G Bharathi Vs the Union of India

¶1

APHC010378242023

¶2

IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction)

¶3

[3327]

¶4

THURSDAY, THE TWELFTH DAY OF MARCH TWO THOUSAND AND TWENTY SIX

¶5

PRESENT

¶6

THE HONOURABLE SRI JUSTICE K SREENIVASA REDDY WRIT PETITION NO: 19327/2023

¶7

Between:

¶8

G BHARATHI, W/O KARUNAKARAM, AGED 47 YEARS RAILWAY CATERING CONTRACTOR, NO. 27, MANALMUDU STREET, OPP GOODS SHED, ERODE658001, REPRESENTED BY ITS AUTHORISED PERSON NAMELY BATHULA SRINIVASARAO, S/O VENKATESWARLU, AGED ABOUT 38 YEARS, OCC. MANAGER, R/O 20-18-289, D S NAGAR, 5TH LINE, OPPOSITE MSR COULD STORAGEM ETUKUR DOAD, GUNTUR DISTRICT, ANDHRA PRADESH, 522003

¶9

...PETITIONER

¶10

A N D

¶11

THE UNION OF INDIA, REPRESENTED BY GENERAL MANAGER RAILWAYS, SOUTH CENTRAL RAILWAY, SECUDRABAD, TELANGANA, 500071

¶12

THE DIVISIONAL RAILWAY MANAGER, , DIVISIONAL OFFICER SOUTH CENTRAL RAILWAY, GUNTUR, ANDHRA PRADESH.

¶13

THE SENIOR DIVISIONAL COMMERCIAL MANAGER, SOUTH CENTRAL RAILWAYS, GUNTUR

¶14

...RESPONDENT(S):

¶15

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 pass orders particularly one in the nature of writ of Mandamus declaring the proceedings no. GNT/C 79/PF Stall/PF 4 and 5/GNT, dated 27-07-2023 issued by the respondent no.3 is null and void and declare the same as illegal, arbitrary and against the principles of natural justice, against the office Memorandum issued by Department of Expenditure Procurement Policy Division No. F-1/20/2018-PPD dated 2-112021, the Railway Board had issued a debarment guidelines via latter no. 2021/RS(G)/779/17(E33880061 dated 09-11-2022 and

¶16

SRK, J W.P.No.19327 of 2023

¶17

2

¶18

consequently quash the proceedings no. GNT/C 79/PF Stall/PF 4 and 5/GNT, dated 27-07-2023 issued by the respondent no.3 and direct the respondents to reopen the catering stall/SMU -3 at platform Nos. 4 and 5 on Guntur Railway Station, by giving an opportunity to pay the licence fee for the year 2023-2024 within stipulated time and pass

¶19

IA NO: 1 OF 2023

¶20

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 pleased to stay of all further proceedings in GNT/C 79/PF Stall/PF 4 and 5/GNT, dated 27-072023 issued by the respondent no.3 and direct the respondents to reopen the catering stall/SMU -3 at platform Nos. 4 and 5 on Guntur Railway Station, giving an opportunity to pay the licence fee for the year 2023-2024 within stipulated time, pending disposal of the writ petition and pass

¶21

IA NO: 2 OF 2023

¶22

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 respondents by giving an opportunity to participate in the future tenders by suspending the impugned proceedings in GNT/C 79/PF Stall/PF 4 AND 5/GNT, dated 27-07-2023 issued by the respondent No.3 and direct the respondents to give an opportunity to pay the licence fee for the year 2023-2024 within stipulated time, pending disposal of the writ petition and pass

¶23

IA NO: 3 OF 2023

¶24

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 file the additional affidavit/ additional material papers and consider the additional affidavit/ additional material papers as part and parcel of the above writ petition, pending disposal of the above writ petition and pass

¶25

IA NO: 4 OF 2023

¶26

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition,

¶27

SRK, J W.P.No.19327 of 2023

¶28

3

¶29

the High Court may be pleased to extend the interim orders dated 02-08-2023 granted earlier in IA No. 1 of 2023 in WP no. 19327 of 2023 and pass

