TMI Blog2020 (11) TMI 966X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed as civil death of a person who is foisted with the order of blacklisting. Such an order is stigmatic in nature and debars such a person from participating in government tenders which means precluding him from the award of government contracts. In the present case, the factum of service of the show cause notice dated 10.04.2018 by the Corporation upon the Appellant is not in dispute. Rather, what Shri Banerji has argued on behalf of the Appellant is that the contents of the said show cause notice were not such that the Appellant could have anticipated that an order of blacklisting was being contemplated by the Corporation - Gorkha Security Services is a case where this Court had to decide whether the action of blacklisting could have been taken without specifically proposing/contemplating such an action in the show-cause notice. A clear legal position emerges that for a show cause notice to constitute the valid basis of a blacklisting order, such notice must spell out clearly, or its contents be such that it can be clearly inferred therefrom, that there is intention on the part of the issuer of the notice to blacklist the noticee. Such a clear notice is essential for e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 3687 of 2020 (Arising out of S.L.P. (C) No. 14228 of 2019) - - - Dated:- 16-11-2020 - S. Abdul Nazeer and B.R. Gavai, JJ. JUDGMENT S. Abdul Nazeer, J. 1. Leave granted. 2. This appeal is directed against the order dated 13.02.2019 passed by the High Court of Madhya Pradesh at Jabalpur in Writ Petition No. 2778 of 2019. By the impugned order, the High Court has dismissed the writ petition and has upheld the validity of the order dated 09.01.2019 passed by Respondent No. 1, namely Food Corporation of India (for short 'the Corporation') through its Deputy General Manager (Personnel), who is Respondent No. 2 herein, to terminate a contract of service with the Appellant and to blacklist the Appellant from participating in any future tenders of the Corporation for a period of 5 years. 3. The Corporation had issued a Bid Document on 25.11.2016 inviting bids for appointment of a recruitment agency to conduct the process of recruitment for hiring watchmen for the Corporation's office. The Appellant submitted its bid on 21.12.2016 and was eventually declared as the successful bidder vide the Corporation's letter dated 28.03.2017. After completion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation which compared the seized documents with the original question papers and contended that there were many dissimilarities between the two and thus there had been no leakage or dissemination of the original question papers. 6. By its aforesaid order dated 09.01.2019, the Corporation concluded that the shortcomings/negligence on part of the Appellant stood established beyond any reasonable doubt and proceeded to terminate its contract with the Appellant and also blacklisted the Appellant from participating in any future tenders of the corporation for a period of 5 years. Further, the Appellant's security deposit with the Corporation was forfeited and the Appellant was directed to execute the unexpired portion of the contract at its own cost and risk. 7. Aggrieved by the above order of the Corporation, the Appellant, after issuing a legal notice, filed Writ Petition No. 2778 of 2019 before the High Court. This petition came to be dismissed by the High Court's aforesaid order dated 13.02.2019 which is under challenge before us. 8. At the outset, it may be noted that Shri Gourab Banerji, learned Senior Counsel for the Appellant, has submitted that the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sit or any part thereof for recovery of all losses, damages, costs and expenses which may be incurred by FCI consequent to such termination and/or in completing the assignment. FCI may also effect recovery from other sums then due to the Agency or which at any time thereafter may become due under this or any other contract with FCI. In case the sum is not sufficient to cover the full amounts recoverable, the Agency shall pay FCI on demand the entire remaining balance due. (iii) FCI may at any time without assigning any reason terminate the contract without any liability by giving 7 working days' notice to the bidder. 10. On behalf of the Appellant, it was submitted by Shri Banerji that the Corporation had no power under the above quoted or any other provisions of the Bid Document dated 25.11.2016 to blacklist the Appellant. It was argued that above quoted Clause 10 titled Disqualifications Conditions , which has been relied upon by the Corporation, merely lays down eligibility criteria and does not grant any power of future blacklisting. It was further alleged that the said Clause was also not mentioned in the show cause notice dated 10.04.2018 issued by the Corporation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erned, would in turn be determined by the validity of the underlying show cause notice dated 10.04.2018 issued by the Corporation to the Appellant. 