ORDER A.M. <NAME>, J.

1. Special leave granted. Heard counsel on both sides.

2. The only question to which we are addressing ourselves is whether the Administrative Member of <ORG> could alone decide the case in the face of this Court's decision in <CITATION> 1987(1) SCC 125. In that case this Court pointed out in paragraph 5 of the judgment as under:

It is necessary to bear in mind that service matters which are removed from the jurisdiction of <ORG> under Articles 226 & 227 of the Constitution and entrusted to <ORG> set up under the impugned set for adjudication involves questions of interpretation and applicability of Articles 14, 15, 16 and 311 in quite a large number of cases. These questions require for their determination not only judicial approach but also knowledge and expertise in this particular branch of constitutional law. It is necessary that those who adjudicate upon these questions should have same modicum of legal training and judicial experience because we find that some of those questions are so difficult and complex that they baffle the minds of even trained judges in <ORG>s and <ORG>. That is why at the time of the preliminary hearing of these writ petitions we insisted that every bench of <ORG> should consist of the judicial member and one administrative member and there should be no preponderance of administrative members on any bench. Of course, the presence of the administrative member would provide input of practical experience in the functioning of the services and add to the efficiency of <ORG> but the legal input would undeniably be more important and sacrificing the legal input or not giving in sufficient weightage would definitely impair the efficacy and effectiveness of <ORG> as compared to <ORG>.

3. Part XIVA containing Article 323A and 323B was introduced in the Constitution by the 42nd Amendment Act 1976. Article 323A enables <ORG> to make law providing for the adjudication or trial by Administrative <ORG>s of disputes and complaints with respect of recruitment and conditions of service of persons or of any <ORG> or of any local or other authority within the territory of India or under the control of <ORG> or of any <ORG> owned or controlled by the Government. It permits the exclusion of the jurisdiction of all Courts except the jurisdiction of this Court under Article 136 of the Constitution. The <ORG> then enacted the Administrative <ORG> Act , 1985, providing for the adjudication of such disputes and complaints through the <ORG>s established under Section 4 of the Said Act. Section 5(1) sets out the Constitution of the <ORG> and adds that 'the jurisdiction, powers and authority of the <ORG> may be exercised by Benches thereof. Sub- section 2 of that section next provides that 'a Bench shall consist of one Judicial Member and Administrative Member'. No provision to the contrary is shown to us. It is, therefore, statutorily recognised that every Bench of the <ORG> must consist of a Judicial Member and an Administrative Member. It is, therefore, obvious that the Administrative Member alone could not have heard and decided the matter.

4. In view of the above state of the law we have no hesitation in coming to the conclusion that the matter ought not to have been disposed of by the Administrative Member alone. We, therefore, set aside the impugned order and remand the matter to the <ORG> for disposal in accordance with law by a Bench properly constituted as required by Section 5(2) of the statute. The Civil Appeal is accordingly disposed of.

