Simplified Explanation of the Judgment

The Patna High Court recently set aside a 10-year blacklisting order against a government contractor, ruling that the decision was arbitrary and in violation of natural justice. The petitioner, a registered Class I contractor under the Minor Irrigation Department of Bihar, was blacklisted by the department for allegedly submitting forged work experience documents in a 2021-22 tender.

The blacklisting order was issued by the In-charge Chief Engineer of the department on 20 February 2023. It cited an alleged interpolation in the “work done value” section of the contractor’s documents, without properly informing him of the specific charge or giving a valid opportunity to defend himself.

The petitioner argued that:

• The show cause notice issued on 11 October 2022 did not mention blacklisting as a possible outcome.
• The notice was vague, lacked specific allegations, and was not issued by the competent authority.
• Despite submitting a detailed reply on 5 December 2022, the department did not respond to the petitioner’s explanation.
• New evidence and recommendations used in the final decision were not disclosed to the petitioner, violating the principles of natural justice.
• The final order was non-speaking, meaning it did not explain the reasoning or address the reply.

The department defended its decision by stating that:

• The contractor submitted a forged certificate and had admitted it was a “bonafide mistake.”
• The department had the authority to act under Rule 11(a)(vii) of the Bihar Contractors Registration Rules, 2007.
• They had issued multiple letters seeking an explanation, and there was no procedural violation.

However, the High Court observed several flaws in the process:

• No proper show cause notice was issued for blacklisting; the earlier notices only asked for clarification regarding document discrepancies.
• The blacklisting order did not address or evaluate the petitioner’s response.
• The order lacked reasoning and violated the established principle that punitive administrative decisions must be reasoned.
• The penalty of 10 years was disproportionate, considering the certificate issue might not have been deliberate.

Citing various Supreme Court decisions, including Gorkha Security Services v. Government of NCT of Delhi and Kulja Industries Ltd. v. BSNL, the High Court emphasized that any decision to blacklist must meet procedural fairness, include a specific notice regarding the proposed penalty, and be proportional to the alleged offense.

In conclusion, the Court quashed the blacklisting order and directed the department to reconsider the matter afresh within three months, following due process and legal guidelines.

Significance or Implication of the Judgment

This ruling reinforces the need for government departments to adhere strictly to the principles of natural justice when penalizing contractors. Blacklisting, being a serious civil and economic penalty, cannot be imposed casually or without full procedural compliance. For contractors, this judgment ensures their right to fair hearing and protects them from arbitrary actions. For government departments, it serves as a reminder to follow due process, especially when imposing severe sanctions like multi-year blacklisting.

Legal Issue(s) Decided and the Court’s Decision with reasoning

• Was the blacklisting order valid without a specific show cause notice proposing blacklisting?
  • No. The Court held that no proper show cause notice was issued stating that blacklisting was being considered, violating natural justice.
• Was the final order of blacklisting a reasoned decision?
  • No. It did not evaluate the petitioner’s defense nor offer reasoning, rendering it arbitrary and unsustainable.
• Did the authority consider fresh evidence without sharing it with the petitioner?
  • Yes. Post-notice letters and recommendations were considered in the final decision without sharing them with the petitioner.
• Was the 10-year blacklisting order proportionate?
  • No. The Court found the duration excessively harsh and lacking justification, especially when the registration was only valid for five years.
• Did the Court allow alternative remedy arguments to bar writ petition?
  • No. Given that fundamental rights and natural justice were involved, the writ was maintainable.

Judgments Referred by Parties (with citations)

• Gorkha Security Services v. Government of NCT of Delhi, (2014) 9 SCC 105
• Siemens Engineering v. Union of India, AIR 1976 SC 1785
• S.L. Kapoor v. Jagmohan, AIR 1981 SC 136
• S.N. Mukherjee v. Union of India, AIR 1990 SC 1984
• Chandan Kumar Yadav v. State of Bihar, 2013 (2) PLJR 605

Judgments Relied Upon or Cited by Court (with citations)

• Kulja Industries Ltd. v. BSNL, (2014) 14 SCC 731
• Erusian Equipment and Chemicals Ltd. v. State of West Bengal, AIR 1975 SC 266
• Raghunath Thakur v. State of Bihar, (1989) 1 SCC 229
• UMC Technologies (P) Ltd. v. FCI, (2021) 2 SCC 551
• M.P. Power Management Co. Ltd. v. Sky Power Southeast Solar India (P) Ltd., (2023) 2 SCC 703

Case Title

Rajiv Kumar vs. State of Bihar & Others

Case Number

Civil Writ Jurisdiction Case No. 3860 of 2023

Coram and Names of Judges

Hon’ble Mr. Justice P. B. Bajanthri
Hon’ble Mr. Justice Arun Kumar Jha

Names of Advocates and who they appeared for

For the Petitioner:

• Mr. Prabhat Ranjan, Advocate
• Mr. Chandan Kumar, Advocate

For the Respondents:

• Mr. Ajay Kumar, G.A.-9

Link to Judgment
https://www.patnahighcourt.gov.in/ShowPdf/web/viewer.html?file=../../TEMP/578ea692-7ae7-4596-9625-c0c3c169fac3.pdf&search=Debarment

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