13. At the outset, it must be noted that it is the first principle of civilised jurisprudence that a person against whom any action is sought to be taken or whose right or interests are being affected should be given a reasonable opportunity to defend himself. The basic principle of natural justice is that before adjudication starts, the authority concerned should give to the affected party a notice of the case against him so that he can defend himself. Such notice should be adequate and the grounds necessitating action and the penalty/action proposed should be mentioned specifically and unambiguously. An order travelling beyond the bounds of notice is impermissible and without jurisdiction to that extent. This Court in Nasir Ahmad v. Assistant Custodian General, Evacuee Property, Lucknow and Anr. (1980) 3 SCC 1, has held that it is essential for the notice to specify the particular grounds on the basis of which an action is proposed to be taken so as to enable the noticee to answer the case against him. If these conditions are not s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riving 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 blacklisting. 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. XXX XXX XXX 15.... The blacklisting order involves civil consequences. It casts a slur. It creates a barrier between the persons blacklisted and the Government in the matter of transactions. The black lists are instruments of coercion. XXX XXX XXX 20. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes 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. 17. Similarly, this Court in Raghu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e show cause notice dated 10.04.2018 by the Corporation upon the Appellant is not in dispute. Rather, what Shri Banerji has argued on behalf of the Appellant is that the contents of the said show cause notice were not such that the Appellant could have anticipated that an order of blacklisting was being contemplated by the Corporation. Gorkha Security Services (supra) is a case where this Court had to decide whether the action of blacklisting could have been taken without specifically proposing/contemplating such an action in the show-cause notice. For this purpose, this Court laid down the below guidelines as to the contents of a show cause notice pursuant to which adverse action such as blacklisting may be adopted: Contents of the show-cause notice 21. The central issue, however, pertains to the requirement of stating the action which is proposed to be taken. The fundamental purpose behind the serving of show-cause notice is to make the noticee understand the precise case set up against him which he has to meet. This would require the statement of imputations detailing out the alleged breaches and defaults he has committed, so that he gets an opportunity to rebut the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cited clauses are only indicative not exhaustive. Whereas, it is quite evident from the sequence of events that M/s. U.MC Technologies Pvt. Ltd., Kolkata has violated the condition/clauses governing the contract due to its abject failure clear negligence in ensuring smooth conduct of examination. As it was the sole responsibility of the agency to keep the process of preparation distribution of question paper and conducting of exam in highly confidential manner, the apparent leak point towards, acts of omission commission on the part of M/S. UMC Technologies Ltd. Kolkata. Whereas, M/S. UMC Technologies Pvt. Ltd. Kolkata is hereby provided an opportunity to explain its Position in the matter before suitable decision is taken as per T C of MTF. The explanation if any should reach this office within a period of 15 days of receipt of this notice falling which appropriate decision shall be taken, ex-parte as per terms and conditions mentioned in MTF without prejudice to any other legal rights remedies available with the corporation. 23. It is also necessary to highlight the order dated 09.01.2019 passed by the Corporation in pursuant to the aforesaid notice, the op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a Clause in the Bid Document, which mentions blacklisting as a bar against eligibility, cannot satisfy the mandatory requirement of a clear mention of the proposed action in the show cause notice. The Corporation's notice is completely silent about blacklisting and as such, it could not have led the Appellant to infer that such an action could be taken by the Corporation in pursuance of this notice. Had the Corporation expressed its mind in the show cause notice to black list, the Appellant could have filed a suitable reply for the same. Therefore, we are of the opinion that the show cause notice dated 10.04.2018 does not fulfil the requirements of a valid show cause notice for blacklisting. In our view, the order of blacklisting the Appellant clearly traversed beyond the bounds of the show cause notice which is impermissible in law. As a result, the consequent blacklisting order dated 09.01.2019 cannot be sustained. 26. In view of our conclusion that the blacklisting order dated 09.01.2019 passed by the Corporation is contrary to the principles of natural justice, it is unnecessary for us to consider the other contentions of the learned Counsel for the Appellant. Having ..... X X X X Extracts X X X X X X X X Extracts X X X X
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