M/s Komandoor And Co. L.L.P. Chartered Accountants, Having Its Office At 306a, 3rd Floor v. 1 - Chhattisgarh State Power Distribution Company Limited Through Its Managing D
Case Details
AMARDEEP CHOUBEY Digitally signed by AMARDEEP CHOUBEY Date: 2025.07.29 12:35:50 +0530 1 2025:CGHC:36441-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPC No. 1443 of 2025 M/s Komandoor And Co. L.L.P. Chartered Accountants, Having Its Office At 306a, 3rd Floor, Lal Ganga Midas, Near Fafadih, Ward No. 22, Raipur- 492001, Through Its Authorized Signatory Shri Mohit Ramani, S/o Madhav Das Ramani, Aged About 30 Years, R/o 306a, 3rd Floor, Lal Ganga Midas, Near Fafadih, Ward No. 22, Raipur- 492001 ... Petitioner versus 1 - Chhattisgarh State Power Distribution Company Limited Through Its Managing Director, Ground Floor, Vidyut Sewa Bhawan, Danganiya, Raipur- 492013, Chhattisgarh 2 - The Executive Director (Fin), Chhattisgarh State Power Distribution Company Limited, Through Its Managing Director, Ground Floor, Vidyut Sewa Bhawan, Danganiya, Raipur- 492013, Chhattisgarh --- Respondents For Petitioner For Respondents
Legal Reasoning
: Mr. Kshitij Sharma, Advocate : Mr. Harshal Chouhan, Advocate Hon'ble Shri Ramesh Sinha, Chief Justice Hon'ble Shri Bibhu Datta Guru, Judge Judgment on Board Per Ramesh Sinha, Chief Justice 28.07.2025 2 1. By the present writ petition, the petitioner is challenging the order dated 30/12/2024 (Annexure-P/1) passed by the respondent No.6, whereby, the order has been passed by the respondent/CSPDCL terminating the letter of award issued to the petitioner, forfeiting its EMD of Rs.40000/- and blacklisting of the petitioner for a period of one year from participating in future tenders of the respondents. For which, the petitioner is seeking following reliefs:- “10.1 The Hon’ble Court may kindly be pleased to call for the records pertaining to the subject tender for the kind perusal of this Hon’ble Court. 10.2. The Hon’ble Court may further kindly be pleased to issue such writ/orders quahing and setting aside the impugned order dated 30.12.2024 (Annexure P-1) whereby the letter of Award of the petitioner has been terminated, its EMD of Rs.40000/- has been forfeited, and it has been blacklisted for a period of 1 year; and 10.3) The Hon'ble Court may further kindly be pleased to issue such writ /orders granting injunction on the effect and operation of the blacklisting order until the pendency
Decision
of the Writ Petition; and 10.4) The Hon'ble Court may further kindly be pleased to issue such writ /orders / directions to the Respondents directing them to issue a clarification to all the Power Generating Companies in Chhattisgarh and the Institute of Chartered Accountants of India to whom they have circulated the impugned order-dated 30.12.2024 (Annexure P1) clarifying that the said circulation is not an inducement to them to blacklist the Petitioner from participating in their Tenders; and 3 10.5) Cost of the petition may also be granted to the Petitioner, and 10.6) Any other relief, which the Hon'ble Court deems fit and proper, may also kindly be granted to the Petitioner, in the interest of justice.” At the very outset, learned counsel for the petitioner would submit that though in the instant petition the petitioner is claiming several reliefs, however, now he is only pressing the relief clause with regard to blacklisting of the firm of the petitioner for a period of one year. 2. (A) Learned counsel for the petitioner would submit that the Respondent No.1 floated a Notice Inviting Tender No.05-06/Accounts/1777 dated 28/10/2024 for appointment of CS firm for preparation of quarterly and annual accounts of CSPDCL and related allied activities for two years. The cost of the tender document was Rs. 5,000/- and the estimated cost of the tender was Rs. 38.70 Lacs. Clause 8 of the NIT provided for Earnest Money Deposit of Rs. 40,000/-, which were to be returned to unsuccessful bidders within 30 days of award of contract to the successful bidder. The Petitioner participated in the tender and submitted its bid along with the EMD of Rs. 40,000/-. The Petitioner emerged as a successful bidder, and therefore, a Letter of Award dated 05.12.2024 was issued to it by the Respondents. The Letter of Award in the opening paragraphs required the Petitioner to accept the Letter of Award in the following terms, "Acceptance of this letter of award may 4 please be conveyed and contract agreement may be signed within 15 days from the date of receipt of this order, failing which this order will be treated as cancelled." (B) Learned counsel would submit that the petitioner could not complete the formalities of signing of the contract agreement since one of its associates, who was supposed to be deputed to the office of the respondent in terms of the contract agreement, had suffered a medical disability. As such, the Respondents vide letter-dated 19.12.2024 reminded the petitioner to complete the formalities by 23.12.2024 otherwise it may result in cancellation of work order and other consequences as per the tender document. In response thereto, the Petitioner vide letter-dated 23.12.2024 sought 7 working days from the Respondents to complete the contract formalities. The Petitioner also explained that it was unable to complete the formalities within due date since one of its associates had suffered a medical disability. However, in disregard to the time sought by the petitioner of 7 working days, which were going to expired on 03.01.2025, the Respondents prematurely vide the impugned order dated 30.12.2024, cancelled the Letter of Award issued to the Petitioner, forfeited its EMD of Rs. 40,000/-, and blacklisted it for a period of one year. (C) Learned counsel for the petitioner would submit that no opportunity was granted to the petitioner prior to initiating the adverse action of Blacklisting. There was no show-cause notice 5 whatsoever that was issued to the petitioner as far as blacklisting of petitioner’s firm. He would submit the punishment of blacklisting can be imposed on a person only when the delinquent person is guilty of severe offences such as fraud or cheating i.e., actions which go to the root of the relationship between the parties. Therefore, arbitrary, unjust, unfair and unreasonable and deserves to be set aside. 