PATNA REGIONAL DEVELOPMENT AUTHORITY AND ORS. ETC.versusMIS. RASHTRIYA PARIYOJANA NIRMAN NIGAM AND ORS. ETC.

                 PATNA REGIONAL DEVELOPMENT AUTHORITY                                  A
                              AND ORS. ETC.
                                               v.
                 MIS. RASHTRIYA PARIYOJANA NIRMAN NIGAM
                                      AND ORS. ETC.
                                                                                       B
                                         MAY 7, 1996

                    [J.S. VERMA AND SUJATA V. MANOHAR, JJ.]


                Co11tract-Black-listi11g of Contractor-Effect of-Patna Regional C
         Development Authority i11viti11g te11ders for co11st1uctio11 of a building-Tender
         of lowest quotations submitted by a contractor who had been black-listed by
         the State Water Resources Depa1tment rejected and contract given to other
         bidde,.....Held, Tender Committee rightly took i11ta account the fact of black-
         listing of the Contracto,.....This was a releva11t consideration in decidi11g D
         whether a contract should be give11 to him-The decisio11 ca11not be considered
         as arbitrary or unreasonable.

               Code of Civil Procedure, 1908 :

                 Order VIII Rule 5--Pleadings-17teory of no11-traversaf--Proving of
                                                                                       E
         statement of facts made in pleadingr-ln spite of the tender of respondent
-;,       offering lowest quotations, contract denied to him as he had bee11 black-listed
 <
         for five years-High Court setting aside the order passed by the Government
         black-listing the contractor an the ground that the order was not served on the
         co11tractar and the fact of no11-service of the order was not denied by the F
         Department and as such there was 11on-traverse of the statement made by the
         respo11dent that the order was 11ot received by him-Held, the Department had
 I       clearly pleaded that the order black-listing the co11tractor was cammu11icated
     '
         ta him-This cal!llot be constrned as nan-traverse-lll view of the proviso to
         Order VIII Rule 5(1) CFC, the High Court should have asked that the receipt G
         or non-receipt of the order be proved otherwise thQ/I by the alleged admis-
         sio1t-lt should not have set aside the order of black-listing after a lapse of
         four years only an the grau11d of alleged nan-traverse.

               Doctrine· of 11011-traversaf-Explained.                                 H
                                               377
    378                    SUPREME COURT REPORTS (19961SUPP.2 S.C.R.

A        CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7829 of
    1996 Etc.

         From the Judgment and Order dated 22.12.95 of the Patna High
    Court in L.P.A. No. 912 of 1995.

B         Soli J. Sorabjce, K.D. Prasad, AN. Bardayar, T.N. Singh, Sushi! Kr.
    Jain, AP. Dhamija, Atul Chitale, Ms. S. A Chitalc for the appearing
    parties.

          The following Order of the Court was delivered :

C         Leave granted.

           The Patna Regional Development Authority (hereinatier referred to
    as the 'appellants') invited tenders for the construction of a high rise
    building 'Maurya Towers' in the town of Patna, of the three bids which
    were submitted, the bid of the first respondent, namely, Rashtriya
D   Pariyojana Nirman Nigam was found to be the lowest. The second lowest
    bid was of respondent No. 4. M/s. Walia Builders. Although the tender
    submitted by the first respondent was the lowest, the Committee took into
    account the fact that the first respondent had been black-listed for a period
    of five years by the Water Resources Department, Government of Bihar
E   under a black-listing order dated 26.9.1991, and decided not to award the
    contract to the first respondent. Instead, it awarded the contract to the
    fourth respondent. The fourth respondent, after negotiation, agreed to do
    the work al the rates offered by the first respondent.

          This decision of the appellants was challenged by the first respondent
F  by filing a writ petition being C.W.J.C. No. 3964 of 1995 which was filed
   on 13.6.1995 in the Patna High Court. The first respondent also filed
   another writ petition bearing C.W.J.C. No. 4064 of 1995 challenging the
 • black-listing order of 26.9.1991. Writ Petition C.W .J.C. No. 4064 of 1995
   was rejected by a learned Single Judge of the Patna High Court by his
G order dated 18.9.1995 on the ground of delay, since the order of black-
   listing was challenged more than four years after it was made. The first
   respondent filed an appeal to a Division Bench of the Patna High Court
   being L.P.A No. 1473 of 1995.

          Writ Petition C. W..T .C. No. 3964 of 1995 filed by the first respondent
H   against the decision not· to award the contract to it, was allowed by a
       PATNA REGNL. DEV.AUTIJORITY 1·. RASHTRIYA PARlYOJANANIRMANNIGAr-.1 379


    learned Single Judge of the Patna High Court. He held, inter alia, that A
    before the appellants decided not to award the contract to the first respon-
    dent on the ground of its being black-listed, no sho\v-cause notice was
    issued by the appellants to the first respondent. Hence their decision was
    against the principles of natural justice and was bad in law. Two Letters
    Patent Appeals were filed from this judgment and order, being L.P.A. No.
                                                                                 B
    912 of 1995 filed by the appellants and L.P.A. No. 1078 of 1995 filed by
    the fourth respondent, M/s. Walia Builders.

