C.K. Jacob Chowallur House v. State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE T.R.RAVI** **THURSDAY, THE 26[TH] DAY OF AUGUST 2021 / 4TH BHADRA, 1943 WP(C) NO. 11503 OF 2020** ## **PETITIONER:** **C.K.JACOB CHOWALLUR HOUSE, THAIKKAD P.O, GURUVAYUR, THRISSUR DISTRICT.** **BY ADVS. DR.K.P.SATHEESAN (SR.) SRI.P.MOHANDAS (ERNAKULAM) SRI.K.SUDHINKUMAR SRI.S.K.ADHITHYAN SRI.SABU PULLAN SRI.GOKUL D. SUDHAKARAN** ## **RESPONDENTS:** - **1 STATE OF KERALA REPRESENTED BY THE PRINCIPAL SECRETARY, PUBLIC WORKS DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM 695 001** - **2 THE SUPERINTENDING ENGINEER, OFFICE OF THE SUPEREINTENDING ENGINEER, P.W.D (BUILDINGS), CENTRAL CIRCLE, THRISSUR 680 001** - **3 THE EXECUTIVE ENGINEER, OFFICE OF THE EXECUTIVE ENGINEER, PWD ROADS DIVISION, THRISSUR 680 020 BY ADV RASHMI K.M. GOVERNMENT PLEADER** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION** **ON 9.08.2021, THE COURT ON 26.08.2021 DELIVERED THE FOLLOWING:** W.P.(C)No.11503 of 2020 :-2-: Dated this the 26[th] day of August, 2021 ## **J U D G M E N T** The petitioner, an "A" class contractor, who has been undertaking works under the Public Works Department of the 1[st] respondent since the year 2003, has filed this Writ petition challenging Exhibit P4 order dated 12.2.2020, whereby he has been blacklisted and his license has been cancelled. 2. Heard Sri K.Sudhinkumar, Counsel for the petitioner and Smt.K.M.Rashmi, Government Pleader, on behalf of the respondents. 3. The petitioner undertook the restoration work of Chavakkad bypass road as per agreement dated 19.4.2018. According to the petitioner, though the work was satisfactorily completed on 13.3.2019, during the 2019 monsoon, certain potholes had developed on the road and since the damage was during the defect liability period, he was responsible to repair the road at his expense. According to the petitioner, since the Honourable Chief Minister had planned to visit Guruvayur on 23.9.2019, the officers of the 1[st] respondent had directed him to carry out the repairs on W.P.(C)No.11503 of 2020 :-3-: 21.9.2019. The petitioner submits that the works were carried out as directed and that since the day was a holiday, none of the officers were available to oversee the work. By Exhibit P2 order dated 24.9.2019, the 3[rd] Respondent issued orders forfeiting the security deposit of Rs.87,400/- as penalty. Soon thereafter, the petitioner was issued with a notice directing him to show cause. By letter dated 30.10.2019, the petitioner was asked to be personally present on 7.11.2019 for a hearing on cancellation of his "A" Class Contractor licence. It appears that the petitioner had contacted the office of the respondents on 6.11.2019 and he was informed that the hearing will be on 12.11.2019. The petitioner submits that on 12.11.2019 he had submitted Exhibit P3 letter narrating the above said incidents and requesting for time to submit reply, and that soon thereafter Exhibit P4 order was issued blacklisting him and cancelling his license. He has stated in Ext.P3 letter that he is not in a position to submit his written explanation since he has not been given a copy of the letter dated 28.9.2019 from the 2[nd] respondent, the contents of which he will have to answer. The petitioner relies on Exhibit P5 judgment of this Court, W.P.(C)No.11503 of 2020 :-4-: wherein this Court has found that poor workmanship is not a ground stipulated in clause 1916 of the PWD Manual for blacklisting a contractor. This Court had observed that it is high time to include such a ground also in the PWD Manual. On the question of cancellation of license, this Court in Ext.P5 judgment held that, since cancellation is an extreme step, the Respondents can suspend the license for a period and take a decision on the issue after hearing the aggrieved party. The counsel for the petitioner submitted that the copy of the letter dated 28.9.2019 of the 2[nd] respondent has not been issued to him till date and hence there has been no effective hearing of the petitioner prior to issuance of Exhibit P4. 4. The Government Pleader submitted that after Ext.P5 judgment, poor workmanship has also been included as a new ground for blacklisting a contractor as per Government order dated 23.6.2020. Apart from that, the Government Pleader points out that poor workmanship can be a ground for removing a contractor from the approved list, going by paragraph 1915 of the PWD Manual. It is hence submitted that Exhibit P4 cannot be found fault with. Reference ## W.P.(C)No.11503 of 2020 :-5-: is made to the counter affidavit filed by the 3[rd] Respondent to submit that, the petitioner had no authority to do any work on the road after the defect liability period was over. It is stated that in the case on hand, the defect liability period was over on 13.9.2019 and the petitioner had in the absence of the officials and without permission of the department officials, filled the potholes using waste bituminous materials and cut earth, without following any specification in the PWD Manual. It is further stated that a video showing the above repair work carried out by the contractor was published through the social media, thereby leaving a scar in the image of the PWD Department and its officers. 