By filing the instant writ petition in terms of Article 199 of the Constitution of the Islamic Republic of Pakistan, 1973 (the Constitution), the petitioner has assailed the legality and propriety of order dated 10.08.2018, passed by the Inspector General of Prisons Punjab, Lahore, whereby petitioner 's firm was blacklisted.
2. Precise and concise facts of the case as gathered from the record and necessary for decision of the instant writ petition are that the petitioner 's registered firm is an approved government contractor with the name and style "Din Muhammad Thekedar & Sons". The Punjab Prisons Department invited sealed bids for the procurement of nutritional articles of different kinds for fiscal year 2018 2019 and in response to such invitation, petitioner 's firm participated in tender proceedings, which were carried out at Regional Office, Multan on 09.06.2018 and on the recommendations of the Purchase Committee, the tender for the supply of chicken meat at factor rate 1.59 k.g was approved in favour of the petitioner firm. Worth mentioning that prior to acceptance of contract, on 29.06.2018, petitioner moved an application to respondent No.2 through the Superintendent New Central Jail, Bahawalpur/respondent No.4 for cancellation of tender/contract by expressing his inability to provide chicken meat at the factor rate, which was inadvertently, mentioned 1.59 instead of 1.69 per k.g. Later on, respondent No.4 directed the petitioner to execute an agreement. However, in pursuance of his aforesaid application, his contract was cancelled vide order dated 16.07.2018 with forfeiture of earnest money. Moreover, vide same order dated 16.07.2018, show cause notice was issued by respondent to the petitioner, who submitted reply thereto.
Subsequently, the petitioner was also summoned for personal hearing by the said respondent and vide impugned order dated 10.08.2018, his firm was blacklisted, the operative part of impugned order is as under:- "6. In view of the above facts, the undersigned is constrained to take appropriate action in the matter . As such, your firm is hereby blacklisted besides forfeitur e of earnest money of the tender rate of Chicken Meat as your firm failed to execute the Agreement Deed in the light of clause-5 of bidding document."
As such, by filing the instant petition, the petitioner has made the following supplication:- " that instant constitutional petition may kindly be allowed and in result thereof the impugned order dated 10-08- 2018 passed by respondent No.2 may kindly be set-aside with a direction to respondents to disburse the earnest money Rs.2,50,000/- to petitioner in the interest of justice."
3. Contention heard. Record perused.
4. There is no cavil to the legal proposition that the freedom of trade, busine ss or profession is one of the fundamental rights of every citizen of Pakistan and Article 18 of the Constitution in unequivocal manner admits such right in the language as reproduced hereunder:- "18. Freedom of trade, business or profession.
Subject to such qualifications, if any, as may be prescribed by law, every citizen shall have the right to enter upon any lawful profession or occupation, and to conduct any lawful trade or business: Provided that nothing in this Article shall prevent-
(a) the regulation of any trade or profession by a licensing system; or (b). the regulation of trade, commerce or industry in the interest of free competition therein; or
(c) the carrying on, by the Federal Government or a Provincial Government, or by a corporation controlled by any such Government, of any trade, business, industry or service, to the exclusion, complete or partial, of other persons.
The above quoted Article and Article 25 of the Constitution came up for interpretation before the Hon'ble Supreme Court of Pakistan in various cases, including Pakcom Limited vs. Federation of Pakistan (PLD 2011 Supreme Court 44 ), wherein following principle has been laid down:- "52. The interpretation of Article 18 has been made variously and the judicial consensus seems to be that the "right of freedom of trade, business or profession guaranteed by Article 18 of the Constitution is not absolute, as it can be subjected to reasonable restrictions and regulations as may be prescribed by law. Such right is therefore not unfettered. The regulation of any trade or profession by a system of licensing empowers the Legislature as well as the authorities concerned to impose restrictions on the exercise of the right. They must, however be reasonable and bear true relation to trade? or profession and for purposes of promoting general welfare. Even in those countries where the right to enter upon a trade or profession is not expressly subject to conditions similar to this Article, it was eventually found that the State has, in the exercise of its police power, the authority to subject the right to a system of licensing, i.e., to permit a citizen to carry on the trade or profession only if he satisfies the terms and conditions imposed by the prescribed authority for the purposes of protecting and promoting general welfare..."
5. Thus, there is no denial that such right of trade, business or profession is not unfettered and it will fall within the domain of Federal Government or Provincial Government to make rules/regulations of any trade or profession by a licencing system to ensure free competition and the respective Federal or Provincial Government, or a corporation controlled by such Government may frame rules for any trade, business, industry or service.
