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Patna High Court

Dharmendra Kumar PatelversusThe Bihar State Food and Civil Supply Corporation Ltd.

Decided
Disposal
DISMISSED

Holding

The Court held that the corporation was contractually empowered to terminate the agreement, blacklist the petitioner and forfeit the security deposit, and that the action was not arbitrary or violative of natural‑justice principles, so the writ petition must be dismissed.

Summary

The petitioner, a transport agent for the Bihar State Food and Civil Supply Corporation (BSFSC), was appointed to deliver food grains under the PDS and later had his contract cancelled, was blacklisted for three years, and his security deposit forfeited following a police seizure of grain bags alleged to be involved in black marketing. The petitioner challenged the cancellation, arguing no contractual clause justified the action and that the seized grains were not PDS stock. The corporation relied on Clauses 10.2, 11, 15.4 of the Notice Inviting Tender and Clause 17 of the agreement, asserting a breach of contractual obligations. The Court examined the contractual provisions, the procedural compliance of notice and hearing, and relevant Supreme Court precedents on blacklisting and judicial review. It held that the corporation acted within its contractual authority and that the procedural safeguards satisfied natural‑justice requirements, rendering the writ petition untenable. Consequently, the petition was dismissed.

Issues considered

  • Whether the corporation was justified in invoking Clauses 10.2, 11 and 15.4 of the Notice Inviting Tender read with Clause 17 of the agreement to terminate the contract, blacklist the petitioner and forfeit the security deposit and bank guarantee.
  • Whether the corporation’s action was arbitrary, mala fide, or violative of principles of natural justice warranting interference under Article 226 of the Constitution.

Legislation cited

Subjects

  • contract termination
  • blacklisting
  • forfeiture of security deposit
  • Public Distribution System
  • Essential Commodities Act
  • administrative law
  • judicial review
  • Article 226
  • natural justice
  • show cause notice

Judgment

         IN THE HIGH COURT OF JUDICATURE AT PATNA
                    Civil Writ Jurisdiction Case No.15550 of 2018
     ======================================================
     Dharmendra Kumar Patel Son of Late Hridya Nand Singh, Resident of
     Village- Sion, P.S.- Bhabhua, District- Kaimur Bhabhua.

                                                            ... ... Petitioner/s
                                      Versus
1.   The Bihar State Food and Civil Supply Corporation Ltd. Khadya Bhawan,
     Daroga Rai Path, Patna- 800 001.
2.   The Managing Director, Bihar State Food and Civil Supply Corporation
     Ltd., Khadya Bhawan, Daroga Rai Path, Patna- 800 001.
3.   The Chief of Procurement, Bihar State Food and Civil Supply Corporation
     Ltd., Khadya Bhawan, Daroga Rai Path, Patna- 1.
4.   The Chief of Transporting, Bihar State Food and Civil Supply Corporation
     Ltd., Khadya Bhawan, Daroga Rai Path, Patna.
5.   The District Manager, Bihar State Food and Civil Supply Corporation Ltd.,
     Kaimur, District- Kaimur.

                                               ... ... Respondent/s
     ======================================================
     Appearance :
     For the Petitioner/s   :         Mr. Amrendra Narayan Rai, Advocate
     For the Respondent/s   :         Mr. Shailendra Kumar Singh, Advocate
     ======================================================
     CORAM: HONOURABLE MR. JUSTICE SUDHIR SINGH
             and
             HONOURABLE MR. JUSTICE RANJAN KUMAR JHA
     ORAL JUDGMENT
     (Per: HONOURABLE MR. JUSTICE SUDHIR SINGH)

      Date : 30-06-2026

                    Heard learned counsel for the parties.

