ORDER
Aftab Alam, J.
1. The petitioner company is incorporated under the Indian Companies Act, having its registered office in New Delhi. According to it, it specialises in the field of manufacture of steel structures and hydraulic gates, hoist, gantry crane etc. for hydel and irrigation projects and it has completed a large number of projects in the different States of the Court.
2. This petition under Article 226 of Constitution has been filed at the instance of the petitioner company seeking to challenge an order issued by the Joint Secretary in the Department of Water Resources (Irrigation), Government of Bihar under his memo No. 30/MUK-5/15010/99-5 dated 4-11-2001 (Annexure-1). In this order it is stated that in comnliance with the direction of this Court the Secretary of the department duly considered the representation filed by the petitioner company and also gave hearing to its representative following departmental order No. 3162, dated 23-12-2000 passed giving detailed reasons for the black listing of the petitioner company in terms of Clause 18(ii) of the Bihar Enlistment of Contractor Rules, 1992 on the company being found guilty of the three charges as enumerated in the Joint Secretary’s order. The copies of the Joint Secretary’s order were sent, apart from the petitioner, to the Chief Secretaries and the Secretaries, Water Resources Department of all the States in the Union of India.
3. Though from the Joint Secretary’s order it was evident that it was more in the nature of a communication intimating the fact of the petitioner’s black-listing and the decision of black-listing was contained in the order, dated 23-12-2000 passed by the Secretary of that department, the Secretary’s which was mainly required to be challenged was neither brought on record nor any relief against that order was prayed for in the writ petition. The Secretary’s order, dated 23-12-2000 finally came before this Court as Annexure-B to the counter affidavit filed on behalf of the State. Even at that stage no amendment petition was filed nor any prayer was made on behalf of the petitioner to be allowed to challenge that order which contained the decision for the petitioner company’s black-listing and only in pursuance of which the later order, dated 4-1-2001 was issued by the Joint Secretary, intimating I” ie petitioner and others regarding the department’s decision to black-list it on certain charges. In case, therefore, a very technical view was to be taken, this writ petition would be liable to be dismissed for that reason alone. But I do not propose to take that course after the parties were heard at length on merits of their respective cases and after the counsel for the petitioner was allowed In course of hearing to mainly assail the Secretary’s order, dated 23-12-2000.
4. The petitioner company entered into a set of two agreements dated 18-11-1987 and 13-10-1988 with the Water Resources Department Government of Bihar for the design, manufacture supply and erection of gates and hoist for the North Koel Dam at Mandal. On 25-2-1990 the petitioner company entered into another agreement, being agreement No. 17/89-90, with the department for the design, manufacture, supply, irrigation, painting and commissioning of Ajay Barrage Gate at Slkatia. Under the agreement the construction and commissioning of the Ajay Barrage Gate was to be completed within 24 months from the date of execution of the agreement, at a cost of Rs.704.95 lacs. On the day following the execution of the agreement the petitioner received an advance of Rs.1,05,13,143/-. Though it appears that both the contracts went bad and the works assigned under any of the two sets of agreements were not completed, the present controversy of the petitioner’s black listing arises from the agreement No.17/89-90, dated 25-2-1992. The break down of the two sets of contracts gave rise to developments on familiar patterns; a number of judicial proceedings have been instituted, some at the instance of the petitioner and others at the instance of the State Government. According to the petitioner, in respect of the North Koel project agreements it has an arbitration award, dated 17-1-1997 in its favour by which the arbitrator awarded the company a sum of over Rs.3 crores which along with interest accrued till the date of the order of blacklisting had added up to about Rs.5 crores. It is stated that the State Government was not making payment as directed In the arbitrator’s award.
5. As regards the agreement dated 25-2-1990 relating to the work of the Barrage with which we are mainly concerned in this case, it is stated that In 1992 the petitioner made an application under Section 20 of the Indian arbitration Act, 1940 before the court of Subordinate Judge, Deogharfor appointment of an arbitrator in connection with certain dispute and differences arising between the parties over the terms and conditions. The Subordinate Judge, Deoghar rejected the petition filed under S.20 of the Arbitration Act by order dated 17-1-1996. Against that order the petitioner company filed Misc. Appeal No. 157/96 which was admitted by order, dated 17-12-1997 and awaits final hearing in the High Court.
6. In connection with agreement, dated 25-2-1990 the department filed a complaint case, being as P.C.R. No. 470 of 1996, in the Court of the Chief Judicial Magistrate, Deoghar alleging that the company and its officials, tn connivance with some departmental employees, had made interpolations, cuttin and over-writings in the agreement in an attempt to cheat and defraud the Government of huge sums of money. The Chief Judicial Magistrate took cognizance of the offences and summoned the accused for trial. The company and its officials, however, came to the High Court for quashing the order of cognizance and the Criminal Misc. Petition (s) filed at their instance was admitted by jrder dated 17-9-1998 and further proceedings in the court of the Chief Judicial Magistrate were stayed.
