Blacklisting Order Has Civil And Economic Consequences, Must Be Reasoned: Karnataka High Court

A single judge bench of Justice M Nagaprasanna said,

"The order has economic and civil consequences upon the petitioner. Any order having civil or economic consequences should bear application of mind. Application of mind is discernible only when the order contains reasons, as reasons are live links between the decision maker and the decision taken."

The bench accordingly quashed an order passed by the Ministry of Railways, blacklisting the petitioner, Krishi Infratech which is engaged in the business of carrying out construction activities since 2011, for a period of 5 years. The action was taken two years after completion of work as per tender, on the basis of statement of charges/ misconduct.

The bench referred to the impugned order and noted that the first paragraph refers to statement of charges that was served on the petitioner, second paragraph notices the reply given by the petitioner and third paragraph reads that the Ministry of Railways decided to ban business dealings with the petitioner for 5 years. However, except these three paragraphs, there was no mention that the Ministry considered the reply in detail. It did not even mention that the reply is not found to be satisfactory.

"It is this action that does not inspire confidence of the Court...impugned order would not indicate even a semblance of application of mind on the part of the Competent Authority who takes away the right of the petitioner to enter into a trade for a period of 5 years. Such an order which has a sweeping ramification could not have been casually passed by the respondent/Railways."

It added that a reasoned order is always desirable by any judicial, quasi judicial or administrative functionaries because reasons are the "heartbeat" of a conclusion, without which the order becomes lifeless.

"The order impugned does not indicate any of the tenets of audi alteram partem. Merely giving a show cause notice and seeking a reply would not suffice. The reply must be considered and that consideration should bear presence in the order that would be passed on consideration of such reply, failing which, it would demonstrate an inscrutable face of the sphinx. On this solitary ground, in the considered view of this Court, the order is rendered unsustainable."

Allowing the petition, the court remitted the matter back to the authorities to pass appropriate orders in accordance with law, bearing in mind the observations made by the Court, as also the justification tendered by the petitioner, in replies. The petitioner shall also be afforded an opportunity of hearing on all the charges where it has not been afforded opportunity of hearing.

Case Title: Krishi Infratech & ANR v. Union of India & others

Case No: WP 20978 of 2022

Citation: 2022 LiveLaw (Kar) 517

Date of Order: 01-12-2022

Appearance: A.S.Ponnanna Senior Advocate, for Vasudeva Naidu S, advocate for petitioner.

M.B.Nargund, Addl. Solicitor General a/w Shanthi Bhushan H, Deputy Solicitor General.