                  2. Following are the reliefs sought for in the present

      writ application:

                                           "I. For quashing the memo no 2261
                                dated 29.12.2017 (Annexure-6 series) issued by
                                District Manager, SFC, Kaimur by the order (memo
                                no. 13058 dated 23.12.2017) of Managing Director,
                                whereby and where under, agreement for Door step
                                delivery between petitioner and SFC, Kaimur has
                                been cancelled and petitioner has been declared
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                                 black listed for three years and his security amount
                                 along with Bank guaranty has been forfeited.
                                               II.    For    directing   the     respondent
                                 authorities to re-engage the petitioner immediately
                                 as transporting agent for door step delivery of food
                                 grains under Kaimur District because petitioner's
                                 agreement has been illegally cancelled by the
                                 respondent authorities.
                                               III.    For   issuance    of     any   other
                                 appropriate             writ/writs,           order/orders,
                                 direction/directions for grant of any other reliefs to
                                 which the petitioner may be found entitled under the
                                 facts & circumstances of the case."


                     3. The brief facts of the present case are that the

         respondent-Corporation issued a Notice Inviting Tender dated

         05.02.2016        inviting     applications          for      appointment       of

         Transporting and Handling Agents for Door Step Delivery of

         food grains under the Public Distribution System (PDS) in

         various districts of the State of Bihar, including the district of

         Kaimur. The petitioner participated in the tender process and,

         upon being found eligible by the District Transport Committee

         as well as the Head Office Transport Committee, was appointed

         as    a   Transporting        and      Handling       Agent      for     Kaimur.

         Consequently, an agreement was executed between the parties

         on 31.08.2016, whereunder the petitioner was entrusted with the

         work of transportation and doorstep delivery of food grains for
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         the prescribed contractual period.

                     4. While the petitioner was discharging his contractual

         obligations, an alleged incident occurred on 15.09.2017,

         pursuant to which Bhabhua P.S. Case No. 577 of 2017 was

         instituted. The allegation in the FIR was that 26 bags of rice

         meant for the Public Distribution System were being transported

         for the purpose of black marketing in the petitioner's tractor

         bearing Registration No. BR-45G-3141 and trailer bearing

         Registration No. BR-45G-3143, which were intercepted and

         seized by the police. It was further alleged that the said vehicle

         was being used for facilitating the illegal diversion of food

         grains meant for distribution under the Public Distribution

         System.

                     5. Taking note of the aforesaid incident, the Managing

         Director of the respondent-Corporation issued a show cause

         notice dated 10.10.2017. The petitioner submitted his reply

         dated 17.10.2017 denying the allegations. Thereupon, the

         District Manager, vide Memo No. 2261 dated 29.12.2017,

         acting     upon     the    decision      of   the   Managing   Director

         communicated vide Memo No. 13058 dated 23.12.2017,

         cancelled the petitioner’s agreement, blacklisted him for a

         period of three years, and forfeited his security deposit as well
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         as the bank guarantee.

                     6. Learned counsel for the petitioner submits that the

         entire action of the respondent-Corporation proceeds on the

         alleged violation of Clause 10.2 of the agreement, whereas no

         such clause exists either in the tender conditions or in the

         agreement executed between the parties. It is further submitted

         that there is no material on record to establish that the petitioner

         was involved in any act of black marketing or diversion of food

         grains under the Public Distribution System. The allegation is

         founded merely on the seizure of certain food grains from the

         petitioner’s vehicle, despite the fact that the PDS food grains

         had already been delivered to the concerned dealer and the

         seized bags were not PDS bags.

                     7. Learned counsel further submits that even the F.I.R.

         does not attribute any overt act to the petitioner and, on the

         contrary, records the stand of the concerned PDS dealer that the

         seized food grains were his own agricultural produce. In such

         circumstances, there was no justification for the respondents to

         conclude that the petitioner had violated the terms of the

         agreement.

                     8. Learned counsel further submits that the impugned

         orders are liable to be quashed as being arbitrary, mala fide,
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         unsupported by any legal or factual basis, and violative of

         Articles 14 and 19(1)(g) of the Constitution of India.

                     9. Per contra, learned counsel appearing on behalf of

         the respondents submits that Bhabhua P.S. Case No. 577 of

         2017 was instituted under Section 7 of the Essential

         Commodities Act against the concerned PDS dealer, Shri

         Anirudh Prasad, wherein it was alleged that the petitioner’s

         tractor bearing Registration No. BR-45G-3141 and trailer

         bearing Registration No. BR-45G-3143 were used in the

         transportation of the food grains forming the subject matter of

         the case.

