1 2025:CGHC:10037 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPC No. 974 of 2025 1 - M/s Medi Globe Medical Systems Private Limited A Company Registered Under The Companies Act, 2013, Having Its Registered Office At Bl Tower, Behind Arogya Hospital, Shankar Nagar, Raipur, Chhattisgarh 492001, Through Its Director, Mr. Lokesh Kumar Sharma Petitioner(s) versus 1 - State Of Chhattisgarh Through Principal Secretary, Department Of Health And Family Welfare, Government Of Chhattisgarh, Swastha Bhawan, North Block, Sector 19, Atal Nagar, Nava Raipur, Chhattisgarh (C.G.) 492101 2 - Chhattisgarh Medical Services Corporation Limited (Cgmsc) 4th Floor, C.G. Housing Board Commercial Complex, South East Corner, Sector 27, Atal Nagar, Nava Raipur, Chhattisgarh (C.G.)- 492015 3 - Dau Kalyan Singh (Dks) Super Speciality Hospital Dks Bhawan, Near Amrit Sandesh Complex, Ghadi Chowk, Raipur, Chhattisgarh (C.G.)- 492002 Respondent(s) For Petitioner(s) : Mr. Manoj Paranjpe and Mr. Shikhar Shrivastava, Advs. For State : Mr. R.K. Gupta, Addl. Advocate General For Resp No. 2 : Mr. Trivikram Nayak, Advocate (HON’BLE SHRI JUSTICE BIBHU DATTA GURU) Order on Board RAHUL JHA Digitally signed by RAHUL JHA Date: 2025.03.03 10:26:07 +0530 2 28/02/2025 1. By the present writ petition, the petitioner is seeking setting-aside the impugned blacklisting order dated 06/02/2025 (Annexure-P/1) passed by the respondent No.2, by which the petitioner/Firm has been blacklisted for a period of three years. 2. (I) The facts of the case, as projected in the writ petition, are that Respondent No. 2 issued e-Tender No. 49(R)E(P)/CGMSC/EQP/20171, ("Tender 49(R)") for the Rate Contract and Supply of Oxygen Gas Plant System for DKS Super Specialty Centre, Raipur. The Petitioner participated in the said tender and emerged as a successful bidder. Thereafter, the Petitioner entered into an Agreement dated 19.02.2018 and subsequently, Purchase Order No. EQP/1014/2017/18 was issued in favour of the Petitioner on 24.02.2018 for supply of the Turnkey Project for oxygen gas plant system of amount Rs 2,90,86,400/- The Petitioner duly met its obligations under the agreement and timely completed the supply of the Oxygen Gas Plant System to Respondent No.3. According to the petitioner, the Respondent No. 3 did not get the AMC/CMC executed by the Petitioner after the expiry of the warranty period and the maintenance work of the oxygen plant was given by the respondents to a local vendor to save costs. Only when the purity levels of the oxygen plant came down to 20%, the proposal of the Petitioner was accepted by Respondent No. 03 after one month, vide its letter dated 02.09.2022. Subsequently, an Agreement vide Stamp No. AA 361603 dated 12.09.2022 was entered between the Petitioner and Respondent No. 3 for 1 for brevity ‘Tender 49(R)’ 3 the CMC of the oxygen plant. After the CMC was executed, the Petitioner was diligently provided the repair and maintenance service of the oxygen plant. However, the functioning of the oxygen plant was getting disrupted due to the external issues like earthing and leakage at the plant site. (II) The Petitioner, through a letter dated 06.12.2022, apprised Respondent No. 3 that the oxygen plant had been operated continuously beyond its designated capacity during the COVID-19 period, leading to exhaustion of the chemical's lifespan within the plant. The Petitioner further informed about the urgent requirement to replace the 'Zeolite Molecule,' which has a lifespan of 3-4 years, as previously informed. The Petitioner by letter dated 02.01.2023, communicated Respondent No. 3 about the urgent need to replace the 'Zeolite Molecule, as being displayed in the machine and further informed about its estimated cost. Thereafter, vide letter dated 03.01.2023 to Respondent No. 2, the Petitioner informed about its previous correspondence to Respondent No. 3 about the need of replacing Zeolite, which did not form a part of CMC and again vide letter dated 05.01.2023 addressed to Respondent No. 2 appraised about the issues and need of replacing Zeolite in detail. After multiple letters from the Petitioner, the Respondent authorities did not take any necessary steps for a significant time period of around 6 months. Thereafter, the Respondent No. 2 issued E-Tender bearing reference 193(R2)/EQP/CGMSC/2023-242 for the Rate Contract and Supply, Replacement, Installation, Commissioning and Testing of 2 for brevity ‘Tender 193(R2)’ 4 Zeolite in PSA based Oxygen Plant. The Petitioner participated in the said tender and emerged as a successful bidder. (III) The Purchase Order No. EQP/69/2023-24 was issued in favour of the Petitioner on 14.07.2023 for supply, replacement and installation of Zeolite in PSA Based Oxygen plant of amount Rs 34,51,500/-. The assigned supply and installation of the Zeolite was successfully completed by the Petitioner within the time period on 02.09.2023, whereafter Consignee Receipt Certificate was signed by Respondent No. 2 on the same date and invoices were raised by the Petitioner. Following the timely supply of Zeolite, the Petitioner, vide letter dated 30.09.2023, informed Respondent No. 3 about the broken Touch Panel of the Oxygen Plant, as observed by the Service