Gauhati High Court
Page No.# 1/ vs The State Of Assam And 3 Ors on 15 May, 2025
Author: Michael Zothankhuma
Bench: Michael Zothankhuma
Page No.# 1/11
GAHC010262262022
2025:GAU-AS:6037
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WP(C)/8237/2022
SHRI SAILEN KUMAR SHARMA
S/O- LT. MANI RAM SHARMA, R/O- H/NO. 22-B, MANIK NAGAR, ZOO
ROAD, GHY-05, DIST.- KAMRUP (M)
VERSUS
THE STATE OF ASSAM AND 3 ORS
REP. BY THE COMM. AND SECY. TO THE GOVT. OF ASSAM, WATER
RESOURCE DEPTT. OF ASSAM, DISPUR, GHY-06
2:THE CHIEF ENGINEER
WATER RESOURCE DEPTT.
ASSAM WATER CENTRE
BASISTHA
GHY-29
DIST.- KAMRUP (M)
ASSAM
3:THE EXECUTIVE ENGINEER
NALBARI WATER RESOURCES DIVISION
NALBARI P.O. NALBARI- 781335
4:THE EXECUTIVE ENGINEER
BARPETA WATER RESOURCES DIVISION
BARPETA
P.O. BARPETA- 78130
Advocate for the Petitioner : MR S SARMA,
Advocate for the Respondent : SC, WATER RESOURCE,
Page No.# 2/11 BEFORE HON'BLE MR. JUSTICE MICHAEL ZOTHANKHUMA For the petitioner : Mr. S. Sarma, Advocate For the respondents : Mr. R. M. Das, Advocate.
Date of hearing & judgement : 15.05.2025 Judgment & order (oral) Heard Mr. S. Sarma, learned counsel for the petitioner. Also heard Mr. R.M. Das, learned counsel for the Water Resources Department.
2. The petitioner is aggrieved with the office order dated 13.05.2022 issued by the respondent No.2, by which he has been blacklisted for illegally withdrawing 2% Earnest Money amounting to Rs.9,65,000/-, which was deposited against work order No.CE/CC/WR/WO/SOPD-FDR/2019-20/1011/222 dated 28.05.2020 in relation to the work "Reconstruction of breached like damage embankment at U/S & D/S of Rly. line along with improvement of Noona R/B embankment along with A/E measures of different reaches under SOPD-FDR for the year 2019-20." By the said impugned office order dated 13.05.2022 the petitioner has also been informed that he will not be allowed to participate in the tender process of the department and no renewal of registration will be allowed to him until further orders.
3. The petitioner is also aggrieved with the subsequent office order dated 18.05.2022, which superseded the earlier office order dated 13.05.2022. Vide office order dated 18.05.2022 the petitioner has been blacklisted for illegally Page No.# 3/11 withdrawing 2% Earnest Money deposited against the schemes under Nalbari Water Resources Division and Additional Performance Security as well as 2% Earnest Money deposited against Schemes under Barpeta Water Resources Division. The work orders against which the security were deposited are (1) CE/CC/WR/WO/SOPD-FDR/2019-20/1011/222, Dated- 28.05.2020 (2% Earnest Money) under Nalbari Water Resources Division) and (ii) CE/CC/WR/WO/SOPD- FDR/2019-20/1011/10, dated- 20.01.2020, and (iii) BWRD/Esti-4/RIDF- XXV/Sonkuchi-Rangapani/Pt-I/2020/3, Dated- 09.10.2020, 2% Earnest Money as well as Additional Performance Security under Barpeta Water Resources Division. By the said impugned office order dated 18.05.2022, the petitioner has also been informed that he will not be allowed to participate in tender process of the department and no renewal of registration will be allowed to him until further orders.
4. The petitioner's counsel submits that in terms of Rule 151 of the General Financial Power Rules, 2017, a procuring entity may be debarred/blacklisted for a period not exceeding 2 years. Also, in terms of Clause-1(iii) of the Office Memorandum dated 02.11.2021 issued by the Government of India, Department of Expenditure, Ministry of Finance, Procurement Policy Division, a procuring entity may be debarred/blacklisted for a period not exceeding 2 years. Further, in terms of Clause-14 of the O.M. dated 02.11.2021, an order of debarment/blacklisting shall be deemed to have automatically revoked, on the expiry of the specific period and it would not be necessary to issue a specific formal order of revocation.
5. The petitioner's counsel submits that the petitioner having been debarred/blacklisted on 13.05.2022 and 18.05.2022, the period of 2 years Page No.# 4/11 expired on 30.05.2024. As such, the petitioner cannot be debarred or blacklisted beyond 30.05.2024 and his debarment/blacklisting would have to be considered to be automatically revoked from 01.06.2024.