5. Pending the Writ petition, the 2[nd] respondent has issued Ext.P6 order dated 28.4.2021, whereby the request made by the petitioner to renew his "A" Class Contractor licence was rejected on the ground that Exhibit P4 order has only been stayed by this Court and has not been set aside. The petitioner contended that the nonrenewal of the license cannot be based on an order which is stayed by this Court and it is contended that the petitioner is entitled to have his W.P.(C)No.11503 of 2020 :-6-: application for renewal of license reconsidered. This Court had during the hearing of the case directed the Government Pleader to place on record any notice that was issued to the petitioner regarding the proposal to blacklist him. The Government Pleader has filed a memo on 27.7.2021, producing along with the letters dated 31.10.2019 and 11.12.2019 issued by the 2[nd] respondent to the petitioner and the letter dated 15.1.2020 from the petitioner to the 2[nd] respondent to show that the petitioner had notice regarding proposal to blacklist. In the letter dated 31.10.2019 referred to above, the 2[nd] respondent has directed the petitioner to appear on 7.11.2019, for a hearing regarding cancellation of licence. The letter does not refer to the proposal for blacklisting. In the letter dated 11.12.2019, the 2[nd] respondent has informed the petitioner that the time for submission of his reply has been extended by one month. The above letter also does not refer to the proposal to blacklist the petitioner. The letter dated 15.1.2020 is a reply submitted by the petitioner pursuant to the letters dated 31.10.2019 and 11.12.2019. This letter is referred to as Reference No.4 in Ext.P4 order. It is stated in the letter that on 20.9.2019, the W.P.(C)No.11503 of 2020 :-7-: Assistant Engineer, PWD Roads Section, Chavakkad, had called the petitioner's son, from her mobile phone and directed him to fill up the potholes formed in front of the Chavakkad Bus Stop on the very next day, since the Chief Minister was visiting Guruvayur on 23.9.2019. On the basis of the directions of the Assistant Engineer and considering the urgency for carrying out the work, the petitioner states that he had gone over to the spot on 21.9.2019 afternoon with his workers and with the necessary materials and equipments and filled the potholes which had been formed by the heavy rains which occurred during the month of August, 2019. Since 21.9.2019 was holiday to the government offices, it is stated that the officers were not present while the work was being carried out. It was further stated that since the Assistant Engineer had directed the petitioner to carry out the work on the very next day, which happened to be a holiday, necessary steps ought to have been taken to ensure that an official is present at the time of carrying out the work. It is hence stated that the absence of the PWD officials cannot be a reason to blame the petitioner. The petitioner has also stated that in the letter dated 8.11.2019 sent by the W.P.(C)No.11503 of 2020 :-8-: Executive Engineer, PWD, Roads and Bridges, it is admitted that the petitioner had done the work on instructions over telephone given by the Assistant Engineer. On the above reasons, the petitioner requested the 2[nd] respondent to verify the files regarding the above aspects before finalising on a decision against the petitioner. It is also stated that going by the records of the PWD office, even the date of completion cannot be clearly ascertained, which alone will be helpful in finding out the actual defect liability period. Without ascertaining when the defect liability period was over, it cannot be said for certain that the work in question was done by the petitioner without any authority; is the contention. 6. Blacklisting of a contractor is a punishment which has serious civil consequences. It is well settled that such a blacklisting should be done only after putting the affected person on notice and after hearing him. In **Erusian Equipment & Chemicals Ltd. v. State of W.B.** reported in **(1975) 1 SCC 70,** the Apex Court held that the blacklisting order involves civil consequences and casts a slur and that it creates a barrier between the persons blacklisted and the W.P.(C)No.11503 of 2020 :-9-: Government in the matter of transactions and that the fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the blacklist. In **Patel Engg. Ltd. v. Union of India,** reported in **(2012) 11 SCC 257** , the Hon'ble Supreme Court held that though the State in exercise of its executive power to carry on the trade or business, has the power to blacklist a contractor, such action should be fair and rational and not arbitrary. In **UMC Technologies (P) Ltd. v. Food Corpn. of India** reported in **(2021) 2 SCC 551,** the Hon'ble Supreme Court held that 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. In the context of blacklisting of a person or an entity by the State or a State Corporation, the requirement of a valid, particularised and W.P.