High Court · 2025 on 08 Jul 2025

Judgment

1. Heard Shri Ved Byas Mishra, learned counsel for the petitioner and Shri Shashi Kant Upadhyay, learned counsel for the respondent no. 3.

2. This petition has been filed seeking quashing of an order dated

7.2.2018 passed by the Executive Officer, Nagar Palika Parishad, Barhaj, District Deoria whereby after holding the petitioner guilty of not completing the contracted work in accordance with the standards prescribed and as per the terms of the work order/contract, his registration was cancelled and he was blacklisted. In the impugned order it was further mentioned that for the financial loss caused to the respondent- Nagar Palika Parishad, the same would be calculated and for its recovery,

separate notice would be issued to the firm.

3. It appears from the petition that for construction of a pakka ghat and other civil works, tenders were invited by publication of advertisement on 3.10.2014, in which process, the petitioner's application was accepted and the contract for interlocking of road in Ward No. 21 was granted and the work order was issued on 11.11.2014. It is stated that the running bill of the petitioner amounting to Rs. 23,56,374/- was paid after due sanction. Thereafter, the work was finalised and the final payment was made after its sanction on 1.6.2015. On a basis of a complaint dated

2.2.2017, a letter has been issued by the District Magistrate, Deoria to the Executive Officer of the Nagar Palika Parishad for recovery of the loss 2 caused by irregularity in performance of the contractual work done by the petitioner-contractor and to blacklist him and also to lodge an FIR. It appears that a fresh notice was issued to the petitioner on 24.7.2017 asking the petitioner to show cause why he not be blacklisted and why recovery of the financial loss caused to the Nagar Palika not be recovered from him. The petitioner submitted his reply on 3.8.2017. It is stated that without considering the reply of the petitioner, an order dated 17.10.2017 was passed blacklisting the petitioner. That order was challenged by the petitioner in Writ-C No. 54413 of 2017. The writ petition was allowed on

16.11.2017 setting aside the order dated 17.10.2017 with a direction to the Executive Officer to consider the petitioner's reply dated 3.8.2017 afresh and decide the notice afresh after giving the petitioner an opportunity of being heard. Thereafter, a notice was issued to the petitioner asking him to appear in person, in pursuance, whereby the petitioner appeared on

31.1.2018 and made his submissions. It is stated that without considering the reply of the petitioner, the impugned order dated 7.2.2018 has been passed.

4. The contention of the learned counsel for the petitioner is that his reply that the fault lay with the Junior Engineer concerned and was not of the petitioner has not been considered in the impugned order. It is further stated that the blacklisting of the petitioner for an indefinite period is impermissible.

5. Learned Standing Counsel has pointed out that the Government Order of 2.1.2017 that has been enclosed as Annexure No. 4 to the writ petition, under point no. 1 thereof, states that under the interlocking bricks utilized for construction of the road, the soil had settled because of which some interlocking tiles had broken.

6. Learned counsel for the petitioner in response has referred to page 110 of the writ petition which is part of the impugned order of 7.2.2018 in which it is reflected that due to negligence of the petitioner-contractor, by way of penalty, in the first and the running bill an amount of Rs. 13,019/- 3 was proposed to be deducted and in the second and final bill, an amount of Rs. 1,133/- was proposed to be deducted which was duly deducted by the Nagar Palika. Further, amounts of Rs. 3,000/- and Rs. 500/- were also deducted from the first and the running bill and second and final bill, respectively, of the contractor-petitioner.

7. It appears that on 17.4.2017 the Executive Officer of the Nagar Palika Parishad issued a notice to the petitioner referring to a Government Order dated 2.2.2017, in which, in respect of the irregularity done in the construction work of the interlocking road done by the petitioner in Ward No. 21 a direction had been issued to assess the irregularity and to recover the amount from the petitioner and to put the petitioner on the blacklist. It was stated that since no reply had been submitted by the petitioner within the period of three days, it was clear that he had nothing to say. Therefore, in compliance of the order of the District Magistrate dated 30.3.2017 pursuant to the aforesaid Government Order dated 2.2.2017, the petitioner-contractor was put on the blacklist with immediate effect and the financial loss caused to the Nagar Palika would be recovered.

8. The aforesaid order of 17.4.2017 was challenged by the petitioner in Writ-C No. 18063 of 2017 which writ petition was allowed and the order dated 17.4.2017 was quashed. The Executive Officer of the Nagar Palika Parishad was directed to issue a fresh show cause notice along with copy of the inquiry report giving reasonable time to the petitioner to submit his reply. Thereafter, the notice dated 24.7.2017 was issued to the petitioner by the Executive Officer. In this notice, apart from iterating the content of the previous notice dated 17.4.2017 the petitioner was directed to submit his explanation within a period of one week as to why after assessing the constructions made the entire amount be not recovered and the petitioner be not placed in the blacklist. It was stated that if within the prescribed time, no explanation is submitted, ex-parte proceedings would be taken for which the petitioner himself would be responsible. 4

