Tender – Tender agreement – Breach of contract – Blacklisting – Power of the Authority to blacklist – Scope – Show cause notice – Issuance of – Appellant was assigned a contract by the respondent no.1 – Issuance of show cause notice by respondent no.1 to the appellant to show cause as to why it should not be blacklisted for a period of three years and the security deposit/EMD be forfeited for violation of the clauses of the tender agreement – Writ petition by the appellant – Rejected by the Single Judge of the High Court – Appeal thereagainst, also dismissed – Correctness:
Held: Ordinarily, a writ court should not entertain any petition, seeking to challenge a show cause notice unless the Court is convinced that the same has been issued by an authority having no jurisdiction, or the same is tainted with mala fides – Sum and substance of the clauses of the tender is that if the appellant is unable to complete the work of printing within the stipulated time then the consequences will be blacklisting – Guiding principles as to when and in what circumstances a blacklisting order can be passed then, should be borne in mind by the Authority at the time of issuing a show cause notice – On facts, no good reason for the Authority to issue show cause notice calling upon the contractor why he should not be blacklisted – There is always an inherent power in the Authority to blacklist a contractor but there should be reasonable ground to exercise such power – Final order in any case cannot travel beyond the show cause notice – Whether show cause notice makes out a case for blacklisting, should be the test to determine whether it is a genuine case to blacklist a contractor or visit him with any other penalty, like forfeiture of EMD, recovery of damages – Once an order of blacklisting is passed the same would put an end to the business of the person concerned, it is a drastic step – 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 – 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 – Mere allegation of breach of contractual obligations without anything more, per se, does not invite any such punitive action – Respondent no.1 to forfeit the EMD, however notice calling upon the appellant as to why it should not be blacklisted is quashed and set aside. [Paras 16, 24, 29, 30, 32-37]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Nidhi Jain. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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