TaxTMI 
TaxTMI 
2025 (2) TMI 1243
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....er of this litigation is the show cause notice that came to be issued by the respondent no. 1 to the appellant firm, calling upon the firm to show cause as to why it should not be blacklisted for a period of three years and the EMD of Rs. 5,00,000/- (Rupees Five Lakh only), be forfeited. The appellant firm was also called upon to show cause as to why the loss incurred by the corporation, due to its default in fulfilling its terms of contract, be recovered. 4. Prima facie, it appears that the petitioner firm was declared as L-1 in one of the tenders issued by the corporation i.e. the respondent no. 1. According to the respondent no. 1, the appellant firm violated few clauses of the tender agreement. 5. The relevant clauses of the tender document/agreement which according to the respondent no. 1, have been breached, read thus:- "16.1 Period of supply of books maximum 90 days as per mentioned in the work order from the date of printing order. It will be imperative upon the bidder to complete the allotted printing & binding work within stipulated time period i.e. maximum 90 days as per mentioned in the work order. In emergency the CGPPN will reduce period for supply of b....
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....ause. The show cause notice was only confined to Clause 13.3 & 13.6. Reading of clause 13.3 & 13.6 would show that they are in general terms as Clause 13.3 purports that any failure to fulfill contractual obligations or breach of any provisions of agreement, may render the bidder to be blacklisted. Clause 13.6 further purports that if the printer is found to influence any staff of the Nigam in any unauthorised manner will also be blacklisted. In the Statement of Chinta Ram Sahu and in police enquiry against him, nothing was found against the petitioner and omnibus inference cannot be drawn that the petitioner had influenced the staff of the Corporation and had influenced the Police, thereby the petitioner was liable to be blacklisted. 24. Applying the principles laid down by the Supreme Court, I am of the view that the blacklisting order in this case travelled beyond the scope of show cause notice, as such, is liable to be quashed. Accordingly the order dated 02.01.2021 is quashed. With the above observations, this writ petition is allowed." 9. The plain reading of the aforesaid order would clearly give an indication that the challenge in the earlier round of litigation wa....
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....s is reflected in the show cause notice against the petitioner. 13. The further question to be considered also is the fact that if at all if the earlier writ petition stands allowed which was exclusively challenging the order of blacklisting would it not amount to the respondents being precluded for all time to come from initiating any action in respect of any illegality which was detected by the respondents in respect of the contract entered into between the petitioner and the respondents. All the contentions and the allegations that the petitioner raises is only trying to establish the fact that the allegations leveled against the petitioner does not stand the test of law as it has already been subjected to test in the earlier round of litigation i.e. in WPC No. 1325/2021. Whereas on the perusal of the order of the earlier writ petition would clearly give an indication that the challenge in the said writ petition was only to the order of blacklisting. That it was only the order of blacklisting which was subjected to scrutiny by the writ Court and it was only the order of blacklisting which has been set aside/quashed. The writ Court in the earlier judgment in WPC No. 1325....
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....nly thereafter a final decision in the matter could be taken. Interference by the Court before that stage would be premature and the Hon'ble Supreme Court went on holding that, the High Court in our opinion ought not have interfered with the show cause notice. 13. Again, the Hon'ble Supreme Court in the case of Secretary, Ministry of Defence & Ors. v. Prabhash Chandra Mirdha [2012 11 SCC 565] in paragraph 8, 10 & 12 has held as under:- "8. The law does not permit quashing of chargesheet in a routine manner. In case the delinquent employee has any grievance in respect of the charge-sheet he must raise the issue by filing a representation and wait for the decision of the disciplinary authority thereon. 10. Ordinarily a writ application does not lie against a charge-sheet or show-cause notice for the reason that it does not give rise to any cause of action. It does not amount to an adverse order which affects the right of any party unless the same has been issued by a person having no jurisdiction/competence to do so. A writ lies when some right of a party is infringed. In fact, chargesheet does not infringe the right of a party. It is only when a final order....
