ORDER
1. This appeal under Clause 10 of the Letters Patent of the Patna High Court has been filed against the order dated 11-10-2001 passed in C.W.J.C. No. 1612 of 2001 by a learned Single Judge of this Court dismissing the writ application filed by the appellant for quashing the order dated 3-1 -2001, issued under the signature of the Joint Secretary, Water Resources Department (for short ‘the Department’), Government of Bihar, communicating the order dated 23-12-2000 of the Commissioner-cum-Secretary of the said Department, by which the appellant-Company has been black-listed from the list of the contractors on the grounds mentioned therein. A copy of the order dated 3-1-2001 was appended as Annexure ‘1’ to the writ petition. The appellant did not challenge the order dated 23-12-2000 on the ground that the same was not available but during the course of argument when the said document was brought by the State as Annexure ‘B’ to the counter-affidavit, the same was also challenged.
The said order of black-listing the appellant-Company was passed under Rule 18(ii) of the Bihar Enlistment of Contractors Rules, 1992 (for short ‘the Rules’) on the following three grounds:-
(i) Having taken more than one crore of rupees as advance, the appellant did not complete, much less start the construction work of Gates of Ajoy Barrage.
(ii) After execution of the agreements, in connivance with the local employees and officers of the Department, the appellant indulged in making a number of cuttings, overwritings and interpolations in the agreements and, thus, committed a fraud, for which a criminal case has been registered against it.
(iii) The Bank-guarantee given by the appellant for security even after its lapse was not renewed/extended and even after cancellation of the agreements, it did not return the amount to the Department and kept the huge amount with itself without furnishing any security therefor.
2. The brief facts necessary for disposal of the appeal are that the appellant is a Company registered under the Companies Act having its registered office at Kota (Rajasthan) and its Branch Office at Delhi. It is engaged in manufacture of Heavy Steel Structural and Hydraulic Gates, Hoist, Gantry Crane, etc. for Hydel and Irrigation Projects. It is asserted by the appellant that it has completed several big projects in various States throughout the country. Some of the Projects are of national importance.
3. The appellant-Company entered into three agreements with the Department. Two agreements were executed on 18-11-1987 and 13-10-1988, respectively, with regard to works of design, manufacture, supply and Erection of Gates and Hoists for North Koel Dam at Mandal, Palamu, District Daltonganj. The third agreement was executed on 25-2-1990 with regard to execution of the works of Design, manufacture, supply and erection of spillway gates and hoists for Ajoy Barrage at Sikatia, District Deoghar. The order of black-listing has been passed in connection with the agreement dated 25-2-1990.
4. According to the appellant, it completed the work of design, concerned
manufacture, supply of all the gate parts and hoist with regard to the two agreements executed in connection with North Koel Dam. It also completed the major portion of the erection works but the remaining erection works could not be completed as the civil works of the Dam Structure were not made available by the Project authorities. Ultimately, a dispute arose between the parties with regard to the said two agreements and the same was referred to the Arbitrator (Justice O.P. Mehrotra, a retired Judge of the Allahabad High Court), who gave his Award dated 17-11-1997 of three crores of rupees and odd with interest.
5. As stated above, the agreement with regard to the completion of work of Ajoy Barrage was executed on 25-2-1990 and the work was to be completed by 24-2-1992. The said work was also not completed and there was difference between the appellant and the respondent-Department. The appellant requested the respondent-Department to appoint an Arbitrator and on refusal to appoint the Arbitrator, it made an application under the provision of the Indian Arbitration Act before the Subordinate Judge, Deoghar, being T.S. No. 99 of 1992 for appointment of an Arbitrator, which was rejected on 17-12-1996, against which it has filed a Misc. Appeal being Misc. Appeal No. 157 of 1996 and the same is pending after admission.
6. The respondent-Department having noticed that the appellant-Company in connivance with the local officials and officers of the Department had made cuttings, overwritings and interpolations in the agreement with a view to cheat the Department filed a complaint case bearing PCR No. 470/96 in the Court of the Chief Judicial Magistrate, Deoghar, in which cognizance has been taken. Against the order of taking cognizance, the appellant and its officials filed Cr. Misc. No. 17749 of 1998 before this Court, which has been admitted and the proceedings of the said PCR case have been stayed by Order 17-9-98.
7. The respondent-Department cancelled the agreement dated 25-2-1990 with regard to Ajoy Barrage by order dated 5-9-98 on the ground that the appellant has committed the breach of the terms and also on the ground of filing of a criminal case. The said order has been challenged by the appellant by filing Title Suit No. 124/1998 in the Court of the Subordinate Judge, Deoghar, which is pending for final adjudication. The respondent-Department passed the order dated 21-10-1998 black-listing the appellant from the list of the contractors, with a further direction that in future no contract would be allotted to it by the department concerned (Water Resources Department). The grounds given for black-listing the appellant from the list of the contractors were that it did not complete the work within the stipulated time and has committed forgery in the agreements and has not extended the period of the Bank-guarantee after its expiry and for the same a criminal case has been registered and the agreements have been cancelled with regard to North Koel Dam. Similar complaint was received with regard to other agreement relating to Ajoy Barrage entered between the appellant and the Department.