9. The petitioner submitted a reply on 3.8.2017 which is enclosed as Annexure No. 11 to the writ petition. In his response, the petitioner stated that pursuant to the work order dated 11.11.2014, the construction of the interlocking road was done by him under the supervision of the Junior Engineer. On the left side of the road, due to a depression being there, soil was filled after which the interlocking work was done. It is stated that an average of 2.5 meters of soil filling was done by the petitioner as per the direction of the Junior Engineer. It is stated that despite the filled soil not settling fully, as per the direction of the Junior Engineer, the work of the interlocking was got done by the petitioner prior to the stated time, whereafter, after about period of one year due to settlement of the soil, up to 20 meters of the road had undergone depression, the full responsibility of which was with the Junior Engineer. That filling of the soil and the interlocking work was done by the petitioner as per the standards prescribed and as per the measurements done by the Junior Engineer. The bill was presented by the petitioner to the Nagar Palika Parishad, which bills dated 18.4.2015 and 1.6.2015 were certified and after perusing an inquiry report, the District Magistrate directed payment of the bill on

1.6.2015. It is stated that the materials used in the aforesaid interlocking work done by the petitioner was subjected to lab test in the Maharana Pratap Polytechnic College, Gorakhpur, and in terms of the letter of the District Magistrate dated 1.6.2015, the work having been found to be correct and satisfactory, the petitioner was refunded the security deposit after a period of six months. It was stated that no notice whatsoever was given to the petitioner regarding short fall or error in the work done by the petitioner during the 'probation period'. It was stated that after a period of one year, the responsibility for maintenance of the road is with the Nagar Palika Parishad.

10. Again by means of a letter dated 17.10.2017, the petitioner was put on the blacklist with a direction that the financial loss caused to the Nagar Palika Parishad would be recovered from him. The aforesaid order of 5

17.10.2017 was challenged by the petitioner in Writ-C No. 54413 of 2017 which was allowed by means judgment dated 16.11.2017 on the ground that there was no application of mind nor was there any consideration of the grounds raised in the reply of the petitioner. The petitioner then submitted a detailed representation dated 22.1.2018 in response to a notice of the Nagar Palika Parishad dated 15.1.2018. Another representation was submitted by the petitioner on 31.1.2018.

11. By the impugned order, the petitioner was blacklisted. It is clearly mentioned in the impugned order dated 7.2.2018 that deductions were done by the respondents for not duly compacting the soil during the work executed by him both in the first running bill and in the second final bill. Further, deductions were done on the first running bill on the recommendation of the District Level Task Force. It has been stated in the impugned order with reference to the aforesaid deductions that there had been no negligence in the supervision of the construction work done by the respondent-authorities. It has been mentioned that the work was not done by the petitioner in accordance with the standards for which he is guilty and that he had violated the terms of the contract. It has been observed that the stand of the petitioner that the work in question has undergone a depression after two rainy seasons is contrary to fact. In case, the petitioner-contractor had got the work done as per the standards, the interlocking road would have lasted for more than a period of five years.

12. In our opinion, the order impugned dated 7.2.2018 is without objective consideration of the reply and representations submitted by the petitioner and it clearly indicates that action is being taken against the petitioner (for blacklisting) on the ground of violation of the contract.

13. The Supreme Court in the case of M/s. Techno Prints Vs. Chhattisgarh Textbook Corporation and another1, while relying upon its judgments in the case of Kulja Industries Limited Vs. Chief General 1 2025 (3) SCR 208; 2025 INSC 236 6 Manager Western Telecom Project BSNL and others2 and The Blue Dreamz Advertisng Private Limited and another Vs. Kolkata Municipal Corporation and others3 observed that the guiding principles as to when and in what circumstances a blacklisting order can be passed had been explained by the Supreme Court and those principles should also be borne in mind by the authority at the time of issuing a show cause notice for blacklisting. While relying upon the judgment in Erusian Equipment & Chemicals Limited Vs. State of West Bengal4, it was observed that there have to be strong, independent and overwhelming materials to resort to the power of blacklisting given the drastic consequences on a contractor visited by an order of blacklisting. The power to blacklist cannot be resorted to when the grounds for the same are only breach or violation of a term or condition of a particular contract and when legal redress is available to both parties. The Supreme Court has observed as follows: "34. Plainly, if a contractor is to be visited with the punitive measure of blacklisting on account of an allegation that he has committed a breach of a contract, the nature of his conduct must be so deviant or aberrant so as to warrant such a punitive measure. A mere allegation of breach of contractual obligations without anything more, per se, does not invite any such punitive action.

35. Usually, while participating in a tender, the bidder is required to furnish a statement undertaking that it has not been blacklisted by any institution so far and, if that is not the case, provide information of such blacklisting. This serves as a record of the bidder's previous experience which gives the purchaser a fair picture of the bidder and the conduct expected from it. Therefore, while the debarment itself may not be permanent and may only remain effective for a limited, pre-determined period, its negative effect continues to plague the business of the debarred entity for a long period of time. As a result, it is viewed as a punishment so grave, that it must follow in the wake of an action that is equally grave."

14. In view of the aforesaid, the order of blacklisting cannot stand. It is evident from the initial notices issued to the petitioner pursuant to the