Simplified Explanation of the Judgment
The Patna High Court, in a recent decision, addressed a dispute between a contractor (petitioner) and the Rural Works Department of the State of Bihar (respondents). The petitioner had challenged the termination of his work agreement, forfeiture of his security deposit, and an order debarring him from participating in future tenders.
The petitioner claimed that:
- The Executive Engineer, without giving him a chance to explain, terminated Agreement No. 97/SBD/2009-10 by issuing letter No. 1330 dated 31.08.2018.
- Along with termination, his security deposit was forfeited arbitrarily.
- He was not paid for maintenance work done during 2014–2015 and 2015–2016.
- Later, through another order dated 20.09.2019, he was debarred from participating in tender processes without even specifying the duration of debarment.
The petitioner approached the High Court seeking quashing of these orders and return of his forfeited security deposit. He also sought payment for the pending maintenance work.
The Court noted that normally, disputes arising out of contracts should be resolved as per the terms of the agreement, usually through arbitration or other stipulated remedies. However, this case was different because the impugned orders directly affected the petitioner’s civil rights and were issued without following principles of natural justice.
The Court observed:
- The termination and debarment orders were passed without issuing any show-cause notice or giving the petitioner an opportunity to present his defense.
- A similar blanket order had been passed earlier against 59 contractors without considering each case individually, which indicated procedural unfairness.
- The debarment order did not mention the period of debarment, making it legally unsustainable.
Considering these factors, the High Court quashed both the termination order dated 24.08.2018 and the debarment order dated 20.09.2019. The Court directed the petitioner to appear before the Executive Engineer on 16.01.2023 at 11:00 a.m., where he would be given an opportunity to submit any documents or evidence in his defense. The Executive Engineer was instructed to pass a fresh order after considering all relevant facts.
The Court also granted the petitioner liberty to return to the court if any issue arose in the future after the fresh order was passed.
By setting aside the orders, the Court reinforced the principle that any decision having adverse civil consequences must comply with natural justice — primarily the right to be heard.
Significance or Implication of the Judgment
This ruling is significant for contractors, government suppliers, and others dealing with public works departments. It reaffirms that:
- Government departments cannot terminate contracts, forfeit security deposits, or impose debarment without following due process.
- Orders affecting civil rights must be preceded by a proper hearing and show-cause notice.
- Blanket or group decisions without considering individual cases are likely to be struck down by courts.
For the government, this decision serves as a reminder to ensure procedural fairness in administrative actions to avoid legal setbacks.
Legal Issue(s) Decided and the Court’s Decision with Reasoning
- Issue: Whether termination of contract and debarment without hearing violates principles of natural justice.
Decision: Yes. Orders quashed for being passed without following due process. - Issue: Whether debarment without specifying the period is valid.
Decision: No. Such an order is incomplete and unsustainable in law. - Reasoning:
- Civil consequences require compliance with natural justice.
- No opportunity of hearing was given.
- Orders were similar to previous blanket actions against multiple contractors without case-specific analysis.
Case Title
Petitioner vs. State of Bihar & Others
Case Number
Civil Writ Jurisdiction Case No. 17615 of 2019
Coram and Names of Judges
Hon’ble The Chief Justice Sanjay Karol
Hon’ble Mr. Justice Partha Sarthy
Names of Advocates and Who They Appeared For
For the Petitioner: Mr. Uma Shankar Tiwary, Advocate
For the Respondents: Mr. Alok Ranjan, AC to AAG-5
Link to Judgment
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