Simplified Explanation of the Judgment
In a recent decision, the Patna High Court quashed a blacklisting order issued by the Bihar School Examination Board (BSEB) against a private service provider engaged in conducting computer-based examinations. The Court held that since the BSEB was not a party to the contract, it had no authority to pass the order of debarment and blacklisting, and hence acted without jurisdiction.
The petitioner, a private limited company, was selected through a transparent bidding process conducted by the Bihar State Electronics Development Corporation Limited (BELTRON) to provide services for various computer-based examinations conducted by BSEB. After entering into a valid service agreement with BELTRON, the petitioner started executing examination-related tasks for BSEB.
However, due to certain issues in the conduct of some examinations, the BSEB issued show-cause notices to the petitioner. Though the petitioner replied, BSEB found the responses unsatisfactory and issued an order on 20.10.2023 debaring and blacklisting the company for a period of three years.
The petitioner challenged this decision in the High Court on the grounds that:
- The agreement was with BELTRON, not BSEB.
- BSEB had no contractual relationship with the petitioner and hence no authority to impose such penalties.
- The blacklisting order carried serious commercial consequences and was passed without proper jurisdiction or adequate reasoning.
The High Court, upon examining the facts and the contract, observed that:
- The tender and agreement were both issued and signed solely by BELTRON.
- BSEB was merely the end beneficiary of the services and was not a contracting party.
- Clause 7 of the agreement clarified that only the contracting parties (BELTRON and the petitioner) could take action like termination or blacklisting based on breach of terms.
The Court emphasized that blacklisting is a serious matter with significant civil consequences and must follow due process, including jurisdictional competence, proper show-cause, and a fair hearing. Since BSEB did not possess the legal authority to blacklist a party with whom it had no contractual relationship, the impugned order was held to be without jurisdiction.
The Court thus quashed the blacklisting order but clarified that BELTRON was free to take action under the terms of the contract, following due process. BELTRON had already issued a show-cause notice separately, and it was directed to proceed after hearing both sides.
Significance or Implication of the Judgment
This judgment underscores the importance of jurisdiction and procedural fairness in administrative decisions that have serious financial and reputational implications. For private contractors and service providers working with government agencies, it reinforces the principle that only the party to a contract can take punitive actions arising out of it. Government bodies must act within their legal boundaries, and decisions such as blacklisting must follow proper legal procedure to avoid being struck down.
It also serves as a reminder for all government departments to clearly outline their roles and responsibilities in tripartite or agency-based contractual arrangements. Failing to do so may result in unenforceable decisions and legal setbacks.
Legal Issue(s) Decided and the Court’s Decision
- Whether BSEB had jurisdiction to blacklist a contractor not directly engaged by it?
→ No. The contract was solely between BELTRON and the petitioner. BSEB was not privy to the agreement and lacked authority to impose blacklisting. - Was the blacklisting order passed with due process and application of mind?
→ No. The order lacked detailed reasoning and failed to demonstrate application of mind. - What is the effect of blacklisting by a non-contracting party?
→ It is void for want of jurisdiction and liable to be quashed.
Judgments Referred by Parties
- Vetindia Pharmaceuticals Ltd. v. State of Uttar Pradesh, (2021) 1 SCC 804.
Judgments Relied Upon or Cited by Court
- Kulja Industries Ltd. v. Chief General Manager, BSNL, (2014) 14 SCC 731.
Case Title
M/s Edutest Solutions Private Limited v. Bihar School Examination Board & Others
Case Number
Civil Writ Jurisdiction Case No.16224 of 2023
Coram and Names of Judges
Hon’ble the Chief Justice
Hon’ble Mr. Justice Harish Kumar
Names of Advocates and who they appeared for
- Mr. Mrigank Mauli, Sr. Advocate (for the petitioner)
- Mr. Saket Tiwary, Advocate (for the petitioner)
- Mr. Satyabir Bharti, Advocate (for the respondents – BSEB)
- Mr. Abhishek Anand, Advocate
- Ms. Manupriya, Advocate
Link to Judgment
https://www.patnahighcourt.gov.in/ShowPdf/web/viewer.html?file=../../TEMP/4f582046-be3a-4a4e-a42d-92dd2837995d.pdf&search=Blacklisting
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