Kailash Agarwal vs Food Corporation of India and Others

Navin Sinha, Actg. C.J.

The present application assails order dated 26.12.2012 terminating the contract awarded to the petitioner forfeiting the earnest money deposit and blacklisting it for a period of 5 years. Learned counsel for the Petitioner submits that bid documents provided that the tender would be opened on 23.4.2012. It would remain open for acceptance upto 6.6.2012 extendable by a period of 30 days i.e. 6.7.2012 as outer limit. The Respondents never communicated acceptance before 6.7.2012. The Petitioner, in the circumstances on 6.7.2012 wrote to the Respondents that in absence of any communication for acceptance, he was withdrawing his offer and requested for return of the earnest money deposit. The Petitioner denies receipt of any registered letter dated 4.7.2012 or telegram of that date. The subsequent communication sought to be made by the Respondents on 12.7.2012 and 26.7.2012 including the paper publication done on 28.7.2012 after expiry of the last date for acceptance were duly answered by the Petitioner contending that no communication was made to him by the stipulated date for acceptance by the Respondents. All these facts are specifically mentioned in the reply dated 30.7.2012.

It was next submitted relying on B.S.N. Joshi and Sons Ltd. Vs. Nair Coal Services Ltd. and Others, that blacklisting has serious consequences as the person concerned may not get any contract at all and may have to wind up his business having a disastrous effect. If a person raises a bona fide dispute with regard to the issues, so long as the dispute is not resolved, he may not be declared to be a defaulter. The Petitioner has denied receipt of any communication for acceptance from the Respondents before 6.7.2012 and according to the bid documents, that was the last date up to which acceptance could have been extended by the Respondents as agreed between the parties.

No prior show cause notice was given before blacklisting was ordered on 8.8.2012. Clause 7 (iv) and Clause IX(f) visualizes more than one penalty and therefore, it was necessary to give a show cause notice first that the Respondents proposed to enforce blacklisting as one of the alternate punishments mentioned in the contract. No such notice having been given, the order of blacklisting itself was bad. The subsequent order dated 26.12.2012 pursuant to the order of the Court in the earlier Writ Petition dated 7.11.2012 in W.P. (C) No. 1648/2012 is but a reiteration of the earlier order and therefore, the illegality in the earlier order for blacklisting pervades throughout vitiating the subsequent order dated 26.12.2012 also.

Learned counsel for the Respondents submitted that the Petitioner was well aware that blacklisting was one of the penalties that could be imposed under the contract clauses and that too for a period of five years. If there was any infirmity in the decision making process before passing the order dated 8.8.2012, it was rectified when the Petitioner was granted hearing pursuant to the order dated 7.11.2012 by the Court. If there was no infirmity in the decision making process, the Court may not interfere with the order for blacklisting. There will be a presumption that the acceptance communicated by the Respondents on 4.7.2012 both by registered post and telegram reached their destination in normal course unless rebutted by evidence. The Respondents have brought on record the postal endorsement of refusal to accept both the registered letter and the telegram. Thereafter the matter enter into the arena of disputed facts which cannot be entertained in the writ jurisdiction.

We have considered the submissions on behalf of the parties. Blacklisting undoubtedly has civil consequences and it has also been called a "civil death" bringing the business of the concerned to a virtual halt. It is therefore necessary that an order for blacklisting must be preceded by a show cause notice. The fact that Clause-7(iv) or Clause IX(f) may have mentioned blacklisting as one of the punishments that could be imposed apart from others mentioned therein would not suffice and there had to be a separate show cause notice that the Respondents proposed to enforce the penalty for blacklisting as considered in Gorkha Security Services Vs. Govt. of NCT of Delhi, . But the petitioner accepted the order of the Court in W.P. (C) No. 1648/2012 for a post decisional hearing. Once that order was accepted, the infirmity in the decision making process stands cured. The conditions of the contract between the parties including blacklisting shall therefore have full effect. Judicial review of an order for blacklisting has to be confined to the decision making process and not to the merits of the decision itself. In view of the order in W.P. (C) No. 1648/2012 having attained finality, we find it difficult to grant any relief to the Petitioner in the facts of the case on basis of Gorkha Security Services (supra) in so far as blacklisting is concerned.

The challenge to the termination of the contract also is difficult to entertain in the writ jurisdiction because of disputed questions of facts being involved with regard to the communication sent by the Respondents by registered post and telegram before the last date for acceptance i.e. 6.7.2012. If for the purpose of discussion, we ignore the subsequent extensions communicated by the Respondents, there shall be a presumption under the Post Office Act and under Section 114(e) of the Evidence Act that the registered letter and the telegram reached its destination unless it is shown to contrary. The onus for rebuttal lies on the Petitioner which he has not been able to discharge. The blanket statement that it was not received will not suffice but will require evidence of the person concerned who had gone to deliver and recorded the endorsement for refusal to accept both the registered communication and the telegram. The enquiry is not possible in the writ jurisdiction. If the Petitioner so desires, he may pursue his remedies before the appropriate forum in that regard.

In conclusion, we find no reason to interfere with the order for blacklisting and termination of the contract including forfeiture of the earnest money deposit.

It is clarified that the order of blacklisting will operate from 8.8.12 and not from 26.12.2012 as the letter is only a confirmation of the former. The writ petition is dismissed.