High Court

Heard Ms. Tanisha Jahangir Monir, learned counsel appearing on behalf of petitioner, Mr. Alok Mishra, learned counsel appearing on behalf of respondent nos. 2 to 5 and learned Standing Counsel appearing on behalf of State respondent.

2. This is a writ petition under Article 226 of the Constitution of India wherein the petitioner is aggrieved by the order dated December 2, 2024 wherein several consequences have been meted out to the petitioner including blacklisting for a period of three years and further orders passed with regard to confiscation of the bank guarantee.

3. It is to be noted that a show cause notice was issued to the petitioner on May 14, 2024, which did not mention the factum of blacklisting. Subsequently, a show cause notice was issued dated September 28, 2024 with regard to blacklisting. By the order dated October 26, 2024, the objections filed by the petitioner were rejected by the authority concerned and subsequently by the impugned order, the petitioner company was blacklisted.

4. The impugned order is delineated below : “एतद्द्वारा कार्याा(cid:10)लर्या वि(cid:13)द्युत वि(cid:13)तरण मण्डल-विद्वतीर्या, अलीगढ़ द्वारा वि(cid:13)द्युत वि(cid:13)तरण खण्ड- षष्ठम, अलीगढ़ के अन्तग(cid:10)त वि(cid:13)स्तारिरत नगर पंचार्यात, कौडिडर्याागंज एं(cid:13) वि(cid:13)स्तारिरत नगर पंचार्यात वि(cid:13)जर्यागढ़ मे विनर्धाा(cid:10)रिरत रोस्टर के अनुसार वि(cid:13)द्युत आपूर्तित प्रदान विकर्याे जाने के लिलए (cid:13)ांछि1त वि(cid:13)द्युत नेट(cid:13)क(cid:10) सुदृढ़ीकरण के कार्या(cid:10) सेमी टन(cid:10) -की आर्धाार पर करार्याे जाने हेतु 1 of 3 आमंवि5त क्रमशः ई-विनवि(cid:13)दा संख्र्याा वि(cid:13)वि(cid:13)मंविद्वअ-53/2022-23 एं(cid:13) ई-विनवि(cid:13)दा संख्र्याा वि(cid:13)वि(cid:13)मंविद्वअ-54/2022-23 के सापेक्ष अनुबन्धिन्र्धात कार्या(cid:10)दार्याी संस्था मै० श्री गणेश एण्टरप्राइजेज, 5/305, रिरसाल सिंसह नगर, आई०टी०आई० रोड, अलीगढ़ द्वारा अनुबन्र्धा की शतD तथा मानकों के अनुरूप सामग्री उपलब्र्धा न करार्याे जाने तथा स-समर्या कार्या(cid:10) पूण(cid:10) न करार्याे जाने के फलस्(cid:13)रूप सन्दर्भिLत कार्या(cid:10) में हुर्याे अना(cid:13)श्र्याक वि(cid:13)लम्ब तथा वि(cid:13)Lागीर्या संसार्धानों के अना(cid:13)श्र्याक व्र्याथ(cid:10) होने के दृविQगत उ०प्र० पा(cid:13)र कारपोरेशन लिल० लखनऊ के कार्याा(cid:10)लर्या ज्ञाप संख्र्याा 2001-कार्या(cid:10)/चौदह-पाकालिल/2022-10-के/2021 विदनांक 03-09- 2022 के विबन्दु संख्र्याा 2.1 (ii) ii) एं(cid:13) 2.1 (ii) iii) के अनुपालन में सक्षम स्तर से प्राप्त अनुमोदन के पश्चात मै० श्री गणेश इण्टरप्राइजेज, 5/305, रिरसाल सिंसह नगर, आई०टी०आई० रोड, अलीगढ़ को विदनांक 02-12-2024 से 03 (cid:13)ष(cid:10) की अ(cid:13)डिर्धा के लिलए काली सूची में डाला जाता है/Black List विकर्याा जाता है।"

5. Upon perusal of the order, we find that the order does not satisfactorily comply with the requirements that have to be adhered to by the authority before blacklisting of a firm.

6. One may rely on the judgement delivered by a coordinate Bench of this High Court in M/s Hi Tech Pipe Limited vs. State of U.P. and 4 others (ii) Writ C No. 11037 of 2024) decided on 5.8.2024, Neutral Citation No. - 2024:AHC:125882-DB, wherein the coordinate Bench had held as follows : "6. This Court in A.K. Construction Company v. Union of India and Others (ii) Writ-C No.20223 of 2024 decided on July 19, 2024), after examining the Supreme Court judgment in M/s Kulja Industries Limited -v- Chief Gen. Manager W.T. Proj. BSNL & Ors. (ii) Civil Appeal No. 8944 of 2013), has held as follows:

14. Upon a perusal of the relevant paragraphs above, it is evident that the judgement brings forward several critical principles concerning the judicial scrutiny of decisions to blacklist contractors by governmental or public authorities. First, the inherent power to blacklist a contractor is vested in the entity awarding the contract, typically the State or its instrumentalities. This authority does not necessarily require explicit statutory authorisation but must conform to fairness and reasonableness. It is also to be noted that any governmental or public authority's decision to blacklist a contractor is open to judicial review, ensuring adherence to natural justice principles, particularly audi alteram partem and the doctrine of proportionality. This means courts can examine such decisions to ensure they are just and balanced. Further, before blacklisting a contractor, the entity must provide a fair hearing, allowing the contractor to present their case and defend against the allegations or reasons for blacklisting. The decision to blacklist must also be reasonable, fair, and proportionate to the gravity of the alleged offence or breach, avoiding arbitrariness or discrimination. Additionally, actions by State authorities, including blacklisting decisions, must pass the reasonableness test under Article 14 of the Indian Constitution, which ensures equality before the law and 2 of 3 prevents arbitrary State actions. Furthermore, precedents and legal standards established in prior judicial decisions, such as Erusian Equipment & Chemicals Ltd. -v- State of W.B., reported in (ii) 1975) 1 SCC 70 and subsequent cases like Radha krishna Agarwal and Ors. - v- State of Bihar & Ors., reported in (ii) 1977) 3 SCC 457, shed light on the legal framework guiding the judicial review of blacklisting decisions. These principles collectively aim to ensure that the power to blacklist is exercised judiciously, upholding fairness, reasonableness, and proportionality while safeguarding contractors' rights to a fair hearing and defense.

7. The entire concept of blacklisting is required to be seen in a holistic manner and what has to be appreciated that an order of blacklisting/debarment of a particular firm is in the nature of punishment which carries with civil consequences for a firm. An order of blacklisting is accordingly required to be passed taking into consideration all aspects and should not be passed in a casual and cavalier manner as the same has an impact on the person for which such blacklisting is done."

7. In light of the same, we are of the view that this order of blacklisting is arbitrary and mala fide and required to be struck down. The order with regard to the confiscation of bank guarantee and other consequential orders cannot be decided in this writ petition and the petitioner is at liberty to approach the appropriate forum for redressal of the grievances therein.

8. In light of the same, this writ petition is partly allowed quashing the impugned order dated December 2, 2024. Order Date :- 7.1.2025 DKS 3 of 3

Heard Ms. Tanisha Jahangir Monir, learned counsel appearing on behalf of petitioner, Mr. Alok Mishra, learned counsel appearing on behalf of respondent nos. 2 to 5 and learned Standing Counsel appearing on behalf of State respondent.

2. This is a writ petition under Article 226 of the Constitution of India wherein the petitioner is aggrieved by the order dated December 2, 2024 wherein several consequences have been meted out to the petitioner including blacklisting for a period of three years and further orders passed with regard to confiscation of the bank guarantee.

3. It is to be noted that a show cause notice was issued to the petitioner on May 14, 2024, which did not mention the factum of blacklisting. Subsequently, a show cause notice was issued dated September 28, 2024 with regard to blacklisting. By the order dated October 26, 2024, the objections filed by the petitioner were rejected by the authority concerned and subsequently by the impugned order, the petitioner company was blacklisted.

4. The impugned order is delineated below : “एतद्द्वारा कार्याा(cid:10)लर्या वि(cid:13)द्युत वि(cid:13)तरण मण्डल-विद्वतीर्या, अलीगढ़ द्वारा वि(cid:13)द्युत वि(cid:13)तरण खण्ड- षष्ठम, अलीगढ़ के अन्तग(cid:10)त वि(cid:13)स्तारिरत नगर पंचार्यात, कौडिडर्याागंज एं(cid:13) वि(cid:13)स्तारिरत नगर पंचार्यात वि(cid:13)जर्यागढ़ मे विनर्धाा(cid:10)रिरत रोस्टर के अनुसार वि(cid:13)द्युत आपूर्तित प्रदान विकर्याे जाने के लिलए (cid:13)ांछि1त वि(cid:13)द्युत नेट(cid:13)क(cid:10) सुदृढ़ीकरण के कार्या(cid:10) सेमी टन(cid:10) -की आर्धाार पर करार्याे जाने हेतु 1 of 3 आमंवि5त क्रमशः ई-विनवि(cid:13)दा संख्र्याा वि(cid:13)वि(cid:13)मंविद्वअ-53/2022-23 एं(cid:13) ई-विनवि(cid:13)दा संख्र्याा वि(cid:13)वि(cid:13)मंविद्वअ-54/2022-23 के सापेक्ष अनुबन्धिन्र्धात कार्या(cid:10)दार्याी संस्था मै० श्री गणेश एण्टरप्राइजेज, 5/305, रिरसाल सिंसह नगर, आई०टी०आई० रोड, अलीगढ़ द्वारा अनुबन्र्धा की शतD तथा मानकों के अनुरूप सामग्री उपलब्र्धा न करार्याे जाने तथा स-समर्या कार्या(cid:10) पूण(cid:10) न करार्याे जाने के फलस्(cid:13)रूप सन्दर्भिLत कार्या(cid:10) में हुर्याे अना(cid:13)श्र्याक वि(cid:13)लम्ब तथा वि(cid:13)Lागीर्या संसार्धानों के अना(cid:13)श्र्याक व्र्याथ(cid:10) होने के दृविQगत उ०प्र० पा(cid:13)र कारपोरेशन लिल० लखनऊ के कार्याा(cid:10)लर्या ज्ञाप संख्र्याा 2001-कार्या(cid:10)/चौदह-पाकालिल/2022-10-के/2021 विदनांक 03-09- 2022 के विबन्दु संख्र्याा 2.1 (ii) ii) एं(cid:13) 2.1 (ii) iii) के अनुपालन में सक्षम स्तर से प्राप्त अनुमोदन के पश्चात मै० श्री गणेश इण्टरप्राइजेज, 5/305, रिरसाल सिंसह नगर, आई०टी०आई० रोड, अलीगढ़ को विदनांक 02-12-2024 से 03 (cid:13)ष(cid:10) की अ(cid:13)डिर्धा के लिलए काली सूची में डाला जाता है/Black List विकर्याा जाता है।"