                     10. Learned counsel further submits that the action of

         cancellation of the agreement, blacklisting of the petitioner and

         forfeiture of the security deposit and bank guarantee is fully

         justified in terms of Clauses 10.2, 11 and 15.4 of the Notice

         Inviting Tender read with Clause 17 of the agreement, which

         govern the obligations of the transporter and empower the

         Corporation to take appropriate action in the event of breach of

         the contractual terms.

                     11. It is, therefore, submitted that the impugned orders

         have been passed after following due procedure and in

         accordance with the contractual provisions, and as such, the writ
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         petition is liable to be dismissed.

                     12. The following issue arises for consideration before

         this Court:

         1. Whether, in the facts and circumstances of the present case,

             the respondent-Corporation was justified in invoking Clauses

             10.2, 11 and 15.4 of the Notice Inviting Tender read with

             Clause 17 of the agreement for terminating the petitioner’s

             contract, blacklisting him and forfeiting his security deposit

             and bank guarantee?

         2. Whether the impugned action suffers from any arbitrariness,

             perversity or procedural infirmity so as to warrant

             interference by this Court in exercise of its jurisdiction under

             Article 226 of the Constitution of India?

                     Re Issue No. (i)

                     13. Before adverting to the rival submissions, it would

         be apposite to reproduce the relevant contractual clauses

         governing the parties.

                     14. Clause 10.2 of the Notice Inviting Tender reads as

         under:

                               "10.2. In case any default in course of transporting
                               work any loss cause to corporation by the
                               Transporter on account of strike or any other mode
                               such loss shall be recovered by forfeiting the Bank
                               guarantee/security deposit which will be utilized by
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                               the Corporation or/and the said loss shall be also
                               recovered from the immovable property by way of
                               attachment or sale of mortgaged Properties."
                     15. Clause 11 of the NIT stipulates:

                                 "11. Transporter will be solely responsible for
                                 transporting grains handed over by SFC, block
                                 godown for delivery of food grains under Door
                                 Step delivery for PDS dealers as per delivery
                                 schedule and route chart as directed by the
                                 concerned        District   Administration/District
                                 Manager and obtained signature of the recipient
                                 (FPS) on the document handed over to him by
                                 block godown of SFC."
                     16. Clause 15.4 of the NIT provides:

                                   "15.4. The agreement shall be remain in
                                   operation for the period of one year from the
                                   date of execution of the agreement or
                                   allotment of work. This may be extended by
                                   mutual consent for a further period of one
                                   year on the recommendation of District
                                   Transport Committee or may be terminated
                                   earlier than the period mentioned above on
                                   behalf of the BSFC in case of non delivery of
                                   food grains. During the specified period if
                                   there is any breach of the terms of agreement
                                   by   the    Transport     Handling-cum-Delivery
                                   Agent, he will be terminated and blacklisted as
                                   well as debar for further work."
                     17. Likewise, Clause 17 of the Agreement provides,

         inter alia, that:

                                     "17. The agreement shall remain in
                                     operation for one year which may be
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                                     extended by mutual consent for a
                                     further period of one year on the
                                     recommendation of District Transport
                                     Committee or it can be terminated any
                                     time by issuing 15 days prior notice.
                                     This may be terminated earlier than
                                     the period mentioned above on behalf
                                     of the First Party in case of non-
                                     lifting of grains, sugar, edible oil etc.
                                     During the specified period if there is
                                     any breach of any of the terms of the
                                     agreement by the second party, the
                                     agreement may be terminated and
                                     blacklisted as well as debarred for
                                     next      five    years   from     future
                                     transportation work, security deposits
                                     will be forfeited and Bank guarantee
                                     of 10 laces (Ten lac only) will be
                                     utilized and encashed at once by the
                                     First Party. The responsibility of the
                                     second party shall not cease with the
                                     termination of the agreement unless
                                     he has redelivered the grains, sugar,
                                     edible oils and etc, entrusted to him
                                     and      rendered   complete     accounts
                                     thereof to the satisfaction of the First
                                     Party.”
                     18. A conjoint reading of the aforesaid clauses leaves

         no room for doubt that the contractual scheme casts a
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         heightened degree of responsibility upon the transporter

         entrusted with the movement of food grains under the Public

         Distribution System. Clause 11 unequivocally fastens the

         responsibility of safe transportation and delivery of the food

         grains upon the transporter, whereas Clauses 15.4 and 17

         reserve to the Corporation the power to terminate the agreement,

         blacklist the contractor and forfeit the security deposit in the

         event of breach of the contractual obligations. Clause 10.2

         further contemplates recovery of loss suffered by the

         Corporation on account of any default committed during the

         course of transportation work.

