Telangana High Court

Unity Infraprojects Limited vs The A.P. Industrial Infrastructure ... on 8 April, 2024

Author: Surepalli Nanda

Bench: Surepalli Nanda

      HON'BLE MRS. JUSTICE SUREPALLI NANDA

             Writ Petition No.22474 of 2013

ORDER:

Heard Sri D. Ramakrishna, learned counsel for the

petitioner and Sri L. Prabhakar Reddy, learned Standing

Counsel for Telangana State Industrial Infrastructure

Corporation Limited (TSIIC) appearing for respondent

Nos.1 & 2.

2. The petitioner approached this Court seeking

prayer as under:

"to issue an writ order or direction more particularly one in the nature of Writ of Mandamus declaring the letter No.ENCAPIIC/T2- 38/IRDA/BLDG/2008-09 dated 12-07-2013 issued by the Respondents as discriminatory, illegal, arbitrary, unjust, contrary to principles of natural justice and violative of Article 14 of the Constitution of India and set aside the same and also declare that the Petitioner is entitled to participate in future tenders which may be issued by the Respondents and consequently direct the Respondents to permit the Petitioner to participate in future tenders which may be issued by the Respondents in the interest of

justice and pass such other order or orders as this Hon'ble Court may deem fit and proper in the circumstances of the case."

3. This Court by its order dated 30.07.2013 in WPMP

No.27566 of 2013 passed orders, which read as under:

"The writ petition is instituted by Unity Infraprojects Limited aggrieved by letter No.ENCAPIIC/T2-38/IRDA/BLDG/2008-09, dated 12.07.2013. By the above order, the subject contract work of the petitioner was terminated and the petitioner Company was black listed.

Learned senior counsel appearing for the petitioner submits that the black listing was done without issuing notice or giving opportunity to the petitioner.

Learned counsel for the respondent Corporation resisted the claim for grant of interim suspension and stated that the issue regarding non completion of the work entrusted to the petitioner was subject matter of continuous correspondence for a long time and the order impugned was as a result of the correspondence, which was going on, and therefore, it cannot be said that the order was a non speaking order.

The grievance of the petitioner is with regard to the black listing and its non-participation in future contracts. Prima facie, the material on record does not show that petitioner was put on notice and afforded opportunity with reference to prohibition from participation in future contracts.

Hence, there shall be interim suspension as prayed."

4. It is represented by the learned Standing Counsel

appearing on behalf of the respondents that the interim orders

of this Court dated 30.07.2013 are in force as on date and the

only ground for passing of the interim orders in favour of the

petitioner by this Court on 30.07.2013 is that the order

impugned dated 12.07.2013 passed by respondent No.2 is a

non-speaking order.

5. Perused the record. The impugned order dated

12.07.2013 reads as under:

"To M/s. Unity Infra Projects Limited, 1252, Pushpanjali, Old Prabhadevi Road, Mumbai - 400 025.

Sub: Construction of IRDA Office Building at Nanakramguda, Hyderabad - Blacklisting in APIIC for Tenders - Reg.

Ref: 1. L.S. Agt No: 16/ENC/APIIC/2011-12, DT 04.05.2011.

2. Lr.No.ZM/CBZ/DB/APIIC/DW/IRDA/NNK/2011-12, Dt 01.06.2013.

~~ ~~ ~~

Your attention is drawn to the reference cited where in the contract for the subject work was terminated after all efforts to get the work done failed in spite of several opportunities given to you.

In continuation of the above it is informed that your firm M/s. Unity Infra Projects Limited is blacklisted and debarred from taking part in future tenders of APIIC.

ENGINEER-IN-CHIEF"

A bare perusal of the impugned order dated 12.07.2013

issued by respondent No.2 clearly indicates that it is not a

speaking order and the said decision of blacklisting the whole

company had been taken without assigning any reasons and in

clear violation of principles of natural justice without issuing

notice to the petitioner.

6. The Apex Court in its Judgment reported in 1975

(1) SCC Page 75 in "Erusian Equipment and Chemicals

Ltd. v. State of West Bengal", at paras 17 and 20

observed as under:

"17 ...The activities of the Government have a public element and, therefore, there should be fairness and equality. The State need not enter into any contract with anyone but if it does so, it must do so fairly without discrimination and without unfair procedure. Reputation is a part of a person's character and personality. Blacklisting tarnishes one's reputation.

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."

7. The Apex Court in the Judgment reported in 1989

1 SCC Page 230 in "Raghunath Takur v. State of Bihar",

at para 4, observed as under:

"4. Indisputably, no notice had been given to the appellant of the proposal of blacklisting the appellant. It was contended on behalf of the State Government that there was no requirement in the rule of giving any prior notice before blacklisting any person. Insofar as the contention that there is no requirement specifically of giving any notice is concerned, the respondent is right. But it is an implied principle of the rule of law that any order having civil consequence should be passed only after following the principles of natural justice. It has to be realised that blacklisting any person in respect of business ventures has civil consequence for the future business of the person concerned in any event. Even if the rules do not express so, it is an elementary principle of natural justice that parties affected by any order should have right of being heard and making representations against the order. In that view of the matter, the last portion of the order insofar as it directs blacklisting of the appellant in respect of future contracts, cannot be sustained in law. In the premises, that portion of the order directing that the appellant be placed in the blacklist in respect of future contracts under the Collector is set aside. So far as the cancellation of the bid of the appellant is concerned,

that is not affected. This order will, however, not prevent the State Government or the appropriate authorities from taking any future steps for blacklisting the appellant if the Government is so entitled to do in accordance with law i.e. after giving the appellant due notice and an opportunity of making representation. After hearing the appellant, the State Government will be at liberty to pass any order in accordance with law indicating the reasons therefor. We, however, make it quite clear that we are not expressing any opinion on the correctness of otherwise of the allegations made against the appellant. The appeal is thus disposed of."

8. The Apex Court in the Judgment reported in

(2014) 9 SCC Page 105 in "Gorkha Security Services v.

Government (NCT of Delhi) and others", at paras 16

and 34, observed as under:

"16. It is a 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 follow. It is described as "civil death" of a person who is foisted with the order of

blacklisting. 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."

34. For the aforesaid reasons, we are of the view that the impugned judgment of the High Court does not decide the issue in the correct perspective. The impugned Order dated 11.09.2013 passed by the respondents blacklisting the appellant without giving the appellant notice thereto, is contrary to the principles of natural justice as it was not specifically proposed and, therefore, there was no show-cause notice given to this effect before taking action of blacklisting against the appellant. We, therefore, set aside and quash the impugned action of blacklisting the appellant. The appeals are allowed to this extent. However, we make it clear that it would be open to the respondents to take any action in this behalf after complying with the necessary procedural formalities delineated above. No costs."

9. Taking into consideration the aforesaid facts and

circumstances and the law laid down by the Apex Court

in the judgments (1) Erusian Equipment and Chemicals

Ltd Vs. State of West Bengal, reported in 1975 (1) SCC

Page 75, (2) Raghunath Takur Vs. State of Bihar,

reported in 1989 1 SCC Page 230, and (3) Gorkha

Security Services Vs. Government (NCT of Delhi) and

others reported in 2014 (9) SCC, Page 105, (referred to

and extracted above), the Writ Petition is allowed as

prayed for. It is however, observed that it is open for

the respondents to reinitiate the proceedings afresh

relating to blacklisting the petitioner, if so advised by