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....no point of time had precluded the respondents from conducting an inquiry and proceeding in accordance with law. It had only found the order of blacklisting earlier passed on 02.01.2021 to be bad in law and contrary to the contents of the show cause notice dated 13.04.2020. 10. The plain reading of the averments of the show cause notice would by itself show that the respondents have made certain serious allegations against the petitioner in respect of the lifting of the papers from the respondent-Corporation by material suppression of facts so far as furnishing of the Bank Guarantee is concerned. 11. Only because the earlier order of blacklisting having been quashed by the High Court would not preclude the respondent-Corporation from initiating appropriate proceedings for the irregularity committed by the petitioner, if any, in accordance with law. That it is for this reason that the petitioner has been issued with a fresh show cause notice spelling out the allegations that has been made against him. The petitioner can very well provide all the explanations to the allegations made to the respondents supported with all relevant documents in their support. Upon such....
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.... order of blacklisting was traveling beyond the scope of the show cause notice. 14. Under the circumstances, the subsequent show cause notice in respect of the same contract would be sustainable and the same cannot be held to be either arbitrary or bad in law at this stage. The petitioner would have all the rights and liberty to put up their explanation so far as the allegations are concerned in their response which they are required to submit to the show cause notice. That upon such reply being furnished the authorities concerned are duty bound to duly consider the same and then take an appropriate decision whether to proceed further on the show cause notice proceedings in the light of the explanation so submitted by the petitioner or not?"" 10. In such circumstances record to above, the appellant is here before this Court with the present appeal. 11. We have heard Mr. Gaurav Agarwal, the learned senior counsel, appearing for the appellant and Mr. Ankit Mishra, the learned counsel appearing for the respondent nos. 1 and 2, respectively. 12. We take notice of the order passed by this Court dated 17.05.2023, the same reads thus:- "Mr. Priyank Upadhyay, lea....
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.... learned senior counsel appearing for the appellant would submit that one cannot blacklist or even be called upon to show cause as to why you should be blacklisted, unless there is an intent to cheat or take undue advantage which is not there in the present case. He would submit that there is nothing to indicate that the appellant deliberately defaulted. In such circumstances, the proceedings instituted against the appellant deserves to be dropped. 22. On the other hand, the learned counsel appearing for the corporation would submit that the action of blacklisting would not depend upon as to whether default of the appellant herein, was deliberate or not, or there was any intention to take undue advantage or to cheat or not. It depends upon the contravention of the contract and the damage caused to the respondents. 23. The show cause notice reads thus: "Chhattisgarh Textbook Corporation Office Complex, Block-B, Sector-24 Atai Nagar, Nava Raipur No./2806/PPN/Printing/2020-21 /2022 Raipur on 14/12/2022 To, Techno Prints, Behind Banjari Mata Mandir, Near Heera Steel, Rawanbhata Raipur Chhatt....
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....p; Order No. 4013 Date 17.01.2020 GROUP MEMBER SUB GROUP NUMBER NAME OF BOOK CLASS APPROX PAGE NO. BOOK NO. 70 GSM PAPER QUANTITY IN M. TONNE 220 GSM COVER PAPER SHEET NO. L-1 A Vigyan (SZ) 10 360 234862 182.840 59890 0.2150 B English (SZ) 7 144 236402 73.616 60283 0.2090 B English (SZ) 7 144 9034 2.813 2304 0.2090 Total 259.269 122477 ORDER NO. 4460 DATE 18.02.2020 GROUP MEMBER SUB GROUP NUMBER NAME OF BOOK CLASS APPROX PAGE NO. BOOK NO. 70 GSM PAPER QUANTITY IN M. TONNE 220 GSM COVER PAPER SHEET NO. L-1 1 B Science (SZ) 10 216 16563 7.737 4224 0.20 1 C Ganit (SZ) 6 244 246729 130.187 62926 0.20 1 A History and Civics (SZ) 6 128 8717 2.413 2223 0.20 20 B Paryawaran (SZ) 7 124 239544 64.234 61084 0.2090 20 A Hindi (SZ) 3 128 240413 66.546 61305 0.2090 20 A Hindi (SZ) 7 128 8850 2.450 2257 0.2090 B Yo....
