Case Note & Summary
The petitioner, Apar Industries Ltd., a major supplier of Over Head Equipment to the Indian Railways, challenged a blacklisting order passed by the Railways. The dispute arose from a contract for supply of HDGC wires, where the petitioner supplied copper cathodes to HCL (an approved supplier) to manufacture CCC rods. The Railways objected to this arrangement and subsequently blacklisted the petitioner. The court found that the blacklisting order was passed without affording the petitioner a proper opportunity of hearing and without a reasoned order, violating principles of natural justice. The court also held that the blacklisting was disproportionate to the alleged breach. The court set aside the blacklisting order and directed the Railways to reconsider the matter afresh after giving the petitioner a hearing.
Headnote
A) Administrative Law - Natural Justice - Audi Alteram Partem - Blacklisting - The court held that blacklisting a supplier without giving a proper opportunity of hearing and without a reasoned order violates principles of natural justice. The impugned order was set aside. (Paras 1-21)
B) Contract Law - Blacklisting - Proportionality - The court held that blacklisting must be proportionate to the alleged breach and cannot be arbitrary. The Railways' order was found to be disproportionate and unreasoned. (Paras 15-20)
C) Constitutional Law - Article 226 - Judicial Review - The court held that the High Court can interfere with administrative decisions that are arbitrary, unreasonable, or in violation of natural justice. The writ petition was allowed. (Paras 1-21)
Issue of Consideration
Whether the blacklisting order passed by the Railways against the petitioner without affording a proper opportunity of hearing and without a reasoned order is sustainable in law.
Final Decision
The court allowed the writ petition, set aside the blacklisting order, and directed the Railways to reconsider the matter afresh after giving the petitioner a hearing.
Law Points
- Natural justice
- Audi alteram partem
- Blacklisting
- Reasoned order
- Proportionality
- Legitimate expectation
- Judicial review of administrative action
Case Details
2023 LawText (BOM) (01) 148
WRIT PETITION (L) NO. 35402 OF 2022 WITH INTERIM APPLICATION (L) NO. 2098 OF 2023
G.S. Patel, Neela Gokhale
Mr Mustafa Doctor, Senior Advocate, with Jehangir Jejeebhoy, Rahul Dwarkadas, Areez Gazdar & Shireen Mistri, i/b Veritas Legal; for the respondent-Railways: Mr Suresh Kumar
Union of India, Central Organisation For Railway Electrification, Research Designs And Standards Organization, Rail India Technical And Economic Service
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Nature of Litigation
Writ petition under Article 226 of the Constitution of India challenging a blacklisting order passed by the Railways.
Remedy Sought
Setting aside of the blacklisting order and direction to the Railways to reconsider the matter after giving a hearing.
Filing Reason
The petitioner was blacklisted by the Railways without a proper opportunity of hearing and without a reasoned order.
Previous Decisions
The court had made an interim order on 25th November 2022. This is the final judgment.
Issues
Whether the blacklisting order was passed in violation of principles of natural justice.
Whether the blacklisting order was arbitrary and disproportionate.
Submissions/Arguments
The petitioner argued that the blacklisting order was passed without giving a proper opportunity of hearing and without a reasoned order.
The Railways argued that the petitioner had violated the terms of the contract by directly supplying copper cathodes to HCL.
Ratio Decidendi
Blacklisting of a supplier without affording a proper opportunity of hearing and without a reasoned order violates principles of natural justice and is arbitrary. Such an order is liable to be set aside under Article 226 of the Constitution.
Judgment Excerpts
This appears to be a fourth round of litigation by the Petitioner.
The court held that the blacklisting order was passed without affording the petitioner a proper opportunity of hearing and without a reasoned order.
Procedural History
The petitioner filed a writ petition challenging the blacklisting order. The court made an interim order on 25th November 2022. After hearing both sides, the court delivered this final judgment on 10th February 2023.
Acts & Sections
- Constitution of India: Article 226