6. The petitioner's counsel submits that the petitioner was not issued any show cause notice, prior to the issuance of the office orders dated 13.05.2022 and 18.05.2022 and as such, the petitioner was not given an opportunity to rebut the reasons for blacklisting the petitioner. In this regard, he has relied upon the decision of this Court in the case of M/s Feedback Infra Pvt. Ltd. Vs. The Union of India & 2 Ors., WP(C) No.2934/2024. He also submits that a blacklisting order cannot operate in perpetuity and in this regard, he has relied upon the judgment of the Supreme Court in the case of Vetindia Pharmaceuticals Ltd. Vs. The State of Uttar Pradesh, reported in AIR 2020 SC 5753 and the Division Bench judgment of the Allahabad High Court in Ramraja Constructions Vs. State of Uttar Pradesh & 4 Ors., reported in 2024:AHC:94730-DB.
7. Mr. R.M. Das, learned counsel for the Water Resources Department submits that the General Financial Power Rules, 2017, which has been made by the Ministry of Finance, Government of India, is not applicable to the Water Resources Department, Government of India. He submits that the Water Resources Department has got it's own guidelines and in terms of Clause-J of the guidelines, a contractor can be blacklisted on the following grounds:-
"(i) In the event of any adverse Police report against him or in the event of any FIR is filed against the contractor.
(ii) Misbehaviour/threatening of departmental and supervisory officers Page No.# 5/11 during execution of work/tendering process
(iii) Involvement in any sort of tender fixing.
(iv) Constant non-achievement of milestones on insufficient and imaginary grounds and non-adherence to quality specifications despite being pointed out.
(v) Persistent and intentional violation of important conditions of contract.
(vi) Security consideration of the State ie, any action that jeopardizes the security of the State.
(vii) Submission of false/fabricated/forged documents for consideration of a tender."
8. He also submits that in terms of Clause-L of the guidelines applicable to the Water Resources Department, once a blacklisting order is issued, it shall not be revoked ordinarily, unless the Chief Engineer is of the opinion that there is sufficient justification to revoke the order of blacklisting or the accused has been honourably acquitted by a Court of law.
9. Mr. R.M. Das also submits that the respondents have issued a show cause notice to the petitioner, prior to blacklisting the petitioner vide show cause notices dated 02.05.2022 and 10.05.2022. He further submits that there has been unintentional mistake while filing the affidavit-in-opposition of the respondent No.2, inasmuch as, the show cause notices dated 02.05.2022 and 10.05.2022 were not annexed as Annexure-2 & 3 in the affidavit, though averments to the said effect had been made. Instead, he had unintentionally annexed some other documents. He accordingly submits that in view of the blacklisting orders having been issued after issuing notices to the petitioner, the petitioner may submit a representation to the Chief Engineer, Water Resources Page No.# 6/11 Department, to take a decision as to whether the blacklisting of the petitioner should be revoked, in terms of the guidelines applicable to the Water Resources Department.
10. I have heard the learned counsels for the parties.
11. As can be seen from the submissions made by the counsels for the parties and the pleadings, the blacklisting order has been in operation for 3 years as on date.
12. The show cause notices dated 02.05.2022 and 10.05.2022, which had been apparently furnished to the petitioner prior to the impugned blacklisting orders, are reproduced hereinbelow as follows:-
"02.05.2022 Sub:- Show Cause Notice As reported by the Executive Engineer, Nalbari Water Resources Division vide his No. WR/NLB/C-26/Pt-II/2010/140, Dated- 30/04/2022 that a F.I.R. has been lodged against you at Nalbari Police Station. In view of this please justify why you should not be blacklisted and debarred from participating in the tender process of the Department. Your reply should reach this office within 7 (seven) days time or else necessary action will be initiated against you."
"10.05.2022 Sub:- Show Cause Notice With reference to the letter as cited above, this is to inform you that Page No.# 7/11 this office has not yet received your reply to the Showcause Notice issued against you. If your reply is not received within 3 (three) days time necessary action will be taken against you for blacklisting and debarring from participating in the tender process of the Department."
13. As can be seen from the contents of the show cause notices, the petitioner has not been informed as to the precise case set up against him by the respondents and on the basis of which the petitioner is to be blacklisted. The materials/grounds upon which the department is seeking to take action, is only on the ground that an FIR has been lodged against the petitioner at Nalbari Police Station. The show cause notices have not given specific particulars, as to what default or breach has been committed by the petitioner so that the same can be addressed by the petitioner.
14. Though the guidelines that are applicable to the Water Resources Department provides that a contractor would be blacklisted in the event of any adverse police report against him or in the event of any FIR being filed against the contractor, the fact remains that neither the FIR nor the materials on the basis of which the FIR had been registered, had been furnished to the petitioner along with the show cause notices dated 02.05.2022 and 10.05.2022.
