Principles Of Natural Justice Cannot Be A Mere Formality: Jharkhand HC Quashes Blacklisting Order

The Court said that when an adverse decision is being taken then it is incumbent upon the authority concerned to apprise the party concerned who is to suffer from the adverse decision i.e., regarding the proposed action which is to be taken against that party.

The Court was hearing a Writ Petition under Article 226 of the Constitution of India against an order issued under the Signature of Deputy Administrator, Ranchi Municipal Corporation, by which, the Petitioner has been debarred for one year.

The bench of Acting Chief Justice Sujit Narayan Prasad and Justice Arun Kumar Rai observed, “the principles of natural justice cannot be said to be mere formality and when an adverse decision is being taken then it is incumbent upon the authority concerned to apprise the party concerned who is to suffer from the adverse decision i.e., regarding the proposed action which is to be taken against that party. If such parameter has not been followed then it will be said that there is non-compliance of principles of natural justice.”

Advocate Prashant Pallav appeared for the Appellant and Advocate LCN Shahedeo appeared for the Respondent.

Brief Facts-

The Petitioner participated in an e-tender for the supply of medicines and was declared successful. An agreement was signed for a two-year supply, and a supply order was issued. However, the Petitioner was informed that some medicines were not up to specifications and were spoiled. The Petitioner replaced the defective medicines and clarified that the supply was sourced from reputable manufacturers. Despite that, a notice was issued stating that certain medicines were below standard and violated certain clauses of the agreement. Consequently, an order was issued blacklisting the Petitioner for one year.

The Court mentioned the Supreme Court decision in Erusian Equipment & Chemicals Lts. v. State of W.B. (1975) where according to the Court the severity of the effects of blacklisting and the resultant need for strict observance of the principles of natural justice before passing an order of blacklisting were highlighted. The Court quoted, “The order of blacklisting has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is unable to enter into advantageous relations with the Government because of the order of blacklisting. The blacklisting order involves civil consequences. It casts a slur. It creates a barrier between the persons blacklisted and the Government in the matter of transactions. The blacklists are “instruments of coercion”.”

The Court further mentioned the Supreme Court decision in Gorkha Security Services v. State (NCT of Delhi) (2014) and quoted, “With blacklisting, many civil and/or evil consequences follow. It is described as “civil death” of a person who is foisted with the order of blacklisting. Such an order is stigmatic in nature and debars such a person from participating in government tenders which means precluding him from the award of government.”

Accordingly, the Court quashed and set aside the impugned order.

Finally, the Court disposed of the Writ Petition.

Cause Title: M/s Pama Pharmaceuticals v. The Ranchi Municipal Corporation 

Appearance:

Appellant: Advocates Prashant Pallav and Parth Jalan

Respondent: Advocate L.C.N. Shahedeo