8. The appellant challenged the aforesaid order before this Court in C.W.J.C. No. 3158 of 1999, which was dismissed on 3-1 -2001. The appellant preferred L.P.A. No. 163/2000 against the said order and the said appeal was allowed on 4-7-2000, a copy of which was appended as Annexure 15′ to the writ application. This Court, however, did not quash the order of black-listing the appellant-Company, but taking into consideration the peculiar facts of the case ordered that the appellant had to be given an opportunity to represent the matter against the order of its black-listing and, accordingly, directed that the appellant should represent the matter before authority concerned within three weeks from the passing of the order along with a copy of the same and the authorities concerned of the Department would hear and dispose of its representation within the time stipulated therein without being prejudiced by any of the observations made by the learned Single Judge in the said order. Thereafter, the appellant filed a representation before the Commissioner-cum-Secretary of the Department requesting him to give an opportunity of personal hearing and the latter heard the representative of the appellant as well as that of the Department and rejected the representation on the grounds mentioned above and reaffirmed its earlier order.
9. Learned Counsel appearing for the appellant submitted that as the appellant-Company was not a registered Contractor under the provisions of the Rules, no order for black-listing it can be passed under the provisions of Rule 18(ii) thereof. He also submitted that as the order of cancellation of the agreements as well as the filing of the criminal case are subjudice before this Court, the order of black-listing the appellant-Company on the basis of the same very allegation without any final adjudication thereof by this Court is not permissible in law.
10. Now, it is settled law that even in the contractual matter, the Government cannot act like a private individual. The Government, while acting even in the said field, is required to maintain certain standards, which are not unauthorised or arbitrary. Non-arbitrariness being a necessary concomitant of the rule of law, it is clear that all actions of every public functionary in whatever sphere must be guided by reasons, and not by whims, caprices and humour or personal likes and dislikes of the person entrusted to exercise the power. The State can enter into an agreement with any person, whom it chooses and no person can claim as a matter of right that the Government must enter into agreement with him. However, when the Government decides to enter into agreement, every citizen has right as well as expectation to claim that an equal treatment should be given to him like in the matter of awarding contract. The State and its officers should not act arbitrarily or capriciously. Similarly, once the contract has been entered into, the State and its authorities cannot act arbitrarily and at this stage also, they are required to maintain standard and norms consistent with reasonableness.
11. Black-listing of the contractor by the State Government visits with Civil Consequences. The contractor black-listed is deprived of an opportunity to enter into agreement and as such, the affected-person should be given opportunity of hearing before the order of black-listing is passed. Once an opportunity has been given and the order has been passed by the authority then the High Court in exercise of jurisdiction under Article 226 of the Constitution of India cannot sit over the matter as an appellate forum. It will only consider as to whether in the decision-making process, the authorities have committed any error in the sense that the order is passed without evidence or contrary to the statutory provisions, or is arbitrary or in the sense that the conclusion arrived at could not have been reached by a reasonable man
12. In this case, the order of black-listing the appellant-Company has been passed after giving an opportunity of hearing to the appellant. It appears from the record that so far as the second and third grounds regarding interpolation and failure of the appellant to extend/renew the Bank-guarantee are concerned, the appellant did not offer any defence before the authority on the ground of pendency of a title suit and a criminal case. As regards the first ground, it offered certain explanation but the authority having noticed that in spite of the advances having been given, the work was not started, has rejected the same.
13. The order of black-listing the appellant-Company has been challenged on two grounds as stated above. So far as the first ground is concerned, we find that the learned Single Judge has rightly rejected the same. In this connection, it is important to mention that at the time of submitting bid for the works in question, the appellant assured the authorities that it would get itself registered within thirty days with the Department but it did not do so and on its assurance, the Department gave him the contract work. The appellant at this stage now cannot be allowed to take benefit of its own wrong by saying that it was not registered under the provisions of the Rules and, therefore, its black-listing cannot be made under Rule 18(ii) thereof.
14. A copy of the rules has been annexed as Annexure ’17’ to the writ application. Rule 18(ii) thereof runs as follows:
18(ii) Black listing-If obvious defect is found at a later date in the work done by the contractor or his conduct and behaviour is found unbecoming of a civilized person either during or after the construction period (but within the period of registration or he is found guilty of any criminal offence, or it is established that he has managed to receive excess payment from the Department, or engineers employed by him are found to be associated or employed simultaneously with other firms, or any information furnished by him is found to be wrong or misleading during any time, his registration is valid, then for any; or all of the above reasons, it will be open to the Department to black-list the contractor for an indefinite or a specified period and/or de-register him and withhold any further payment due to him and forfeit his earnest money, and security deposit after giving him proper opportunity to represent his case. During the period the contractor has been black-listed, he will not be eligible to purchase tender or supply for any work or receive contract anywhere for any work in the Department.
15. A bare perusal of the aforesaid Rule would show that several grounds for black-listing have been given and it is not the case of the appellant that it (appellant) is not covered by the grounds given therein. The learned Single Judge has dealt with the matter in detail and we fully agree with the view taken by him. This apart, we are of the view that even assuming that the rules have no application, if there was allegation of fraud and breach of the terms of the agreement then the Department concerned can pass order black-listing the appellant provided the rule of natural justice has been complied with and in this case, the same has been complied with and as such, the first point raised on behalf of the appellant is rejected.
16. So far as the second point is concerned, it is equally without any substance. on the ground of pendency of civil and criminal cases, the matter regarding blacklisting cannot be postponed for an indefinite period as both of them operate in different fields. The black-listing is done for the purpose of preventing the contractor from entering into a fresh contract on the ground of its past conduct, whereas, in the civil case the jurisdiction is with regard to breach of the contract, in which in case the assertion of the appellant will be found correct, then it is entitled to the damages, etc. In the criminal case, the appellant and its officials have been prosecuted for committing cuttings, overwritings and interpolations in the agreements. In the criminal case, the subject-matter of consideration is as to whether for the acts aforementioned, the appellant should be punished or not. Thus, the pendency of the aforesaid matters is no ground to quash the order of black-listing the appellant-Company.
17. In the result, we find no merit in this appeal and it is, accordingly, dismissed.