2019 (11) TMI 1796 - HC - Indian Laws

Blacklisting of a commercial Firm - petitioner has been debarred for a period of one year from participating directly or indirectly in any work with the MP PWD with immediate effect - HELD THAT - The blacklisting of a commercial Firm has serious civil consequences and at the same time it affects the reputation of the Firm. In such a situation the State is expected to proceed with care and responsibility before blacklisting any Firm as it is a drastic step to be taken against a person. Still further it is the basic principle of natural justice that the parties who are adversely affected by an order should have a right of being heard against the same. The Apex Court in the case of CANARA BANK VERSUS VK. AWASTHY 2005 (3) TMI 476 - SUPREME COURT has held that the natural justice is another name of common sense justice. The Rules of natural justice are not codified canons. But they are principles ingrained into the conscience of man. The expressions natural justice and legal justice do not present a watertight classification. It is the substance of justice which is to be secured by both and whenever legal justice fails to achieve this solemn purpose natural justice is called in aid of legal justice. This aspect of the matter has also been considered by the Supreme Court in the case of KRANTI ASSOCIATES PVT. LTD. VERSUS MASOOD AHMED KHAN 2010 (9) TMI 886 - SUPREME COURT wherein it is laid down that judicial trend has always been to record reasons even in administrative decisions if such decisions affect anyone prejudicially. It is further held that insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well. Apparently in the present case no show cause notice was issued to the petitioner with regard to blacklisting in respect of which the impugned order has been passed. Further it does not satisfy the test of being a reasoned speaking order. The present petition is allowed.

Summary

Issues Involved:
1. Territorial Jurisdiction
2. Legality of Debarment Order
3. Principles of Natural Justice
4. Requirement of Reasoned Speaking Order

Detailed Analysis:

1. Territorial Jurisdiction:
The court overruled the office objection regarding territorial jurisdiction, stating that the dispute falls within the State of Madhya Pradesh, even though it relates to Indore. However, this ruling shall not be treated as a precedent in future cases.

2. Legality of Debarment Order:
The petitioner challenged the order dated 10.10.2019 issued by respondent No.3, which debarred the petitioner from participating in any work with the MP PWD for one year. The petitioner argued that the debarment order was issued without a proper show cause notice or an opportunity for a hearing, violating the principles of natural justice. The petitioner had submitted detailed project reports and received acknowledgment of successful completion from the respondent. However, discrepancies in cost estimates for pole shifting work led to show cause notices and eventually the debarment order.

3. Principles of Natural Justice:
The court emphasized that blacklisting a commercial firm has serious civil consequences and affects the firm's reputation. It is a basic principle of natural justice that parties adversely affected by an order should have the right to be heard. The court cited the case of Canara Bank v. V.K. Awasthy, highlighting that natural justice is another name for common-sense justice and is ingrained into the conscience of man. The court reiterated that no one should be condemned unheard, and adequate notice and opportunity must be provided before passing any adverse order.

4. Requirement of Reasoned Speaking Order:
The court referred to the Supreme Court judgment in M/s Kranti Associates Pvt. Ltd. v. Sh. Masood Ahmed Khan, which mandates that reasons must be recorded in support of conclusions, even in administrative decisions affecting parties prejudicially. The court noted that the impugned debarment order did not satisfy the test of being a reasoned speaking order and lacked adequate reasoning and transparency.

Conclusion:
The court allowed the petition, quashing the order dated 10.10.2019. The respondents were granted liberty to pass a fresh speaking order in accordance with the law, after affording an opportunity of hearing to the petitioner. The court clarified that its observations should not be construed as an expression of opinion on the merits of the controversy.