High Court of Orissa

Ram Kumar Agrawal Engineers Pvt. Ltd. Vs. State of Odisha and Ors.

MANU/OR/0056/2022

04.03.2022

Commercial

A fair hearing to the party being blacklisted is an essential pre-condition for a proper exercise of the power and a valid order of blacklisting

In present writ petition, the Petitioner has assailed the order wherein the Opposite Party No. 3- has directed the Executive Engineer to initiate appropriate action as per Appendix XXXIV of OPWD Code pertaining to blacklisting of the Petitioner.

The power to blacklist a contractor, whether it is a contract for supply of material or equipment or for the execution of any other work whatsoever, is inherent in the party allotting the contract. In fact, 'blacklisting' simply signifies a business decision by which the party affected by the breach decides not to enter into any contractual relationship with the party committing the breach. Between two private parties, the right to take any such decision is absolute and untrammelled by any constraints. But, in the instant case, the employer is Government and the importance of procedural fairness cannot be undermined.

It is true that, blacklisting affects the reputation of a person put on the blacklist, it is not limited to his dealings with the Government but also in dealings with private firms and amounts to affecting his business prospects. A blacklist order leads to civil consequences. Such an order must not be passed by any authority without affording due opportunity of being heard to the person likely to be affected by such an order.

Even though the right of the writ Petitioner is in the nature of a contractual right, the manner, the method and the motive behind the decision of the authority whether or not to enter into a contract is subject to judicial review on the touchstone of fairness, relevance, natural justice, non-discrimination, equality and proportionality. A fair hearing to the party being blacklisted thus becomes an essential pre-condition for a proper exercise of the power and a valid order of blacklisting. In addition, the State has to examine the principle of proportionality while examining the instant case since the blacklisting period is not specified.

The decision of the State to blacklist the Petitioner has been done in a hush hush manner without giving a proper hearing. Further, the application of the doctrine of proportionality has not been kept in mind in proper perspective while awarding a punitive measure like blacklisting without a period specified in the impugned order. In addition, there seems to be violation of codal procedures, in so far as procedural formalities are concerned. The impugned order of blacklisting the Petitioner deserves a revisiting by the State authority. The opposite party No. 3 is directed to re-examine the entire issue in proper perspective by giving the petitioner an opportunity to put forth his case and pass a reasoned order in accordance with law within a period of three months. Petition disposed off.

Tags : Blacklisting Fair hearing Opportunity

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