Quashed

M/s Aryabhat Computers v. The State Of Bihar and Ors.

Patna HC23 Apr 2019CWJC/20595/2018

Case brief

AI extract

What is this about?

The petitioner challenged a permanent blacklisting order imposed after alleged fraud. The Court found the order violated natural justice as it ignored the petitioner's reply, distinguishing the cited Supreme Court case on proportionality.

What did the court decide?

The blacklisting order is quashed. The matter is remitted to the Civil Surgeon-cum-CMO, Gaya, to consider the petitioner's reply within 90 days.

M/s Aryabhat Computers Vs The State Of Bihar… — Contract and Commercial Disputes | Patna HC (2019)

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IN THE HIGH COURT OF JUDICATURE AT PATNA Civil Writ Jurisdiction Case No.20595 of 2018

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M/s Aryabhat Computers, 304, Gorakh Nath and Lila Apartment, East Boring Canal Road, Patna-800001, represented through its Secretary, Shri Nagendra Prasad Singh, aged about 58 years, Son of Late Aslok Singh, presently residing at Flat No. 201, Saket Apartment, Montessori Lane, Boring Road, Patna-800001, District Patna, Bihar.

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... ... Petitioner/s

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Versus

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The State Of Bihar represented through the Principal Secretary, Health Department, Government of Bihar, Patna.

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The Executive Director, State Health Society, Bihar, Patna

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The District Magistrate cum Chairman, District Health Society, Gaya.

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The District Magistrate, Gaya.

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The Civil Surgeon-cum-Chief Medical Officer, Gaya.

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The Secretary-cum-the Chief Medical Officer, District Health Society, Gaya.

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The Commissioner, Magadh Division, Gaya.

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The Superintendent of Jay Prakash Narayan Hospital, Gaya.

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The Superintendent of Prabhavati Hospital, Gaya.

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... ... Respondent/s

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====================================================== Appearance : For the Petitioner/s : Mr.Prabhat Ranjan, Adv. Mr. Kumar Ravish, Adv. Mr. Kashyap Kaushal, Adv. For the State : Mr.S.D. Yadav, AAG IX. Mr.Nagindra Kumar, AC to AAG IX. For the Respondent No.2: Mr. Shashi Shekhar, Adv. ======================================================

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CORAM: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD ORAL ORDER

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2 23-04-2019 Petitioner in this case is aggrieved by the order as contained in Memo No.2623 dated 01.09.2018 (Annexure ‘P/29’) to the writ application by which the petitioner has been blacklisted permanently.

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Learned counsel for the petitioner submits that vide Annexure ‘P/14’ vide Letter No.818 dated 15.03.2018 issued

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Patna High Court CWJC No.20595 of 2018(2) dt.23-04-2019 2/7

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under the signature of the Civil Surgeon-cum-Chief Medical Officer, Gaya, the petitioner was called upon to submit the explanation within a period of 24 Hours. From the subject of the letter (Annexure ‘P/14’) only the petitioner could know that the respondents are going to take action for blacklisting of the petitioner for the alleged fraudulent withdrawal of bills on account of generator services. Learned counsel submits that some kind of explanation was called vide Memo No.278 dated 14.03.2018 issued by the Prabhawati Hospital, Gaya. The petitioner had submitted his reply to both show cause notices, copies of the replies of the petitioner have been brought on record as Annexures ‘P/16 and P/17’ to the writ application. The petitioner seems to have controverted the allegations with regard to the fraudulent withdrawal of money.

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The grievance of the petitioner is that looking into the replies of the petitioner, the impugned order as contained in Annexure ‘P/29’ has been passed by which the petitioner has been permanently blacklisted. Learned counsel for the petitioner has drawn the attention of this Court towards the impugned order and submits that in fact the impugned order nowhere shows any consideration of the replies of the petitioner. It is, thus, submitted that in view of the Judgment of the Hon’ble

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Patna High Court CWJC No.20595 of 2018(2) dt.23-04-2019 3/7

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Supreme Court in the case of M/s Kulja Industries Limited v. Chief Gen. Manager, W.T. Proj., BSNL and others reported in AIR 2014 SC 9, the impugned order is fit to be set-aside on both the grounds, i.e., on the ground of violation of principles of natural justice as well as on the ground of quantum of punishment. It is submitted that there cannot be a permanent debarment/blacklisting of the petitioner.

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Learned counsel for the State submits that in the counter affidavit the respondents have justified the blacklisting of the petitioner. It is submitted that replies of the petitioner were not satisfactory, hence, the impugned order was passed.