5. In the facts and circumstance of this case there will be no order as to costs.


PETITIONER: <NAME> Vs. RESPONDENT: STATE OF WEST BENGAL AND ORS. DATE OF JUDGMENT26/03/1980 BENCH: <NAME>, O. CHINNAPPA (J) BENCH: <NAME>, O. CHINNAPPA (J) KRISHNAIYER, V.R. PATHAK, R.S. CITATION: 1980 AIR 1170 1980 SCR (3) 179 1980 SCC (3) 304 ACT: Service matter-All India Services Discipline and Appeal Rules 1969-Consultation with <ORG>er, if vitiates the order-Enquiry Officer if combined the roles of prosecutor and judge-Reasonable opportunity, if denied. HEADNOTE: The appellant was a member of <ORG>. In an enquiry under rule 8 of the All India Services (Discipline and Appeal) Rules, 1969 against him the Commissioner for Departmental Enquiries, <ORG>, West Bengal was appointed as the Enquiry Officer. He held that certain charges framed against the appellant were proved, certain others were partly proved and one was considered to be a technical omission rather than a serious lapse. The State <ORG> expressed its view on the Enquiry Officer's Report. Thereafter, after consulting <ORG>, the State Government, which was <ORG>, imposed on the appellant the punishment of reduction in rank from the stage of Rs. 2,750 p.m. to the stage of Rs. 2,500 p.m. with certain other consequences. The appellant's writ petition was dismissed by a single Judge of <ORG> and his appeal to <ORG> was also dismissed. In appeal to this Court it was contended by the appellant that instead of holding the enquiry under the All India Services Disciplinary Rules, 1969 it was held under the All India Services (Discipline and Appeal) Rules, 1955 which were repealed and that this caused prejudice to him; as required by rule 8 (19) of the 1969 rules he was not questioned with reference to the circumstances appearing against him which denied him that opportunity of explaining the circumstances which weighed in the mind of the Enquiry Officer; the Government should not have consulted the <ORG>er who had no statutory status; though the ultimate finding was based on the report of the <ORG> his report was not supplied to him; the Enquiry Officer combined in himself the role of prosecutor and judge and he was denied a reasonable opportunity of defending himself as important witnesses were not called to enable him to cross-examine them. Dismissing the appeal, ^ HELD: 1. There is no substance in the contention that the 1955 rules and not 1969 rules were followed. The charges framed against the appellant as well as in the first show- cause notice, the reference was clearly to the 1969 rules. The appellant himself mentioned in one of his letters that the charges had been framed under 1969 rules. The enquiry report mentioned that the Enquiry Officer was appointed under the 1969 rules. [183 B-C] 2. The appellant was not questioned by the Enquiry Officer under rule 8(19) of the 1969 rules. The failure to comply with this requirement did 180 not vitiate the enquiry unless the delinquent officer was able to establish prejudice. [183 C-D] In the instant case the single judge as well as <ORG> found that the appellant was in no way prejudiced by the failure to observe the requirement of rule 8(19). [183 G] 3. The provision incorporated in rule 8(19) is akin to section 342 of the Criminal Procedure Code of 1898 and section 313 of the Criminal Procedure Code of 1974. It is now well-established that mere non-examination or defective examination under section 342 of the 1898 Code is not a ground for interference unless prejudice is established. [183 <CITATION> ,  2 S.C.R. 1057; <CITATION> ,  2 S.C.R. 104; referred to. 4. The appellant was not in the least prejudiced by the failure of the Enquiry Officer to question him in accordance with rule 8 (19). He cross examined the witnesses himself, submitted his defence in writing in great detail and argued the case himself at all stages. The appellant was fully alive to the allegations against him and dealt with all aspects of the allegations in his written defence. [183 G-H, 184 A] 5. If the disciplinary authority arrived at its own conclusion on the material available to it, its findings and decision cannot be said to be tainted with any illegality merely because the disciplinary authority consulted the <ORG> and obtained its views on the very same material. [184 D-E] 6. The findings which were communicated to the appellant were those of the disciplinary authority and it was wholly unnecessary for the disciplinary authority to furnish the appellant the copy of the report of the <ORG>er when the findings communicated to the appellant were those of the disciplinary authority and not of the vigilance commission. [184 F-G] 7. From the circumstances that the Enquiry Officer considered the report of investigation with a view to find out if there was material for framing charges and prepared draft charges, it cannot possibly be said that when he was later appointed he constituted himself both as prosecutor and judge. There is nothing strange in the same Magistrate who finds prima-facie case at an earlier stage trying the case, after framing charges. There is therefore no basis for the contention that the Enquiry Officer was prejudiced against the appellant and combined in himself the role of the prosecutor and judge. [185 A, C-E] 8. The appellant cross-examined the prosecution witnesses and also examined defence witnesses. Thereafter when the matter was posted for argument and was adjourned at least once at the instance of the appellant, the appellant came forward with an application seeking permission to engage a lawyer. The Enquiry Officer rejected the application noticing that it was made at a very late stage. The rules give a discretion to the Enquiry Officer to permit or not to permit a delinquent officer to be represented by a lawyer. No prejudice has resulted by the denial of a lawyer. [185 E-G] 9. All the necessary documents were called and there is nothing in the record to suggest that the appellant wanted any particular witness to be called and the request was turned down. The grievance of the appellant that if the 181 officers who made the notings on the file in connection with some of the charges had been called, he would have been in a position to cross-examine them and elicit statements to substantiate his defence, has neither reasonable basis nor force. [186 B-C] JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1277/1975.

Appeal by Special Leave from the Judgment and Order dated 19-9-1975 of <ORG> in Appeal No. 299/73.

<NAME> for the Appellant.

<NAME> and <NAME> for the Respondents.

The Judgment of the Court was delivered by.

