Natural Justice – Opportunity of hearing – Appellantpharmaceutical supplier had bid for contract to supply various categories of medicines to the Health Department of the State – The State issued order dated 21.08.2015 directing its Medical and Health Department to stop local purchase from the appellant – It was alleged that there was a FIR against the appellant and CBI was inquiring into the same – The pending criminal case amounted to violation of the terms of the tender conditions – Appellant challenged the order dated 21.08.2015 before the High Court – Appellant contended that the criminal case in question was filed against an erstwhile Director, who had ceased to have any connection with the appellant – It was also contended that the decision of the State amounted to blacklisting and that it was issued without notice or pre-decisional hearing – High Court rejected the challenge – On appeal, held: In the instant case, even if one assumes that accused in the pending criminal case was involved and had sought to indulge in objectionable activities, that ipso facto could not have resulted in unilateral action of the kind which the State resorted to against the appellant, which was never granted any opportunity of hearing or a chance to represent against the order dated 21.08.2015 – It is settled that no one can be inflicted with an adverse order, without being afforded a minimum opportunity of hearing and prior intimation of such a move – High Court fell into error in holding that in matters of award of public contracts, the scope of inquiry in Judicial review is limited – Also, the order dated 21.08.2015 debarred the purchase of medicines for an indefinite duration – This action of the State, not to procure indefinitely, on assumption of complicity by appellant was in violation of principles of natural justice – Accordingly, order dated 21.08.2015 quashed – The impugned judgment of the High Court set aside – Contract – Public contract. Allowing the appeal, the Court
HELD: 1. The State of U.P. has argued that the impugned order dated 21.08.2015 requiring that no procurement ought to be made from appellant, is neither a blacklisting nor a debarring order, in opinion of this Court, in fact and in reality, that order is nothing but an order or a directive, debarring and preventing the State of U.P. from local purchase of medicines from appellants for an indefinite duration. Unlike a “normal” blacklisting order which has a finite life span (of three or maximum five years), the indefinite directive (which appears to be co-terminus with the lifetime of the criminal case) is facially far more disproportionate than a blacklisting order. Even as on date, it is not clear whether formal charges have been framed against the accused. [Para 13][131-D-E]
2. In the present case, even if one assumes that the accused in the pending criminal case was involved and had sought to indulge in objectionable activities, that ipso facto could not have resulted in unilateral action of the kind which the State resorted to- against appellant, which was never granted any opportunity of hearing or a chance to represent against the impugned order. If there is one constant lodestar that lights the judicial horizon in this country, it is this: that no one can be inflicted with an adverse order, without being afforded a minimum opportunity of hearing, and prior intimation of such a move. This principle is too well entrenched in the legal ethos of this country to be ignored, as the state did, in this case. [Para 15][132-E-F]
3. The High Court, in the opinion of this court, fell into error in holding that in matters of award of public contracts, the scope of inquiry in judicial review is limited. Granted, such jurisdiction is extremely circumscribed; no doubt the court had refused to grant relief to appellant against its plea of wrongful rejection of its tender. However, what the impugned judgment clearly overlooks is that the action of the state, not to procure indefinitely, on an assumption of complicity by appellant, was in flagrant violation of principles of natural justice. [Para 16][132G-H; 133-A] Erusian Equipments and Chemicals Ltd. v. State of West Bengal (1975) 1 SCC 70 : [1975] 2 SCR 674;
Raghunath Thakur v. State of Bihar & Ors (1989) 1 SCC 229 : [1988] 3 Suppl. SCR 867; Southern
Painters v. Fertilizers & Chemicals Travancore Ltd., (1994) Supp 2 SCC 699; Grosons Pharmaceuticals (P) Ltd. v. State of U.P., (2001) 8 SCC 604 : [2001] 2 Suppl. SCR 567; B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd. (2006) 11 SCC 548 : [2006] 8 Suppl. SCR 11 – relied on.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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