Madhya Pradesh High Court
M/S Marson\'S Electrical Industries vs M.P.State Electricity Board on 12 February, 2013
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HIGH COURT OF MADHYA PRADESH : JABALPUR
WRIT PETITION No.219/2008
M/s Marson's Electrical Industries
Vs.
Madhya Pradesh State Electricity Board & another
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Present : Hon'ble Shri Justice K.K. Trivedi
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Shri Prem Francis, learned Counsel for the petitioner.
Shri A.P. Shroti, learned Counsel for the respondents.
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O R D E R
(12.02.2013) This writ petition is directed against the order dated 12.04.2002 by which while blacklisting the petitioner, it is said that this order is not to be disclosed to the petitioner. It is contended that in fact for any reason if the petitioner was to be blacklisted, as per the requirement, the petitioner should have been given an opportunity of hearing by issuance of a show cause. Nothing has been done in this respect, therefore, the order impugned is bad in law.
2. By filing a return, it is contended by the respondents that petitioner was awarded contract for supply of the transformers. On one of the occasion, it was found that the transformer supplied by the petitioner was sub-standard quality and the transformer could not pass the test of suitability. The petitioner was issued a letter on 12.04.2012 to deposit an amount of Rs.69.51 lacs towards the loss caused to the respondents and in the said letter it was stated that in case the said amount is not deposited, action against the petitioner for blacklisting would be initiated. Thus, it is contended that in fact the petitioner was informed that in case 2 of non-deposit of the amount aforesaid, action would be taken against him and, therefore, it cannot be said the petitioner was blacklisted without giving opportunity of hearing.
3. This Court has examined such a situation in one of the occasion when the fact was pointed out that proper opportunity of hearing was not given before the action of blacklisting initiated against the concerned. This Court taking into consideration the law laid-down by the Apex Court in the case of M/s Erusian Equipment & Chemicals Ltd. vs. State of West Bengal & another, (1975) 1 SCC 70, has reached to the conclusion that proper opportunity of hearing should be granted before an order of blacklisting is issued. In case it is found that opportunity of hearing is not granted, the action of blacklisting cannot be sustained.
4. The Apex Court in the case of M/s Erusian Equipment & Chemicals Ltd. (supra) has dealt with such a situation in the following manner :
"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."
Further taking into consideration the similar situation in the case of Joseph Vilangandan vs. The Executive Engineer, (PWD), Ernakulam and others, (1978) 3 SCC 36, the Apex Court has held that blacklisting would be illegal in case the opportunity of hearing is not given in appropriate manner to the person concerned. The observation made by the Apex Court in the case of Joseph Vilangandan (supra) reads thus :
"The majority judgment of the Kerala High Court, inasmuch as it holds that a person is not entitled to a hearing before he is blacklisted, must be deemed to have been overruled by the 3 decision of this Court in Erusian Equipment (ibid) wherein it was held that "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."
Controversy in the instant case, therefore, narrows down into the issue, whether such an opportunity was given to the appellant. Answer to this question will turn on an interpretation of the notice, dated April 17, 1968 (Ex.P-8) given by the Executive Engineer to the appellant. This notice has been extracted in a foregoing part of this judgment. The material sentence therein is :
"You are, therefore, requested to show cause....why the work may not be arranged otherwise at your risk and loss, through other agencies after debarring you as a defaulter....."
The crucial words are those that have been underlined. They take their color from the context. Construed along with the links of the sentence which precede and succeed them, the words "debarring you as a defaulter", could be understood as conveying no more than that an action with reference to the contract in question, only, was under contemplation. There are no words in the notice which could give a clear intimation to the addressee that if was proposed to debar him from taking any contract, whatever, in future under the Department. A perusal of the appellant's reply (Ex.P-7), dated May 20, 1968, sent to the Executive Engineer, also appears to show that by the word "debarring" mentioned in the Executive Engineer's letter dated April 17, 1968 (Ex.P-6), he understood as debarring him from executing the contract in question after declaring him a defaulter, and then getting the same work done by other agencies, at his risk and loss. All that has been said in Ex.P-7 by the appellant is directed to justify that the non- execution of the contract was not due to his fault, but due to the delay on the part of the department in handing over the building to him for starting the work within the time specified in the agreement and consequently, if any loss would be incurred by the department in getting the work done through any other agency, he would not be liable to make good the same. In short, the letter (Ex.P-6) dated April 17, 1968 4 from the Executive Engineer, did not give any clear notice to the appellant that action to debar him from taking in future any contract, whatever, under the department or its Ernakulam Division was in contemplation. The appellant was thus not afforded adequate opportunity to represent against the impugned action."
5. Similar view has been taken by the Division Bench of this Court in W.P. No.18749/2010, MAYTAS Infra Ltd. vs. Madhya Pradesh State Electricity Board & others, decided on 31.01.2011, wherein it is held that decision to suspend future business relation without affording any opportunity of hearing is not sustainable, being void ab initio.
6. In view of the law well settled by the Apex Court, it cannot be said that merely because the petitioner was given a letter to make deposit of certain amount in which it was said that in case of failure action would be initiated for blacklisting of the petitioner, it was sufficient compliance of the provisions of law or could it be treated as a show cause notice issued to the petitioner before order of blacklisting was passed. Thus, in fact the petitioner was not granted any opportunity of hearing before blacklisting.
7. Consequently, the writ petition is allowed. The order dated 12.12.2007 (Annexure P-11) is hereby quashed. However, the respondents would be at liberty to follow proper procedure for taking any action against the petitioner, if so required in accordance to law.
8. The writ petition is allowed and disposed of accordingly. However, there shall be no order as to costs.
(K.K. Trivedi) Judge Skc