<NAME>, J.-The appellant, a member of <ORG>, while working as Divisional Commissioner, North Bengal, was served on May 2, 1970, with a memorandum of charges and was informed by another memorandum to which a list of documents and witnesses was attached, that it was proposed to hold an enquiry against him under Rule 8 of the All India Services (Discipline and Appeal) Rules, 1969, and that, if he so desired, the appellant could inspect the documents mentioned in the enclosed list. He was further informed that he should submit a written statement of defence within fourteen days from the date of completion of inspection. The appellant submitted his written statement of defence on June 9, 1970. On August 12, 1970 <NAME>, Commissioner for Department Enquiries, <ORG>, West Bengal, was appointed as Enquiry Officer to enquire into the charges against the appellant. After completing the enquiry, the Enquiry Officer submitted a report giving his findings on the various charges. Charge Nos. 2 and 5 were held to be proved, charge Nos. 3 and 4 partly proved and charge No. 1 also proved but considered to be a technical omission rather than serious lapse. The <ORG> which considered the Enquiry Officer's report, found that charge Nos. 1, 2, 3 and 5 were fully proved and charge No. 4 partly proved. On April 6, 1971, the disciplinary authority namely <ORG> issued a notice to the appellant informing him that, on a consideration of the report of the Enquiry Officer they had come to the conclusion that charges Nos. 1, 2, 3 and 5 were fully proved and that charge No. 4 was partly proved and calling upon the appellant to show cause why he should not be reduced in rank. <ORG> was then consulted and their advice obtained. According to <ORG> charge No. 3 had not been proved while charge No. 1 was proved but was con-

sidered to be a technical irregularity and charge Nos. 2, 4 and 5 were partly proved. Thereafter <ORG> came to the final conclusion that charge No. 3 had not been proved, charge No. 1 had been proved but was only a technical irregularity and charge Nos. 2, 4 and 5 were partly proved. On those findings the punishment which was imposed on the appellant was reduction 'from the stage of Rs. 2750/- per month to the stage of Rs. 2500/- per month in the scale of Rs. 2500/- 125/- 2750/- with effect from the date of issue of the order'. This was, however, not to be a bar to his earning increments from the stage of Rs. 2500/- from the date of reduction to the lower stage. Aggrieved by the order of the <ORG> the appellant filed a Writ Petition in <ORG> of Calcutta. A learned Single Judge of <ORG> went into the matter in great detail, almost as if he was hearing a regular appeal, perhaps because one of the arguments urged before him was that there was no evidence to sustain any of the charges. The learned Single Judge found that charge Nos. 2, 3 and 5 were not proved, charge No. 4 was partly proved, charge No. 1 was proved but was only a technical irregularity. He was, however, of the view that the punishment which was actually imposed on the appellant could be imposed in respect of charge No. 4 to the extent to which it was proved. He, therefore, dismissed the Writ Petition. On appeal under the Letters Patent <ORG> of <ORG> came to the conclusion that charge No. 5 was proved, charge No. 1 was proved but was a technical irregularity and charge No. 2 was partly proved. There was a difference of opinion on the question whether charge No. 4 was proved. Both the learned Judges agreed in dismissing the appeal.

The appellant who argued the appeal in person raised several contentions. He contended that though the enquiry was to have been held under All India Services Disciplinary Rules 1969, it was in fact held under the All India Services (Discipline & Appeal) Rules, 1955, which had been repealed. He was thereby prejudiced and in particular he pointed out that he was not questioned with reference to the circumstances appearing against him as provided by sub rule 19 of rule 8 of the 1969 rules. He was thus denied an opportunity of explaining the circumstances which weighed in the mind of the Enquiry Officer. The appellant also contended that the Vigilance Commissioner had no statutory status and he should not have been consulted by the Government. He made a grievance of the circumstance that the report of the Vigilance Commissioner was not furnished to him though the ultimate findings of the Government were based on the report of the Vigilance Commissioner. He further submitted that the Enquiry Officer was prejudiced against him and that he combined in himself the role of both prosecutor and judge. He further submitted that he was denied a reasonable opportunity of defending himself as important witnesses were not called so as to enable him to cross examine them though the notings made by them in the files were relied upon against him. Some of the additional documents sought by him were not also made available. He was also not permitted to engage a lawyer.

There is no substance in the contention of the appellant that the 1955 rules and not the 1969 rules were followed. As pointed out by <ORG>, in the charges framed against the appellant and in the first show cause notice the reference was clearly to the 1969 rules. The appellant himself mentioned in one of his letters that the charges have been framed under the 1969 rules. The enquiry report mentions that <NAME> was appointed as an Enquiry Officer under the 1969 rules. It is, however, true that the appellant was not questioned by the Enquiry Officer under rule 8 (19) which provided as follows:

"The enquiring authority may, after the member of the services closes his case and shall if the member of the service has not examined himself, generally question him on the circumstances appearing against him in the evidence for the purpose of enabling the member of the service to explain any circumstances appearing in the evidence against him".

