M/S Infosystem And Solutions vs The State Of Bihar
2023 Latest Caselaw 2077 Patna

          IN THE HIGH COURT OF JUDICATURE AT PATNA
                   Civil Writ Jurisdiction Case No.8928 of 2022
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M/s Infosystem and Solutions through its proprietor namely Abhishek Kumar Upadhyay having its Office situated at - 3rd floor, Devendra Laxmi Complex, Shaguna More, Patna - 801503.

... ... Petitioner/s Versus

1. The State of Bihar through the Principal Secretary, Prohibition, Excise and Registration Department, Government of Bihar, Patna.

2. Principal Secretary, Prohibition, Excise and Registration Department, Government of Bihar, Patna.

3. Joint Secretary, Prohibition, Excise and Registration Department, Government of Bihar, at Patna.

4. Under Secretary, Prohibition, Excise and Registration Department, Government of Bihar, Patna.

5. Deputy Secretary, Prohibition, Excise and Registration Department, Government of Bihar, Patna.

... ... Respondent/s ====================================================== Appearance :

For the Petitioner/s : Mr.Sumeet Kumar Singh, Advocate Mr.Kumar Avinash, Advocate For the Respondent/s : Ms. Roona, AC to GP7 ====================================================== CORAM: HONOURABLE MR. JUSTICE P. B. BAJANTHRI and HONOURABLE MR. JUSTICE ARUN KUMAR JHA ORAL JUDGMENT (Per: HONOURABLE MR. JUSTICE P. B. BAJANTHRI)

Date : 03-05-2023

A hard copy of the Counter affidavit is accepted.

2. In the instant petition, the petitioner has prayed for the

following reliefs:-

"I. That the present writ application is being filed in the nature of Certiorari for quashing the letter no. 3214 dated 02.05.2022 (Annexure-

P/17), issued under the signature of the Joint Secretary, Prohibition, Excise and Registration Department, Government Patna High Court CWJC No.8928 of 2022 dt.03-05-2023

of Bihar by which order has been passed to cancel the agreement of the petitioner/company dated 21.02.2022 which was in relation to empanelment of man power placement agency for providing services (multi-tasking staff(MTS), data entry operator(DTO), office boy in the department), the Bank guarantee of Rs. 14 lakhs of the petitioner/company has been forfeited, the petitioner/ company has been blacklisted to participate in any future tenders of the department for 3 years till 31.03.2025; on the ground that the entire order passed by the respondent authority is without considering the show cause reply given by the petitioner/company, there is no finding with regard to the reply given by the petitioner to the authority, there is no consideration by the respondent of the fact that there is with regard to breach of the terms of the agreement, the grounds stated for cancellation of the agreement is beyond the purview of the terms of the agreement, the work dated 21.02.2022(work order) and letter 02.03.2022 does not speak of supply of manpower of 189 manpower, the action of the respondent is exceeding his jurisdiction and without following the principles of natural justice;

II. That the present writ application being filed in the nature of Mandamus for a direction to the Joint Secretary, Prohibition, Excise and Registration Department, Bihar at Patna to reinstate the petitioner/company in relation to the tender which was for selection of man power placement agency for providing the office staff like data entry operator, multi-tasking staff bearing NIT no.

PRED/HQ/ADMN/SUPPORT/2021 in Patna High Court CWJC No.8928 of 2022 dt.03-05-2023

terms of the agreement dated 21.02.2022 and to provide all consequential benefits;

III. And pass any such other order/ orders as this Hon'ble Court deem fit and proper."

3. The petitioner was a successful bidder insofar as

providing manpower to the Prohibition, Excise and Registration

Departments, Government of Bihar. During the course of the

contract, the respondents have noticed certain defects in executing

the work. In this regard, the number of office orders were issued

insofar as fulfilling the required manpower in terms of the

agreement. The same has not been rectified by the petitioner.

Further, he is involved in offences under the Excise Act. In this

regard, he was arrested on 24.03.2022. While taking note of these

two issues, the respondent issued notice on 01.04.2022, for which

the petitioner is stated to have submitted his reply on 05.04.2022.

Thereafter, an order of forfeiting ₹14,00,000/- (Rupees Fourteen

Lakhs Only) and blacklisting for a period of three years which

would be in vogue till 31.03.2025 has been ordered on 02.05.2022,

hence the present writ petition.

4. Learned counsel for the petitioner submitted that the

notice dated 01.04.2022 is not in compliance to Clause 14.1.4 of

the agreement. It is further submitted that there is no specific

averment in the notice that there is a proposal for forfeiting of Patna High Court CWJC No.8928 of 2022 dt.03-05-2023

₹14,00,000/- (Rupees Fourteen Lakhs Only) and blacklisting for a

period of three years i.e. upto 31.03.2025. In addition to these two

counts, it is also submitted that merely he was involved in the

offences under Excise Act in his personal capacity that too, the

alleged incident had taken place at his residence. Such incident

cannot be taken note of for the purpose of forfeiting and

blacklisting the petitioner, in the absence of any such clause in the

agreement.