6. In case Messrs Kulja Industries Limited vs. Chief General Manager , W.T. Project, BSNL and others (2014 SCMR 1748 ), the Supreme Court of India while interpreting Section 23 of the Contract Act (IX of 1872) laid down following principle:- "17 . Power to blacklist a contractor whether the contract be for supply of material or equipment or for the execution of any other work whatsoever was inherent in the party allotting the contract. There was no need for any such power being specifically conferred by statute or reserved by contractor . That was because blacklisting? simply signified a business decision by which the party affected by the breach decided not to enter into any contractual relationship with the party committing the breach. Of course, between private parties, the right to make any such decision was absolute and untrammeled by any constraints whatsoever . The freedom to contract or not to contract was unqualified in the case of private parties. But any such decision was subject to judicial review when the same was taken by the State or any of its instrumentalities. Any such decision would be open to scrutiny not only on the touchstone of the principles of natural justice but also on the doctrine of proportio nality . A fair right of audience to the party being blacklisted is an essential pre condition for proper exercise of the power and valid order of blacklisting made pursuant thereto. The order itself being reasonable, fair and proportionate to the gravity of the offence was similarly examinable by the Court (in its power of judicial review under the Constitution)."
7. Under Section 17A of the Punjab Procurement Regulatory Authority Act, 2009 (the Act, 2009), a procuring agency may, for a specified period and in the prescribed manner , debar a bidder or contractor from participating in any public procurement process of the procuring agency , if the bidder or contractor indulges in corrupt practice or any other prescribed practice.
8. To achieve the objectives and purposes of the Act, 2009, the Punjab Procurement Rules, 2014 (the Rules 2014) have been framed and Rules 20 and 21 deal with "Declaration of ineligibility" and "Blacklisting" of an applicant for prequalification and a bidder or contractor from participating in any public procurement process of the procuring agency . It will be beneficial to reproduce these rules as under:- "20. Declaration of ineligibility . Subject to rule 21, the procuring agency may, after providing an opportunity of hearing, declare, through a notification, an applicant for prequalification as ineligible for participating in any public procurement process for such period as it may determine on account of his engaging, directly or through an agent, in corrupt practice ." (emphasis supplied)
21. Blacklisting (1) A procuring agency may, for a specified period, debar a bidd er or contractor from participating in any public procurement process of the procuring agency , if the bidder or contractor has: (underlined to provide emphasis)
(a) acted in a manner detrimental to the public interest or good practices;
(b) consistently failed to perform his obligation under the contract;
(c) not performed the contract up to the mark; or
(d) indulged in any corrupt practice."
9. As stated at bar, the term "Blacklisting " used in the Act, 2009 and the Rules, 2014, has not been defined, as such, in order to comprehend the proposition involved in this case, it is appropriate firstly to examine the definition of "Blacklisting".
In Black' s Law Dictionary Ninth Edition, it has been defined as "To put the name of (a person) on a list of those who are to be boycotted or punished.
In Oxford Advanced Learner 's Dictionary , blacklisting means "a list of the name of people, companies, product or countries that an organization of a government considers unacceptable and that must be avoided".
In Webster 's unabridged dictionary , it has been defined as "a list of persons under suspicion, disfavor , censure etc."
10. Now it is well settled that power to blacklist a contractor irrespective of the fact that the contract be for supply of material or equipment or for the execution of any other work whatsoever was inherent in the party sanctioning the contract. There was no need for any such power being specifically conferred by statute or reserved by contractor. Because "blacklisting" simply signifies a business decision by which the party affected by the breach/violation of contract decided not to further enter into any contractual relationship with the party committing the breach. Of course, between private parties, the right to make any such decision was absolute and untrammeled by any constraints whatsoever. The freedom to contract or not to contract was unqualified in the case of private parties. But any such decision was subject to judicial review when the same was taken by the State or any of its instrumentalities. Any such decision would be open to scrutiny not only on the touchstone of the principles of natural justice but also on the doctrine of proportionality. Thus a fair right of audience to the party being blacklisted is an essential pre-condition for proper exercise of the power and valid order of blacklisting made pursuant thereto. Reliance can be placed on case The Murree Brewery Co. Ltd vs. Pakistan through The Secretary to Government of Pakistan, Works Division and 2 others (PLD 1972 Supreme Court 279), Chief Secretary Punjab and others vs. Abdul Raoof Dasti (2006 SCMR 1876), Joseph Vilangandan vs. The Executive Engineer (P.W.D.), Ernakulam and others (AIR 1978 Supreme Court 930), Preetam Pipes Syndicate vs. Tamil Nadu Slum, Clearance Board, Madras (AIR 1986 Madras 310), Tristar Shipping Lines Limited vs. Government of Pakistan through Secretary, Ministry of Food, Agriculture and Livestock and 2 others (1997 CLC 1475 Lahore), Shehzad Ali vs. Secretary, Housing and Physical Planning and others (2016 YLR 296 Lahore), Muhammad Iqbal vs. Fatima Jinnah Medical College and another (1989 MLD 4237 Lahore), Shahid Afzal vs. Government of Pakistan through Secretary, Education, Islamabad and 3 others (PLD 1977 Lahore 117) and Dawood Corporation (Private) Limited and another v. The Director-General, Department of Supplies, Government of Pakistan, Ministry of Industries, Karachi and 2 others (1988 CLC 788 Karachi ).