It may be noticed straightaway that this provision is akin to section 342 of the Criminal Procedure Code of 1898 and section 313 of the Criminal Procedure Code of 1974. It is now well established that mere non examination or defective examination under section 342 of the 1898 Code is not a ground for interference unless prejudice is established, vide, <CITATION> , <CITATION> . We are similarly of the view that failure to comply with the requirements of rule 8 (19) of the 1969 rules does not vitiate the enquiry unless the delinquent officer is able to establish prejudice. In this case the learned single Judge of <ORG> as well as the learned Judges of <ORG> found that the appellant was in the way prejudiced by the failure to observe the requirement of rule 8 (19). The appellant cross-examined the witnesses himself, submitted his defence in writing in great detail and argued the case himself at all stages. The appellant was fully alive to the allegations against him and dealt with all aspects of the allegation in his written defence. We do not think that he was in the least prejudiced by the failure of the Enquiry Officer to question him in accordance with rule 8 (19).

We do not also think that the disciplinary authority committed any serious or material irregularity in consulting the <ORG> Commissioner, even assuming that it was so done. The conclusion of the disciplinary authority was not based on the advice tendered by the <ORG> Commissioner but was arrived at independently, on the basis of the charges, the relevant material placed before the Enquiry Officer in support of the charges, and the defence of the delinquent officer. In fact the final conclusion of the disciplinary authority on the several charges are so much at variance with the opinion of the <ORG> Commissioner that it is impossible to say that the disciplinary authority's mind was in any manner influenced by the advice tendered by the <ORG> Commissioner. We think that if the disciplinary authority arrived at its own conclusion on the material available to it, its findings and decision cannot be said to be tainted with any illegality merely because the disciplinary authority consulted the <ORG> Commissioner and obtained his views on the vary same material. One of the submissions of the appellant was that a copy of the report of the <ORG> Commissioner should have been made available to him when he was called upon to show cause why the punishment of reduction in rank should not be imposed upon him. We do not see any justification for the insistent request made by the appellant to the disciplinary authority that the report of the <ORG> Commissioner should be made available to him. In the preliminary findings of the disciplinary authority which were communicated to the appellant there was no reference to the views of the <ORG> Commissioner. The findings which were communicated to the appellant were those of the disciplinary authority and it was wholly unnecessary for the disciplinary authority to furnish the appellant with a copy of the report of the <ORG> Commissioner when the findings communicated to the appellant were those of the disciplinary authority and not of the <ORG> Commission. That the preliminary findings of the disciplinary authority happened to coincide with the views of the <ORG> Commission is neither here nor there.

We find no basis for the contention of the appellant that there was a reasonable apprehension in his mind that the Enquiry Officer was prejudiced against him. Nor do we agree with the statement that the Enquiry Officer combined in himself the role of the prosecutor and the judge. It appears that when the preliminary report of investigation was considered by the <ORG> Commissioner with a view to recommend to the disciplinary authority whether a disciplinary proceeding should be instituted or not, the report of investigation was referred by the <ORG> Commissioner to <NAME> for his views and for the preparation of draft charges if institution of disciplinary proceedings was to be recommended. <NAME> expressed his opinion that there was material for framing five charges and he also prepared five draft charges and forwarded them to the <ORG> Commissioner. The <ORG> Commissioner in turn forwarded the papers to the Government who finally decided to institute a disciplinary proceeding against the appellant. Thereafter <NAME> was appointed as Enquiry Officer. From the circumstance that <NAME> considered the report of investigation with a view to find out if there was material for framing charges and prepared draft charges, it cannot possibly be said that <NAME>, when he was later appointed as Enquiry Officer constituted himself both as prosecutor and judge. Anybody who is familiar with the working of criminal courts will at once realise that there is nothing strange in the same Magistrate who finds a prima facie case and frames the charges, trying the case also. It cannot for a moment be argued that the Magistrate having found a prima facie case at an earlier stage and framed charges is incompetent to try the case, after framing charges. This was one of the circumstances on which the appellant relied to substantiate his allegation of apprehension of bias. The other circumstances were that he did not permit the appellant to engage a lawyer and that he allowed the Presenting Officer to introduce extraneous matters. The rules give a discretion to the Enquiry Officer to permit or not to permit a delinquent Officer to be represented by a lawyer. In the present case the appellant cross-examined the prosecution witnesses and also examined defence witnesses. Thereafter when the matter was posted for arguments and was adjourned atleast once at the instance of the appellant, the appellant came forward with an application seeking permission to engage a lawyer. The Enquiry Officer rejected the application noticing that it was made at a very belated stage. We think he was right in doing so. Nor is it possible for us to infer bias from the circumstance that the Enquiry Officer did not allow the appellant to engage a lawyer. We may mention that the appellant who himself presented his case before us argued admirably and with such clarity and precision as would have done credit to the best of advocates. We cannot conceive of any prejudice resulting to him by the denial of a lawyer. The other circumstance regarding extraneous matters being allowed to be brought in is also equally weightless and we need say nothing more about it.

