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Smart Summary

Factual and Procedural Background

The respondent invited sealed tenders for Emergency Shut Down and Running, Maintenance and Repair Works in the Boiler Auxiliary at the Thermal Power Station in Neyveli. The petitioner’s tender was accepted. Subsequently, upon a complaint by Rajan of Suji Enterprises, an investigation was conducted. On 06.07.2001, a show cause notice was issued to the petitioner alleging that the petitioner threatened others from applying for tenders and formed a cartel, causing loss to the respondent company. After receiving the petitioner’s reply, the respondent passed an order dated 02.02.2002 blacklisting the petitioner. The petitioner filed the present writ petition seeking issuance of a writ of certiorari to quash the blacklisting order.

Legal Issues Presented

  1. Whether the order blacklisting the petitioner without specifying a definite period is legally sustainable.
  2. Whether blacklisting for an indefinite period without proper application of mind and consideration of public interest is permissible.

Arguments of the Parties

Petitioner's Arguments

  • The petitioner’s counsel contended that the blacklisting order is not legally sustainable.
  • It was argued that blacklisting without specifying a definite period is impermissible.
  • The counsel relied on Supreme Court judgments and a Division Bench decision of this Court to support the contention that indefinite blacklisting is unjustified.

Respondent's Arguments

  • The respondent’s counsel submitted that the matter is serious and must be considered in the interest of the respondent company.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
M/s. P.T. Sumber Mitra Jaya, Chennai Vs. The National Highways Authority of India (2003 Writ L.R. 327) Interference by Court in Government’s discretion in non-statutory contracts only when public interest is involved; blacklisting must not be indefinite and must involve proper application of mind. The Court applied this precedent to hold that blacklisting without a specified period is tantamount to permanent blacklisting, which is impermissible without proper consideration.

Court's Reasoning and Analysis

The Court noted that the impugned blacklisting order did not specify any period, effectively resulting in indefinite blacklisting. Relying on the cited Division Bench decision, the Court observed that such permanent blacklisting without clear application of mind and without public interest considerations is legally unsustainable. The Court emphasized that assurances given outside the language of the order do not alter the permanent nature of the blacklisting. Consequently, the Court concluded that the order is liable to be quashed and the matter should be remitted to the respondent for reconsideration on merits. The Court also suggested that the petitioner may approach the respondent with a request to reconsider blacklisting based on assurances of good conduct.

Holding and Implications

The writ petition is allowed.

The Court quashed the impugned blacklisting order on the ground that indefinite blacklisting is impermissible. The matter is remitted back to the respondent for fresh consideration on merits. The petitioner is permitted to approach the respondent with a request not to insist on blacklisting, and the respondent is directed to consider such request and pass appropriate orders. No costs were imposed. This decision directly affects the parties by setting aside the indefinite blacklisting order but does not establish a new precedent beyond the application of existing principles.

    A.Rajendran v. The General Manager

    This writ petition has been filed for the issuance of the writ of certiorari, to call for the records from the respondent in his proceedings Ref.Lr.No.GM/TPS-1/TMC-7/T-054/048/2002 dated 02.02.2002, and to quash the same.

    2. The brief facts that are necessary for the disposal of this writ petition are as follows: Sealed tender was invited by the respondent for Emergency Shut Down and Running, Maintenance and Repair Works in Boiler Auxiliary in Thermal Power station at Neyveli, and the petitioner tender was accepted later on. On a complaint given by one Rajan, representing Suji Enterprises, the matter was investigated and on 06.07.2001, a show cause notice was issued on the ground that the petitioner threatened others not to apply for tenders and they formed a cartel in affording tenders, resulted in loss to the respondent company. After getting reply from the petitioner, the respondent passed an order dated 02.02.2001, blacklisting the petitioner. Against that order, the present writ petition has been filed.

    3. Mr.J.Raja Kalifulla, learned counsel appearing for the petitioner referred to the entire order of the respondent and also referred to various judgment of the Honourable Supreme Court and contended that order is not legally sustainable. Finally, he referred to the Order that the blacklisting has not been confined to a specified period. Therefore, blacklisting for an indefinite period is not legally permissible.

    4. In support of his contention, the learned counsel for the petitioner referred to a Division Bench decision of this Court in M/s.P.T. Sumber Mitra Jaya, Chennai Vs. The National Highways Authority of India (2003 Writ L.R. 327), wherein Paragraph-47 reads as follows:

    Then it was pointed out that the Court should interfere only where the 'public interest' was involved when it came to interfere with the Government's discretion in respect of non-statutory contracts. We have already clarified above that this was not a simple question of terminating the contract or accepting or non-accepting a tender. Here is an order which stigmatised the appellant permanently. We have already clarified that this shows a total non-application before taking a drastic action like blacklisting of the appellant permanently. A subsequent assurance given in the Court that the action was meant only for one year would really be of no consequence in the wake of specific language of the impugned order of blacklisting. From the language at least, it appears that blacklisting is permanent.

    5. This decision squarely applies to the facts of the present case. Inasmuch as the period of blacklisting has not been specified, it is blacklisting for indefinite period. Therefore, the impugned order is liable to be quashed.

    6. In the circumstances, the matter is remitted back to the respondent for passing fresh order on the merits of the case. The learned counsel appearing for the petitioner submitted that in view of the fact that the matter is pending for two years, the entire matter may be given a quietus and need not be remitted back to the authority.

    7. Mr.N.A.K.Sharma, learned counsel appearing for the respondent submitted that it is a serious matter which has to be taken into account in the interest of the respondent company. 8. Considering the submissions made by the counsel for the petitioner and the respondent, this Court is of the view that the petitioner may approach the respondent with a request not to insist upon blacklisting and satisfy the respondent that he may not do anything against the interest of the respondent and it is for the respondent to consider such request and pass appropriate orders. 9. With this observation, the writ petition is allowed. Consequently, connected WMP is closed. No costs.

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    A.Rajendran v. The General Manager
    (Oct 16, 2003)