Case Note & Summary
The petitioner, Nawab Ali Khan, a contractor providing services to the Special Economic Zone Authority (respondent no.2), was blacklisted for one year by an order dated 21st September 2017. The blacklisting was based on an incident where three of his employees, while removing wood as per the contract schedule, also collected other garbage without authorization. When confronted, the employees admitted the act and unloaded the unauthorized material. No loss was caused to the respondent. The petitioner challenged the blacklisting order on the ground that it was passed without any opportunity of hearing, violating principles of natural justice. The respondents argued that the employees' misconduct justified the action. The court, relying on the Supreme Court judgment in Raghunath Thakur v. State of Bihar, held that blacklisting has serious civil consequences and cannot be imposed without affording a hearing. The court noted that the period of blacklisting had already expired but the stigma continued, causing difficulty in future tenders. The court quashed the blacklisting order and directed that the petitioner be treated as not blacklisted for any purpose. The court also observed that the action against the three employees (prohibiting entry for three years) was excessive but did not interfere as it was not challenged.
Headnote
A) Administrative Law - Natural Justice - Blacklisting - Opportunity of Hearing - The petitioner was blacklisted for one year due to misconduct of his three employees without any prior notice or hearing - The court held that blacklisting has serious civil consequences and cannot be imposed without following principles of natural justice - Relied on Raghunath Thakur v. State of Bihar, AIR 1989 SC 620 - Held that the impugned order is unsustainable (Paras 1-6).
Issue of Consideration
Whether the blacklisting of the petitioner-contractor without giving him an opportunity of hearing is valid in law, especially when the alleged misconduct was by his employees.
Final Decision
The court allowed the writ petition, quashed the blacklisting order dated 21st September 2017, and directed that the petitioner be treated as not blacklisted for any purpose. Rule made absolute.
Law Points
- Natural justice
- audi alteram partem
- blacklisting without hearing is illegal
- vicarious liability for employee misconduct
- proportionality of punishment
Case Details
2018 LawText (BOM) (12) 160
Writ Petition No.2274 of 2017
B. P. Dharmadhikari, Sarang V. Kotwal
Shanay Shah, Prayag Joshi, Bipin Joshi for Petitioner; Rajshekhar V. Govilkar, Shaba N. Khan, Mihir Govilkar for Respondent Nos.2 to 4
Union of India, The Special Economic Zone Authority, The Development Commissioner, The Deputy Development Commissioner
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Nature of Litigation
Writ petition challenging blacklisting order passed by respondent authorities without giving opportunity of hearing.
Remedy Sought
Petitioner sought quashing of blacklisting order dated 21st September 2017 and direction to treat him as not blacklisted.
Filing Reason
Petitioner was blacklisted for one year due to alleged misconduct of his three employees without any prior notice or hearing.
Issues
Whether blacklisting order passed without affording opportunity of hearing is sustainable in law.
Whether the petitioner can be held vicariously liable for the acts of his employees without any fault on his part.
Submissions/Arguments
Petitioner argued that blacklisting was without opportunity of hearing, violating natural justice as per Raghunath Thakur v. State of Bihar.
Petitioner submitted that employees acted without malintention and no loss was caused to respondent.
Respondents argued that the employees' misconduct justified the blacklisting action.
Ratio Decidendi
Blacklisting has serious civil consequences and cannot be imposed without following principles of natural justice, i.e., giving an opportunity of hearing to the affected party. The order of blacklisting is unsustainable if passed in violation of audi alteram partem rule.
Judgment Excerpts
action of blacklisting has been taken against the Petitioner without giving any opportunity and, therefore, it is in violation of law as laid down in the case of Raghunath Thakur Vs. State of Bihar and others reported in AIR 1989 SUPREME COURT 620.
Though the period of one year of blacklisting is over, the stigma continues and the Petitioner, therefore, faces difficulty while participating in other tender processes.
Procedural History
The petitioner filed Writ Petition No.2274 of 2017 before the Bombay High Court challenging the blacklisting order dated 21st September 2017 passed by respondent no.2. The court heard the matter finally and delivered judgment on 6th December 2018.