There is also no substance in complaint of the appellant that necessary documents and witnesses were not called. All necessary documents were called and there is nothing in the record to suggest that the appellant wanted any particular witness to be called and the request was turned down. The grievance of the appellant is that if the Officers who made the notings on the file in connection with some of the charges had been called, he would have been in a position to cross examine them and elicit statements to substantiate his defence. We do not think that there is any reasonable basis in the record for such a submission. We find no force in any of the contentions raised by the appellant and having given our earnest consideration to all the contentions raised by him we dismiss the appeal. but, in the circumstances of the case, without costs. The appellant made a complaint before us that his pension and other retirement benefits have not yet been finalised though it is quite a considerable time since he voluntarily retired from service. <NAME> learned counsel for the State of West Bengal stated at the <ORG> that all steps would now be taken to finalise the matter. We hope the Government will take immediate steps to redress forthwith this grievance of the appellant.

N.K.A. Appeal dismissed.


PETITIONER: <ORG> Vs. RESPONDENT: STATE OF WEST BENGAL & ANR. DATE OF JUDGMENT11/11/1974 BENCH: <NAME>, A.N. (CJ) BENCH: <NAME>, A.N. (CJ) MATHEW, KUTTYIL KURIEN UNTWALIA, N.L. CITATION: 1975 AIR 266 1975 SCR (2) 674 1975 SCC (1) 70 CITATOR INFO : RF 1977 SC1496 (20) R 1978 SC 930 (15,16,17,18) R 1979 SC1628 (12,21) RF 1987 SC1086 (28) ACT: Constitution of India, 1950, Art. 14- Black listing of contractors without opportunity to show cause-Validity. HEADNOTE: Certain persons engaged in the business of purchase export of Cinchona pro ducts, and others who were on the approved list of the Director General, <ORG>, were put on the black list by the <ORG>, because, <ORG> had information that they were indulging in some malpractices. On the question whether they were entitled to a notice to be heard, before they were put on the black list, HELD : (1) Under Art. 298 of the Constitution the executive power of the <ORG> and the <ORG> shall extend to the carrying on of any trade and to the acquisition, holding and disposal of property and the making of contracts for any purpose. The <ORG> can carry on executive function by making a law or without making a law. The exercise of such powers and functions in trade by the <ORG> is subject to Part III of the Constitution. Article 14 speaks of equality before the law and equal protection of the laws. Equality of opportunity applies to matters of public contracts. The <ORG> need not enter into any contract with anyone but if it does, it must do so fairly without discrimination and without unfair procedure. No one has any right to enter into a contract with the Governor quotations for the purchase of goods. This privilege arises because it is the <ORG> which is trading With the public, and the democratic form of <ORG> demands equality and absence of arbitrariness and discrimination in such transactions. The activities of the <ORG> have a public element and, therefore, there should be fairness and equality. [677C-E, G; 678D-E] (2) A body maybe under a duty to give fair consideration to the facts and to consider the representation but not to disclose details of information in its possession. Sometimes the duty to act fairly can also be sustained without providing opportunity for an oral hearing. It will depend upon the nature of the interest affected, and the circumstances in which the power is exercised and the nature of sanctions involved therein. [678H-679B] (3) Exclusion of 'a member of the public from dealing with a <ORG> in sales transactions has the effect of preventing him from purchasing and doing a lawful trade in goods by discriminating against him in favour of other people. The <ORG> can impose reasonable conditions regarding rejection and acceptance of bids or qualifications of bidders. Just as an exclusion of the lowest tender will be arbitrary, similarly exclusion of a person. who offers the highest price from participating in a public auction would also have the same aspect of arbitrariness. [678F-G] (4) Black listing has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the <ORG> for purposes of gain. A person who is on the approved list is unable to enter into advantageous relations With the <ORG> because of the order of black listing. A person who has been dealing with the <ORG> in the matter of sale and purchase of materials ha& a legitimate interest or expectation. Black listing tarnishes one's reputation and reputation is a part of person's character and personality. The fact that a disability is created by the order of black listing indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before be is put on the black list. [678EF; 679B-C] 675 JUDGMENT:

ORIGINAL JURISDICTION : Writ Petitions Nos. 34 of 1974 and 959 of 1973.