7. On 5-9-1998 the department cancelled the agreement, dated 25-2-1990 on the ground of the petitioner company committing breach of its terms and in view of the filing of the criminal case against the petitioner company and its officials. The petitioner company responded by filing Title Suit No. 124/98 in the Court of Subordinate Judge, Deoghar on 24-11-1998 seeking a declaration that the action of the State Government in cancelling the agreement was illegal and further claiming damages and other consequential reliefs. The suit remains pending before the subordinate Judge.
8. Amidst the filing of all the cases as indicated above, an order was issued by the Joint Secretary in the department under his memo No. 30/Misc-2-17003/98-2791, dated 21-10-1998 (Annexure-14). In this order it was stated that the petitioner company did not complete the construction of the Barrage gate within the time stipulated in the agreement and with ulterior motives made forgery In the agreement; that the department had instituted a criminal case against the company and also cancelled the agreement due to the company’s failure to extend the period of the security deposit and the Bank guarantee furnished by it against the amount given to it as mobilisation advance; further, that similar complaints were found also in respect of other agreements entered into between the department and the company. The order further said that on the allegations of fraud being established, the company was being entered in the blacklist of contractors and in future it will not be given any work of the Water Resources Department.
9. This order, dated 21-10-1998 marks the commencement of the present controversy of the black listing of the petitioner company.
10. The petitioner company then came to this Court challenging the order of black listing, dated 21-10-1998 in C. W. J. C. No. 3158 of 1999. That writ petition was dismissed by a learned single Judge by order, dated 4-1-2000. Against that order the petitioner company preferred an appeal being L.P.A. No. 163 of 2000. The petitioner’s appeal was allowed by a bench of this court by order, dated 4-7-2000 mainly on the ground that the petitioner was not allowed an opportunity to represent its case before the order of black listing was passed. The relevant portion of the order allowing the appellant is reproduced below :
“The law is well settled that black-listing of contractor visits with civil consequences and no order of black-listing can be passed unless an opportunity of hearing is given to the person concerned. In this case, there Is controversy as to whether any opportunity was given to the appellant was given to the appellant or not before passing the order of black-listing. Taking into consideration the peculiar facts of this case and also that the cases are pending as stated above, we are of the view that proper course in this appeal would be to give an opportunity to the appellant to represent the matter against the order of black-listing”.
11. Here it is significant to note that while allowing the appeal this court did not take the course of quashing or setting aside the black listing order dated 21-10-1998 and then leaving it open to the department to give a fresh notice to the company and proceed afresh on the basis of that notice. On the contrary the black listing order dated 21-10-1998 was left undisturbed and the petitioner was asked to make a representation before the concerned authorities who in turn were directed to give a hearing to the petitioner and to dispose of its representation. To me it appears that the procedure laid down by this Court, while allowing the petitioner’s appeal, considerably circumscribed the grounds on which the petitioner could assail the Initiation of the black listing proceeding and in this writ petition the petitioner’s challenge to the black listing order can only be considered within the limits as circumscribed by the earlier order passed by the division bench.
12. Following the order dated 4-7-2000 passed its appeal the company submitted a representation, dated 24-7-2000 before the Secretary, Department of Water Resources Government of Bihar. In its representation the petitioner company also made a request for personal hearing. The Secretary granted the request and held the hearing of the case on 23-11-2000 when the representative of the company appeared on its behalf and the Chief Engineer, Deoghar was heard on behalf of the department. After hearing the parties the Secretary passed a detailed order, dated 23-12-2000 holding that the black listing of the company was just and proper and in accordance with the relevant rules. The Secretary considered the matter of the company’s black listing on three grounds which may be enumerated as follows :
(i) The failure of the company to even start the work of construction of the gates of the Ajay Barrage, leave aside the completion of the work, even after receiving a sum of over Rs. 1 crore as advance.
(ii) committing fraud on the department by making interpolations, cuttings, over-writings and changing the rates of a number of items as provided in the agreement for which a criminal case was also filed by the department against the company.
(iii) The failure to extend the period of security deposit and the Bank guarantee furnished against the advance given to the company.
13. In the order of the Secretary the three grounds forming the basis of the company’s black-listing have been discussed separately and in considerable detail. As regards the first ground regarding non-commencement of the work of construction of the gates it Is to be noted that notwithstanding the payment of advance of over a crore of rupees the work was never started at the site. Though some gate materials were brought to the site by the company, even those were not put to any use in the construction work as those materials were seized by the customs officials for realisation of certain customs and excise dues amounting to Rs. 14.19 lacs.