5. Per contra, learned counsel for the respondent

resisted the aforesaid contentions and submitted that the petitioner

has failed to comply the various clauses of agreement insofar as

providing or supplying manpower. In this regard, two office orders

were issued on 21.02.2022 and 02.03.2022. The same has not been

complied by the petitioner. That apart, he is involved in criminal

proceedings. The same has been taken note of while issuing show

cause notice on 01.04.2022 and proceeded to forfeiting of

₹14,00,000/- (Rupees Fourteen Lakhs Only) and blacklisting him

for a period of three years i.e. upto 31.03.2025 vide order dated

02.05.2022 is in order. Therefore, it is also submitted that Clause

11.4 has been complied.

6. Heard the learned counsel for the respective parties. Patna High Court CWJC No.8928 of 2022 dt.03-05-2023

7. Before adverting to the factual aspects of the matter it

is necessary to reproduce the Clause 11.4 and 14.1.4 of the

agreement which reads as under:-

"Clause 11.4. In the event of the agreement being terminated or rescinded due to non compliance of any of the clause/condition of the agreement by the FIRST Party, the Performance Guarantee shall stand forfeited in full on issue of notice of termination of Agreement and shall be absolutely at the discretion of DEPARTMENT.

Clause 14.1.4. FIRST PARTY becomes bankrupt or goes into receivership or liquidation or makes an assignment for the benefit of his creditors.

                                        In any such events (other than the
                             specified      in     Clause     14.1.4   where
                             DEPARTMENT             may      terminate    the

AGREEMENT forthwith, DEPARTMENT may terminate this AGREEMENT by giving the FIRST PARTY 30 (thirty) days written notice on the effective date of which FIRST PARTY shall stop the performance of the SERVICES and during which FIRST PARTY shall take such action towards winding up of the SERVICES as DEPARTMENT may reasonably direct. In the event of such termination DEPARTMENT shall pay to the FIRST PARTY:

i) Amount earned by but unpaid to the FIRST PARTY prior to termination.

                                        ii)     Other     reasonable    costs
                             determined        solely   by     DEPARTMENT

incidental to such winding up of SERVICES, provided that the Termination is not on account of reasons attributable to FIRST Party."

Patna High Court CWJC No.8928 of 2022 dt.03-05-2023

8. No doubt, the respondents are empowered to invoke

Clause 11.4. At the same time, they cannot brush aside the judicial

pronouncements insofar as providing specific notice for

blacklisting of a contractor. That apart, they have violated Clause

14.1.4 to the extent that notice dated 01.04.2022 stipulate within

seven days he has to file his reply. On the other hand, Clause

14.1.4 specifically provide 30 days written notice.

9. Further, we noticed that notice is not specific insofar

as blacklisting the petitioner for a period of three years. The

respondents have taken extraneous material insofar as involvement

of the petitioner in a criminal proceedings for the offences under

the Excise Act. If a contractor is involved in criminal proceedings

in that event there is no clause in the agreement, to the extent that

contract would be terminated and a contractor would be

blacklisted. Therefore, the respondents have taken extraneous

material.

10. In the light of these facts and circumstances, on short

ground, the petitioner has made out a case that notice is not in

terms of Clause 14.1.4 and notice is not specific to the extent of

blacklisting the petitioner for a period of three years i.e. till

31.03.2025.

Patna High Court CWJC No.8928 of 2022 dt.03-05-2023

11. Accordingly, Letter No. 3214 dated 02.05.2022

stands set aside and the present writ petition is allowed, reserving

liberty to the respondents to initiate appropriate proceedings and in

accordance with law. The concerned authorities are to take note of

judicial pronouncements insofar as blacklisting how action is

required to be taken.

12. In this regard Apex Court in the case of UMC

Technologies Pvt. Ltd. vs. Food Corporation of India and

Another, reported in (2021) 2 SCC 551 read with Isolators And

Isolators Through Its Proprietor Mrs. Sandhya Mishra vs.

Madhya Pradesh Madhya Kshetra Vidyut Vitran Co. Ltd. & Anr.

reported in 2023 LiveLaw (SC) 330 had taken note of as to how

the authority was required to proceed before blacklisting a

contractor. In this regard, the following points are required to be

taken note of before proceeding further against the petitioner:-

"(i) The order of blacklisting involving civil consequences cast slur. Such an action can be taken only on the basis of objectives, satisfaction of the authority concerned. The fundamental of fair play required that the person concerned should be given an opportunity to present his case before he is put on blacklisting.

(ii) The order of blacklisting must specifically spell out the intention of blacklisting.

(iii) The order of blacklisting must be speaking order supported with reasons. Patna High Court CWJC No.8928 of 2022 dt.03-05-2023

(iv) Blacklisting cannot be for an indefinite period and the period of blacklisting should be fixed based on doctrine of proportionality of the case."

13. Further, action shall be taken against the petitioner

within a period of four months from the date of receipt of this

order.

(P. B. Bajanthri, J)

( Arun Kumar Jha, J) abhishekkr/-

AFR/NAFR                NAFR
CAV DATE                NA
Uploading Date          09.05.2023
Transmission Date       NA