5. Upon perusal of the order, we find that the order does not satisfactorily comply with the requirements that have to be adhered to by the authority before blacklisting of a firm.

6. One may rely on the judgement delivered by a coordinate Bench of this High Court in M/s Hi Tech Pipe Limited vs. State of U.P. and 4 others (ii) Writ C No. 11037 of 2024) decided on 5.8.2024, Neutral Citation No. - 2024:AHC:125882-DB, wherein the coordinate Bench had held as follows : "6. This Court in A.K. Construction Company v. Union of India and Others (ii) Writ-C No.20223 of 2024 decided on July 19, 2024), after examining the Supreme Court judgment in M/s Kulja Industries Limited -v- Chief Gen. Manager W.T. Proj. BSNL & Ors. (ii) Civil Appeal No. 8944 of 2013), has held as follows:

14. Upon a perusal of the relevant paragraphs above, it is evident that the judgement brings forward several critical principles concerning the judicial scrutiny of decisions to blacklist contractors by governmental or public authorities. First, the inherent power to blacklist a contractor is vested in the entity awarding the contract, typically the State or its instrumentalities. This authority does not necessarily require explicit statutory authorisation but must conform to fairness and reasonableness. It is also to be noted that any governmental or public authority's decision to blacklist a contractor is open to judicial review, ensuring adherence to natural justice principles, particularly audi alteram partem and the doctrine of proportionality. This means courts can examine such decisions to ensure they are just and balanced. Further, before blacklisting a contractor, the entity must provide a fair hearing, allowing the contractor to present their case and defend against the allegations or reasons for blacklisting. The decision to blacklist must also be reasonable, fair, and proportionate to the gravity of the alleged offence or breach, avoiding arbitrariness or discrimination. Additionally, actions by State authorities, including blacklisting decisions, must pass the reasonableness test under Article 14 of the Indian Constitution, which ensures equality before the law and 2 of 3 prevents arbitrary State actions. Furthermore, precedents and legal standards established in prior judicial decisions, such as Erusian Equipment & Chemicals Ltd. -v- State of W.B., reported in (ii) 1975) 1 SCC 70 and subsequent cases like Radha krishna Agarwal and Ors. - v- State of Bihar & Ors., reported in (ii) 1977) 3 SCC 457, shed light on the legal framework guiding the judicial review of blacklisting decisions. These principles collectively aim to ensure that the power to blacklist is exercised judiciously, upholding fairness, reasonableness, and proportionality while safeguarding contractors' rights to a fair hearing and defense.

7. The entire concept of blacklisting is required to be seen in a holistic manner and what has to be appreciated that an order of blacklisting/debarment of a particular firm is in the nature of punishment which carries with civil consequences for a firm. An order of blacklisting is accordingly required to be passed taking into consideration all aspects and should not be passed in a casual and cavalier manner as the same has an impact on the person for which such blacklisting is done."

7. In light of the same, we are of the view that this order of blacklisting is arbitrary and mala fide and required to be struck down. The order with regard to the confiscation of bank guarantee and other consequential orders cannot be decided in this writ petition and the petitioner is at liberty to approach the appropriate forum for redressal of the grievances therein.

8. In light of the same, this writ petition is partly allowed quashing the impugned order dated December 2, 2024. Order Date :- 7.1.2025 DKS 3 of 3