(Prayer: Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate Writ, order or direction more particularly one in the nature of WRIT OF MANDAMUS declaring Memo No. 1929135/Vig. 11/2022, dt. 25-03-2023 issued by the 1st respondent whereunder directed to blacklist the petitioner for on the allegation of substandard quality work execution and the proceedings dt. 01.062023 of the 4th respondent and the consequential letters dt. 17-05-2023 and 29- 08-2023 of the respondents 2 and 3 whereunder directed me to pay an amount of Rs.37,074/- and to relay the rejected components of the work at the cost and risk of the petitioner failing which an amount of Rs. 43,71,676/- will be recovered towards the cost of the rejected components of work, is illegal, arbitrary and violation of Article 19(1)(g) of Constitution of India and to pass Prayer is amended as per the Order of this Court, dt.27.11.2023 vide order passed in I.A.4 of 2023.

IA NO: 1 OF 2023

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend Memo No. 1929135/Vig. 11/2022, dt. 25-03-2023 issued by the 1st respondent whereunder directed to blacklist the petitioner for on the allegation of substandard quality work execution and the consequential letters dt. 17-05-2023 and 29-08-2023 of the respondents 2 and 3 whereunder directed me to pay an amount of Rs.37,074/- and to relay the rejected components of the work at the cost and risk of the petitioner failing which an amount of Rs. 43,71,676/- will be recovered towards the cost of the rejected components of work, pending disposal of the main writ petition and pass

IA NO: 2 OF 2023

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to permit the petitioner to implead the Engineer in Chief (PR) as respondent no.4 in the writ petition as he is the proper and necessary party to these proceedings and pass

IA NO: 3 OF 2023

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend Memo No. 1929135A/ig. II/2022, .dt. 25-03-2023 issued by the 1strespondent whereunder directed to blacklist the petitionerfor on the allegation of substandard quality work execution and the proceedings dt.01-06-2023 of the 4threspondent and the consequential letters dt. 17-05-2023 and 29-08-2023 of the respondents 2 & 3 whereunder directed me to pay an amount of Rs.37,074/- and to relay the rejected components of the work at the cost and risk of the petitioner failing which an amount of Rs. 43,71,676/- will be recovered towards the cost of the rejected components of work, pending disposal of the main writ petition and pass such other order or orders as this Hon‟ble Court may deem fit and proper in the circumstance of the case” in the place of “I further humbly pray that this Hon‟ble Court may be pleased to suspend Memo No.1929135A/ig. 11/2022, dt. 25-03-2023 issued by the 1 respondent whereunder directed to blacklist the petitioner for on the allegation of substandard quality work execution and the consequential letters dt. 17-05- 2023 and 29-08-2023 of the respondents 2 & 3 whereunder directed me to pay an amount of Rs.37,074/- and to relay the rejected components of the work at the cost and risk of the petitioner failing which an amount of Rs.43,71,676/- will be recovered towards the cost of the rejected components of work, pending disposal of the main writ petition and pass

IA NO: 4 OF 2023

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to permit the permit the petitioner to amend the writ prayer as “ to issue an appropriate Writ, order or direction more particularly one in the nature of WRIT OF MANDAMUS declaring Memo No. 1929135A/ig. II/2022, dt. 25-03-2023 issued by the respondent whereunder directed to blacklist the petitioner for on the allegation of substandard quality work execution and the proceedings dt. 01-06-2023 of the 4*^^ respondent and consequential letters dt. 17-05-2023 and 29-08-2023 of the respondents 2 & 3 whereunder directed me to pay an amount of Rs.37,074/- and to relay the rejected components of the work at the cost and risk of the petitioner failing which an amount of Rs. 43,71,676/- will be recovered towards the cost of the rejected components of work, is illegal, arbitrary and violation of Article 19(1 )(g) of Constitution of India in the place of to issue an appropriate Writ, order or direction more particularly one in the nature of WRIT OF MANDAMUS declaring Memo No. 1929135/Vig. 11/2022, dt. 25-03-2023 issued by the 1®„ respondent whereunder directed to blacklist the petitioner for on the allegation of substandard quality work execution and the consequential letters dt. 17- 05-2023 and 29-08-2023 of the respondents 2 & 3 whereunder directed me to pay an amount of Rs.37,074/- and to relay the rejected components of the work at the and risk of the petitioner failing which an amount of Rs. 43,71,676/- will be recovered towards the cost of the rejected components of work, is illegal, arbitrary and violation of Article 19(1)(g) of Constitution of India and to cost pass

IA NO: 1 OF 2025

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the 4th respondent to register the firm M/s. Shiridi Sai Baba Constructions as class-1 contractor by considering the application dt. 25-11-2024, pending disposal of the main writ petition and pass

IA NO: 1 OF 2026

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to vacate the interim order dated.07.12.202 3 in WP.No.29586 of 2023 and pass)

1. Heard Sri K.Ashok, learned counsel representing Sri I.Koti Reddy, learned counsel for the petitioner and Sri P.Rajesh Kumar, learned Assistant Government Pleader for Panchayat Raj & Rural Development for the respondents.

