Patna Regional Development Authority
& Ors Vs. M/S.Rashtriya Pariyojana Nirmannigam & Ors  INSC 675 (7 May 1996)
Jagdish Saran (J) Verma, Jagdish Saran (J) Manohar Sujata V. (J)
1996 AIR 2074 1996 SCC (4) 529 JT 1996 (6) 113 1996 SCALE (4)488
APPEAL NO 7830 OF 1996 (Arising out Or S.L.P. (C) No.4434 of 1996) M/s.Walia
Builders V. Rashtriya Pariyojana Nirman Nigam & Ors.
O R D
Regional Development Authority (hereinafter referred to as the 'appellants')
invited tenders tor 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 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
Tender 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 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 at the rates offered by the first respondent.
decision of the appellants was challenged by the first respondent 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 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.
C.W.J.C. No.3964 of 1995 filed by the first respondent against the decision not
to award the contract to it, was allowed by a learned Single Judge of the Patna
High Court. He held, inter alia, that before the appellants decided not to
award the contract to the first respondent on the ground of its being
black-listed, no show- 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.912 of 1995 filed by the appellants and
L.P.A.No.1078 of 1995 filed by the fourth respondent, M/s.Walia Builders.
two Letters Patent Appeals along with L.P.A.No.1473 of l9g5 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 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
view the impugned decision of the Division Bench of the Patna 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 was communicated by a letter
of the same date to the first respondent. The High Court has, however, held
that the letter of 26.9.1991 addresses by the Water Resources Department,
Government of Bihar to the first respondent was not served on the first
respondent. This conclusion is arrived at by the High Court only on the ground
that the allegation of non-service of the letter, 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, stated in
their pleading that the letter of 26.9.1991 was communicated to the first
respondent. The 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
26.9.1996 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.
cannot be construed as non-traverse. In any case, the proviso to Order VIII
Rule 5(1) of the Civil Procedure Code states that the court may, in its
discretion, require any fact so admitted to be proved otherwise than by such ad
issue. Looking to the nature of the pleadings the High Court should have asked
that the receipt or nonreceipt of the order of 26.9.1991 be proved otherwise
than by the alleged admission. It should not have set aside the order of black-
listing after a lapse of four years only on the ground of alleged non-traverse.
decision of the Tender Committee taken on 30.5.1995 not to award the contract
to the first respondent 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 Committee requires to be re-considered. The
very basis for this finding is defective. In considering whether the decision
of the Tender Committee to award the tender to the fourth respondent is
arbitrary or unreasonable, one will have to examine the existing circumstances
at the time when the decision was taken. The Tender Committee rightly took into
account the fact that the Water Resources Department of the State of Bihar had
black-listed the first respondent for a period of five years. This was a
relevant consideration in deciding whether a tender should be awarded to the
was no challenge to the black-listing order at the relevant time. The
performance record of the first respondent while executing previous contracts
was relevant in deciding whether to award the contract to the first respondent
or note. The impugned decision thus took into account relevent factors. It
cannot be considered as arbitrary or unreasonable.
first respondent contended that the order of black -listing was not in force
because even after 1991, it had been awarded two contracts. The first contract
referred to in this connection by the first 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 contract relied upon is by the Chief
Engineer, Rural Engineering Organization 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 Organization informed the appellants
that when the contract was awarded to the first respondent, the fact of its
having been black- listed in the State of Bihar was not brought to his notice.
because of the suppression of this information that the work was allotted to
the first respondent. This contention of the first respondent, therefore, has
first respondent also contends that the disqualification imposed by the State
Government will not automatically disqualify the first respondent qua the
appellants, an autonomous body. The appellants, however, can legitimately take
into account the fact that The first respondent has been blacklisted by the
Water Resources Department, State of Bihar, in deciding whether to give work to
the first respondent or not.
was also no question of issuing of any show-cause notice to the first
respondent before the Tender Committee of the appellants took the decision on
30.5.1995. The appellants were merely taking note of an existing order.
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
appeals are, therefore, allowed. The impugned judgment and order of the Patna
High Court is set aside and Writ Petitions bearing C.W.J.C. Nos.3964 and 4064
of 1995 filed in the Patna High Court are dismissed with costs.