¶30

IA NO: 1 OF 2025

¶31

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 the impugned proceedings- dated 27-7-2023, and to permit the petitioner to participate in the tender notification No. dated 10/9/2025, issued by the IRCTC, Pending disposal of the above writ petition and pass

¶32

IA NO: 2 OF 2025

¶33

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 fix an early date for hearing and expedite the heading of the WP.No.13327/2023 and pass

¶34

Counsel for the Petitioner:

¶35

1.P SHASHI VARDHAN

¶36

Counsel for the Respondent(S):

¶37

1.JUPUDI V K YAGNADUTT(CENTRAL GOVERNMENT COUNSEL)

¶38

The Court made the following:

¶39

SRK, J W.P.No.19327 of 2023

¶40

4

¶41

O R D E R

¶42

This Writ Petition was filed seeking the following relief:

¶43

“…to issue a Writ or Order or direction more particularly one in the nature of Writ of Mandamus declaring the Proceedings No.GNT/C79/PF Stall/PF 4 & 5/GNT, dated 27.072023 issued by respondent No.3, as null and void and declare the same as illegal, arbitrary and against the principles of natural justice, against the Office Memorandum issued by the Department of Expenditure Procurement Policy Division No.F-1/20/2018-PPD, dated 02.11.2021, the Railway Board had issued a debarment guidelines via Letter No.2021/RS (G)/779/17 (E33880061, dated 09.11.2022) and consequently, quash the Proceedings No.GNT/C 79/PF Stall/PF 4 & 5/GNT, dated 27.07.2023 issued by the respondent No.3 and direct the respondents to reopen the catering stall/SMU-3 at Platform Nos.4 & 5 on Guntur Railway Station, by giving an opportunity to pay the license fee for the year 2023-2024 within stipulated time and pass such other order…”

¶44

2. Contents of the affidavit filed by the General Manager/

¶45

Authorized Person, working in the office of the Writ Petitioner, in brief, are that the Writ Petitioner is a Railway Contractor and has been in railway catering for about 10 years; that the Writ Petitioner was allotted Special Minor Unit : SMU-3 at Platform Nos.4 and 5 on Guntur Railway Station of ‘A’ Category (SMU) earmarked for Scheduled Tribe category, pursuant to a Public Auction/Tender Process conducted by the respondents in the year 2019 and the Writ Petitioner entered into Master License Agreement with respondent No.3 on 18.09.2019 for a tenure of Five (05) years, commencing from 01.05.2019 and valid up to 30.04.2024.

¶46

SRK, J W.P.No.19327 of 2023

¶47

5

¶48

(b) The Writ Petitioner was permitted to sell packaging drinking water, biscuits, packaged food, packaged cooked food, cool drinks on the said platform vending by engaging 12 vendors in 3 shifts; that the license fee for entire duration is Rs.26,88,400/and for the first Three (03) years, the license fee is Rs.5,17,000/and for 4th and 5^th years, the license amount, with 10% escalation from 3^rd year amount is Rs.5,68,700/-. The Writ Petitioner successfully completed four (04) years of her tenure and she is supposed to pay 5^th year license fee as per the Master License Agreement on or before 15 days before the commencement of next year i.e. on 15.04.2023, but due to work pressure and some unavoidable situations, the Writ Petitioner chose to pay the license fee with delayed fine amount as per Column No.4.3 of the Master License Agreement.

¶49

(c) The respondents sent a link to the Writ Petitioner through e-Mail on 12.04.2023, but the Writ Petitioner chose to pay the said amount on 14.07.2023 and when it was tried to pay the license amount for 5^th year on the said date, the web portal of the respondents’ authority did not work and a message that ‘ due to migration activity, MERS application will not be available from 14^th July, 2023 (17:00 hrs) to 15^th July, 2023 (10:00 hrs). Users are

¶50

SRK, J W.P.No.19327 of 2023

¶51

6

¶52

strictly advised to not use the portal during this time period. Inconvenience caused is deeply regretted’ was displayed.