                     19. The record reveals that Bhabhua P.S. Case No.

         577 of 2017 came to be registered under Section 7 of the

         Essential Commodities Act against the concerned PDS dealer. It

         is not in dispute that the FIR specifically mentions the

         petitioner's tractor bearing Registration No. BR-45G-3141 and

         trailer bearing Registration No. BR-45G-3143 as the vehicle

         used in the alleged black marketing of the food grains. Acting

         upon the said report, the respondent-Corporation issued a

         detailed show cause notice to the petitioner calling upon him to

         explain his conduct. The petitioner submitted his reply, which

         was duly considered by the competent authority before the
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         impugned order came to be passed.

                     20. The principal contention of the petitioner is that

         no loss has been caused to the Corporation and that Clause 10.2,

         therefore, could not have been invoked. This submission, in the

         considered opinion of this Court, cannot be accepted in

         isolation. Clause 10.2 cannot be read in isolation from Clauses

         11, 15.4 and Clause 17 of the agreement. The contractual

         provisions have to be construed harmoniously. While Clause

         10.2 deals with recovery of loss through forfeiture of the

         security deposit and bank guarantee, Clauses 15.4 and 17

         independently empower the Corporation to terminate the

         agreement and blacklist the contractor upon breach of the

         contractual obligations. Therefore, the absence of a quantified

         pecuniary loss by itself does not denude the Corporation of its

         contractual authority to terminate the contract if the conduct of

         the transporter amounts to breach of the obligations undertaken

         under the agreement.

                     21. The submission that the food grains seized were

         not PDS food grains or that the concerned dealer claimed them

         to be agricultural produce are matters which may have relevance

         in the criminal proceedings. However, the Corporation was not

         required to await the outcome of the criminal prosecution before
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         taking an administrative decision regarding continuation of a

         contractor entrusted with the transportation of essential

         commodities under the Public Distribution System. The

         contractual relationship is founded upon confidence, integrity

         and accountability. Once the competent authority, after issuing

         notice and considering the explanation, arrived at a bona fide

         satisfaction that the petitioner’s conduct was inconsistent with

         the standards expected of a transporter engaged under the PDS

         scheme, it cannot be said that the action was dehors the contract.

                     22. The Hon'ble Supreme Court in Patel Engineering

         Ltd. v. Union of India, reported in (2012) 11 SCC 257, has

         held that the power of the State or its instrumentalities to

         blacklist a contractor is an inherent facet of its executive power

         to enter into contracts, subject only to the requirement that such

         power must be exercised fairly and for a legitimate purpose. The

         relevant part of the said order reads as follows:

                               15. It follows from the above judgment in Erusian
                               Equipment case that the decision of the State or
                               its instrumentalities not to deal with certain
                               persons or class of persons on account of the
                               undesirability of entering into the contractual
                               relationship    with    such   persons   is   called
                               blacklisting. The State can decline to enter into a
                               contractual relationship with a person or a class
                               of persons for a legitimate purpose. The authority
                               of the State to blacklist a person is a necessary
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                               concomitant to the executive power of the State to
                               carry on the trade or the business and making of
                               contracts for any purpose, etc. There need not be
                               any statutory grant of such power. The only legal
                               limitation upon the exercise of such an authority
                               is that the State is to act fairly and rationally
                               without in any way being arbitrary—thereby such
                               a decision can be taken for some legitimate
                               purpose. What is the legitimate purpose that is
                               sought to be achieved by the State in a given case
                               can vary depending upon various factors.”


