Simplified Explanation of the Judgment
In a significant judgment, the Patna High Court partially allowed the writ petition of a private security firm that challenged its exclusion from a government tender process and subsequent blacklisting without being given a fair opportunity to present its case.
The petitioner, a private limited company engaged in security and facility management services, had applied in response to a Notice Inviting Tender (NIT) issued on 18.03.2016 by the District Health Society, Purnea. The tender process was for a public health-related project under the Department of Health, Government of Bihar.
However, the petitioner’s bid was not considered and its financial bid was not even opened. The Civil Surgeon-cum-Member Secretary of the District Health Society issued an order (Memo No. 683 dated 25.05.2016) cancelling the petitioner’s participation. The firm alleged that the cancellation was arbitrary and done to favor other participants. The company, having prior experience and qualification, claimed it was unfairly prevented from competing.
While the writ petition was pending, the petitioner was blacklisted and barred from participating in any future tenders by the district authorities. This additional penalty was challenged through interlocutory applications, upon which the Court had granted a temporary stay in 2016.
Upon final hearing in 2023, the Court examined two key issues:
- Whether the cancellation of the financial bid warranted interference; and
- Whether the blacklisting of the petitioner without a fair hearing could be sustained.
Regarding the first issue, the Court noted that there was no interim protection granted by the Court regarding the opening of the financial bid. Meanwhile, the tender process had been completed and the work already allotted to other respondents. Hence, the Court declined to interfere with the tender allotment process, considering it as concluded.
On the second and more critical issue—blacklisting—the Court found in favor of the petitioner. The bench observed that the blacklisting order dated 16.08.2016 was passed without giving the petitioner a chance to be heard. Such a process violates the principles of natural justice and is contrary to settled law.
Referring to Supreme Court rulings, especially:
- UMC Technologies Pvt. Ltd. v. Food Corporation of India & Anr. [(2021) 2 SCC 551], and
- Isolators and Isolators Through Its Proprietor v. MP Madhya Kshetra Vidyut Vitran Co. Ltd. [2023 LiveLaw (SC) 330],
the High Court reiterated that blacklisting cannot be sustained without due notice and hearing.
As a result, the Court set aside the blacklisting order, while granting liberty to the authorities to take appropriate action afresh—only after following due process of law, including giving the petitioner a fair opportunity to be heard. The Court directed that this entire process should be completed within four months from the receipt of the order.
Significance or Implication of the Judgment
This judgment is a strong reaffirmation of the fundamental principle of “audi alteram partem”—the right to be heard before being condemned. It serves as a cautionary message to government departments and public agencies that blacklisting or debarment, which affects the livelihood and business rights of a firm, cannot be imposed arbitrarily.
For businesses and contractors dealing with government tenders, the judgment offers legal clarity and recourse. It ensures that any exclusion or penal action must follow fair procedure and established legal standards. For public authorities, this judgment re-emphasizes the importance of procedural integrity and transparency in procurement and contract-related decisions.
Legal Issue(s) Decided and the Court’s Decision with Reasoning
- Was the petitioner entitled to relief for cancellation of its financial bid?
- Decision: No
- Reasoning: The Court did not interfere as the tender process had already concluded and no interim protection was in place.
- Was the blacklisting of the petitioner valid under law?
- Decision: No
- Reasoning: The blacklisting order was passed without giving the petitioner a chance to be heard, violating principles of natural justice.
- Can authorities reinitiate blacklisting action?
- Decision: Yes, but only after providing due hearing and following lawful procedure.
- Timeline for reconsideration by authorities?
- Decision: Within four months from the receipt of the Court’s order.
Judgments Relied Upon or Cited by Court
- UMC Technologies Pvt. Ltd. v. Food Corporation of India & Anr., (2021) 2 SCC 551
- Isolators and Isolators Through Its Proprietor v. MP Madhya Kshetra Vidyut Vitran Co. Ltd., 2023 LiveLaw (SC) 330
Case Title
M/s A To Z Protection And AMC Services Pvt. Ltd. v. The State of Bihar & Ors.
Case Number
CWJC No. 10754 of 2016
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
- None appeared for the petitioner
- Mr. Ajit Kumar (G.A.-9), Mr. Arvind Kumar (AC to G.A.-9) – for the respondents
Link to Judgment
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