Engineer, and sought its replacement. Despite bona-fide efforts to repair the panel, the issue remained unresolved. Consequently, the Petitioner, vide letter dated 26.10.2023, formally requested the issuance of a work order for its replacement. Letter dated 21.11.2023 was issued by the Petitioner to Respondent No. 3 seeking permission to change the broken PCB of the oxygen plant. (IV) The Petitioner vide its letter dated 01.01.2024 to Respondent No. 2, requested for clearing the outstanding dues amounting to Rs 24,16,050/- under the PO for supply, replacement and installation of Zeolite, which the respondents have not paid till date. Thereafter the damaged parts were replaced in the oxygen plant system and service was provided by the Petitioner which is evident from the service report dated 26.01.2024 which clearly records that the oxygen plant was running in a good condition. Subsequently a letter was issued by the Petitioner to 5 Respondent No. 3 dated 17.02.204 highlighting the bona fide reasons for the oxygen plant working at 1200 LPM and requested for the payment of outstanding amounts for the completed work. The Petitioner received a letter dated 06.04.2024 from Respondent No. 3 stating that the oxygen plant is not functioning in its full capacity. The Petitioner submitted the reply vide letter dated 09.04.2024 stating that the oxygen plant was handed over providing 93% purity. Furthermore, it also stated that on account of non-payment of outstanding dues by the respondent, the manufacture company is facing difficulties for providing the services. Vide letter dated 06.05.2024, the Petitioner informed Respondent No. 3 about the negligence in operation of the oxygen plant which was being used through bypassing the Air Dryer which is severely affecting the air purity of the plant. This was also affecting the newly installed Zeolite Molecule, as without the air dryer the moisture of the plant was being absorbed by Zeolite which started affecting its negatively. However, the respondent authorities not paying heed to the Petitioner's letter issued another letter dated 14.05.2024 seeking functioning of the oxygen plant at 1500 LPM with 95% purity. The Petitioner diligently replied to it through its letter dated 16.05.2024 stating that the oxygen plant was fully used from 25.01.2025 to 20.04.2024 with 90-92% purity, but theno payments were released by the respondents. (V) Thereafter an Inspection Panchnama was held on 10.07.2024 and report was prepared where it was found that some parts of the plant like filter was damaged which required replacement. The Petitioner was unwarrantedly issued with a Show Cause Notice by Respondent No. 2 6 on 30.07.2024 regarding the non-functioning of oxygen plant in its capacity and for breaching the conditions of the tender by the petitioner. The Petitioner submitted its reply vide letter dated 31.07.2024 explaining in detail there was no negligence or breach of tender conditions on part of the petitioner, in fact despite not receiving payments, service was timely provided by the Petitioner company within the warranty period. Thereafter, Respondent No. 2, vide order dated 31.07.2024, constituted a five-member committee to inspect and evaluate the operational status of the oxygen plant. The inspection was duly conducted, and an Inspection Panchnama was recorded on 01.08.2024 in the presence of all committee members. The Panchnama affirmed that the plant was functioning efficiently at 1100 LPM with an oxygen purity level of 94.6%. It was further noted that due to the plant's proper functioning, the hospital administration's requirement of oxygen cylinders had significantly reduced. The same was duly informed to Respondent No. 2 vide letter dated 02.08.2024. The Respondent No. 2 issued another Show Cause Notice to the Petitioner on 02.01.2025 regarding the non-functioning of the oxygen plant in its full capacity. The Petitioner replied to the notice vide its letter dated 04.01.2025 elaborately stating that the plant has been handed over in its best functioning output in working condition and requested for settling of outstanding dues along with getting required CMC/AMC of the plant for future. The Respondent No. 2 continuing its arbitrary approach issued a show cause notice dated 11.01.2025 for blacklisting the Petitioner company, which was completely baseless and devoid of any merit. The Petitioner vide letter dated 16.01.2025, 7 elaborately and in a detailed manner explained reasons and justifications countering each of the averments made by the Respondent No. 2. Without considering the contentions of the Petitioner, the Respondent No. 2 issued another Show Cause Notice dated 23.01.2025 stating that the response of the petitioner was not satisfactory and sought justification and explanation as to why the Petitioner should not be blacklisted. The Petitioner, gave a point-wise justification to the contents of the show cause notice in a comprehensive manner through its letter dated 28.01.2025. As per the CA Certificate dated 07.02.2025, it is clear that major portion of annual revenue of the Petitioner is derived from tender work of statutory authorities, & thus blacklisting has endangered survival of the Petitioner and livelihoods of its 20 employees and their families. Despsite the fact that the petitioner has rendered its service in terms of tender conditions, the blacklisting order has been passed in an illegal and arbitrary manner. Thus, this petition. 