                     23. Likewise, in Kulja Industries Ltd. v. Chief

         General Manager, Western Telecom Project, BSNL, reported

         in (2014) 14 SCC 731, the Supreme Court reiterated that while

         the power of blacklisting is inherent, its exercise must satisfy

         the requirements of fairness, proportionality and observance of

         natural justice. The relevant part of the said order reads as

         follows:

                                17. That apart, the power to blacklist a
                                contractor whether the contract be for supply of
                                material or equipment or for the execution of any
                                other work whatsoever is in our opinion inherent
                                in the party allotting the contract. There is no
                                need for any such power being specifically
                                conferred by statute or reserved by contractor.
                                That is because “blacklisting” simply signifies a
                                business decision by which the party affected by
                                the breach decides not to enter into any
                                contractual       relationship   with   the   party
                                committing the breach. Between two private
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                                parties the right to take any such decision is
                                absolute and untrammelled by any constraints
                                whatsoever. The freedom to contract or not to
                                contract is unqualified in the case of private
                                parties. But any such decision is subject to
                                judicial review when the same is taken by the
                                State or any of its instrumentalities. This implies
                                that any such decision will be open to scrutiny
                                not only on the touchstone of the principles of
                                natural justice but also on the doctrine of
                                proportionality. A fair hearing to the party being
                                blacklisted     thus   becomes     an     essential
                                precondition for a proper exercise of the power
                                and a valid order of blacklisting made pursuant
                                thereto. The order itself being reasonable, fair
                                and proportionate to the gravity of the offence is
                                similarly examinable by a writ court.”



                     24. In the present case, the records disclose that the

         petitioner was served with a show cause notice specifically

         proposing action against him, an opportunity of reply was

         afforded, and the reply was considered before the competent

         authority passed the impugned order. Thus, the procedural

         safeguards recognised in the aforesaid decisions stand duly

         complied with.

                     25. This Court is, therefore, of the considered view

         that the respondent-Corporation acted within the four corners of

         the contractual provisions while invoking Clauses 10.2, 11 and

         15.4 of the Notice Inviting Tender read with Clause 17 of the
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         agreement. The decision to terminate the agreement, blacklist

         the petitioner and forfeit the security deposit and bank guarantee

         cannot be said to be without contractual authority or

         unsupported by the governing terms of the contract.

                     26. Accordingly, Issue No. 1 is answered in favour of

         the respondent-Corporation and against the petitioner.

                     Re Issue No. (ii)

                     27. The scope of judicial review under Article 226 of

         the Constitution in matters arising out of contractual

         relationships is well settled. While this Court is not denuded of

         its power to examine the decision-making process of a State

         instrumentality, it is equally settled that judicial review is

         concerned with the legality of the decision-making process and

         not with the merits of the decision itself. Unless the impugned

         action is shown to be arbitrary, mala fide, perverse, actuated by

         extraneous considerations, or in violation of the principles of

         natural justice or the statutory or contractual provisions, the writ

         court would not substitute its own view for that of the

         competent authority.

                     28. In Tata Cellular vs. Union of India, reported in

         (1994) 6 SCC 651, the Hon'ble Supreme Court held that judicial

         review in contractual matters is confined to examining the
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         decision-making process and not the correctness of the decision

         itself. The Court observed that it is not the function of the writ

         court to act as an appellate authority over administrative

         decisions unless the action is vitiated by arbitrariness,

         irrationality or mala fides. The relevant part of the said order

         reads as follows:

                                    “77. The duty of the court is to confine itself
                                    to the question of legality. Its concern should
                                    be:

                                    1. Whether a decision-making authority
                                    exceeded its powers?

                                    2. Committed an error of law,

                                    3. committed a breach of the rules of natural
                                    justice,

                                    4. reached a decision which no reasonable
                                    tribunal would have reached or,

                                    5. abused its powers.

                                    Therefore, it is not for the court to determine
                                    whether a particular policy or particular
                                    decision taken in the fulfilment of that policy
                                    is fair. It is only concerned with the manner
                                    in which those decisions have been taken.
                                    The extent of the duty to act fairly will vary
                                    from case to case. Shortly put, the grounds
                                    upon which an administrative action is
                                    subject to control by judicial review can be
                                    classified as under:

                                    (i) Illegality : This means the decision-maker
                                    must understand correctly the law that
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                                    regulates his decision-making power and
                                    must give effect to it.

