High Court allowed writ petition quashing blacklisting communication issued without prior notice, holding it violated principles of natural justice.
Writ petition allowed; communication dated 1.3.2019 blacklisting petitioner was quashed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 17TH DAY OF NOVEMBER, 2023
BEFORE
THE HON'BLE MR JUSTICE C.M. POONACHA WRIT PETITION NO. 20854 OF 2019 (CS-RES)
BETWEEN:
(BY SRI. KEERTHI KRISHNA REDDY, ADVOCATE FOR
Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA
SMT ANJANA C H, ADVOCATE)
AND:
REP BY THE SECRETARY, DEPARTMENT OF CO-OPERATION KARNATAKA GOVERNMENT SECRETARIAT ROOM NO.610, 3RD GATE, 6TH FLOOR, M.S.BUILDING, DR. AMBEDKAR VEEDHI, BANGALORE-01
…RESPONDENTS
(BY SRI P S RANGANATHAN, ADVOCATE FOR R1 & R2 R3 SERVED AND UNREPRESENTED V/O DTD 18.12.2019 NOTICE TO R4 IS ACCEPTED)
THIS W.P. IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO SET ASIDE THE COMMUNICATION DTD 01.03.2019 ISSUED BY THE R-2 VIDE ANNXD, CONSEQUENTLY REMOVING THE NAME OF THE PETITIONER FROM THE BLACKLIST.
THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
The present writ petition is filed challenging the communication dated 01.03.2019 bearing No.KaRaaSaGrama/SaKaEBaa/2018-19/875 issued by Respondent No.2.
the present petition are that the Petitioner is engaged in supplying food materials, vegetables and other miscellaneous
items to the Social Welfare Department, Karnataka Residential Education Institutional Societies, Hostels and residential schools in the Bagalkot District and has the experience in trading and supplying food materials to various Government Departments. That the Petitioner is a member of Respondent Nos.1 to 3 - Federation and has supplied materials for the period 2013-14 to 2016-17 to Bagalkot Branch of the Respondent Federation which had procured tenders from the Social Welfare Department and other Departments. It is the case of the Petitioner that the membership in the Respondent - Federation was not renewed by the Petitioner from the year 2017 and the Petitioner is not an active member of the Respondent Federation from the year 2017 and the Petitioner started participating in the tender process independently and respondent Nos. 1 to 3 – Federation became a competitive bidder.
case of the Petitioner that during a tender process, when the Petitioner produced the Satisfaction Certificate issued by Respondent No.3, the same was objected to by respondent No.3. However, the said objections was rejected by the Deputy Commissioner, Bagalkot and the Petitioner was permitted to participate in the bid. Thereafter, Respondent Nos.1 to 3 in the General Body Meeting dated 28.02.2019 took a decision to blacklist the Petitioner and the same was communicated to the Petitioner vide letter dated 01.03.2019.
signatures and seal in question tally with the standard specimen signature and seal. A copy of the report of the Forensic Laboratory is produced as Annexure-E series to the writ petition.
the role and ought not to be treated as a member of the Respondents’ federation. Various other averments have been made in the statement of objections justifying the decision taken by respondent Nos.1 to 3.
have been considered and the material on record has been perused. The question that arises for consideration is, whether the communication dated 1.3.2019 is erroneous and liable to be interfered with in the present writ petition?
1 (1998) 8 SCC1
NC: 2023:KHC:41292 WP No. 20854 of 2019
in dispute that the Petitioner is engaged in a similar line of business as that of Respondent Nos.1 to 3.
“15. ……….. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field.”
(emphasis supplied)
“17. That apart, the power to blacklist a contractor whether the contract be for supply of material or equipment or for the execution of any other work whatsoever is in our opinion inherent in the party allotting the contract. There is no need for any such power being specifically conferred by statute or reserved by contractor. That is because “blacklisting” simply signifies a business
2 (2014) 14 SCC 731
decision by which the party affected by the breach decides not to enter into any contractual relationship with the party committing the breach. Between two private parties the right to take any such decision is absolute and untrammelled by any constraints whatsoever. The freedom to contract or not to contract is unqualified in the case of private parties. But any such decision is subject to judicial review when the same is taken by the State or any of its instrumentalities. This implies that any such decision will be open to scrutiny not only on the touchstone of the principles of natural justice but also on the doctrine of proportionality. A fair hearing to the party being blacklisted thus becomes an essential precondition for a proper exercise of the power and a valid order of blacklisting made pursuant thereto. The order itself being reasonable, fair and proportionate to the gravity of the offence is similarly examinable by a writ court.
18. The legal position on the subject is settled by a long line of decisions rendered by this Court starting with Erusian Equipment & Chemicals Ltd. v. State of W.B. [(1975) 1 SCC 70] where this Court declared that blacklisting has the effect of preventing a person from entering into lawful relationship with the Government for purposes of gains and that the authority passing any such order was required to give a fair hearing before passing an order blacklisting a certain entity. This Court observed: (SCC p. 75, para 20)
“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.”
…..”
(emphasis supplied)
ORDER
is required to be afforded before any decision is arrived
at;
Ordered accordingly.
Sd/JUDGE
BS/ND List No.: 1 Sl No.: 36
3 issues framed by the court
Whether the communication blacklisting the petitioner without prior notice violated principles of natural justice.
Whether the petitioner is entitled to relief from the blacklisting communication despite the existence of an alternate remedy.
Whether a fair hearing is a precondition for a valid order of blacklisting by a state instrumentalities.
Colour shows how this judgement treated each authority
Whirlpool Corpn v. Registrar of Trade MarksRelied on¶39
Whirlpool Corpn v. Registrar of Trade Marks (1998) 8 SCC1
Kulja Industries Ltd v. Western Telecom Project BSNLRelied on¶55
Kulja Industries Ltd v. Western Telecom Project BSNL (2014) 14 SCC 731 · Who else cites this
Erusian Equipment & Chemicals Ltd. v. State of W.B.Referred¶60
Erusian Equipment & Chemicals Ltd. v. State of W.B. [(1975) 1 SCC 70] · Who else cites this
2 provisions across 2 enactments
PRABHU TRADING CORPORATION
KARNATAKA STATE CO-OPERATIVE CONSUMERS FEDERATION LIMITED
THE MANAGING DIRECTOR KARNATAKA STATE CO-OPERATIVE CONSUMERS FEDERATION LTD.
STATE OF KARNATAKA
C.M. POONACHA
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