Petition under Art. 32 of the Constitution of India and Civil Appeal No. 318 of 1974.

From the judgment and order dated the 15th September 1973 of <ORG> in Appeal No. 38 of 1973. <NAME>, <NAME>, (In W.P. No. 34/74), <NAME> and <NAME>, (In W.P. No. 959/73) and <NAME>, for the petitioners (In W.P. No. 34/74 & 959/73). <NAME>, <NAME>, <NAME> and <NAME>, for the respondents (In W.P. No. 34/74 and 959/73).

<NAME>, Solicitor General of India, <NAME> and <NAME>, for the appellant (In C.A. No. 318/74). <NAME> and <NAME>, for the respondents (In C.A. No. 318/74).

The Judgment of the Court was delivered by RAY, C.J.-The two Writ Petitions and the Civil Appeal raise the question as to whether a person who is put on the black list by <ORG> is entitled to a notice to be heard before the name is put on the black list. Sale of Cinchona is held by <ORG> at meetings of <ORG>. Sealed quotations are invited for intending buyers. The State maintains a list of buyers or bidders. The State has the right to reject a bid at an auction.

The petitioners in the Writ Petitions were engaged in the business of purchase and export of Cinchona products between the years 1966 and 1971. They submitted tender for purchase of Cinchona. Their tender was accepted. They entered into contracts with <ORG> during those years for purchase of Cinchona for large sums of money. The petitioners submitted tender once on 15th February, 1973 and again on 4 December, 1973. The petitioners allege that since the month of December, 1970 all offers of the petitioners were rejected though in most cases their offer was the highest. The petitioners contend that there is discrimination and lack of fair play at the sale. The petitioners submit that they are entitled to receive the same treatment and to be given the same chance as anybody else for the purchase of Cinchona. The petitioners are interested in the purchase of Cinchona in course of their trade and business.

The respondent <ORG> alleges that the petitioners were guilty of misdeclaration of goods in their export transactions. <ORG> of the <ORG> learnt from a secret letter from the Collector of <ORG>, Calcutta that the firm of the petitioners was involved in malpractices, and their case was under investigation. <ORG> at a meeting on 21 January, 1971 resolved not to deal with the firm of the petitioners till the firm was cleared of charges of malpractices. It is because of this resolution that the tender of the petitioners was not accepted. The petitioners according to the respondent came to know this resolution at the meeting of <ORG> on 4 December, 1973. The <ORG> could not however produce the original resolution in this Court. It may be mentioned here that the petitioners have challenged the charges and cases under the Foreign Exchange Regulations Act in <ORG> at Calcutta in Writ Petition No. 959 of 1973 which is pending.

The respondent in Civil Appeal No. 318 of 1974 was on the, approved list of <ORG> since the year 1942. The last renewal of registration of the respondent was on 5 June, 1963 for three years. Certain reports were received against the respondent regarding shortage of timber. <ORG> took charge of account books of the respondent in the month of August, 1964. A Departmental enquiry was made against the store-keeper and the Store-holder in <ORG>. Those two employees were suspended in the month of December, 1964. On 4 December, 1965 the department put the name of the respondent on the black list. The employees of the <ORG> who had been suspended in the year 1964 were dismissed on 1 June, 1967. In the month of January, 1968 the respondent applied to the <ORG> for return of the account books which had been taken by <ORG>. In the month of March, 1968 the account books were ordered to be returned. The respondent filed Writ Petition in the High <ORG> at Bombay on 20 January, 1969. On 12 January, 1973 the High <ORG> allowed the writ petition of the respondent setting aside the order whereby the respondent was blacklisted. The State filed an appeal. The High <ORG> of Bombay dismissed the appeal. The present appeal is against that judgment. The employees who had been dismissed by the State also applied to the High <ORG> for setting aside their dismissal. The High <ORG> accepted the prayer of the employees by an order dated 3 August, 1972.

In Writ Petitions counsel for the <ORG> submitted that the petitioner was not entitled to any order of mandamus inasmuch as the sales were contractual. It was said that the petitioner was not entitled as of right to acceptance of tender. It was also said that the attitude of the <ORG> was not discriminatory against the petitioner but that the <ORG> wanted that the pending proceedings against the petitioner for alleged violation of Foreign Exchange Regulation Act should be adjudicated first and thereafter the <ORG> would deal with the petitioner.