                                    (ii)    Irrationality,    namely,   Wednesbury
                                    unreasonableness.

                                    (iii) Procedural impropriety.

                                    The above are only the broad grounds but it
                                    does not rule out addition of further grounds
                                    in course of time. As a matter of fact, in R. v.
                                    Secretary of State for the Home Department,
                                    ex Brind [(1991) 1 AC 696] , Lord Diplock
                                    refers specifically to one development,
                                    namely, the possible recognition of the
                                    principle of proportionality. In all these cases
                                    the test to be adopted is that the court should,
                                    “consider whether something has gone
                                    wrong of a nature and degree which requires
                                    its intervention”.

                     29. The said principle has been consistently reiterated

         by the Hon'ble Supreme Court in Michigan Rubber (India) Ltd.

         v. State of Karnataka, reported in (2012) 8 SCC 216 , wherein

         it was held that in matters concerning contracts entered into by

         the State, interference under Article 226 is warranted only when

         the process adopted or the decision made is mala fide, intended

         to favour someone, or is so arbitrary and irrational that no

         reasonable authority acting in accordance with law could have

         arrived at such a decision. The relevant part of the said order

         reads as follows:

                                    “24. Therefore, a court before interfering in
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                                    tender or contractual matters, in exercise of
                                    power of judicial review, should pose to itself
                                    the following questions:

                                    (i) Whether the process adopted or decision
                                    made by the authority is mala fide or
                                    intended to favour someone; or whether the
                                    process adopted or decision made is so
                                    arbitrary and irrational that the court can
                                    say: “the decision is such that no responsible
                                    authority     acting   reasonably     and       in
                                    accordance with relevant law could have
                                    reached”? And

                                    (ii) Whether the public interest is affected?

                                    If the answers to the above questions are in
                                    the negative, then there should be no
                                    interference under Article 226.”

                     30. Similarly, in Silppi Constructions Contractors v.

         Union of India, reported in (2020) 16 SCC 489, the Apex Court

         cautioned that constitutional courts should exercise restraint in

         interfering with contractual and commercial decisions of the

         State unless the decision-making process is demonstrably

         arbitrary or suffers from patent illegality. The relevant part of

         the said order reads as follows:

                                    “19. This Court being the guardian of
                                    fundamental rights is duty-bound to interfere
                                    when there is arbitrariness, irrationality,
                                    mala fides and bias. However, this Court in
                                    all the aforesaid decisions has cautioned time
                                    and again that courts should exercise a lot of
                                    restraint while exercising their powers of
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                                    judicial review in contractual or commercial
                                    matters. This Court is normally loathe to
                                    interfere in contractual matters unless a
                                    clear-cut case of arbitrariness or mala fides
                                    or bias or irrationality is made out. One must
                                    remember that today many public sector
                                    undertakings       compete   with the private
                                    industry. The contracts entered into between
                                    private parties are not subject to scrutiny
                                    under writ jurisdiction. No doubt, the bodies
                                    which are State within the meaning of Article
                                    12 of the Constitution are bound to act fairly
                                    and are amenable to the writ jurisdiction of
                                    superior courts but this discretionary power
                                    must be exercised with a great deal of
                                    restraint and caution. The courts must realise
                                    their limitations and the havoc which
                                    needless interference in commercial matters
                                    can cause. In contracts involving technical
                                    issues the courts should be even more
                                    reluctant because most of us in Judges' robes
                                    do not have the necessary expertise to
                                    adjudicate upon technical issues beyond our
                                    domain. As laid down in the judgments cited
                                    above the courts should not use a magnifying
                                    glass while scanning the tenders and make
                                    every small mistake appear like a big
                                    blunder. In fact, the courts must give “fair
                                    play in the joints” to the government and
                                    public sector undertakings in matters of
                                    contract. Courts must also not interfere
                                    where      such     interference   will   cause
                                    unnecessary loss to the public exchequer.”
                     31. Tested on the aforesaid principles, this Court finds
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         no such infirmity in the present case. The records reveal that the

         petitioner was served with a detailed show cause notice setting

         out the allegations against him. The petitioner submitted his

         explanation, which was duly considered by the competent

         authority before passing the impugned orders. Thus, the

         requirements of audi alteram partem stood substantially

         complied with and the petitioner cannot legitimately contend

         that the impugned action was taken in breach of the principles

         of natural justice.

