State Doesn’t Need Statutory Power To Blacklist A Fraud Committing Firm From Entering Into Contractual Relationship With It: Rajasthan HC
Rajasthan Excessive Courtroom dominated that energy to blacklist a contractor was inherent within the social gathering allotting the contract, with out there being want for such energy conferred by statute.
Blacklisting of a agency discovered to have dedicated fraud was not an idea international to contractual regulation. The regulation particularly offered for restraining any agency to enter into additional enterprise relations with a celebration if it was discovered to have dedicated fraud with the opposite social gathering, it held.
The bench of Justice Rekha Borana held that the precise to take such selections if exercised between personal events was absolute, and if exercised by the State or its instrumentalities, was topic to judicial evaluation on the touchstone of rules of pure justice and doctrine of proportionality.
The Courtroom was listening to a petition filed by an organization in opposition to the communication by the Central Transmission Utility of India Restricted (“CTU”) as per which it was blacklisted from making use of for and acquiring any connectivity or open entry with CTU.
The petitioner was a agency approved by the Authorities of Rajasthan for creating Photo voltaic Park for which it had utilized for Stage I Connectivity which was granted. This was adopted by utility for Stage II connectivity, which was additionally granted. Transmission Agreements have been additionally executed between the petitioner and the CTU.
Subsequently, complaints have been obtained by CTU in opposition to the petitioner pertaining to the land paperwork submitted by the petitioner for fulling circumstances whereas making use of for the Stage II connectivity. It was discovered that deliberate misrepresentations have been made and deceptive paperwork have been submitted by the petitioner which amounted to fraud as per the Agreements.
After offering alternative of listening to to the petitioner, and never being happy with the reason offered, CTU revoked the connectivity granted to the petitioner, encashed the financial institution ensures submitted beneath the Agreements, and proceeded to blacklisting the petitioner for a interval of three years. The order of blacklisting was challenged.
It was argued by the petitioner that CTU being solely a nodal company had no statutory authority to take action and it may have acted solely when it comes to the Agreements signed between them which it did by cancelling the connectivity and encashing the financial institution ensures.
Quite the opposite, the CTU relied on the case of Patel Engineering Ltd. v Union of India to argue that the authority of the State to blacklist an individual was a vital concomitant to the manager a part of the State to hold on the commerce or enterprise, and making all contracts for any individual, requiring no statutory grant of such energy.
After listening to the contentions, the Courtroom agreed with the reliance on the case of Patel Engineering by CTU and noticed that,
“As noticed by Hon’ble the Apex Courtroom in Patel Engineering (supra), the choice of State or its instrumentality to not take care of sure individuals or class of individuals on account of undesirability of coming into into contractual relationship with such individuals is named ‘blacklisting’ and the State can decline to enter right into a contractual relationship with an individual or a category of individuals for a professional function.”
The Courtroom additional made a reference to a different Supreme Courtroom case of Kulija Industries Ltd. v Western Telecom Mission BSNL by which related ruling was given.
On this mild, it was held that there was no want for any statue to confer this energy. Such energy, if exercised by the personal events was absolute, and if exercised by the State or any of its instrumentalities, was topic to judicial evaluation on grounds of rules of pure justice and doctrine of proportionality.
It was opined that within the present matter, since sufficient alternative of listening to was offered to the petitioner, there was no violation of rules of pure justice, and additional since fraud on a part of the petitioner was confirmed on file, it couldn’t have been ignored by CTU.
Therefore, it was said the CTU was empowered to take a choice to not enter into any contractual relationship with the petitioner, and the actions weren’t arbitrary or in opposition to any provision of regulation.
Accordingly, the petition was dismissed,
Title: M/S Soltown Infra Personal Restricted & Ors. v. Central Transmission Utility of India Ltd.
Quotation: 2025 LiveLaw (Raj) 229