¶53

(d) On 15.07.2023 and 16.07.2023, being Holidays, the Writ Petitioner made a representation on 17.07.2023, but the Chief Commercial Inspector closed the stall at 12.00 midnight i.e. on the intervening night of 14.07.2023 and 15.07.2023, without issuing any notice and at that time, there was nearly Rs.25,000/- worth material. On 15.07.2023, the Chief Commercial Inspector came to Railway Station, took the signatures of Writ Petitioner on the termination proceedings. The delay and fault in non-payment of license fee within the stipulated time is not willful, but it is due to the fault of respondents as the web portal did not work on the last day i.e. 14.07.2023, due to which, the Writ Petitioner could not pay the license fee.

¶54

(e) During Covid-19 Pandemic effect, as per the instructions of respondents, the Writ Petitioner closed the catering stalls and considering the said situation, even after expiry of license period, the license period of 235 days was extended, but without calculating the same, the respondents closed the catering stall. The respondents without issuing any show-cause notice, straightaway issued Proceedings No.GNT/C 79/PF Stall/PF 4 & 5/GNT, dated 27.07.2023, debarring the Writ Petitioner from participating in

¶55

SRK, J W.P.No.19327 of 2023

¶56

7

¶57

further catering tenders for a period of Five (05) years with effect from 27.07.2023 to 26.07.2028, which is arbitrary and against the principles of natural justice. If there is any default/material breach in violation of the contract conditions, before terminating the contract, a show-cause notice need to be issued duly mentioning the imposed charges and grant time to rectify the same, but contrary to that, the representation for seeking time was disposed of, and the show-cause notice guidelines has not been followed and directly debarred the Writ Petitioner for a period of Five (05) years.

¶58

(f) Respondent No.1 issued a Memorandum No.2021/ RS(G)/779/17(E 3380016), dated 09.11.2022 to various General Managers of Railway Zones identifying the guidelines to be followed for sending debarment proposals to the Railway Board. The competent authority for approving debarment is an Additional Member of the Railway Board and in the event, the Additional Member is not in position, a Board Member may nominate the concerned Principal Executive Director or Executive Director as the Competent Authority. A debarment proposal has to be sent to the Railway Board in a prescribed format for examination and in the event, the proposal is accepted by the Railway Board, a showcause notice, in the prescribed format, shall be issued to such a bidder, where the charges against the bidder would clearly be

¶59

SRK, J W.P.No.19327 of 2023

¶60

8

¶61

identified, and if the bidder sends a reply to the show-cause notice, an opportunity, to be heard through oral hearing, shall be fixed, and on the basis of the above, the decision to debar a bidder shall be taken. The impugned proceedings dated 27.07.2023 is, therefore, in violation of the Debarment Guidelines, 2022. The Writ Petitioner’s source of income entirely rests on its business relationship with the Indian Railways or IRCTC and the arbitrary decision to debar the Writ Petitioner for five years, would cause financial ruin. Hence, the Writ Petition.

¶62

Respondents filed counter-affidavit, denying the contents of the affidavit accompanying Writ Petition, contending inter alia that the Writ Petition is not maintainable, for the reason that as per the Agreement Conditions, the Writ Petitioner is having alternative remedy before the Arbitrator, and as subject issue is purely connected to contractual in nature, and the relief sought by the Writ Petitioner cannot be enforced by way of Writ Petition. Any dispute or different on any account, the same will be resolved in terms of the General Conditions of Contract for works of Railways and as per the provisions of the Arbitrary and Conciliation Amendment Act, 2015, but without invoking those provisions, the Writ Petitioner approached the Court and thereby, disobeyed the Clause No.18.1 of Agreement.

