Patna High Court
Chandan KumarversusThe State of Bihar
- Decided
- Disposal
- DISMISSED
Holding
The Court held that the corporation’s cancellation of the agreement, forfeiture of the EMD, and three‑year blacklisting were within its statutory powers under the NIT and were not disproportionate, thus the writ petition was dismissed.
Summary
The petitioner, Chandan Kumar, had been awarded a transportation contract under NIT No. 1350 and entered into an agreement with the Bihar State Food and Civil Supplies Corporation. After about three and a half months of performance, the corporation issued a show‑cause notice alleging discrepancies in the turnover certificate and audit reports, which were later found to bear the same UDIN number, raising doubts about their authenticity. The corporation cancelled the agreement, black‑listed the petitioner for three years and forfeited his EMD, actions upheld by the appellate authority. The petitioner challenged these actions before the Patna High Court, arguing that the documents were not forged and that the penalties were disproportionate. The Court examined the relevance of the NIT clauses on forgery and misrepresentation, the doctrine of proportionality, and precedents on the inherent power to blacklist, concluding that the corporation’s actions were within its statutory authority and not excessive. Consequently, the Court dismissed the writ petition.
Issues considered
- The validity of the corporation’s cancellation of the contract and imposition of blacklisting and EMD forfeiture on the ground of alleged forged audit documents.
- Whether the lack of distinct UDIN numbers for audit reports renders the documents fraudulent and justifies the penal actions.
- Whether the corporation’s actions are proportionate and comply with principles of natural justice and administrative law.
Subjects
- blacklisting
- public procurement
- tender cancellation
- forgery
- audit report
- proportionality
- administrative law
- contract termination
- EMD forfeiture
Judgment
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.16811 of 2025
======================================================
Chandan Kumar Son of Shri Gorelal Singh, Resident of Hathidah, Ward No.
13, Police Station- Hathidah, District- Patna (Bihar)
... ... Petitioner/s
Versus
1. The State of Bihar through the Managing Director cum Chairman, Bihar
State Food and Civil Supplies Corporation Limited
2. The Managing Director-cum-Chairman, Bihar State Food and Civil Supplies
Corporation Ltd, Patna, Bihar.
3. The General Manager (Public Distribution) Bihar State Food and Civil
Supplies Corporation Limited, Patna, Bihar.
4. The District Transport Committee, Khagaria through its Chairman cum
District Magistrate, Khagaria.
5. The District Magistrate-cum-Chairman, District Transport Committee
Khagaria.
6. The Deputy Development Commissioner-cum-Vice Chairman, District
Transport Committee, Khagaria.
7. The District Transport Officer-cum-member, District Transport Committee,
Khagaria.
8. The District Manager-cum-Member Secretary, District Transport
Committee, Khagaria.
9. The District Manager, Bihar State Food and Civil Supplies Corporation Ltd.
Khagaria.
... ... Respondent/s
======================================================
Appearance :
For the Petitioner/s : Mr. Saket Tiwary, Advocate
Mr. Saket Gupta, Advocate
Mr. Aditya Prakash, Advocate
For the Respondent/s : Mr. Addl. Advocate General 05
======================================================
CORAM: HONOURABLE MR. JUSTICE SUDHIR SINGH
and
HONOURABLE MR. JUSTICE RAJESH KUMAR VERMA
ORAL ORDER
(Per: HONOURABLE MR. JUSTICE SUDHIR SINGH)
3 25-02-2026 Heard learned counsel for the parties.
Patna High Court CWJC No.16811 of 2025(3) dt.25-02-2026
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2. The present writ application has been filed for the
following reliefs:
“i. For issuance of an appropriate
writ/ order/ direction in the nature of Certiorari
for quashing of the order contained in Memo
No. 4721 dated 22.06.2023 by which the
Respondent No. 3 has cancelled the Tender No.
1350 dated 07.11.2022.
ii. For issuance of an appropriate
writ/ order/ direction in the nature of
Certiorari for quashing of the appellate order
19.11.2024 passed by the Respondent No. 2
whereby the Respondent No. 2 has upheld the
order dated 13.06.2023 passed by the District
Transport Committee, Khagaria by which the
District Transport Committee, Khagaria passed
an order for cancellation of the agreement
executed with the petitioner, black listing the
petitioner for three years and further forfeiting
the EMD and the Security Deposit.
iii. Till the pendency of this writ
application, stay the operation of impugned
order dated 19.11.2024.
iv. For any other relief/ reliefs for
which the petitioner is entitled to in the facts
and circumstances of the case.”
