M/S Jagdamba Sales Corporation vs. State (Gnct Of Delhi) And Ors.

Held

The Court held that the impugned order of blacklisting for three years was sustainable. The authority had considered the petitioner's contentions, including the impact of demonetization. However, the authority noted that the petitioner's failure to lift the material persisted for months after demonetization, indicating irresponsible conduct and violation of contract terms. The Court found no infirmity in the authority's reasoning that the failure was wilful and demonstrated irresponsibility. The petitioner's argument that the authority failed to consider factors from *Kulja Industries Ltd. v. Chief General Manager, BSNL* was rejected, as the order indicated consideration of the petitioner's conduct. The Court found no grounds for judicial review under the Wednesbury test, stating the order was passed after following principles of natural justice and due application of mind. The Court clarified that it had not examined the controversies regarding forfeiture of performance security and withholding of funds from other contracts, leaving it open for the petitioner to pursue remedies in contractual disputes.

Facts

The petitioner, M/s Jagdamba Sales Corporation, challenged an order dated 04.12.2018 blacklisting it from business activities for three years from 22.12.2017. The petitioner was awarded a rate contract on 05.08.2016 for lifting Mustard De-oiled cake, valid until 30.06.2017. The petitioner commenced lifting in October 2016 but faced difficulties due to demonetization on 08.11.2016, resulting in a failure to lift the contracted quantity. An earlier blacklisting order dated 19.01.2018 was set aside by this Court, remanding the matter for a fresh order. A subsequent order dated 25.09.2018 blacklisting for five years was also challenged and the Court directed a fresh order considering the principles in *Kulja Industries Ltd. v. Chief General Manager, BSNL*. The impugned order followed.

Key Issues

1. Whether the blacklisting order dated 04.12.2018, imposing a three-year ban on the petitioner, is sustainable in light of the petitioner's contentions regarding demonetization, an unblemished record in other contracts, adverse impact on other contracts, and withheld payments from the respondents. This issue turns on the principles of natural justice and proportionality in imposing punitive measures, as discussed in *Kulja Industries Ltd. v. Chief General Manager, BSNL*. Petitioner's arguments: - The default was beyond its control due to demonetization. - It had an unblemished record in other contracts. - Blacklisting would adversely affect other contracts. - Withheld payments by respondents caused a cash crunch, disabling it from lifting the material. Revenue/State's arguments: - The petitioner consistently failed to lift material for several months after demonetization, indicating irresponsible conduct. - The failure resulted in storage issues and loss of value of the product. - Imposition of GST regime also caused commercial difficulties, which do not excuse the default. - Repeated notices were issued, but the petitioner failed to comply.