14. As regards the second and the third grounds regarding making interpolations in the agreement and failure to extend the Bank guarantee, it is significant to note that the petitioner company declined to offer any defence before the Secretary on the plea of pendency of the criminal case and Title Suit No. 124/98. Hence, on those two grounds the Secretary had before her only the case of the department as represented by the Chief Engineer. On a consideration of all the material facts and circumstances and after hearing the two sides the Secretary came to hold and find that all the three charges against the petitioner company were duly, established and the company was, therefore, fully liable to be black listed and therefore there was no occasion to recall or modify the order of black listing, dated 21-10-1998.
15. Mr. A. K, De counsel for the petitioner assailed the order of black listing on a number of grounds which I propose to examine one by one. Mr. De stated that the petitioner company was not registered as a contractor with the Water Resources Department, government of Bihar under the Bihar Enlistment of contractor rules, 1992. On that basis he submitted that the petitioner company was beyond the purview of those rules and the provision of black-listing as contained therein will not apply to the petitioner company. A question may here arise whether it is open to the petitioner any longer to question the initiation of the proceeding for black-listing or the applicability of the provision of black-listing to it in view of the earlier order passed by the Division Bench of this Court while allowing its appeal. But without going into that question I find no substance in the submission that the provisions of black-listing would apply only to contractors who have subsisting registration with the concerned department. The provision of black-listing Is contained in Rule 18 (ii) of the Revised Bihar Enlistment of the Contractor Rules, 1992 which are evidently a set of executive guide lines published In the official gazette. Rule 18(ii) is 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 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 apply for any work or receive contract anywhere for any work in the Department.”
16. From a plain reading of the provisions it is evident that there are a number of grounds distinct and separate from each other (separated by the disjunctive ‘or’) any one or more of which would make the contractors liable to black-listing. Some of the grounds are made applicable to contractor with subsisting registration while other grounds for black listing do not require the contractor being registered. The grounds for black-listing applicable in the case of the writ petitioner do not require registration as a pre-condition.
17. This position emerges on the literal interpretation of the provision of black listing. Apart from this, the proposition that the provision of black-listing is subject to a subsisting registration of the contractor would defeat and frustrate the whole purpose of black listing. For illustration, let us assume that a contractor from outside the State goes away after constructing a bridge within the time stipulated in the contract. The bridge falls down after two years and it is found that the collapse was due to its faulty design and use of sub-standard materials, in breach of the terms of the agreement. But by the time the bridge collapses the registration of the contractor with the department is over. Can it be said on that basis that the government department is powerless to black-list the contractor and the contractor is free to participate with impunity In bids for future work of the department? To my mind such a position would be highly unreasonable and clearly unacceptable.
18. Mr. De next submitted that the action of the department in black listing the company amounted to a colourable and mala fide exercise of power. Learned counsel cited certain facts and circumstances which, according to him, conclusively indicated that the department in passing the order of black-listing was induced by malice against the petitioner. These facts and circumstances can be summarised as follows :
(i) The order of black listing was passed even while a number of judicial proceedings were pending. Mr. De submitted that all the three grounds for black-listing were the subject matter of different judicial proceedings and even though the courts were yet to make a pronouncement on those grounds, determining the rights and liabilities of the parties, the department had unfairly invoked the provision of black-listing. According to him, therefore, the action of the department apart from being unfair, unjust, unreasonable and arbitrary amounted to over-reaching the courts where the different judicial proceedings were pending.
(ii) In the agreements there were sufficient provisions for taking suitable action against a party committing breach of the terms of the agreement. The department was, therefore, obliged to confine Its actions within the terms of the agreement and not to reach out for any provision outside the agreement.
(iii) The action of the department in sending the order of black-listing to the Chief Secretaries and the Secretaries of the Irrigation Departments of the different States in the country was actuated purely by malice and this would vitiate the order of blacklisting as well. Mr. De strongly contended that the object and purpose of black-listing was that in future the concerned department should have no working relationship with the branded contractor. He further pointed out that sending the order of black-listing to different States had no nexus with the object of black listing and it was only intended to cause immense harm and injury to the company. In this regard Mr. De also submitted that the State action must conform to reasonableness but the action of the respondent authorities in sending the order of black-listing to the other States would hardly be described as just, fair and reasonable. According to him last circumstance, coupled with the fact of pending litigations between the company and the department clearly made out a case of mala fide exercise of power.
19. Mr. S.K. Ghosh, learned A. A. G. II appearing for the State submitted that malice as a ground for assailing the order of black-listing should have been raised by the petitioner in the earlier round of litigation when C.W.J.C. No. 3158 of 2000, and arising from that LPA No. 163 of 2000, were filed challenging the black-listing order, dated 21-10-1998. Mr. Ghosh submitted that the petitioner was now barred from raising the ground of malice by the principle of constructive res judicata, more so in view of the order, dated 4-7-2000 passed earlier by the court in LPA No. 163 of 2000.
