the work and it is eager to complete
rest of the work also. If the impugned decision is
taken on account of furnishing of fake Bank
guarantees, then, it cannot stand the test of
judicial scrutiny, because, the Board itself has
agreed subsequently that the appellant has
furnished the proper Bank guarantees. Moreover,
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nowhere in the final notice dated 12-7-2004 or in
the proceedings of the Board Meeting held on 18-
1-2005 or in the letter of termination of contract
dated 27-1-2005, is there any reference to the
Bank guarantee that is furnished being not a
proper one."
(Emphasis supplied)
In a later judgment, this Court in GANESH v. STATE OF
KARNATAKA 1 has held as follows:
6. ... ..... Moreover, the reason stated in the
impugned order that the petitioner had furnished
fake bank guarantee in the year 2013 and
therefore that forms the basis for blacklisting the
petitioner, seems to be very remote. The
respondents have admitted that they have settled
the bills tendered by the petitioner for the works
undertaken during the year 2013. consequent to
the completion of the work and setting of the
accounts, the petitioner was permitted to take
back the bank guarantee. There was no reason
furnished or even stated by the third respondent-
Executive Engineer before permitting the petitioner to
take back the bank guarantee pointing out that the
bank guarantee furnished was fake. It is also difficult to
understand how the third respondent has come to a
conclusion that the bank guarantee furnished by the
petitioner was fake having permitted the petitioner to
2020 SCC OnLine Kar.3064
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take back the bank guarantee after completion of the
works and having settled the bills in favour of the
petitioner. This itself shows that no opportunity was
given to the petitioner before the impugned order
blacklisting the petitioner was passed.
7. In the decision cited by the learned
counsel for the petitioner, the Apex Court has
held that it is 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 flow. It is described as "civil
death" of a person who is foisted with the order
of blacklisting. It was therefore held that 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. Therefore, the high
handed action of the respondents in blacklisting
the petitioner has prevented the petitioner from
participating in any Government tenders since
May 2019."
(Emphasis supplied)
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In the light of the law laid down by the Apex Court and that of
this Court quoted supra, what becomes unmistakably clear, as
a noon day is that no order of debarment or blacklisting can
be made against any person, without at the outset issuing a
notice to show cause as to why such an action should not be
taken against him. The notice, in the case at hand, with
specific reasoning seeking to show cause as to why the
petitioner should not be debarred is admittedly not issued to
the petitioner. Its participation in a meeting considering such
debarment would not suffice. A notice ought to have been
issued in compliance with Section 14A(2) of the Act, which
action will have to be taken now by the State. There cannot be
implied compliance of the tenets of principles of natural
justice, it should be substantive compliance."
12. In the light of the afore quoted undisputed facts
and the law as laid down by this Court, the petition
deserves to succeed.
13. For the aforesaid reasons, the following:
ORDER
i. Petition is allowed in part.
ii. The order dated 16.01.2024 issued by the
Government stands quashed.
iii. The respondents, if they so desire, shall issue a
notice to the petitioner seeking to show cause as to why
action should not be taken, bearing in mind the
observations made in the course of the order.
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iv. In the event, the petitioner furnishes its reply to
the show cause notice, if issued, action shall be taken in
accordance with law, on consideration of the said reply.
v. All other contentions except the one considered
in the course of the order shall remain open.
vi. Consequently, I.A.Nos.1 and 2 of 2024 also
stand disposed."
3. In the light of the petitioner identically placed
like that of the petitioner in W.P.No.101206/2024, the
reasons so rendered and the order so passed would enure
to benefit of the petitioner as well.
4. Learned AGA submits that the only difference in
the case at hand is that, a show cause notice is issued to
the petitioner and a reply is submitted. In
W.P.No.101206/2024, there was not even a show cause
notice issued.
5. Be that as it may. The finding rendered
however enure to the benefit of the petitioner.
6. For the aforesaid reasons, the following:
ORDER
(i) Petition is allowed in part.
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(ii) The order dated 16.01.2024 issued by the
Government stands quashed.
(iii) The respondents, if they so desire, shall
issue a notice to the petitioner seeking to
show cause as to why action should not be
taken, bearing in mind the observations
made in the course of the order.
(iv) In the event, the petitioner furnishes its
reply to the show cause notice, if issued,
action shall be taken in accordance with
law, on consideration of the said reply.
(v) All other contentions except the one
considered in the course of the order shall
remain open.
Sd/-
(M.NAGAPRASANNA)
JUDGE
NAA/CT-ASC