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....roup/groups. For example- if the bidder deposits bank guarantee/FDR for one group (i.e. 20% of cost of paper required to complete the work of concerned group) than paper required for that particular/single group will be allotted but quantity of paper should not exceed double of the amount of bank Guarantee /FDR. Next allotment of paper will be done strictly after 80% supplies received in concern depot. If the progress of the printing work is found unsatisfactory then MD CGPPN reserve the right to allot the remaining work of concern group/ remaining group to another printer on L-1 rate according to his capacity. According to the above provision of the tender, you have to print textbooks by 17.02.20 about 280 MT Reel paper was supplied, against which you have submitted your complaint, in situation of date 11.03.2020, the books were supplied to the depot using only 136 MT of paper. According to provision of Printing Tender Clause 16.3:- 16.3 If the progress of work at any stage is found slower than expected and if the Nigam is convinced that the printer will not be able to complete the work in time, the Nigam shall cancel the contract in full or in part and ....
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....ositive/CD on sharing basis. No objection was lodged by him in this. Accordingly, you have clearly violated the provisions of clause 13.3.1 of the tender. Again by sending a letter to the Corporation on 13.04.2020, you were informed about the closure of the printing press dated 22.03.2020, as well as a request was made to extend the printing and distribution work by 02 months from 17 April 2020 due to the Corona lockdown. Due to Corona lockdown on behalf of the corporation, the period of printing work has been extended from 17th April 2020 to 17th May 2020 till the date of printing and distribution, till the email letter dated 28.04.2020, out of 1267.496 melons allotted by the corporation as per your printing capacity, only 549.927 melons have been printed. Final consent was given for the printing of while the other printers of the corporation completed the allotted work by continuing the printing work even during the corona lockdown. According to the report of the NIC branch of the Corporation, the printing capacity till 22.03.2020, the date of implementation of the Corona Lockdown, by you as per 90 days (in the last 75 days, the printing work allotted b....
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.... rate of group/groups and Nigam allots the printing works to the tenderer on the basis of his 1-1 rate (Lowest Tenderer) of group/groups then also if tenderer refuse to do the printing work or work not completed. In this condition Nigam has right to put the tenderer in BLACKLIST for 3 (Three) years and security deposit and EMD will be forfeited. Since even after being L-1 in different groups of the tender, due to not completing the allotted textbook printing within the stipulated time period, the Corporation had to get it completed by allotting it to other printers, therefore the tender clause 16.3 and 16.9. Why not recover the said compensation from your security amount and balance deposits as per the provision of clause 16.3 and 16.9? In the light of the above mentioned facts, you have clearly violated the provisions of section 16.1, 16.3, 13.3. Why not invoke provision 16.9 against you? In respect of the mentioned facts, give written reply to the show cause notice issued as above within 02 weeks from the date of receipt of the notice. (Ordered by the Managing Director) General Manager Chhattisgarh Textbook Corporation Raipur ....
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....esaid three guiding situations or grounds on which the Authority may be justified in exercising its power to blacklist the contractor. 27. This Court in The Blue Dreamz Advertising Pvt. Ltd. & Anr. v. Kolkata Municipal Corp. & Ors. reported in 2024 INSC 589 while quashing and set asiding the blacklisting order as affirmed by the High Court in almost identical facts observed as under: 1. In case there exists a genuine dispute between the parties based on the terms of the contract, blacklisting as a penalty cannot be imposed. 2. The penalty of blacklisting may only be imposed when it is necessary to safeguard the public interest from irresponsible or dishonest contractors, and 3. The Corporation being a statutory body, have a higher threshold to satisfy before passing such blacklisting order and therefore, the measures undertaken by it should be reasonable. 28. Again, the aforesaid decision of this Court was rendered in a case where the blacklisting order was already passed. 29. However, what is important for us to say is that when there are guiding principles explained by this Court as to when & in what circumstances a blacklisting order can be pa....
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....ts. The endeavour should be to curtail the litigation and not to overburden the High Courts with litigations of the present type more particularly when the law by and large is very well settled and there is no further scope of any debate. 33. As observed by this Court in Erusian Equipment & Chemicals Ltd. Vs. State of W.B. reported in (1975) 1 SCC 70, an order of blacklisting casts a slur on the party being blacklisted and is stigmatic. Given the nature of such an order and the import thereof, it would be unreasonable and arbitrary to visit every contractor who is in breach of his contractual obligations with such consequences. There have to be strong, independent and overwhelming materials to resort to this power given the drastic consequences that an order of blacklisting has on a contractor. 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. Else, for every breach or violation, though there are legal modes of redress and which compensate the party like the Corporation before us, it would resort to blacklisting and at times b....