The Solicitor General on behalf of the appellant in Civil Appeal No. 318 of 1974 made these submissions. The <ORG> could choose any person for entering into a contract. Further, the <ORG> could insist on dealing with persons in whom the <ORG> had trust for integrity. The sales were not under a statute. Black-listing is an inter- nal and confidential step. Rights under Articles 14, 19 and 21 do not extend to the compelling of any third party including the <ORG> to negotiate or enter into a contract. The duty to act fairly may include in many cases duty to act judicially and those would be cases where there is existing vested rights. The duty to act fairly would not always mean a duty to hear the party affected. Whereas public blacklisting is not confidential, departmental black- listing will be a confidential matter. If natural justice does not come into play in rejecting a bid, natural justice does not operate at the time of entering into contract. Under Article 298 of the Constitution the Executive power of the <ORG> and the <ORG> shall extend to the carrying on of any trade and to the acquisition, holding and disposal of property and the making of contracts for any purpose. The <ORG> can carry on executive function by making a law or without making a law. The exercise of such powers and functions in trade by the <ORG> is subject to Part III of the Constitution. Article 14 speaks of equality before the law and equal, protection of the laws. Equality of opportunity should apply to matters of public contracts. The <ORG> has the right to trade. The <ORG> has there the duty to observe equality. An ordinary individual can choose not to deal with any person. The <ORG> cannot choose to exclude persons by discrimination. The order of black- listing, has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is unable to enter into advantageous relations with the <ORG> because of the order of black- listing. A person who has been dealing with the <ORG> in the matter of sale and purchase of materials has a legitimate interest or expectation. When the <ORG> acts to the prejudice of a person it has to be supported by legality.

But for the order of blacklisting, the petitioner would have been entitled to participate in the purchase of cinchona. Similarly the respondent in the appeal would also have been entitled but for the order of blacklisting to tender competitive rates.

The <ORG> can enter into contract with any person it chooses. No person has a fundamental right to insist that the Government must enter into a contract with him. A citizen has a right to earn livelihood and to pursue any trade. A citizen has a right to claim equal treatment to enter into a contract which may be proper, necessary and essential to his lawful calling.

The blacklisting order does not pertain to any particular contract. The blacklisting order involves civil consequences. It casts a slur. It creates a barrier between the persons blacklisted and the <ORG> in the matter of transactions. The blacklists are "instruments of coercion".

In passing an order of blacklisting the <ORG> department acts under what is described as a standardised Code. This is a Code for internal instruction. The <ORG> departments make regular purchases. They maintain list of approved suppliers after takings into account the financial standard of the firm, their capacity and their past performance. The removal from the list is made for various reasons. The grounds on which blacklisting may be ordered are if the proprietor of the firm is convicted by court of law or security considerations so warrant or if there is strong justification for believing that the proprietor or employee of the firm, has been guilty of malpractices such as bribery, corruption, fraud. or if the firm continuously refuses to return <ORG> dues or if the firm employs a <ORG> servant, dismissed or removed on account of corruption in a position where he could corrupt <ORG> servant. The petitioner was blacklisted on the ground of justification for believing that the firm has been guilty of malpractices such as bribery, corruption, fraud. The petitioners were blacklisted on the ground that there were proceedings pending against the petitioners for alleged violation of provisions under the Foreign Exchange Regulations Act . The <ORG> is a government of laws and not of men. It is true that neither the petitioner nor the respondent has any right to enter into a contract but they are entitled to equal treatment with others who offer tender or quotations for the purchase of the goods. This privilege arises because it is the <ORG> which is trading with the public and the democratic form of <ORG> demands equality and absence of arbitrariness and discrimination in such transactions. <NAME> treats privileges as a form of liberty as opposed to a duty. The activities of the <ORG> have a public element and, therefore, there should be fairness and equality. The <ORG> need not enter into any contract with any one but 'if it does so, it must do as fairly without discrimination and without unfair procedure. Reputation is a part of person's character and personality. Blacklisting tarnishes one's reputation. Exclusion of. a member of the public from dealing with a <ORG> in sales transactions has the effect of preventing him from purchasing and doing a lawful trade in the goods by discriminating against him in favour of other people. The <ORG> can impose reasonable conditions regarding rejection and acceptance of bids or qualifications of bidders. Just as exclusion of the lowest tender will be arbitrary similarly exclusion of a person who offers the highest price from participating at a public auction would also have, the same aspect of arbitrariness.