15. In the case of M/s Erusian Equipment & Chemicals Ltd. vs. State of West Bengal & Another, reported in (1975) 1 SCC 70, the Supreme Court has held that blacklisting involves civil consequences and that it has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for the purpose of gain. 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 Page No.# 8/11 that the person concerned should be given an opportunity to represent his case before he is put on the blacklist.
16. In the case of Gorkha Security Services vs. Government (NCT of Delhi) & Others, reported in (2014) 9 SCC 105, the Supreme Court has held that law with regard to issuance of Show-Cause Notice prior to blacklisting is firmly grounded and the giving of an opportunity of hearing to the person against whom the action of blacklisting is sought to be taken has a valid and solid rationale behind it. It held that the serving of the Show-Cause Notice is not only to make the noticee understand the precise case set up against him which he has to meet , but the other requirement is that he should be made to know the nature of action which is proposed to be taken against him. That should be stated in the notice, so that the noticee is able to point out that the proposed action is not warranted in the given case, even if the defaults/breaches complained of are not satisfactory explained. The Supreme Court held in the above case that the giving of a prior notice was imperative. It held as follows :
"When it comes to blacklisting, this requirement becomes all the more imperative, having regard to the fact that it is the harshest possible action."
The Supreme Court thus held in paragraph-22 that in order to fulfill the requirements of principles of natural justice, a Show-Cause Notice should meet the following two requirements viz :
"i)The material/ grounds to be stated on which according to the Department necessitates an action;
Page No.# 9/11
ii) Particular penalty/action which is proposed to be taken. It is this second requirement which the High Court has failed to omit.
We may hasten to add that even if it is not specifically mentioned in the show cause notice but it can be clearly and safely be discerned from the reading thereof, that would be sufficient to meet this requirement."
17. In the case of M/s Feedback Infra Pvt. Ltd. (supra), this Court held that the blacklisting of a person from participating in future projects without issuance of notice was arbitrary and in violation of Article 14 of the Constitution.
18. The next issue to be decided is as to whether the blacklisting of the petitioner in perpetuity is permissible, given the fact that the revocation of the blacklisting can be done by the Chief Engineer, on being satisfied that there is sufficient justification for revoking the order of blacklisting. The other ground for revoking the order of blacklisting order, is when the accused is honourably acquitted by a Court of law.
19. In the case of Ramraja Constructions (supra), the Division Bench of the Allahabad High Court has held that the debarment is never permanent and the period of debarment would invariably depend upon the nature of offence committed by the erring contractor.
20. In the case of Vetindia Pharmaceuticals Ltd.(supra), the Supreme Court has referred to another of it's judgment in Kulja Industries Ltd. Vs. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Ltd. & Ors., reported in (2014) 14 SCC 731 and held that an order of permanent debarment was unjustified.
Page No.# 10/11
21. In the case of Kulja Industries Ltd.(supra), the Supreme Court has held that debarment is never permanent and the period of debarment would invariably depend upon the nature of the offence committed by the erring contractor.
22. In the present case, the debarment appears to be permanent and the same can be revoked only if a decision is taken by the Chief Engineer to revoke it or if the petitioner is honourably acquitted in the criminal case filed against him by the respondents. However, the respondents seem to forget that an accused is presumed to be innocent, until proven guilty beyond all reasonable doubt. As such, the blacklisting of the petitioner in perpetuity and debarring him, only on the ground that he has an FIR registered against him, does not appear to be reasonable. Furthermore, 3 years have elapsed from the date of the order of debarment/blacklisting and as such, the continued blacklisting of the petitioner does not seem to be proper.
23. The above being said, the fact remains that the respondents in the show cause notice have not stated the specific materials/grounds, which according to the State respondents necessitated the blacklisting of the petitioner. The blacklisting of the petitioner only on the ground that he has an FIR registered against him, without giving the petitioner the copy of the FIR or the specifics relating to the FIR, which would afford an opportunity to the petitioner to give a rebuttal to the same, in the view of this Court, is not proper and does not warrant the continued blacklisting of the petitioner, keeping in view the decisions of the Hon'ble Supreme Court.
24. In the view of the above reasons and particularly due to the fact that the Page No.# 11/11 FIR or the reasons for the FIR, have not been furnished to the petitioner along with the show cause notices dated 02.05.2022 or 10.05.2022, this Court is of the view that the impugned blacklisting orders are not sustainable. Accordingly, the impugned office orders dated 13.05.2022 and 18.05.2022 are hereby set aside. It is made clear that any observation or findings made in this writ petition should not have any bearing on the criminal case that has been registered against the petitioner.
25. The writ petition is accordingly allowed and disposed of.
JUDGE Comparing Assistant