¶63

SRK, J W.P.No.19327 of 2023

¶64

9

¶65

(b) Though the Writ Petitioner was penalized for 11 times

¶66

on various irregularities and failed to clear 6 penalties till date, the respondents still permitted the Writ Petitioner to continue the catering contract by imposing penalties as per the Agreement. As per Clause 4.3 of Master License Agreement, the license fee for 5^th year shall be paid at least 15 days before the commencement of the said year and accordingly, the Writ Petitioner is liable to pay the license fee on 15.04.2023 without any penalty, and further, permitted to pay the said fee within 90 days from the date of due date with penal interest at 18%. Though, 90 days of ample time in addition to contract schedule is provided, the Writ Petitioner deliberately failed to pay the same, thereby, the Writ Petitioner contravened Clause 4.3 of the Agreement.

¶67

(c) As per the Agreement, failure in payment of license fee, shall be treated as breach of contract and license will be terminated without issuing any notice for termination and the bidder will also be debarred from participating in future catering tenders over IRCTC for a period of five (05) years. The Writ Petitioner was advised to pay the license fee over Booking Office, Guntur, but it was not done so. The decision of termination of stall is purely an administrative act as a policy matter under the mutually agreed and entered Master License Agreement. During Covid-19, the stall

¶68

SRK, J W.P.No.19327 of 2023

¶69

10

¶70

provided to the Writ Petitioner was granted ‘dies-non’ for a period of 267 days and as such, the original contract period will be extended by 267 days at end of the contract period i.e. from 01.05.2024 to 22.01.2025 subject to successful completion of contract. As per Clause No.4.3 of Agreement, due to non-payment of license fee within the permissible time was treated as breach of contract and the stall was terminated. Therefore, since the contract was terminated due to breach, extension of contract on account of diesnon is not feasible.

¶71

(d) The Writ Petitioner should have paid the license fee before 15 days of commencement of 5^th year i.e. on or before 15.04.2023. The due date to pay 5^th year license fee with penal interest starts from 16.04.2023 and ends on 14.07.2023. If the Writ Petitioner is having a fair intention of paying the license fee, she

¶72

was having reasonable time to make the payment. Since the subject is policy matter, the Railway Board Guidelines issued under Letter No.2021/RS (G)/779/17 (E 3380016), dated 09.11.2022 has no application to the Commercial Tenders. Hence, it is prayed to dismiss the Writ Petition.

¶73

Learned counsel for the Writ Petitioner would contend

¶74

that mere failure in payment of license fee for 5^th year due to work pressure and some unavoidable situations, issuing Proceedings

¶75

SRK, J W.P.No.19327 of 2023

¶76

11

¶77

No.GNT/C 79/PF Stall/PF 4 & 5/GNT, dated 27.07.2023, by debarring the Writ Petitioner from participating in further catering tenders for a period of Five (05) years with effect from 27.07.2023 to 26.07.2028, is arbitrary and against the principles of natural justice, as the Writ Petitioner successfully completed four (04) years’ of her tenure in Special Minor Unit : SMU-3 at Platform Nos.4 and 5 on Guntur Railway Station of ‘A’ Category (SMU). According to learned counsel, the delay and fault in payment of license fee within the stipulated time is not willful, but it is due to the fault of respondents as the web portal did not work on the last day i.e. 14.07.2023. The act of respondents in issuing impugned letter, without issuing any show-cause notice, is contrary to the guidelines issued by respondent No.1 vide Memorandum No.2021/RS(G)/ 779/17(E 3380016), dated 09.11.2022. The impugned proceedings dated 27.07.2023 is, therefore, in violation of the Debarment Guidelines, 2022.

¶78

Learned counsel for respondents would contend that the impugned Letter dated 27.07.2023 was in conformity with the terms and conditions of the tender document and the Letter of Acceptance, and since the Writ Petitioner deliberately failed to comply with the mandatory contractual obligations within the stipulated time, the same was issued. Learned counsel further

¶79

SRK, J W.P.No.19327 of 2023

¶80

12

¶81

contends that the terms of the tender themselves constitute an essential and fundamental condition that the licensee shall pay the License Fee and the security amount within the prescribed time and failure in compliance of the said condition within the time bound, leads to debarment and the same was expressly mentioned in the tender, and for such default, no show-cause notice needs to be issued. It is further contended that the provisions of the General Financial Rules, 2017 have no application to debarment arising under the SBD for GMUs, which constitutes a self-contained contractual framework. According to learned counsel, no approval

¶82

from the Railway Board is required to implement contractual debarment. Hence, prayed to dismiss the Writ Petition.