3. The brief facts giving rise to the present application
are that the petitioner participated in NIT No. 1350, SFC
Patna High Court CWJC No.16811 of 2025(3) dt.25-02-2026
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Khagaria, dated 07.11.2022. The said tender was issued for
selection and empanelment of transportation contractors. The
petitioner after being declared successful in the said bid, entered
into a contract with the respondent-Corporation. After
discharging his contractual obligation for around 3.5 months, a
show cause notice dated 05.06.2023 was served to the petitioner,
wherein certain discrepancies with respect to the documents
submitted (Turnover Certificate and Profit and Loss account,
etc.) by the petitioner were pointed out. In reply to the said show
cause notice, petitioner duly submitted his reply dated
12.06.2023. However, vide Memo No. 871 dated 13.06.2023, an
order was passed for cancellation of the executed agreement,
blacklisting the petitioner for three years, and further forfeiting
the EMD security deposit. Further vide order dated 22.06.2023,
the tender was cancelled and a recommendation for fresh tender
was issued. Aggrieved by the same, the petitioner preferred an
appeal before the Managing Director of the Corporation on
19.06.2023, which was kept pending. Thereafter, the petitioner
preferred CWJC No. 10498 of 2023, whereby a Coordinate
Bench of this Court directed the respondent-Corporation to
dispose of the said appeal. The said appeal was dismissed vide
order dated 19.11.2024, passed by the respondent No. 2 to the
Patna High Court CWJC No.16811 of 2025(3) dt.25-02-2026
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present petition.
4. Learned Counsel for the petitioner submits that the
books of account of the petitioner had been duly audited by a
registered Chartered Accountant (CA), and the same fact is
substantiated by the reference of the UDIN number in the audit
reports issued by the CA. Learned counsel further submits that
since the audit of books of accounts of the petitioner for
Financial Year 2019-20, and 2020-21 were done on the same
day, therefore both the reports bear ‘same date.’ Further, same
UDIN number on the Turnover Certificate, and the Audit Report
for FY 2019-20 and 2020-21 were due to an error on part of the
CA.
5. Learned counsel for the petitioner further submits
that such wrong documents were not intentionally submitted by
the petitioner, and as such cannot be termed as ‘forged.’ Learned
counsel further submits that the authenticity of such documents
were not an essential requirement for evaluation of the bids, and
therefore, the order of blacklisting and forfeiture of EMD passed
by the respondent-Department is not justified.
6. Learned Counsel for the respondent-Corporation
submits that the petitioner submitted a forged Audit report for
FY 2019-20 and 2020-21, and thus, in accordance with law and
Patna High Court CWJC No.16811 of 2025(3) dt.25-02-2026
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after following due procedure, the agreement was cancelled and
penal actions were imposed against him. Learned counsel for
the respondent further submits that all documents which were
required to be submitted as per the NIT would be relevant
consideration for evaluation of bids. As such, the respondent-
Corporation can take action while considering the same under
relevant clauses of NIT. Learned counsel further submits that in
the present case, the petitioner is found to be in violation of
Clause 10 (iii) and 10 (x) of the NIT.
7. The Appellate Authority vide its order dated
19.11.2024, dismissed the said appeal after taking into
consideration the following grounds:
“fuxe eq[;ky; ds egkizca/kd foRr ,oa vkarfjd foRrh;
lykgdkj }kjk fd;s x;s tkap esa ik;k x;k fd Jh dqekj }
kjk lefiZr vkWfMV fjiksVZ foRrh; o’kZ 2019&20 ,oa
2020&21 esa ,d gh UDIN No.
22079889AYACRQ8990 vafdr gS] tks vkifRrtud
gSA
;kfpdkdrkZ }kjk viuh iqjkuh rF;ksa dks nqgjkrs gq,
dgk x;k fd pkVZMZ ,dkmUVsUV dh xyrh ls ,d gh
UDIN lHkh dkxtkrksa ij vafdr gks x;k] mUgsa Hkwy lq/kkj
djus rFkk dkyh lwph ls eqDr djrs gq, ;kfpdkdrkZ dk
dk;Z vkoafVr djus dk vuqjks/k fd;kA nwljh rjQ ftyk
izca/kd] [kxfM+;k }kjk i=kad 1328 fnukad&13-11-2024 ls
izfrosnu miyC/k djkrs gq, Li’V fd;k x;k fd ftyk
ifjogu lfefr] [kxfM+;k }kjk Jh panu dqekj ds NIT esa
Patna High Court CWJC No.16811 of 2025(3) dt.25-02-2026
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Uploaded vfHkJoksa ds tkWapksijkUr ikbZ xbZ folaxfr;ksa ds
fo:) ftls Lo;a Jh panu dqekj ds }kjk Lohdkj Hkh fd;k
x;k gSA lkFk gh ;kfpdkdrkZ }kjk ,djkjukek ds le;
fn;s x, “kiFk&i= ftlds fcUnq 06 esa Li’V% mYysf[kr gS
fd ^^eSa rduhdh chM ds fy;s dksbZ Hkh QthZ dkxtkr
layXu ugha fd;k gwaA ;fn p;u djrs le; ;k p;u ds
ckn mi;qZDr esa ls dksbZ Hkh ckrs xyr vFkok vlR; lkfcr
gqbZ rks esjh fufonk dks jn~n djrs gq, esjs fo:) dkuwuh ,oa
vuq”kklfud dkjZokbZ dh tk ldrh gS^^A
mDr ds vkyksd esa fnuakd&13-06-2023 dks lEiUu
ftyk ifjogu lfefr] [kxfM+;k dh cSBd esa ;g fu.kZ;
fy;k x;k fd ifjogu vfHkdrkZ Jh dqekj }kjk ,djkjukek
dh dafMdk&10(III) ,oa 10(X) dk mYya?ku fd;k x;k gSA
rnkyksd esa ftyk ifjogu lfefr] [kxfM+;k }kjk Jh dqekj
dk ,djkjukek rRdky izHkko ls jn~n djrs gq;s vxys rhu
o’kksZa ds fy, dkyh lwph esa Mkyk x;kA lkFk gh buds tek
vxz/ku dh jkf”k ,oa lqjf{kr tek jkf”k dks tCr djus dk
fu.kZ; fy;k x;kA
nksuksa i{kksa dks lquus rFkk jf{kr vfHkys[k ds
voyksdu ls ;g Li’V gS fd ;kfpdkdrkZ }kjk NIT No.