                     32. The contention that the respondent-Corporation

         ought to have awaited the outcome of the criminal proceedings

         is equally untenable. The impugned action is not founded upon

         the petitioner's criminal liability but upon the contractual

         obligations governing the relationship between the parties. The

         standard applicable to administrative action under a contract is

         distinct from that governing a criminal prosecution. The

         respondent-Corporation was competent to assess whether the

         petitioner’s conduct justified continuation of the contractual

         relationship, independent of the result of the criminal case.

                     33. This Court also does not find any material to

         indicate that the decision of the respondent-Corporation was

         actuated by mala fides, extraneous considerations or colourable
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         exercise of power. The petitioner has not placed any cogent

         material     on    record     to     establish   that   the   action   was

         discriminatory or that similarly situated contractors were treated

         differently in comparable circumstances. On the contrary, the

         records indicate that the Corporation acted upon the information

         received, issued notices, considered the replies and thereafter

         passed the impugned orders in exercise of powers traceable to

         the contractual terms.

                     34. Once this Court has held under Issue No. 1 that

         the respondent-Corporation possessed the contractual authority

         to terminate the agreement, blacklist the petitioner and forfeit

         the security deposit and bank guarantee, and that such action

         was taken after following the prescribed procedure, the scope of

         judicial review becomes considerably limited. This Court cannot

         sit in appeal over the subjective satisfaction of the competent

         authority merely because another view may also be possible.

                     35. In the absence of any demonstrated arbitrariness,

         perversity, mala fides or procedural impropriety, no case is made

         out for interference under Article 226 of the Constitution of

         India.

                     36. Accordingly, Issue No. 2 is answered in favour of

         the respondent-Corporation and against the petitioner.
Patna High Court CWJC No.15550 of 2018 dt.30-06-2026
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                     37. In view of the findings recorded on the issues

         framed hereinabove, this Court is of the considered opinion that

         the impugned orders do not suffer from any illegality,

         arbitrariness, perversity or procedural infirmity warranting

         interference in exercise of the extraordinary writ jurisdiction

         under Article 226 of the Constitution of India. The respondent-

         Corporation has acted within the scope of the contractual

         provisions after affording the petitioner due opportunity of

         hearing. Consequently, no case for interference is made out.

                     38. Accordingly, the present writ petition stands

         dismissed.

                     39. However, it is made clear that this Court has not

         expressed any opinion on any other contractual or monetary

         claims, if any, that may be available to the petitioner.

                     40. If so advised, the petitioner shall be at liberty to

         invoke Clause 20 of the agreement and take recourse to the

         dispute resolution mechanism provided therein by initiating

         appropriate arbitration proceedings for redressal of his

         grievances, in accordance with law. Clause 20 of the agreement

         reads as follows:

                                         “20. All disputes arising under or in
                                         pursuance of this agreement between the
                                         parties, except matters decision of which
                                         herein expressly is otherwise provided, shall
             Patna High Court CWJC No.15550 of 2018 dt.30-06-2026
                                                       22/22




                                                      be referred to sole arbitration of the
                                                      C.M.D/Managing Director of the Bihar State
                                                      Food & Civil Supplies Corporation Ltd.
                                                      Patna or a person nominated by the
                                                      C.M.D/Managing Director decision of such
                                                      arbitrator shall be final and binding on both
                                                      the parties. The provisions of the arbitration
                                                      and conciliation Act, 1996 and rules framed
                                                      there under and statuary modifications
                                                      thereof shall apply to the proceedings of
                                                      arbitration and all such disputes shall be
                                                      subject to the jurisdiction of courts at
                                                      Patna.”
                                  41. Pending application(s), if any, shall also stand

                      disposed of.




                                                  (Sudhir Singh, J)


                                               ( Ranjan Kumar Jha, J)
rishabh/rajesh
AFR/NAFR                AFR
CAV DATE                NA
Uploading Date          07.07.2026
Transmission Date


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