Pawanhari Enterprises Through Proprietor Shri Vishesh Mittal S/o Krishna Gopal Mittal Age About 27 v. 1 - The Chief Municipal Officer Municipal Council Katghora District Korba
Case Details
1 2025:CGHC:33240-DB NAFR AMARDEEP CHOUBEY Digitally signed by AMARDEEP CHOUBEY Date: 2025.07.17 10:44:30 +0530 HIGH COURT OF CHHATTISGARH AT BILASPUR WPC No. 3559 of 2025 Pawanhari Enterprises Through Proprietor Shri Vishesh Mittal S/o Krishna Gopal Mittal Age About 27 Years Having Officer At Ward Number 8 Puchapara Katghora Post- Katghora District Korba (C.G.) ... Petitioner versus 1 - The Chief Municipal Officer Municipal Council Katghora District Korba (C.G.) 2 - Municipal Council Through Its CMO Katghora District Korba (C.G.) 3 - The State Of Chhattisgarh Through Secretary Department Of Urban Administration And Development Mantralaya Mahanadi Bhawan Nava Raipur , Atal Nagar (C.G.) (Respondents) --- Respondents
Legal Reasoning
For Petitioner For Respondent Nos.1 & 2 : Mr. Abhishek Kumar Singh, Advocate. For Respondent/State : Mr. Shashank Thakur, Dy.A.G. : Mr. Akhand Pratap, Advocate Hon'ble Shri Ramesh Sinha, Chief Justice Hon'ble Shri Bibhu Datta Guru, Judge Judgment on Board Per Ramesh Sinha, Chief Justice 2 16.07.2025 1. By the present writ petition, the petitioner is challenging the order dated 18/06/2025 (Annexure-P/1) passed by the respondent No.1, whereby, the petitioners’ firm has been blacklisted from participating in tenders of Nagar Palika Parishad, Katghora, for a period of one year, and its Earnest Money Deposit (EMD) has been forfeited, in connection with the tender issued in March, 2025. The relief clause is quoted below:- “a) That this Hon'ble Court may kindly be pleased to issue an appropriate writ, order or direction for quashing and setting aside the impugned order dated 18.06.2025 (Annexure P-1) passed by Respondent No.1 Chief Municipal Officer, Nagar Palika Parishad, Katghora, whereby the Petitioner has been debarred from participating in future tenders for a period of one year and the EMD has been forfeited; b) That this Hon'ble Court may further be pleased to direct the Respondents to permit the Petitioner to participate in all ongoing and future tenders without any reference to the impugned blacklisting order; c) That this Hon'ble Court may be pleased to grant any other relief(s) as deemed just and proper in the facts and circumstances of the present case; d) Cost of the petition may also be awarded in favour of the Petitioner.” 2. (A) Learned counsel for the petitioner would submit that the impugned order dated 18.06.2025 was passed by the Chief Municipal Officer (Respondent No.1) without issuing any notice, 3 without granting any opportunity of hearing, and without any authority or resolution under the Chhattisgarh Municipalities Act, 1961. The action is patently illegal and violation of Articles 14 and 19(1)(g) of the Constitution of India. He further submits that it is contrary to the judgment of the Hon'ble Supreme Court in M/s Techno Prints v. Chhattisgarh Textbook Corporation & Anr., 2025 INSC 236, which mandates that blacklisting cannot be done arbitrarily or without following due process. The petitioner, being barred from participating in public tenders, is suffering irreparable harm. Learned counsel would further submit that with regard to blacklisting of the Petitioner for the period of 1 year, it is submitted that the same is totally arbitrary, illegal and against the well settled judgments of the Hon'ble Apex Court that blacklisting of any contractor has civil consequences thus before taking such extreme steps against any contractor principles of natural justice must be adhered to which in the present case, the Respondents have failed to do so. 3. Learned counsel for the respondent Nos. 1 & 2 would submit that looking to the defaults committed on the part of the contractors, initially E.M.D. was forfeited and the defaulting contractors was barred from participating in the same tender work. In order to make the deterrent measure more effective, the governing body of the municipal council passed the resolutions to debar defaulter contractor from participating in the 4 tender of municipal council for one year. The measure adopted has direct bearing on the civil amenities in the jurisdiction and also issuance of fresh tender puts unnecessary expenses on the state exchequer and due to the defaults committed by the contractors, the work is delayed. 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 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 5 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 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.” ……………………………………………………………... 6 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 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 7 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 8 harsh penalty like blacklisting with severe consequences, would itself amount to causing prejudice to the appellant." 7. As far as the forfeiture of the earnest money is concerned, since it involves disputed question of facts and as such, we are not inclined to interfere in this regard, however, the petitioner would be at liberty to avail the remedy for refund of earnest money before the appropriate forum as may be available to him under the provisions of law. 8. 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 18.06.2025 in respect of blacklisting of the petitioner’s firm is liable to be and is hereby set aside. 9. Accordingly, the writ petition is allowed to the above extent. However, the concerned authority is at liberty to proceed in accordance with law after issuing show cause notice to the petitioner, if so desires. SD/- SD/- (Bibhu Datta Guru) (Ramesh Sinha) Judge Chief Justice Amardeep/Shoaib