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1988 INSC 345
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Citation Codes
Neutral Citations
1988 INSC 345
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Smart Summary

Factual and Procedural Background

The appellant, Shri Raghu Nath Thakur, successfully bid a sum of Rs 11,000 per month for the Beni Country liquor shop in an auction held on 27-3-1988. After signing the Bandobasti Register, he failed to deposit the required amount (dak). By order dated 25-3-1988, the Collector, Samastipur, cancelled the bid and directed that the appellant’s name be placed on a blacklist for all future contracts. The appellant challenged this blacklisting order before the Supreme Court, which granted special leave to appeal.

Legal Issues Presented

  1. Whether the Collector could blacklist the appellant without giving him prior notice or an opportunity to be heard.
  2. Whether the absence of an explicit rule requiring notice excuses non-compliance with the principles of natural justice when an order has civil consequences.

Arguments of the Parties

Appellant's Arguments

  • No notice was given before the blacklisting order, violating the principles of natural justice.
  • The blacklisting has serious civil consequences affecting future business opportunities, necessitating a prior hearing.

State Government's Arguments

  • The governing rules do not expressly mandate giving notice before blacklisting a defaulter.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Court acknowledged that the applicable rules contain no explicit provision requiring notice before blacklisting. However, it emphasised that an implied principle of the rule of law demands adherence to natural justice whenever an order carries civil consequences. Blacklisting a trader directly affects future business prospects and thus cannot be imposed without offering the affected party a hearing and an opportunity to make representations. Because the appellant received no such notice, the portion of the Collector’s order placing him on the blacklist was deemed unsustainable. The Court distinguished this from the separate action of cancelling the bid, which it left undisturbed.

Holding and Implications

DISPOSED OF: The Supreme Court set aside only that part of the Collector’s order that blacklisted the appellant; the cancellation of his bid remains valid.

Implications: The State Government may initiate fresh blacklisting proceedings against the appellant, but only after serving proper notice and affording him a hearing. The decision reinforces that, even in the absence of express statutory wording, administrative orders with civil consequences must comply with the principles of natural justice; however, it sets no new precedent beyond reaffirming this well-established requirement.

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    Raghunath Thakur v. State Of Bihar And Others

    Sabyasachi Mukharji, J.— Special leave granted.

    2. The order dated 25-3-1988 of the Collector is under challenge in this appeal. The same reads as follows:

    “Shri Raghu Nath Thakur s/o late Gorakh Thakur, Village Repura, P.S Puksha, District Samastipur had bid for Rs 11,000 (Rupees eleven thousand only) per month dak in an auction of Beni Country liquor shop held on 27-3-1988 and he was given the shop of Beni Country liquor but after signing in Bandobasti Register he did not deposit dak amount.
    The name of Shri Raghu Nath Thakur s/o late Gorakh Nath Village Repura, P.S Puksha, District Samastipur is therefore placed in the black list for future under the orders passed by the Collector, Samastipur.”

    3. This order was passed pursuant to the order of the Collector. The letter dated 25-3-1988, states as follows:

    “The Collector of the district after perusal of the said office note passed order on 25-3-1988 which is produced in verbatim below:
    First bidder chunki defaulter hai atah security prapt kar len tatha bhavishya ke liae blacklist karen.”

    4. 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 consequence should be passed only after following the principles of natural justice. It has to be realised that blacklisting any person in respect of business ventures has civil consequence 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. In that view of the matter, the last portion of the order insofar as it directs blacklisting of the appellant in respect of future contracts, cannot be sustained in law. In the premises, that portion of the order directing that the appellant be placed in the blacklist in respect of future contracts under the Collector is set aside. So far as the cancellation of the bid of the appellant is concerned, that is not affected. This order will, however, not prevent the State Government or the appropriate authorities from taking any future steps for blacklisting the appellant if the Government is so entitled to do in accordance with law i.e after giving the appellant due notice and an opportunity of making representation. After hearing the appellant, the State Government will be at liberty to pass any order in accordance with law indicating the reasons therefor. We, however, make it quite clear that we are not expressing any opinion on the correctness of otherwise of the allegations made against the appellant. The appeal is thus disposed of.

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    Raghunath Thakur v. State Of Bihar And Others
    (Nov 8, 1988)