(C)No.11503 of 2020 :-10-: unambiguous show-cause notice is particularly crucial due to the severe consequences of blacklisting and the stigmatisation that accrues to the person/entity being blacklisted. In the case on hand, there is no notice issued to the petitioner specifically and unambiguously informing him of the proposed action of blacklisting. In the light of the legal principles stated above, Ext.P4 order proposing to blacklist the petitioner is bad in law and is liable to be quashed. Apart from the above, a reading of Ext.P4 would show that the period of blacklisting is indefinite. The High Courts of Delhi, Allahabad, Madhya Pradesh, Jharkhand and Patna have held that blacklisting for an indefinite period is impermissible in law. I am also in total agreement with the above said proposition. 7. On the question of cancellation of the petitioner's license, this Court had stayed the operation of Exhibit P4 at the time of admission of this Writ petition. Pending the Writ petition, the validity period of the license expired and the petitioner had requested for renewal of the same. It is seen from Exhibit P6 that the renewal was refused on the ground that this Court had not set aside Exhibit P4 :-11-: W.P.(C)No.11503 of 2020 order. The reason stated in Exhibit P6 for refusing renewal of the license cannot be sustained in law. Regarding the reasons stated in Exhibit P4 for cancelling the license, a reading of Exhibit P4 would show that the explanation submitted by the petitioner has not even been looked into while issuing Exhibit P4. It is true that in Exhibit P4, reference has been made to the reply submitted by the petitioner on 15.1.2020. However, apart from stating that the said letter does not give a satisfactory explanation, there is absolutely no consideration of the aspects that have been pointed out in the letter. It can be seen from the letter dated 15.1.2020, which has been produced by the Government Pleader along with a memo, that the petitioner specifically stated that he has carried out the work on the basis of telephonic instruction from the Assistant Engineer. It is also pointed out that the fact that the petitioner was instructed by the Assistant Engineer is borne out by the records kept by the PWD itself and that it is admitted in a letter written by the Executive Engineer on the issue. Yet another contention that is taken in the reply submitted by the petitioner is that there is no clarity regarding the date on which the W.P.(C)No.11503 of 2020 :-12-: defect liability period ended. The specific contention of the Department is that the defect liability period ended on 13.9.2019, and the work in question was carried out on 21.9.2019. In the letter dated 15.1.2020, the petitioner has pointed out that the measurement book will show that measurement was taken on 25.3.2019. It is also pointed out that in the completion Certificate, both 31.1.2019 and 13.3.2019 are shown as dates of completion. None of the above aspects have been even considered while issuing Exhibit P4. What appears to have weighed with the respondents is the fact that a video recording of the petitioner carrying out work on a holiday appeared in the social media. The order Ext.P4 hence suffers from non-consideration of relevant aspects. In the above circumstances, Exhibit P4 order is quashed. The Respondents were directed to reconsider the question whether the license issued to the petitioner as "A" class contractor should be cancelled, with particular reference to the contentions as noted above, which are already contained in the objection submitted by the petitioner on 15.1.2020, and with reference to the files which have :-13-: W.P.(C)No.11503 of 2020 been referred to in the letter dated 15.1.2020. The Respondents shall also consider the question of renewal of the license of the petitioner in accordance with law, without being prejudiced in any way by the contents of Ext.P4 order which is quashed by this judgment, since the period of the license is already over. The quashing of the decision to blacklist the petitioner is without prejudice to the Respondents' right to initiate fresh proceedings for the same, if so advised. The writ petition is allowed as above. The parties shall bear their respective costs. All pending interlocutory applications are closed. Sd/- **T.R.RAVI, JUDGE** ami/ W.P.(C)No.11503 of 2020 :-14-: ## **APPENDIX OF WP(C) 11503/2020** ## **PETITIONER EXHIBITS** **EXHIBIT P1 TRUE COPY OF THE CONTRACTOR'S REGISTRATION CARD HAVING REG.NO. 14A/2003-04/SE/B & LW CC THSR ISSUED BY THE 2ND RESPONDENT** **EXHIBIT P2 TRUE COPY OF THE ORDER NO. A8-2018/107 DATED 24-09-2019 ISSUED BY THE 3RD RESPONDENT** **EXHIBIT P3 TRUE COPY OF THE REPLY GIVEN BY THE PETITIONER TO THE 2ND RESPONDENT DATED 12-11-2019** **EXHIBIT P4 TRUE COPY OF THE ORDER NO. F2-1887/2019 DATED 12-02-2020 ISSUED BY THE 2ND RESPONDENT** **EXHIBIT P5 TRUE COPY OF THE JUDGMENT DATED 19-022019 IN W.P(C) NO. 21597/2017** **EXHIBIT P6 TRUE COPY OF THE ORDER NO.F2-946/2020 DATED 28.4.2021 ISSUED BY THE 2ND RESPONDENT** ## **RESPONDENT'S EXHIBITS** **EXHIBIT R3(a) TRUE COPY OF THE G.O.(Rt)NO.552/2020/PWD DATED 23.6.2020**