          These two Letters Patent Appeals along with L.P.A. No. 1473of1995
    were heard together by the Division Bench of the Patna High Court. It has
    held that the order of black-listing must be set aside because the order was   C
    not communicated to the first respondent. It has further held that since the
    order of black-listing has been set aside, the question of award of tender
    must be re-examined by the first respondent.

             In our view the impugned decision of the Division Bench of the Patna D
      High Court cannot be sustained. The decision of 26.6.1991 taken by the
      Water Resources Department to black-list the first respondent for five
      years \Vas communicated by a letter of the san1e date to the rirst respon-
      dent. The High Court has, however, held that the letter of 26.9.1991
    . addressed by the Water Resources Department, Government of Bihar to
      the first respondent was not served on the first respondent. This conclusion E
      is arrived at by the High Court only on the ground that the allegation of
      non-service of the Jetter, made by the first respondent in their pleading is
      not denied by the appellants in their pleading. But as the High Court's
      judgment itself records, the appellants had, in fact, slated in their pleading
      that the letter of 26.9.1991 was communicated to the first respondent. The F
      High Court, however has proceeded on the basis that there was non-
      traverse of the statement made by the first respondent that the letter of
      26.9.1991 was not received by the first respondent. The appellants had
      clearly pleaded that the order of 26.9 ..1991 was communicated to the first
      respondent. ·This cannot be construed as non·traversc. In any case, the
      proviso to Order VIJI Rule 5(1) of the Civil Procedure Code states that G
      the court may, in its discretion, require any fact so admitted to be proved
      otherwise than by such admission. Looking to the nature of the pleadings
'     the High Court should have asked that the receipt or non-receipt of the
      order of 26.9.1991 be proved otherwise than by the alleged admission. It
      should not have c.et aside the order of black-listing after a lapse of four H
    380                     SUPREME COURT REPORTS 1!996] SUPP. 2 S.C.R.

A   year~ only on the ground of alleged non-traverse.


           The decision of the Tender Committee taken on 30.5.1995 nut to
    award the contract to the first respcndent has been set aside by the
    Division Bench of the High Court only on the ground that the order of
    black-listing is not a valid order. Hence the decision of the Tender Com-
B   mittee requires to he rc-cons1<lcrc<l. The very basis for this finding is
    defective. In considering \Vhcther the decision of the Tender Con1n1ittee to
    ~nvard the tender to the fourth respondent is arbitrary or unreasonable, one
    \vill have to exan1inc the existing circumstances at the ti1nc v,rhl'.n the
    decision was taken. The Tender Committee rightly took into account the
c   fact that the Water Resources Department of the State of Bihar had
    black-listed the firsl respondent for a period llf rive years. This \Vas a
    relevant consideration in deciding \Vhcthcr a tender should be a\var<lcd lo
    the first respondent. There \Vas no challenge to the black-listing order at
    the relevant time. The perf1Jrrnancc record of the first respondent while
    executing prl..'vious contracts \Vas relevant in deciding \VhcthL:r to aV.'<:tr<l the
D   contract to the first respondent or not. The impugned Jccision thus took
    into account relevant factors. It cannot he cunsi<lcn.:d as arbitrary or
    unreasonable.

          The first respondent contended that the order of black-listing was
E not in force because even after 1991 it h"d been awarded two contracts.
    The first contract referred to in this connection by the lirst respondent is
    a contract for the construction of the Lok Nayak Bhawan given to it by the
    Patna Zilla Parishad. This contract was awarded to the first respondent
    before 27.2.1991 and prior to the order of black-listing. The second con-
F tract relied upon is by the Chief Engineer, Rural Engineer Organisation of
    Chotta Nagpur and Santhal Pargana Wing. This contract relates to the
    Bihar Plato Development Project and was awarded to the first respondent
    in 1994. On enquiry from the appellants, the Chief Engineer of the Rural
    Engineering Organisation informed the appellants that when the contract
    was awarded to the first respondent, the fact of its having boen black-listed
G in the State of Bihar was not brought to his notice. It was because of the
  . suppression of this information that the work was allotted of the lirst
    respondent. This contention of the lirst respondent, therefore, has no force.

           The first respondent also contends that the disqualification imposed
H by the State Government will not automatically disqualify the first rcspon-
   PATNAREGNL DEV.AUTHORITY'· RASHlRIYAPARIYOJANANIRMANNIGAM 381


dent qua the appellants, an autonomous body. The appellants, however,           A
can legitimately take into account the fact that the fi"t respondent has
been black-listed by the Water Resources Department, State of Bihar, in
deciding whether to give work to the first respondent or not.

       The1e was also no question of issuing of any show-cause notice to
the first respondent before the Tender Committee of the Appellants took         B
the decision on 30.5.1995. The appellants were merely taking note of an
existing order. There was no question of their sitting in judgment over the
black-listing order. Nor was this a case of the appellants themselves issuing
an order black-listing the first respondent.

       The appeals are, therefore, allowed. The impugned judgment and           c
order of the Patna High Court is set aside and Writ Petitions bearing
C.W ..T.C. ·Nos .. 3964 and 4064 of 1995 filed in the Patna High Court are
dismissed with costs.

R.P.                                                       Appeals allowed.