IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P. (C) No. 1923 of 2016 --- 1. Vijeta Projects and Infrastructure Ltd., having its Regd. Office at West Morabadi Ground, P. O. Ranchi University, P. S. Bariatu, District Ranchi, through its Managing Director, Parma Singh, son of Late Jung Bahadur Singh, resident of West Morabadi Maidan, P. O. Ranchi University, P. S. Bariatu, District Ranchi 2. Parma Singh, son of Late Jung Bahadur Singh, resident of West Morabadi Maidan, P. O. Ranchi University, P. S. Bariatu, District Ranchi … … Petitioners Versus 1. State of Jharkhand, through Chief Secretary, Nepal House, Govt of Jharkhand, P. O. & P. S. Dhurwa, Dist – Ranchi 2. The Principal Secretary, Road Construction Department, Government of Jharkhand, Ranchi, P. O. & P. S. Dhurwa, Dist – Ranchi 3. Engineer-in-Chief, Road Construction Department, Government of Jharkhand, Ranchi, P. O. & P. S. Dhurwa, Dist – Ranchi 4. Chief Engineer (Communication), Road Construction Department, Government of Jharkhand, Ranchi, P. O. & P. S. Dhurwa, Dist – Ranchi 5. Superintending Engineer, Road Construction Department, Road Circle Dumka, P. O., P. S. & District Dumka 6. Executive Engineer, Road Construction Department, Road Division, Godda, P. O., P. S. & District Godda … … Respondents --- CORAM : HON'BLE MR. JUSTICE RONGON MUKHOPADHYAY --- For the Petitioners : Mr. Vimal Kirti Singh, Advocate For the Respondents : Mr. Ajit Kumar, A.A.G. --- 04/29.04.2016 Heard Mr. Vimal Kirti Singh, learned counsel appearing for the petitioners and Mr. Ajit Kumar, learned A.A.G. The petitioners in this writ application have prayed for quashing of the letter no. 1915 (S) dated 18.03.2016 issued by the respondent no. 3 debarring the petitioner no. 1 from participating in future tenders/contracts. A further prayer has been made for directing the respondents to remove all the impediments which the petitioners are facing in the completion of construction of the road of Nunajore- Shahur Beldiha-Parsa road km 0.00 to 16.600. The facts which have been narrated in the writ application are that tenders were invited by the Road Construction Department, Government of Jharkhand on 09.01.2014 for re-construction of the portion of road of Nunajore-Shahur Beldiha-Parsa for the year 2013-14. Pursuant to the submission of the tender by the petitioners a meeting of the tender committee was held on 07.03.2014 and ultimately upon -2- negotiation the Committee decided to accept the bid submitted by the petitioner no. 1 and the matter was sent for approval of the Principal Secretary, Road Construction Department. On 13.05.2014 a letter of acceptance was issued to the petitioner no. 1 for the said work and pursuant to the deposit of the requisite documents an agreement was executed between the respondent no. 6 on behalf of the Department and the petitioner no.
1. The construction of the road started and it is the case of the petitioners that the work was not completed within time on account of impediments being faced by the petitioner no. 1 to which several representations were submitted before the authorities concerned but surprisingly in terms of letter no. 1915 (S) dated 18.03.2016 the respondent no. 3 had issued the letter debarring the petitioner no. 1 from participating in future tenders/contracts. Mr. Vimal Kirti Singh, learned counsel appearing for the petitioner, has submitted that prior to issuance of the impugned letter dated 18.03.2016 no show cause or any opportunity of hearing was given to the petitioners. It has been submitted that the impugned letter dated 18.03.2016 has been circulated to all the Departments of the State of Jharkhand, which would further highlight the arbitrariness which has been committed by the State authorities. It has been submitted that the State Government cannot unilaterally decide as to whether there has been breach of an agreement and the same at best can be adjudicated by an independent forum/agency. In support of his contention, learned counsel has referred to the case of M/s. Erusian Equipment & Chemicals Ltd. vs. State of West Bengal and Another reported in (1975) 1 SCC70and the case of Gorkha Security Services vs. Government (NCT of Delhi) And Others reported in (2014) 9 SCC105 Learned counsel in support of his contention that the breach of the contract can only be adjudicated upon by an independent agency has relied upon a judgment passed by the Hon'ble Patna High Court in the case of M/s NCC Ltd. vs. The State of Bihar through Principal Secretary and Ors. reported in 2013 (1) PLJR952 -3- The learned counsel for the petitioners, therefore, submits that the impugned letter dated 18.03.2016 being arbitrary, unreasonable and violative of the principle of natural justice is liable to be set aside. Mr. Ajit Kumar, learned A.A.G., submits that he has received instruction and counter affidavit is also ready but the same could not be filed as it is not finalized/filed within a period of forty eight hours as required under the High Court Rules. He however submits from instructions he has received that admittedly no prior notice was given to the petitioners before debarring the petitioner no. 1 as contained in letter dated 18.03.2016. This Court on 22.04.2016 had passed the following order:- “Learned counsel for the petitioners seeks permission to make necessary correction in para – 4 of the I. A. No. 2282 of 2016 in course of the day. Permission accorded. I. A. No. 2282 of 2016 I. A. No. 2282 of 2016 has been filed for amending the main writ application by substituting the date 13.07.2015 with date 03.07.2015 in para 16(C). It appears that the aforesaid amendment required in lieu of typographical error in the main writ application. Accordingly, I. A. No. 2282 of 2016 is allowed and petitioners are directed to make necessary amendment in para -16 (C ) of the main writ application in course of the day. W.P. (C ) No. 1923 of 2016 Let this case be listed on 29.04.2016 along with I. A. No. 2264 of 2016. By that time, State must file counter affidavit, otherwise writ application will be disposed of without counter affidavit.” In view of the aforesaid order and in view of the submission of learned A.A.G. this writ application is being disposed of without the counter affidavit. From the submissions which have been advanced by the learned counsel for the parties it is an admitted fact that no prior notice by way of show cause was served upon the petitioners and without following the principle of natural justice the petitioner no. 1 has been debarred from participating in future tender/contract. In the case of M/s. Erusian Equipment & Chemicals Ltd. vs. State of West Bengal and Another (Supra) it was held as under:- -4-
“15. The blacklisting order does not pertain to any particular contract. The blacklisting order involves civil consequences. It casts a slur. It creates a barrier between the persons blacklisted and the Government in the matter of transactions. The blacklists are “instruments of coercion”.
20. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the blacklist.”
11. In the case of Gorkha Security Services vs. Government (NCT of Delhi) And Others (Supra) it was held as follows:-
“25. It is clear from the reading of the aforesaid clause that when there is a failure on the part of the contractor to comply with the express terms of the contract and/or to commit breach of the said terms resulting into failure to commence/execute the work as stipulated in the agreement or giving the performance that does not meet the statutory requirements of the contract, the Department has a right to impose various kinds of penalties as provided in the aforesaid clause. These penalties are of the following nature: (i) Penalty in the form of 20% of cost of orders/agreement per week, up to delay of 2 weeks. ii) If the delay is beyond 2 weeks then: (a) To cancel the contract and withhold the agreement. In that event, Department has right to get the job carried out from other contractor at the cost of the defaulter contractor; (b) To blacklist the defaulter contractor for a period of 4 years; (c) To forfeit his earnest money/deposits, if so warranted.
27. We are, therefore, of the opinion that it was incumbent on the part of the Department to state in the show-cause notice that the competent authority intended to impose such a penalty of blacklisting, so as to provide adequate and meaningful opportunity to the appellant to show cause against the same. However, we may also add that even if it is not mentioned specifically but from the reading of the show-cause notice, it can be clearly inferred that such an action was proposed, that would fulfil this requirement. In the present case, however, reading of the show-cause notice does not suggest that notice could find out that such an action could also be taken. We say so for the reasons that are recorded hereinafter.” -5- In the case of M/s NCC Ltd. vs. The State of Bihar through Principal Secretary and Ors. (Supra) it was held as follows:-
“15. In fact the question whether the other party committed breach cannot be decided by the party alleging breach. A contract cannot provide that one party will be the arbiter to decide whether he committed breach or the other party committee breach. That question can only be decided by only an adjudicatory forum, that is, a court or an Arbitral Tribunal. In State of Karnataka vs. Shree Rameshwara Rice Mills, MANU/SC/0177/1987: ((1987) 2 SCC160 AIR1987SC1359this Court held that adjudication upon the issue relating to a breach of condition of contract and adjudication of assessing damages arising out of the breach are two different and distinct concepts and the right to assess damages arising out of a breach would not include a right to adjudicate upon as to whether there was any breach at all. This Court held that one of the parties to an agreement cannot reserve to himself the power to adjudicate whether the other party has committed breach. This Court held (Paras 7 and 8 of AIR):-- Even assuming for argument’s sake that the terms of Clause 12 afford scope for being construed as empowering the officer of the State to decide upon the questin of breach as well as assess the quantum of damages, we do not think that adjudication by the other officer regarding the breach of the contract can be sustained upon law because a party to the agreement cannot be an arbiter in his own cause. Interests of justice and equity require that where a party to a contract disputes the committing of any breach of conditions the adjudication should be by an independent person or body and not be the other party to the contract. The position will, however, be different where there is no dispute or there is consensus between the contracting parties regarding the breach of conditions. In such a case the officer of the State, even though a party to the contract will be well within his rights in assessing the damages occasioned by the breach in view of the specific terms of Clause 12. We are, therefore, in agreement with the view of the Full Bench that the powers of the State under an agreement entered into by it with a private person providing for assessment of damages for breach of conditions and recovery of the damages will stand confined only to those cases where the breach of conditions is admitted or it is not disputed.” Since before debarring or blacklisting a contractor issuance of show cause notice or giving a reasonable opportunity of hearing being a pre-condition the same having not been followed the impugned letter dated 18.03.2016 passed by the respondent no. 3 cannot be sustained in the eye of law. -6- Accordingly, in view of the discussions made hereinabove, the letter as contained in memo no. 1915 (S) dated 18.03.2016 issued by the respondent no. 3 is hereby quashed and set aside. However, the respondents are at liberty to proceed further in the matter in accordance with law. (R. Mukhopadhyay, J.) Umesh/-