Everest Enterprises vs National Buildings Construction Corporation Ltd.

S. Ravindra Bhat, J.—Issue Rule. Heard counsel for the parties.

The petitioner seeks quashing of a Circular dated 25.10.2002 issued by the respondent � National Buildings Construction Corporation (hereafter referred to as NBCC), having the effect of black listing it from participating in future tender processes or entering into contracts or commercial arrangements with it.

The petitioner claims to have been engaged in the housekeeping of NBCC�s premises for the period 1993-2002. The latter issued a notice inviting tenders for the job of general upkeep on 26.6.2001, in which the petitioner was held successful and was awarded a contract for the period 1.8.2001 to 31.7.2002. In these circumstances, the petitioner avers that when tenders were called for a subsequent period and it responded, (in relation to another organization), it learnt, on 29.5.2007 from Hindustan Aeronautics Limited that it had been black listed by the NBCC. It claims that the order of black listing was not served upon it and therefore the same should be quashed.

The NBCC contends in its counter affidavit that although the agreement was entered into at the relevant time in 2001, as averred by the petitioner, its services were unsatisfactory; it relies upon a show cause notice dated 9.10.2002, issued through speed post whereby deficiencies were notified to the petitioner and it was called upon to show cause why it should not be black listed or debarred from having future dealings with it.

Learned Counsel reiterated the position taken in the pleadings. It was besides contended on behalf of the NBCC that the petitioner has approached this Court belatedly after a lapse of 5 years of issuance of the impugned Circular. Counsel for the petitioner, on the other hand, contended that the impugned black listing/debarment is unsupportable in law because it was neither communicated to it and more importantly it does not have a terminus quo.

The NBCC�s response, is that the order was kept in its Notice Board and the petitioner should have acquainted itself of this position.

The factual narrative shows that there is no dispute about the fact that the petitioner was issued with a show cause notice before the order was made. However, the petitioner disputes that the actual debarment order was ever communicated to it. The said order reads as follows:

National Buildings Construction Corporation Limited (A Government of India Enterprise)

NBCC BHAWAN

LODI ROAD,

New Delhi 110 003.

Dated: 25th October, 2002

No. NBCC/ADMIN/Maint/2002

Circular

The competent authority has decided that until further order NBCC shall not award any work to the firm known as M/s Everest Enterprises (prop. Shri Rajesh Sharma) Q-60, Sector12, Noida � 201301 and the partners/Directors of this firm, and any other firm/company by whatever name called in which the aforesaid firm or any or more of its partners or their family members, have any share of interest whatsoever.

It may be ensured that the above decision is implemented by all concerned with immediate effect.

This

issues with the approval of Chairman-cum-Managing Director.

Sd/-

(B. Prasad)

Group General Manager (Admin.)

Copy to:

All Zonal Heads-GGM/GM/AGM, NBCC, Limited.

All HODs in the corporate office, NBCC Limited, New Delhi.

ED (Vig.), NBCC Limited, New Delhi-3.

SO to CMD/DSE to Director (P), NBCC, Limited, N. Delhi.

All AGM/DGM/PM/DPM/Unit In charges ,NBCC Limited.

Notice Board.

Sd/-

(B. Prasad)

Group General Manager (Admin.)

According to the NBCC�s contentions, the decision to debar the petitioner was taken in accordance with law and communicated in accordance with its practices. Its contention appears to be that by placing such Circular on the Notice Board, the requirement of natural justice stands fulfilled. It has been held repeatedly by the decisions of the Supreme Court as well as this Court (referred to Erusian Equipment and Chemicals Ltd. Vs. State of West Bengal and Another, that since an order of black listing or debarment involves drastic consequences, the public agency concerned should follow a fair and reasonable procedure the appropriate procedure before issuing it. Now, there is no dispute that the petitioner was issued with a show cause notice. However, the manner in which the order was made and communicated, (or not communicated, which is a better way of describing what happened) can hardly be upheld by the Court. It has been held right from more than four decades ago that any adverse order visiting the party concerned with adverse consequences must not only be made after following minimum requirement of fair procedure but also must be communicated to him.

In this case, the impugned Circular (extracted above) was addressed to all parties except the petitioner who is made to suffer the consequences. Besides this the other serious infirmity, in the view of this Court, is that the Circular is open ended in the sense that no term or tenure has been indicated by the NBCC. In that sense, the impugned circular is disproportionate since it forbids the petitioner for all times from engaging in any kind of commercial transactions with the respondent � NBCC. Such virtual �civil death sentence�, is arbitrary and unreasonable. It is one thing for a public body or agency to say that it would not do business, for a specified term, having regard to behavior, conduct or performance (or nonperformance) of a private concern. Yet, to forbid business altogether negates the rights of such persons under Articles 14 and 19(1)(g) of the Constitution of India. It bristles with absoluteness, and whimsicality that is unsupportable in law. Such action � of not entering into contract � may be a choice available to a private individual, or company, but cannot be countenanced, when expressed for an indefinite term, by a public agency.

In view of the above discussion, the petition deserves to be allowed. Accordingly, the impugned Circular dated 25.10.2002 is hereby quashed. The Writ Petition is allowed in the above terms. No costs.