M/s. Police Uniform Production Centre vs The Director General and Inspector General of Police A.P.

Yogeshwar Dayal, C.J.

1.This writ appeal is directed against the judgment of the learned single Judge dt. 15-2-1988 dismissing the writ petition filed by the appellant against an order dt. 22-12-87 passed by the Director General and Inspector General of Police, A.P. Hyderabad.

The appellant firm is one M/s. Police Uniform Production Centre, situated at 21-4-1985 Gulab Singh Lane, Hyderabad, carrying on the business and supplying the Police Uniforms and webbing to the Police Department. As per the appellant Mohd. Yousuf, son of Mohd. Mehtab, who is the proprietor of this concern by the impugned order dt. 22-12-1987, the petitioner concern M/s. Police Uniform Production Centre, Hyderabad has been blacklisted by the Police Department.

Before the passing of the impugned order it appears that by an order dt. 8-10-87 the petitioner was blacklisted earlier along with several other firms. The petitioner challenged the said order of 8-10-87 by way of W.P. No. 15581/87 in this Court and this Court directed issue of notice to the petitioners and opportunity to give explanation and then pass the appropriate orders.

Accordingly a fresh show cause notice was issued to the petitioner to submit his explanation within a week from 26-10-87.

This firm is one of the six firms organised by Mohd. Yousuf. son of Mohd. Mehtab himself being a partner along with Smt. Sadiq ParVeen, his daughter-in-law (wife of Modh. Yaseen), that all the six firms are managed by partners, who belong to one family, that some of the said firms were involved in misappropriation of amounts collected from Police Department, towards sales-tax and all the six firms share the common intention in this regard.

The petitioner firm filed an explanation dt. 12-11-1987 through its counsel. He denied that Mohd. Yousuf was organising the group of six such firms. It was also stated that Mohd. Yousuf was not a partner in any of the other five firms mentioned in the show cause notice. The Director General-Inspector General of Police considered the explanation and found :

"All these six companies referred to in the show cause notice deal in common items of police uniform and accouterments supplied to the Police Department. These facts point to the inter-relationship between the six firms, though they may appear as separate legal entities.

In view of their close relationship to one another it is difficult to expect competitive rate from these firms. It is not in the Department''s or public interest to have business dealings with such a group of firms which are bound to do business at random. The Purchasing Department is expected to exercise necessary prudence and safeguard public interest in its dealings and for this objective has the prerogative to abstain to have business with firms, when considered undesirable for valid reasons. Blacklisting of firms was done as a departmental measure to preclude dealings with firm when considered undesirable in public interest. It is not a penalty imposed on the firm.

In view of the detailed and valid reasons recounted above, I hereby order blacklisting of the firm M/s Police Uniform Production Centre, Hyderabad."

The petitioner has challenged the aforesaid order on the ground as being violative of his fundamental right under Art. 19(1)(g) of the Constitution to carry on his business, that there is no allegation that the petitioner is a defaulter in performing his part of the contracts with the Police Department. It is submitted that no allegation is made that the petitioner has in any way not complied with any of his duties under the contracts previously entered into with any of the Depart- ments or that he was even alleged to be a defaulter in payment of sales-lax. Even if he is considered to be a defaulter in payment of sales-tax it is not a ground to blacklist him to deal with the department of police.

Every citizen has a fundamental right to carry on any profession, trade or business. The profession of the petitioner is carrying on business by supplying various garments, like Uniforms, Shoes, accouterrnents etc. to the Department of Police. Merely because some close relations of the petitioner are defaulters in payment of sales-tax, it is not ground whatsoever in law to blacklist the petitioner, when the petitioner has not in any way defaulted in performance of the contracts with the contracting parties. The Police Department is not concerned whatsoever whether some close relations of the petitioner are defaulters in payment of sales-tax or Income Tax due to the State. So far as the petitioner is concerned, admittedly he is not in any default either in the performance of any contract or in payment of any dues.

It is true the State can enter into contract with any person it chooses and no person has a fundamental right to insist that the Government must enter into a contract with him. But inasmuch as blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purpose of gain, the satisfaction of the concerned governmental authority must be objective and the State cannot exercise its power of entering into contract arbitrarily. It is, however, open to the State acceptance of bids or regarding qualification of bidders (sic). So long as the State''s refusal to enter into a contract is based on reasonable grounds and is not discriminatory the State does enjoy the right to choose its own suppliers and Art. 19(1)(g) will not be attracted. (Vide Erusian Equipment and Chemicals Ltd. Vs. State of West Bengal and Another, , Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, and Sri Rama Engineering Contractors Vs. Construction Engineer, Civil Engineering, Department of Space, Government of India, Sriharikota, Nellore and Another, .

But in the present case before us, the appellant has been blacklisted not because he is a defaulter in payment of taxes but because his relations who are running similar business are said to be in default of payment of sales-tax. We are clear that this reason is wholly unreasonable and arbitrary and cannot, be sustained. The impugned order is clearly violative of Art. 19(1)(g).

We are accordingly constrained to quash the impugned orders vis-a-vis the petitioner. The order of the learned single Judge is set aside and the writ petition is allowed with costs, which we assess at Rs. 500/-.

The Writ appeal is allowed. No costs.

Appeal allowed.