Blacklisting Order Too Harsh | Orissa HC Ends Civil Death Of Contractor Citing Discrepancies And Denial Of Evidence | Says Proportionality Must Guide Punishment In Public Contracts
Sanchayita Lahkar
The High Court of Orissa Division Bench of Chief Justice Harish Tandon and Justice Murahari Sri Raman held that the blacklisting of a contractor for a period of five years by the Water Resources Department of Odisha was disproportionate in view of the discrepancies in evidence and procedural lapses. The Court modified the blacklisting order, stating that it would remain effective only until the date of the judgment. While refusing to quash the blacklisting order entirely, the Court took judicial notice of the time already elapsed and the lack of clarity surrounding the incident leading to the blacklisting. It found that continuing the debarment beyond the present date would cause undue hardship and civil death to the contractor.
The Court held that although the issuance of a show cause notice and provision of opportunity to reply met the formal requirement of natural justice, the inconsistencies in documentary evidence such as CCTV footage and chargesheet timings rendered the duration of the penalty excessive. The bench concluded that the order should be allowed to stand only up to the date of the judgment.
The writ petition was filed by the proprietor of M/s Urmila Steel Fabrication challenging an order dated 10th August 2021, issued by the Chief Engineer (Mechanical), Water Resources Department, Government of Odisha. Through the impugned order, the petitioner was debarred from participating in any future tenders for five years.
The genesis of the case lies in an alleged incident on 24th March 2021, when the petitioner was accused of entering the Mechanical Division office premises beyond office hours and attempting to snatch important online tender documents from the estimator. This resulted in the registration of an FIR on 25th March 2021 at Nayapalli Police Station. Based on CCTV footage and subsequent investigation, a chargesheet was submitted by the investigating officer, and proceedings were initiated against the petitioner.
On 22nd April 2021, a preliminary inquiry report led to the issuance of a show cause notice against the petitioner. Instead of responding, the petitioner filed W.P.(C) No. 16786 of 2021 before the same Court challenging the notice, which was dismissed. Following this, the department forwarded a proposal for blacklisting, citing misconduct and threats against supervisory staff.
Subsequently, on 16th July 2021, a second show cause notice was served, to which the petitioner responded. In the reply, the petitioner alleged mala fide intentions behind the proceeding, arguing that he had previously lodged complaints against departmental officials for various irregularities. He requested that materials such as CCTV footage, preliminary inquiry report, and witness statements be shared with him to prepare a full defense.
Despite this request, the authorities proceeded to finalize the blacklisting order, citing reliance on statements from seven employees and findings from the chargesheet. The petitioner contended that this was a violation of natural justice as these relied-upon documents were never furnished to him.
On behalf of the petitioner, it was argued that the blacklisting was a retaliatory act arising from the whistleblower complaints previously submitted by him. The petitioner further asserted that he was denied access to crucial evidence, undermining his ability to submit an effective defense. He claimed that the order was issued with a pre-determined mindset and hence violated principles of natural justice and proportionality.
The Additional Standing Counsel for the State submitted that due process had been followed. It was asserted that the show cause notices were validly issued and the petitioner had been given adequate opportunity to respond. The State relied on the Supreme Court decisions in State of Odisha & Ors. v. Panda Infraproject Ltd. (2022) 4 SCC 393 and Grosons Pharmaceuticals (P) Ltd. v. State of U.P. (2001) 8 SCC 604 to argue that a hearing opportunity satisfies natural justice, even in the absence of all documentary evidence being shared.
The respondent further argued that the blacklisting order was based on corroborated misconduct, supported by the FIR, investigation, and internal departmental inquiry.
The Court began its judicial analysis by stating: "It is beyond cavil of doubt that a fundamental principle embraced in a civilized jurisprudence is that a person cannot be condemned nor can be affected by any action without affording a reasonable opportunity to defend himself."
It further noted: "The notice to show cause must clearly and explicitly contain the incident, which led to the initiation of the proceeding in pursuit of blacklisting a person from participating in a future tender."
On the issue of whether all foundational documents must be shared, the Court referred to the Supreme Court decision in Grosons Pharmaceuticals, noting: "It was sufficient requirement of law that an opportunity of show cause was given to the appellant before it was blacklisted."
However, the Bench also observed that: "The law enunciated...exposits that before a person is blacklisted, he must be afforded an opportunity of hearing, being a fundamental principle of natural justice."
The Court addressed the proportionality of punishment, stating: "The debarment to participate in a public contract permanently is against the doctrine of proportionality as no person would be deprived of or be subjected to prejudice for all time to come."
It analysed the charge sheet and show cause notice and noted discrepancies: "The show-cause discloses that the petitioner entered at around 7.15 P.M.... On the other hand, the charge sheet discloses... petitioner entered... at 6.53 P.M. and left... at 6.55 P.M."
Further, it stated: "We cannot rule out the allegation of misconduct having allegedly committed within two minutes inside the office room."
The Court found that although the blacklisting order was issued following procedural steps, the factual inconsistencies rendered the punishment disproportionate. It remarked: "Based upon the discrepancies, we feel that imposition of debarment for a period of five years is too harsh and offends the doctrine of proportionality."
In concluding its reasoning, the Court noted: "The petitioner has already been deprived to participate in any tender from the date of the order... which in our opinion, has percolated a message in the petitioner a sense of responsibility and to maintain an orderly behaviour."
The High Court directed that the existing order of blacklisting dated 10th August 2021 would not continue beyond the date of the present judgment. Specifically, it held:
"On Ex debito justitiae, we set aside the remaining period of blacklisting taking into account that the said order of blacklisting shall be operative till the date of this judgment."
Accordingly, the Court disposed of the writ petition, stating: "The writ petition is disposed of. No order as to costs."
Advocates Representing the Parties:
For the Petitioners: Mr. Gouri Mohan Rath, Advocate
For the Respondents: Ms. Aishwarya Dash, Additional Standing Counsel
Case Title: Shri Artatran Bhuyan v. State of Odisha and Others
Case Number: W.P.(C) No. 37383 of 2021
Bench: Chief Justice Harish Tandon; Justice Murahari Sri Raman
