Kerala High Court Stays Govt Decision To Blacklist Pricewaterhouse Coopers From IT-Related Projects

The Kerala High Court on Friday stayed the decision of the Kerala Government to blacklist premier consultancy firm Pricewaterhouse Coopers Private Ltd (PwC) from IT-related projects for two years.

A single bench of Justice PV Asha stayed the decision for a period of two weeks while issuing notice to the Kerala Government and the Kerala State IT Infrastructure Ltd(KSITIL) on the writ petition filed by PwC.

Senior Advocate Mukul Rohatgi, appearing for the firm,briefed by Shardul Amarchand Mangaldas & Co, argued that the decision was mala-fide and was made in violation of the principles of natural justice without hearing the affected party.

The decision to blacklist the international firm was taken in the wake of the controversial recruitment of Swapna Suresh, the prime accused in the gold smuggling case, to the Space Park Project, of which PwC was the consultant.

The KSITIL had appointed PwC as the Project Management Unit of the Space Park. Following the controversy over the gold smuggling case, PwC faced allegations that it had made appointments to the Space Park without due diligence. 

In July, a two member committee consisting of Chief Secretary Vishwas Mehta and Additional Chief Secretary(Finance) Rajesh Kumar Singh recommended the blacklisting of the London-headquartered firm over irregularities in the appointment.

On November 27, the Kerala Government took the decision, acting on the committee's recommendation to bar the firm from participating in future projects and terminated the subsisting projects.  This meant that PwC was out of the ambitious KFON( Kerala Fibre Optic Network) project of the Kerala Government as well as the Space Park project.

Challenging the decision, the firm approached the High Court through the firm Menon & Pai Advocates, contending that the blacklisting was done without hearing it.

It was also contended that Swapna Suresh was appointed at the recommendation of the Managing Director of the KSITIL.

The Supreme Court recently reiterated the principle that blacklisting of a firm must be done only on proper notice as it results in grave adverse civil consequences. In another recent decision, the Supreme Court observed that blacklisting orders must be proportionate as they can lead to "civil death of institutions".