2016 PLP 296 (YLR)

MUHAMMAD FARRUKH IRFAN KHAN, J.

The petitioner is aggrieved of the order of respondent No.2 dated 21.04.2011 whereby his firm with the name and style of M/S Shahzad Brother (Government Contractor 3-B Faisal Town, Lahore) was black listed on account of failure to provide Tree Guards at different sites of Lahore within the stipulated time.

2. Facts of the case in brief are that respondents Nos.2 to 4 awarded a contract to the petitioner's firm for installation of tree guards vide letter dated 15.02.2011. The petitioner could not complete the work/task within specified period, therefore, respondent No.2 vide impugned order dated 21.04.2011 black listed the firm for life.

3. According to the learned counsel for the petitioner no notice was issued before passing of the impugned order; that there is no provision under the relevant laws for blacklisting a firm and that too for life and under Clause 30 of the Byelaws of Parks and Horticulture Authority, if the work was not completed within stipulated period, compensation could be awarded.

3. According to report and parawise comments of respondents, contract was awarded to the petitioner for supply of 1500 Tree Guards within a period of 20 days. The petitioner failed to complete the work within the specified period due to which the plants were damaged causing huge financial loss to the respondents, as such the competent authority decided to blacklist the firm of the petitioner for life.

4. I have heard the arguments advanced by the learned counsel for the parties and gone through the record.

5. The only question which requires determination is whether the action of the respondents for blacklisting the petitioner's firm for life is justifiable. Rule 19 of the Punjab Procurement Rules, 2009 deals with blacklisting of suppliers and contractors which provides as under:- "Blacklisting of suppliers and contractors.- The procuring agencies shall specify a mechanism and manner to permanently or temporarily bar, from participating in their respective procurement proceedings, suppliers and contractors who either consistently fail to provide satisfactory performances or are found to be indulging in corrupt or fraudulent practices. Such barring action shall be duly publicized and communicated to the PPRA; Provided that any supplier or contractor who is to be blacklisted shall be accorded adequate opportunity of being heard." (emphasis supplied)

6. No doubt the petitioner could not fulfill his obligation to complete the awarded contract within a specified period of time but there is no material available on record that his performance in the previous contracts awarded to him, if any, was consistently poor. Furthermore, no notice as envisaged in the above rule was issued to the petitioner prior to passing of the impugned order. The petitioner is an approved contractor on the Government list and its blacklisting casts a stigma on it, therefore, principle of natural justice demands that due opportunity should have been provided to him to defend his case before passing such order. Reliance is placed on the Indian case reported as Erusian Equipment and Chemicals Ltd., v. M/s. State of W.B., (SC) 1975 AIR SC 266) wherein it has been held by the Indian Supreme Court as under:-- "

12. Under Article 298 of the Constitution the Executive power of the Union and the State shall extend to the carrying on of any trade and the acquisition, holding and disposal of property and the making of contracts for any purpose. The State can carry on executive function by making a law or without making a law. The exercise of such powers and functions in trade by the State is subject to Part III of the Constitutional Article 14 speaks of equality before the law and equal protection of the laws. Equality of opportunity should apply to matters of public contracts. The State has the right to trade. The State has the duty to observe equality. An ordinary individual can choose not to deal with any person. The Government cannot choose to exclude persons by discrimination. The order of black-listing has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is unable to enter into advantageous relations with the Government because of the order of black-listing. A person who has been dealing with the Government in the matter of sale and purchase of materials has a legitimate interest or expectation. When the State acts to the prejudice of a person it has to be supported by legality.

20. Blacklisting has the effect of preventing a person from privilege and advantage of entering into lawful relationship with the Government for purpose of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the blacklist."(Emphasis supplied)

7. Similarly, in case Raghunath Thakur v. State of Bihar, (1989)1 (SCC) 229, where there was no requirement for issuance of notice prior to blacklisting a firm it was observed as under:-- "Indisputably, no notice had been given to the appellant of the proposal of blacklisting the appellant. It was contended on behalf of the State Government that there was no requirement in the rule of giving any prior notice before blacklisting any person. Insofar as the contention that there is no requirement specifically of giving any notice is concerned, the respondent is right. But it is an implied principle of the rule of law that any order having civil consequences should be passed only after following the principles of natural justice. It has to be realized that blacklisting any person in respect of business ventures has civil consequences for the future business of the person concerned in any event. Even if the rules do not express so, it is an elementary principle of natural justice that parties affected by any order should have right of being heard and making representations against the order."

8. In the present case according to the proviso of Rule 19 of the Rules ibid it was mandatory for the respondents to issue due notice to the petitioner but this has not been done, therefore, the impugned order being violative of the aforesaid rule as well as principle of natural justice cannot be allowed to remain intact.

9. Another glaring feature of the case is that the petitioner's firm was blacklisted for ever by the respondent. A specific query was raised to the learned counsel for the respondents that under which rules a supplier can be blacklisted for life but the learned counsel has failed to refer any such rules of the department. It is a settled principle of law that a decision which overrides a fundamental right must correspond to the wrong done or in simple terms the punishment should be commensurate to the wrong done. Except for non-fulfillment of one contract within time, there is nothing on the record to show that performance of the petitioner's firm was consistently poor, therefore, blacklisting the petitioner's firm for life offends the principle of proportionality Reliance is placed on case reported as Ranjit Thakur v. Union of India, 1987(4) SCC 611, wherein, it has been laid down as under:-- "The question of the choice and quantum of punishment is within the jurisdiction and discretion of the court-martial. But the sentence has to suit the offence and the offender. It should not be vindictive or unduly harsh. It should not be so disproportionate to the offence as to shock the conscience and amount in itself to conclusive evidence of bias. The doctrine of proportionality, as part of the concept of judicial review, would ensure that even on an aspect which is, otherwise, within the exclusive province of the Court- Martial, if the decision of the Court even as the sentence is an outrageous defiance of logic, then the sentence would not be immune from correction. Irrationality and perversity are recognized grounds of judicial review."

10. According to Clause 39 of the Byelaws of Parks and Horticulture Authority in case of non-completion of contract, compensation could be claimed from the contractor. The respondents instead of demanding compensation from the petitioner according to their by e laws, proceeded to blacklist its firm for ever at their own whims and caprice. The impugned order of respondent No.2 thus being without lawful authority and contrary to the law cannot be allowed to remain in field.

11. Resultantly, this petition is allowed and the impugned order of respondent No.2 dated 21.04.2011 for blacklisting the petitioner's firm is set-aside. As is evident from the record that respondent No.2 by exceeding its authority blacklisted the petitioner's firm due to which not only the petitioner could not obtain any contract for the last four years but it also adversely affected its reputation. Therefore, the petitioner who suffered at the hands of the respondents is at liberty to claim damages from them for illegally keeping him out of the benefit and opportunity of entering into a lawful relationship with the Government. A cost is imposed upon respondent No.2 in his personal capacity as despite being given opportunity through his counsel the said respondent failed to provide the appropriate rules by which it could issue orders for blacklisting any vendor/contractor for life. Thus, this appears to be a case of grossly exceeding the authority vested in the said respondent. So, respondent No.2 is directed to pay cost of Rs.1,00,000/- to the petitioner within two month from the date hereof, otherwise, the same shall be deducted from his salary and paid to the petitioner. MH/S-68/L Petition allowed.