1350 fnukad&07-11-2022 esa mYYksf[kr dafMdk 10(iii) ,oa
(x) dk Li’V rkSj ij mYya?ku fd;k x;k gS rFkk ftyk
ifjogu lfefr] [kxfM+;k ds fnukad&13-06-2023 dks fy,
x, fu.kZ; ls eSa iw.kZr% larq’V gwaA fufonk ds lHkh “krksZa dk
vuqikyu djuk ;kfpdkdrkZ dh ftEesnkjh Fkh] ftldk
vuqikyu v{kj”k% ;kfpdkdrkZ }kjk u djds fu;eksa dk
mYya?ku fd;k x;k] tks ,djkjukek dk mYya?ku gSA ,slh
ifjfLFkfr esa ;kfpdkdrkZ ds vuqjks/k ij fopkj djuk]
vijk/k dks c<+kok nsuk gh gksxkA vkosnu vLohd`rA ”
8. Having considered the submissions advanced and
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upon perusal of the materials available on record, it is evident
that the petitioner had submitted Audit Report for FY 2019-20,
and Audit Report for FY 2020-21 with the same UDIN number.
However, as per the requirements a separate and distinct UDIN
number is required for each individual document. In absence of
a distinct UDIN for each document, serious doubts are raised
about genuineness and authenticity of the submitted documents.
9. Further, it is also not in dispute that the respondent-
Corporation had the power to cancel the agreement, and impose
penal actions against the petitioner under relevant clauses of
NIT, which is reproduced as under:
“10. Disqualification Condition:
(iii) Suppression of any fact/ any
misleading act/ declaring false information as
regards former selections in any district to the
other bided district/s will amount to mala-fide
intention of the bidder to mislead the District
Tender Committee. In such case, contract,
whether executed or not with the bidder in any
district shall be terminated forthwith along with
the forfeiture of EMD/Security Deposit. Further
she/he shall be blacklisted and consequently not
allowed to participate in any tender for next
five years.
...
...
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(x) If any of the documents submitted
in Technical or financial bids of the tender
found forged or tampered in, the bid will be
rejected and appropriate lawful action will be
taken against the bidder. At the same time,
she/he/they will be blacklisted and consequently
barred from taking part for next five years in
the future tender and EMD will be forfeited.”
10. After going through the impugned order, and
terms and conditions of tender, this Court is of the considered
opinion that the action taken against the petitioner, i.e.,
cancellation of agreement, forfeiture of EMD, and blacklisting
for three years could not be said to be disproportionate.
Therefore, the order impugned also qualifies on the test of
doctrine of proportionality.
11. In Patel Engg. Ltd. v. Union of India & Anr.,
reported in (2012) 11 SCC 257, the Hon’ble Supreme Court
held that the power to blacklist is inherent with the executive
authorities of the State/party allotting contracts. The relevant
paragraph is reproduced as under:
“15. It follows from the above
judgment in Erusian Equipment case [(1975) 1
SCC 70] that the decision of the State or its
instrumentalities not to deal with certain
persons or class of persons on account of the
Patna High Court CWJC No.16811 of 2025(3) dt.25-02-2026
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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 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.”
12. Further in Kulja Industries Ltd. v. Western
Telecom Project BSNL, reported in (2014) 14 SCC 731, the
Hon’ble Supreme Court observed as under:
“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
Patna High Court CWJC No.16811 of 2025(3) dt.25-02-2026
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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 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.”
13. Considering the materials on record, and in light
of the discussions made above, this Court finds no perversity or
illegality in the order passed by the Appellate Authority
(respondent No. 2).
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14. Accordingly, the present writ application stands
dismissed.
15. Pending application(s), if any, shall stand disposed
of.
(Sudhir Singh, J)
(Rajesh Kumar Verma, J)
Anushka/-
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