2. Impugning the Memo No.1929135/Vig.II/2022, dated 25.03.2023 (Ex.P1) issued by the 1st respondent, directing the 4th respondent (a) to recover an amount of Rs.37,074/- from the petitioner towards deficiency observed in the strength of M-15 Grade concrete of protection wall and (b) to relay the rejected components of the work at the cost and risk of the contractor or to recover an amount of Rs.43,71,676/- from the contractor towards costs of the rejected components of work and further requested the 4th respondent to blacklist the petitioner as per G.O.Ms.No.94, dated 01.07.2003, the petitioner filed the above writ petition.

3. The 4th respondent, in pursuance of Ex.P1 memo, blacklisted the petitioner vide proceedings No.AEE(R)/DEE-T/Regn/Shridi Saibaba/FC/2016, dated 01.06.2023. Initially, the blacklisting proceedings were not challenged. Thereafter, the petitioner filed I.A.No.3 of 2023 and the same was ordered on 27.12.2023.

4. Averments, in brief, as set out in the affidavit, are as follows:

                  (a) The 1st respondent sanctioned the work of “Package No.AP021406 providing BT surface to the road from MRL25-Yadiki to Chandana with an estimated contract value of Rs.2,57,20,292/- under the scheme of Pradhana Mantri Gramina Sadak Yojana (PMGSY-II)”. A tender notification was flouted and the petitioner stood as L1 by quoting an excess of 4.95% over the estimated contract value. An agreement No.54/2014-2015 dated 18.12.2014 (Ex.P4) was executed by the proprietor of the petitioner and the 2nd respondent. As per Clause No.16 of the agreement, the date fixed for completion of work is 12 months. While executing the work, the 3rd respondent inspected and submitted the information to the state quality monitor for inspection of ongoing/completed work on 28.01.2015 and 29.04.2015. The work was completed. The authorities verified the work and recorded the M-Books dated 13.12.2015. The total bill amount was paid, withholding 5%, which would be paid after 5 years.

                  (b) Be that as it may, the 1st respondent issued a memo dated 25.03.2023 (Ex.P1). Acting upon the said memo, the respondents 2 and 3 issued Exs.P2 and P3. The 1st respondent issued Ex.P1 memo based on the vigilance report dated 17.12.2022. No vigilance inspection was made in the presence of the petitioner‟s representative. The Vigilance and Enforcement Wing submitted the report in November, 2022, after a lapse of 7 years since the completion of work. The work was completed in December, 2015. In fact, there are no damages to the road.

5. An interim order was granted on 07.12.2023 suspending the blacklisting proceedings dated 01.06.2023, as also Exs.P2 and P3.

6. a) A counter affidavit was filed on behalf of the 4th respondent. It was contended, inter alia, that as per the agreement, the defect liability period is 5 years i.e. 17.12.2020. The contractor has to maintain the road till completion of the defect liability period. The petitioner completed the work within the stipulated time, and the final payment was made after inspection by the state quality monitor of PMGSY on 31.05.2015.

                  b) The information was given to the Assistant Engineer by the Executive Engineer, PR PIU Division, Ananthapuramu, regarding Vigilance & Enforcement Department inspection, and the representative of the contractor attended the work site during the inspection. The work was inspected by the Vigilance & Enforcement Department within the defect liability period. The Vigilance & Enforcement Department, vide report No.45 (C.No.7515/V&E/Engg/ 2018 Sec-III), dated 17.11.2022, recommended initiating disciplinary action against the officers and further recommended to recover the amount from the petitioner as mentioned supra.

                  c) The 1st respondent requested the 4th respondent to initiate action against the petitioner. Acting upon recommendation, the proceedings Ex.P2, P3 and the blacklisting proceedings were issued and eventually prayed to dismiss the writ petition.

7. Learned counsel for the petitioner, as well as learned Assistant Government Pleader, reiterated the contentions as per the averments in the writ affidavit and the counter affidavit.

8. Now, the points for consideration are:

                  1) Whether the blacklisting proceedings dated 01.06.2023 issued by the 4th respondent are legally sustainable?

                  2) Whether Exs.P2 and P3, issued by the respondents 2 & 3, are legally sustainable?

9. The undisputed facts as seen from the pleadings are that the Managing Partner of the petitioner and the 2nd respondent entered into an agreement No.54/2014-2015, dated 18.12.2014 (Ex.P4), in relation to providing BT surface to the road from MRL25-Yadiki to Chandana. As per Clause 16 of the agreement, the date fixed for completion of the work is 12 months i.e. from 18.12.2014 to 17.12.2015. The petitioner completed the work within the time stipulated, and thereafter the entire bill amount was paid, withholding 5% amount, till completion of the defect liability period.