Where the <ORG> is dealing with individuals in transactions of sales and purchase of goods, the two important factors are that an individual is entitled to trade with the Government and an individual is entitled to a fair and equal treatment with others. A duty to act fairly can be interpreted as meaning a duty to observe certain aspects of rules of natural justice. A body may 'be under a duty to give fair consideration to the facts and to consider the representations but not to disclose to those persons details of information in its possession. Sometimes duty to act fairly can also be sustained without providing opportunity for an oral hearing. It win depend upon the nature of the interest to be affected, the circumstances in which a power is exercised the nature of sanctions involved therein. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent.his case before he is put on the blacklist. With regard to the case of the petitioners, it is made clear that the authorities will give an opportunity to the petitioners to represent their case, and the authorities will hear the petitioners as to whether their name should be put on the blacklist or not. This is made clear that the decision on this question will not have any effect on the proceedings pending in <ORG> where the peti- tioner has challenged the adjudication proceedings under the Foreign Exchange Regulations Act . Any decision of the authorities on the blacklisting will have no effect on the correctness of any of the facts involved in those proceedings.

For these reasons, the petitioners succeed. The appeal is dismissed. The parties will pay and bear their own costs.

<ORG> dismissed.


PETITIONER: T. SHANTHARAM Vs. RESPONDENT: STATE OF KARNATAKA & ORS. DATE OF JUDGMENT16/01/1995 BENCH: <NAME>, K. BENCH: <NAME>, K. SEN, S.C. (J) CITATION: 1995 AIR 1123 1995 SCC (2) 538 JT 1995 (2) 642 1995 SCALE (1)320 ACT: HEADNOTE: JUDGMENT:

ORDER

1. Leave granted.

2. The facts are telling that the appellant was appointed in <ORG> as Second Division Clerk in Manglore on October 8, 1963. He was sent on deputation to <ORG> which was then part of <ORG> as Assistant Civil Supplies Inspector on December 26, 1967 and was promoted as Second Grade Civil Supplies Inspector on September 11, 1968 which is stated to be equivalent to Sheristedar. The 5th respondent Mr. <NAME> was appointed as a Second Division Clerk on January 22, 1965 in <ORG> of <ORG>- Thereafter he was regularised as Second Division Clerk on September 30, 1971 and was promoted as a Sheristedar on June 17, 1982. From these facts, it is clear that at all levels of appointments and promotions, the appellant was always senior to 5th respondent. But one fact that remains on record is that the appellant continued to be on deputation in the <ORG> of Revenue Department. When he was sought to be repatriated, the appellant filed APplication No.6432/86 before the Administrative <ORG>, Bangalore. The <ORG> by its order dated January 28, 1988 directed absorption of the appellant in <ORG> as indicated in the order which reads thus:

"Since the applicant is working in <ORG> since 1966(about 32 years and he has not been given any proforma promotion in <ORG> and there are no valid ground to reject his request for absorption, we are of the considered opinion that the Applicant is entitled for a direction to the respondents to absorb him in <ORG> in the post now held by him. It is ordered accordingly after quashing Annexure A."

Subsequent thereto it would appear that the appellant was absorbed and he was placed above the 5th respondent and also promoted on January 1, 1980 as a Assistant Director. It would also appear from the record that the 5th respondent also promoted as Asia Director. The only question is of inter se seniority between the appellant and the 5th- respondent. <NAME>, learned senior counsel for the respondent contended that the Rules prescribed that on the deputation the post should be the post equivalent to which he was holding in the parent department and the appellant cannot be transferred and deputed in <ORG> on higher post than the post hold in the parent department. Though there is force in the contention as per the Rules but meat of the matter is that the appellant uninterruptedly worked in the Food department till date of the order by the <ORG>. Under these circumstances, though initially he might have mistakenly been deputed to hold higher post in <ORG>, since the appellant had obviously discharged his duties and higher re- sponsibilities to the satisfaction of all concerned, at this distance of time, it is highly unjust to send him back to hold the post in the present department which he was entitled to hold and the <ORG> is not right to interfere with action of the department in its absorption of the appellant as per its own earlier order. The direction given by the <ORG> at the instance of 5th respondent in the impugned order dated July 10, 1994 is accordingly set aside and the order issued in the earlier proceedings stands confirmed. In consequence the order of absorption and the promotion given to the appellant stand upheld. The appeal is allowed. No costs.