Sahaji Ch. Rout vs Chairman, PPT and Others

Heard learned Counsel for the parties

The petitioner has challenged the order dated 27.12.2007 passed by opposite party No. 4 forfeiting the EMD of the petitioner, blacklisting him and discharging the tender and putting the work to re-tender.

The main grievance of the petitioner is that by the impugned order dated 27.12.2007 the petitioner was blacklisted without giving him an opportunity of hearing to show cause. The petitioner is an enlisted ''C'' class contractor for a period of three years which commenced from 15th May, 2006. Paradip Port Trust published a Tender Call Notice on 16.4.2007 for the work "Maintenance and Development of various gardens, lawn, parks, etc. in and around Paradip Port and Paradip Port Trust Guest House Garden at Bhubaneswar for the year 2007-08 (Zone-Ill)". In pursuance of the said Tender Call Notice, the petitioner and others applied for the same. The petitioner deposited EMD of Rs. 5200/- and submitted his form. The tenders were opened on 14.5.2007. The work was not issued in his favour. However, all of a sudden, opposite party No. 4 passed the impugned order on 27.12.2007. The action of the said opposite party was without adopting due procedure of law and without applying the principle of natural justice.

Opposite parties have filed their counter affidavit stating therein that as per Clause-34 of the Tender Call Notice which incorporated the clause regarding blacklisting of the tenderer in case wrong/false/ forge/fake documents furnished are found by the authorities. However, nowhere they have stated that after following the due procedure of law they have passed the order or given any opportunity to the petitioner to show cause. It also appears from the minutes of the HOD meeting of the opposite parties held on 23.9.2008 that before blacklisting a firm/individual in cases of default/theft attributable to the contractors and others for imposition of penalties, approval of the competent authority is necessary prior to affording reasonable opportunity to them to show cause. After obtaining approval, the orders were issued straightaway without following the procedure of issuing a final show cause notice to a party. Such technical lapses give rise to grievances on the ground of natural justice. In view of that, all such cases should be properly dealt and final order should only be passed following the due procedure. It is the well settled principle that blacklisting amounts to imposition of punishment leading to civil consequence which affects the petitioner prejudicially in his business and trade.

In the case of Erusian Equipment and Chemicals Ltd. Vs. State of West Bengal and Another, , the apex Court has held as follows:

Under Article 298 of the Constitution the Executive power of the Union and the State shall extend to the carrying on of any trade and to the acquisition, holding and disposal of property and the making of contracts for any purpose. The State can carry on executive function by making a law or without making a law. The exercise of such powers and functions in trade by the State is subject to Part III of the Constitution. Article 14 speaks of equality before the law and equal protection of laws. Equality of opportunity should apply to matters of public contracts. The State has the right to trade. The State has there the duty to observe deal with any person. The Government cannot choose to exclude persons by discrimination. The order of black-listing has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is unabl3 to enter into advantageous relations with the Government because of the order of black-listing. A person who has been dealing with the Government in the matter of sale and purchase of materials has a legitimate interest or expectation. When the State acts to the prejudice of a person it has to be supported by legality.

This Court in the case of Maheswari Enterprises and Ambika Enterprises (Joint Venture) Vs. Mahanadi Coalfields Limited and Another, has also taken the same view.

In view of the settled principle of law, this Court quashes the impugned order blacklisting the petitioner under Annexure-2.

The writ petition is accordingly disposed of.

Urgent certified copy of this order be issued as per rules.