10. The Vigilance & Enforcement Department submitted a report vide No.45 (C.No.7515/V&E/Engg/ 2018 Sec-III), dated 17.11.2022, pointing out sub-substandard in quality. The authority recommended initiating disciplinary action against the officers concerned. Insofar as the petitioner is concerned, the authority recommended blacklisting the firm as well as the recovery of the amount.

11. Whether any show cause notice was issued to the petitioner before blacklisting the petitioner by proceedings dated 01.06.2023? If not, the proceedings are vitiated?

12. A perusal of the proceedings dated 01.06.2023 does not indicate the issuance of a show-cause notice to the petitioner before blacklisting the petitioner. Blacklisting a contractor or a firm has very serious consequences. It prevents the contractor or firm from entering into any lawful relationships/agreements with the Government or other instrumentalities. Before resorting to such an extreme step, an opportunity needs to be provided. The law on this aspect is well settled.

13. In Erusian Equipment and Chemicals Vs. State of West Bengal((1975) 1 SCC 75), at Paragraph-20, the Hon‟ble Apex Court observed as follows:

                  “20. 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.”

14. In Blue Dremz Advertising Pvt. Ltd. & Anr. Vs. Kolkata MunicipalCorp. & Ors(2024 INSC 589), the Hon‟ble Apex Court observed as follows:

                  “1. In case there exists a genuine dispute between the parties based onthe terms of the contract, blacklisting as a penalty cannot be imposed.

                  2. The penalty of blacklisting may only be imposed when it is necessaryto safeguard the public interest from irresponsible or dishonestcontractors, and

                  3. The Corporation being a statutory body, have a higher threshold tosatisfy before passing such blacklisting order and therefore, themeasures undertaken by it should be reasonable.”

15. In this case at hand, no show-cause notice was issued before blacklisting the petitioner. Regarding a show cause notice, before black listing, the Apex Court in UMC Technologies (P) Ltd. v. Food Corporation of India((2021) 2 SCC 551), at Paragraph-19, observed as follows:

                  “19. In light of the above decisions, it is clear that a prior show- cause notice granting a reasonable opportunity of being heard is an essential element of all administrative decision-making and particularly so in decisions pertaining to blacklisting which entail grave consequences for the entity being blacklisted. In these cases, furnishing of a valid show-cause notice is critical and a failure to do so would be fatal to any order of blacklisting pursuant thereto.”

16. Thus, as seen from the material available on record, no show notice wasissued to the petitioner before blacklisting the petitioner. Without giving an opportunity, blacklisting the petitioneris not only illegal but also arbitrary and violative of principles of natural justice.

17. Apart from that, the 4th respondent did not adhere to the procedure mandated under G.O.Ms.No.94 dated 01.07.2003, notice and opportunity of hearing, before blacklisting the petitioner. Thus, the proceedings dated 01.06.2023 are vitiated and liable to be set aside and accordingly, the proceedings No.AEE(R)/DEE-T/Regn/Shridi Saibaba/FC/2016, dated 01.06.2023 are set aside.

18. Insofar as the challenge to Exs.P2 and P3, it was specifically contended in Paragraph-5 of the writ affidavit that no vigilance inspection was conducted by giving any notice to the petitioner. In Paragraph-6 of the counter affidavit, it was contended that the work site was inspected by the Vigilance & Enforcement department within the defect liability period, and the representative of the contractor attended the work site during the inspection. Having pleaded that the representative of the petitioner attended the inspection and the inspection was done during the defect liability period, the 4th respondent, for the reasons best known, failed to indicate the person who attended, and the date of the inspection in the report.

19. The Vigilance report is dated 17.11.2022, filed along with the writ petition (the deponent did not explain the source of securing the confidential report), does not indicate the date of inspection and the presence of the representative of the petitioner. The defect liability, as per the terms of the agreement, is 5 years. The work was completed within the time stipulated, and the final payment was made after the inspection by the state quality monitor of PMGSY on 31.05.2015, as per averments in paragraph-5 of the counter affidavit.

20. The defect liability period as per the agreement was completed by 17.12.2020. In the absence of any material before the Court regarding the date of actual inspection by the vigilance & enforcement department, this Court has to conclude that the alleged inspection, if at all conducted, would be after expiry of the defect liability period and hence, the petitioner cannot be held liable for the defects, if any found thereafter. No show-cause notice was issued to the petitioner prior to the issuance of Exs.P2 and P3. On that ground, also Exs.P2 and P3 are vitiated and liable to be set aside. Accordingly, Lr.No.AEE5/DEE/ATP Yadiki road/V&E Report/2023 dated 17.05.2023 (Ex.P2) and Lr.Notice No.2/AEE-IV/V & OC Report/Yadiki Road/2023-24, dated 29.08.2023 (Ex.P3), are hereby set aside.

21. Given the discussion supra, the Writ Petition stands Allowed. No order as to costs.

As a sequel, pending miscellaneous petitions, if any, shall stand closed.