20. I do not propose to go into the question whether or not It is open to the petitioner to raise the ground of malice at this stage because on a careful consideration of the matter I am satisfied that no finding of mala fide against the department can be recorded on the basis of the facts and circumstances relied upon by Mr. De. As regards the pendency of judicial proceedings, including a criminal case filed by the department. It is plain and simple that the judicial proceedings and proceedings for black-listing operate in different fields and lead to very different consequences. In case the petitioner succeeds in the civil suit, it will be entitled to damages as may be quantified by the court; if the department succeeds in the criminal case, the accused will be liable to face the punishment of imprisonment or fine as may be awarded by the Court. The order of black-listing simply prohibits the company from bidding for any future work in the department and unless the provision of black-listing itself is held to be bad and illegal, I am unable to see how the pendency of the different cases can be said to stand in the way of the department in initiating a proceeding of black-listing and in case the conditions are satisfied in passing an order black-listing the company.
21. The second objection that in the agreement itself there were sufficient provisions for taking suitable action for breach of Its term is also not acceptable for the same reasons as indicated above.
22. As regards the third objection regarding the order of black-listing being sent to other States, it is indeed true that In practical terms this may cause considerable harm to the petitioner but on this ground alone I am unable to hold that the department in passing the order of black-listing was acting mala fide against the petitioner.
23. Mr. A.A.G. II pointed out that queries were received from other States about the petitioner being black-listed by the Department of Water Resources (Irrigation) in this State and it was in that view that copies of the order were sent to other States. Moreover, the black-listing of the petitioner was a matter of fact and Mr. De was unable to point out to me any provision which would prevent the State from announcing or publicising this fact. The petitioner is as much at liberty to publicise the fact that it had got an arbitration award in its favour against the State and that it had instituted a suit for damages against the State as much as the State is free to publicise that it had black-listed the petitioner.
24. In view of the reasons discussed above, I am unable to accept the submission that the order of black-listing suffered from malice and was liable to be struck down on that ground.
25. Mr. De next submitted that in the order of black-listing passed by the Secretary on 23-12-2000 she had failed to deal with all the points raised in the representation filed by the petitioner and, therefore, the order suffered from procedural infirmity and was fit to be set aside. I find no basis for this submission. It is to be noted that in the representation to the department the petitioner had also asked for an oral hearing and the Secretary had given the company of hearing on 23-11-2000. As the order was passed after an oral hearing the authority would naturally deal only with the points raised in course of hearing.
26. In this regard, it is further to be noted that in the black-listing order it is expressly stated that in respect of two charges, namely, (i) making interpolations in the agreement and (ii) failure to renew the bank guarantee the representative of the petitioner declined to disclose its stand in view of the pending complaint case and the title suit respectively. Moreover, on going through the petitioner’s representation, dated 24-7-2000 (Annexure 16 to the writ petition) I do not see any points or objections raised therein which are not dealt with in the Secretary’s order of black-listing, dated 23-12 2000.
27. Mr. De next made a reference to the Supreme Court decision in Taia Cellular v. Union of India (1994) 6 SCC 651 : AIR 1996
SC 11. He invited my attention to the
grounds enumerated in that judgment (Para
77) which make an administrative action
subject to control by judicial review. These
are as under :
“(i) Illegality : This means the decision-maker must understand correctly the law that regulates his decision -making power and must give effect to it.
“(ii) Irrationality, namely, Wednesbury unreasonabless.
“(iii) procedural Impropriety”
28. Mr. De submitted that the order of black-listing passed against the petitioner suffered from all the infirmities enumerated above. I fail to see how ? This submission too is to be rejected for the reasons already dlscussed above.
20. Mr. De also relied upon a decision in the case of Bhim Sain v. Union of India, AIR 1981 Delhi 260 (para 14). The Delhi decision is of no help to the petitioner in this case. That decision was rendered in an altogether different set of facts and the court had found that though an opportunity of hearing was allowed to the contractor, the ground forming the basis of the order of black-listing was quite arbitrary. The facts of the case in hand are entirely different.
30. Mr. De also relied upon a decision in the case of Ram Krishna Kulwant Rai v. Union of India, AIR 1969 Calcutta 18 (Para 33). The decision was also rendered in a different set of facts and the* distinguishing feature is to be found in para 14 of that decision.
31. No other submission was made by Mr. De.
32. For the reasons discussed above, I find no infirmity in the order of black-listing and I find that this writ petition has no merit or substance. It is dismissed but, in the circumstances, with no other as to costs.