3. (A) Learned counsel for the petitioner would submit that the blacklisting order has been passed in violation of Articles 14 and 19 (1) (g) of the Constitution of India and contrary to the principles of natural justice. He would further submit that the blacklisting has caused severe reputational harm and has deprived the petitioner for its fundamental right to carry on trade and business, amounting to civil death, as it renders the petitioner ineligible to participate in tenders across India. He would also submit that the Authorities passed the order impugned by a nonspeaking & unreasoned order, without application of mind, without considering the reply and explanation submitted by the petitioner. 8 (B) Learned counsel would also submit that despite successful completion of all contractual obligations under the First Tender, CMC Agreement, and Second Tender, the Respondent authorities have failed to clear outstanding dues, till date which is affecting the financial stability of the petitioner company. He would next submit that the blacklisting order is excessively punitive and disproportionate, failing to adhere to the doctrine of proportionality, which mandates that any adverse action by the State must be fair, reasonable, and justified. He would lastly submit that though the petitioner submitted its reply in detail by giving all the reasons but the authorities have not at all appreciated the same in its true perspective and hence, the impugned order of blacklisting deserves to be set-aside. 4. Learned counsel appearing for the respondents would submit that the order impugned is a detailed order and there is no illegality at all. 5. I have heard learned counsel for the parties and perused the documents. 6. From the pleadings and the documents, it is apparent that on 30/07/2024, the respondent No. 2 issued a show cause notice to the petitioner alleging certain illegalities and irregularities committed by the petitioner and asked the petitioner to submit its explanation within a period of 3 days. In response to the same, the petitioner submitted its explanation on 31/07/2024 and denied the allegations levelled against the petitioner. The petitioner also stated that the work awarded to him has been done with best of his abilities. Again, the Authorities issued a show cause notices to the petitioner on 02/01/2025 and 11/01/2025 to which, the petitioner 9 submitted its detailed reply and reiterated the fact that it has not committed any illegality and irregularity in discharging its duties/function. 7. Thereafter, the respondent No. 2 passed the impugned blacklisting order. Upon minute consideration of the said order, it is quite vivid that the respondent No.2 mentioned the details about the subject matter and mentioned about the reply submitted by the petitioner, pursuant to the show cause notices. Thereafter, it has been observed that the reply submitted by the petitioner is not satisfactory and except that nothing has been discussed and even no plausible reason has been assigned by the respondent, and straightway passed the impugned order of blacklisting for a period of three years against the petitioner. The respondent No.2 has utterly failed to explain that under what circumstances they have blacklisted the petitioner. 8. In the case of East Coast Railway and Another v Mahadev Appa Rao and Others 3 the Supreme Court in a very categorical terms has held that arbitrariness in the making of an order by an authority can manifest itself in different forms. Every order passed by a public authority must disclose due and proper application of mind by the persons making the order. Application of mind is best demonstrated by disclosure of mind by the authority making the order and disclosure is best done by recording the reasons that led the authority to pass the order in question. Absence of reasons either in the order passed by the authority or in the record contemporaneously maintained is clearly suggestive of the order being 3 (2010) 7 SCC 678 10 arbitrary hence legally unsustainable. In the absence of reasons in support of the order it is difficult to assume that the authority had properly applied its mind before passing of the order. 9. Likewise, in the case of Assistant Commissioner, Commercial Tax Department, Works Contract and Leasing, Kota v Shukla and Brothers4, the Supreme Court has held that recording of reasons is an essential feature of dispensation of justice. 10. Under the aforesaid facts and circumstances of the case, without expressing any opinion on the merits of the matter, the impugned order of blacklisting dated 06/02/2025 (Annexure-P/1) passed by respondent No.2 is quashed. However, liberty is reserved in favour of the respondents’ authorities to take appropriate action against the petitioner, after following the due process of law, if they so advised. 11. In the result, the Writ Petition is allowed to the extent indicated above. Sd/- (BIBHU DATTA GURU) JUDGE Rahul/Gowri 4 (2010) 4 SCC 785