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Umc Technologies Private Ltd. vs Food Corporation Of India - (Supreme Court) (16 Nov 2020)

For a valid blacklisting order, show cause notice must clearly mention intention to blacklist the noticee

MANU/SC/0858/2020

Contract

Present appeal is directed against the order passed by the High Court. By the impugned order, the High Court has dismissed the writ petition and has upheld the validity of the order passed by Respondent no.1, namely Food Corporation of India (‘the Corporation’) through its Deputy General Manager (Personnel), who is Respondent no. 2 herein, to terminate a contract of service with the Appellant and to blacklist the Appellant from participating in any future tenders of the Corporation for a period of 5 years. The sole issue that falls for determination is whether the Corporation was entitled to and justified in blacklisting the appellant for 5 years from participating in its future tenders.

It is the first principle of civilised jurisprudence that a person against whom any action is sought to be taken or whose right or interests are being affected should be given a reasonable opportunity to defend himself. The basic principle of natural justice is that, before adjudication starts, the authority concerned should give to the affected party a notice of the case against him so that he can defend himself. Such notice should be adequate and the grounds necessitating action and the penalty/action proposed should be mentioned specifically and unambiguously. An order travelling beyond the bounds of notice is impermissible and without jurisdiction to that extent. This Court in Nasir Ahmad v. Assistant Custodian General, Evacuee Property, Lucknow and Anr., has held that, it is essential for the notice to specify the particular grounds on the basis of which an action is proposed to be taken so as to enable the noticee to answer the case against him. If these conditions are not satisfied, the person cannot be said to have been granted any reasonable opportunity of being heard.

Specifically, in the context of blacklisting of a person or an entity by the state or a state corporation, the requirement of a valid, particularized and unambiguous show cause notice is particularly crucial due to the severe consequences of blacklisting and the stigmatization that accrues to the person/entity being blacklisted. Not only does blacklisting takes away this privilege, it also tarnishes the blacklisted person’s reputation and brings the person’s character into question. Blacklisting also has long-lasting civil consequences for the future business prospects of the blacklisted person.

A prior show cause notice granting a reasonable opportunity of being heard is an essential element of all administrative decision-making and particularly in decisions pertaining to blacklisting which entail grave consequences for the entity being blacklisted. In these cases, furnishing of a valid show cause notice is critical and a failure to do so would be fatal to any order of blacklisting pursuant thereto.

For a show cause notice to constitute the valid basis of a blacklisting order, such notice must spell out clearly, or its contents be such that it can be clearly inferred therefrom, that there is intention on the part of the issuer of the notice to blacklist the noticee. Such a clear notice is essential for ensuring that the person against whom the penalty of blacklisting is intended to be imposed, has an adequate, informed and meaningful opportunity to show cause against his possible blacklisting. It was incumbent on the part of the Corporation to clarify in the show cause notice that it intended to blacklist the Appellant, so as to provide adequate and meaningful opportunity to the appellant to show cause against the same.

The mere existence of a clause in the Bid Document, which mentions blacklisting as a bar against eligibility, cannot satisfy the mandatory requirement of a clear mention of the proposed action in the show cause notice. The show cause notice does not fulfil the requirements of a valid show cause notice for blacklisting. The order of blacklisting the Appellant clearly traversed beyond the bounds of the show cause notice which is impermissible in law. As a result, the consequent blacklisting order cannot be sustained. The order passed by the High Court is set aside. The Corporation’s order is quashed only so far as it blacklists the appellant from participating in future tenders. Appeal allowed.

Tags : SCN   INTENTION   NATURAL JUSTICE  

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