11. As noticed earlier, under Rule 21(1) of the Rules, 2014, a procuring agency can debar a bidder or contractor from participating in any public procurement process for a specified period, for the grounds enumerated in sub- clause (a) to (d) of Rule ibid. From the Rules 2014, it is quite clear that order for blacklisting can be issued for a specified period and not for life time. Even in cases of fraud on the part of contractor, the State blacklisting a contractor permanently for all times to come is harsh and heavy punishment on the touchstone of proportionality, whereas, period of blacklisting would invariably depend upon the nature of the offence committed by existing contractor. In this respect, reliance can be placed on case Messrs Kulja Industries Limited referred supra and Tristar Shipping Lines Limited vs. Government of Pakistan through Secretary, Ministry of Food, Agriculture and Livestock and 2 others (1997 CLC 1475 Lahore).
12. There is no cavil to the legal proposition that before passing any order of blacklist ing, fair right of audience as guaranteed under Article 10A. of the Constitution is to be afforded to the bidder/contractor . Mere issuance of notice calling for reply of notice and affording right of audience is not intent of law. The competent authority while passing such order is under legal obligation to justify as to why the defence/position taken by the contractor/bidder was not being accepted. The principles of natural justice must be followed not merely as formality but as effective requirement of law. When the impugned order is violative of principles of natural justice or is not speaking one, the same is not sustainable under the law, as infringing fundamental right of carrying on lawful business guaranteed under Article 18 of the Constitution. Reliance can be placed on Tristar Shipping Lines Limited case, referred supra and case Director Food, N.-W.F.P and another vs. Messrs Madina Flour and General Mills (Pvt.) Ltd. and 18 others (PLD 2001 Supreme Court 1) and Atlas Cables (Pvt.) Ltd. vs. Quetta Electric Supply Company Ltd. through Chief Executive Officer (PLD 2011 Quetta 67).
13. Now I revert to the facts of the case, perusal of impugned order , as noticed supra, indicates that no period of blacklisting has been specified and such punishment under Rule 21(1) of Rules, 2014 has been imposed in quite casual manner without realizing its percussions. Moreover , neither the grounds taken in reply to show cause notice nor submissions made during personal hearing have been jotted down, noticed, discussed and discarded without assigning any valid and cogent reason. Thus to my view, impugned order has been passed in quite mechanical manner/stereo style and as such same is not sustainable on the principles of judicial review . No previous incident of violation of the contract by the supplier has been referred to take harsh step of blacklisting firm for an indefinite period, whereas, such order in legal parlance entails serious consequences of attaching stigma against a bidder/supplier apart from suffering financial losses and losing goodwill/reputation in business with Government.
Such course could not be resorted to without observing due process of law as guaranteed under Article 4 of the Constitution. The impugned order is silent as to the reasons, which had persuaded the authority for blacklisting petitioner 's firm, whose huge business might be ruined by action of public functionary , which was prohibited by Article 25 of the Constitution.
14. The resume of above discussion is that the impugned order dated 10.08.2018, passed by the Inspector General of Prisons Punjab Lahore/respondent, is non-speaking one, the defence pleas taken by petitioner 's firm have not been taken into consideration and the same has been passed in mechanical manner without any rhyme or reason and application of mind while exceeding the power vested with the competent authority . As such on the touchstone of judicial review , impugned order being violative of fundamental right of petitioner to enter into a lawful business is not sustainable.
15. Consequently, the instant writ petition is allowed in the terms that the impugned order dated 10.08.2018, passed by the Inspector General of Prisons Punjab Lahore/respondent is set-aside and the matter will be deemed pending before him, who will afford right of fair audience to the petitioner and then decide the matter afresh in accordance with law, rules, principle of proportionality and principle of natural justice, by passing a well - reasoned/speaking order preferably within 30 days from the date of receipt of order of this Court. For that purpose, the petitioner will appear before said respondent on 29.05.2019.