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Having heard learned counsel for the parties and on perusal of the records, this Court finds substance in the statement of learned counsel for the petitioner. A perusal of the impugned order as contained in Memo No.2623 dated 01.09.2018 (Annexure ‘P/29’) to the writ application shows that there is no consideration at all to the replies submitted by the petitioner. The contents of the impugned order are quoted hereunder for ready reference:-

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ifjoknh Jh /khjsUnz dqekj ds ifjokn i= ds fu.kZ; ds vkyksd esa ftyk inkf/kdkjh x;k }kjk xfBr tk¡p ny ds }kjk

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Patna High Court CWJC No.20595 of 2018(2) dt.23-04-2019 4/7

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lkSaih xbZ izfrosnu ds vk/kkj ij ftyk inkf/kdkjh x;k ds i=kad 2134@xks0 fnukad 09-03-2018] i=kad 2168@xks0 fnukad 12-03-2018] i=kad 2170@xks0 fnukad 12-03-2018 rFkk 3696@xks0 fnukad 14-05-2018 ,oa lnj vuq0 inkf/kdkjh] x;k ds i=kad 112@xks0 fnukad 05-04-2018 ds }kjk fn;s x;s funs”k ds vkyksd esa izHkkorh vLirky] x;k] t; izdk”k ukjk;.k vLirky] x;k] laØked jksx vLirky] x;k vuq0 vLirky] “ksj?kkVh] vuq0 vLirky] fVdkjh ,oa izk0Lok0dsUnz] fVdkjh esa iwoZ dk;Zjr fuEu vkmVlkslhZax ,stsUlh dks rRdky izHkko ls dkyh lwph (Black listed) esa ntZ dh tkrh gSA

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1- vk;ZhkÍ dEI;qVj & 192-B oksfjax jksM] ,l0 ds0 iwjh] iVuk A

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2- :yj ;wFk tu lsok ifj’kn] Nijk A

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3- fd”kksj efgyk] f”k”kq dY;k.k laLFkku] ckuk f[ktjljk; A

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4- fiiqy ,D”ku QkWj :jy MsoyiesUV] ukjnhxat A

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g0v0 vlSfud “kY; fpfdRld lg eq[; fpfdRlk inkf/kdkjh] x;k A**

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In the counter affidavit also while responding to the

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submissions of the petitioner, in Paragraph ‘10’ of the counter affidavit submission has been made that the petitioner filed his detailed reply contained as Annexures ‘P/16’ and ‘P/17’ to the writ application but the same was not found satisfactory and hence the petitioner was blacklisted.

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In the case of M/s Kulja Industries Limited (supra) in Paragraph ‘17’ the Hon’ble Supreme Court has held as follows:-

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“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

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Patna High Court CWJC No.20595 of 2018(2) dt.23-04-2019 5/7

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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 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 pre-condition 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. 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 West Bengal and Anr. (1975) 1 SCC 70 : (AIR 1975 SC 266) 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

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Patna High Court CWJC No.20595 of 2018(2) dt.23-04-2019 6/7

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blacklisting a certain entity. This Court observed:

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“ 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.”

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It is apparent from the Judgment of the Hon’ble Apex

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Court in the case of M/s Kulja Industries Limited that the decision of blacklisting is open to judicial review on the touchstone of the principles of natural justice as also on account of proportionality. In the opinion of this Court, both the principles will be applicable in the present case. Neither the replies of the petitioner has been considered nor the respondents have considered the judicial pronouncements of the Hon’ble Apex Court saying that there cannot be a permanent blacklisting.

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In that view of the matter, the impugned order as contained in Memo No.2623 dated 01.09.2018 (Annexure ‘P/29’) to the writ application is hereby quashed. The matter is remitted to the Civil Surgeon-cum-Chief Medical Officer, Gaya, to consider the replies of the petitioner and take a fresh decision

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Patna High Court CWJC No.20595 of 2018(2) dt.23-04-2019 7/7

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thereon within a period of 90 days from the date of receipt/production of a copy of this order. It would be open for the petitioner to submit any other material and submissions if so desired within a period of 15 days from today.

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The writ application is disposed of, accordingly.

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(Rajeev Ranjan Prasad, J)

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R.R.Ojha/-

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M/s Aryabhat Computers v. The State Of Bihar and Ors.

Case brief

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M/s Aryabhat Computers v. The State Of Bihar and Ors.

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