3. Learned counsel appearing for the respondent/CSPDCL, per contra, would oppose the arguments advanced by the petitioner. He would submit that vide communication dated 19.12.24 the respondent had already intimated the consequences of not signing the contract agreement within stipulated period, therefore, the intimation itself amounts to notice to the petitioner firm regarding penal action which may be taken after lapse of stipulated period, and, as such, it cannot be said that no opportunity of hearing was afforded to the petitioner before passing impugned warranting no interference of this Court. 4. We have heard learned counsel for the parties, perused the pleadings and documents. 5. Blacklisting is a serious matter affecting commercial credibility in the business world. It has been described as a civil death also. There has to be a balance of competing interests with regard to the rights of the person entitled to supplies under the contract and those who may have failed to abide by the obligations. The 6 jurisdiction of the Court in judicial review is primarily confined to the decision making process. If there are no infirmities in the decision making process, the writ court will ordinarily refrain from going into the matter further except where there may may be compelling circumstances. But if the decision making process before blacklisting suffers from gross procedural infirmities, judicial review will step in and the order will have to be struck down. 6. The terms of the contract contained several options available to the Respondents to take any action against the Petitioner if it defaulted in supplies. Unless he was specifically told that it was the option for blacklisting which was proposed to be exercised, it cannot be said that he was given an adequate opportunity to show cause. It is very reasonable to presume that the Petitioner may have thought that the Respondents would invoke other options and not blacklisting. This aspect of the matter need not detain us for further discussions in view of the enunciation of law laid down in (2014) 9 Supreme Court Cases 105 (Gorkha Security Services vs. Government [NCT of Delhi) and Others), as follows: 21. The central issue, however, pertains to the requirement of stating the action which is proposed to be taken. The fundamental purpose behind the serving of show-cause notice is to make the notice understand the precise case set up against him which he has to meet. This would require the statement of imputations 7 detailing out the alleged breaches and defaults he has committed, so that he gets an opportunity to rebut the same. Another requirement, according to us, is the nature of action which is proposed to be taken for such a breach. That should also be stated so that the noticee is able to point out that proposed action is not warranted in the given case, even if the defaults/breaches complained of are not satisfactorily explained. When it comes to blacklisting, this requirement becomes all the more imperative, having regard to the fact that it is harshest possible action.” ……………………………………………………………... 26 This clause, no doubt, gives further right to the Department to blacklist the contractor for a period of 4 years and also forfeit his earnest money/security deposit, if so required. It is thus apparent that this sub- clause provides for various actions which can be taken and penalties which can be imposed by the Department. In such a situation which action the Department proposes to take, need to be specifically stated in the show-cause notice. It becomes all the more important when the action of blacklisting and/or forfeiture of earnest money/security deposit is to be taken, as the clause stipulates that such an action can be taken, if so warranted. The words "if so warranted", thus, assume great significance. It would show that it is not necessary for the Department to resort to penalty of blacklisting or forfeiture of earnest money/security deposit in all cases, even if there is such a power. It is left to the Department to inflict any such penalty or not depending upon as to whether circumstances in a particular case warrant such a penalty. There has to be due application of mind by the 8 authority competent to impose the penalty, on these aspects. Therefore, merely because of the reason that Clause 27 empowers the Department to impose such a penalty, would not mean that this specific penalty can be imposed, without putting the defaulting contractor to notice to this effect. " ………………………………………………………………. 33. When we apply the ratio of the aforesaid judgment to the facts of the present case, it becomes difficult to accept the argument of the learned Additional Solicitor General. In the first instance, we may point out that no such case was set up by the respondents that by omitting to state the proposed action of blacklisting the appellant in the show-cause notice, has not caused any prejudice to the appellant. Moreover, had the action of blacklisting being specifically proposed in the show-cause notice, the appellant could have mentioned as to why such extreme penalty is not justified. It could have come out with extenuating circumstances defending such an action even if the defaults were there and the Department was not satisfied with the explanation qua the defaults. It could have even pleaded with the Department not to blacklist the appellant or do it for a lesser period in case the Department still wanted to blacklist the appellant. Therefore, it is not at all acceptable that non-mentioning of proposed blacklisting in the show- cause notice has not caused any prejudice to the appellant. This apart, the extreme nature of such a harsh penalty like blacklisting with severe consequences, would itself amount to causing prejudice to the appellant." 9 7. Applying the well settled principles of law to the facts of the present case as there is no specific notice issued to the petitioner proposing the blacklisting of the petitioner’s firm and for the reasons mentioned herein above, the impugned order dated 30.12.2024, in respect of blacklisting of the petitioner’s firm, is liable to be and is hereby set aside. 8. Accordingly, the writ petition is allowed to the above extent. SD/- SD/- (Bibhu Datta Guru) (Ramesh Sinha) Judge Chief Justice Amardeep/Shoaib