¶83

Perused the entire material available on record.

¶84

It is an admitted fact that the respondents vide Bid

¶85

Notice No.GNT/C79/SMUs/02/2018, dated 10.10.2018 floated a Bid for the license for ‘Provision of Catering Services at Special Minor Unit Number/Name SMU-3 at Platform Nos.4 and 5 on Guntur Railway Station of ‘A’ Category (SMU) earmarked for Scheduled Tribe Category, and pursuant of the same, the Writ Petitioner was declared as the highest bidder. Accordingly, the respondents and the Writ Petitioner entered into Master License Agreement on

¶86

SRK, J W.P.No.19327 of 2023

¶87

13

¶88

18.09.2019, for a period of five (05) years i.e. from 01.05.2019 to 30.04.2024.

¶89

It is made clear that as per Clause 4.2 of the Master License Agreement, the Writ Petitioner, being the licensee, shall pay to the respondents an agreed sum of Annual License Fee every year in the entire duration of the license, and the license fee for first Three (03) years will be quoted in the price bid or arrived after negotiations, and for 4^th year, there will be 10% escalation, and for fifth year, the license fee will be equal to 4^th year license fee. It is also made clear that as per Clause 4.3 of the said Agreement, the license fee for second, third, fourth and fifth year, shall be paid at least 15 days before the commencement of the year, for which license fee is due, and any delay in payment of license fee shall attract interest at the rate of 18% per annum calculated for the number of days of delay. In case the licensee fails to pay the license fee within 90 days of the due date i.e. due date is 15 days before the commencement of next year and 90 days, = 15 days before + 75 days, after the commencement of the year, the license will be terminated with all attendant liabilities by treating it as breach of contract without issuing any notice for termination. The bidder will also be debarred from participating in

¶90

SRK, J W.P.No.19327 of 2023

¶91

14

¶92

future catering tenders over Indian Railways and IRCTC Limited for a period of Five (05) years.

¶93

A perusal of the material on record goes to show that the Writ Petitioner, pursuant to entering into the Master License Agreement, dated 18.09.2019, paid a sum of Rs.5,17,000/- each for first Three (03) years of her license tenure, and a sum of Rs.5,68,700/- for 4^th year too. Cause of action for filing the Writ Petition arose, when the Writ Petitioner failed to pay the license fee for 5^th year. It is the contention of learned counsel for the Writ Petitioner that as per the Master License Agreement, the Writ Petitioner is supposed to pay the license fee on or before 15 days of the commencement of 5^th year i.e. on 15.04.2023, and in case of delay, with interest at 18% per annum within 90 days of the due date. Due to work pressure, the Writ Petitioner could not pay the license fee on 12.04.2023, but chose to pay on 14.07.2023 through a link sent to the e-Mail of the Writ Petitioner. It is the further contention of Writ Petitioner that the web portal of respondentsauthority did not work as it was under migration activity on 14^th July, 2023 and 15^th July, 2023. According to learned counsel, the delay

¶94

and fault in payment of license fee within the stipulated time is not willful, but it is due to the fault of respondents as the web portal did not work on the last day i.e. 14.07.2023, but without considering the

¶95

SRK, J W.P.No.19327 of 2023

¶96

15

¶97

same, the respondents-authority unilaterally issued the impugned proceedings, dated 27.07.2023, debarring the Writ Petitioner for five years.

¶98

Learned counsel for the respondents would contend that though ample time of 90 days in addition to contract schedule was provided, the Writ Petitioner deliberately failed to pay the same, thereby, the Writ Petitioner contravened Clause 4.3 of the Agreement. According to learned counsel, the Writ Petitioner was advised to pay the license fee over Booking Office, Guntur, but it was not done so. Therefore, as per the Agreement, failure in payment of license fee, shall be treated as a breach of contract and license will be terminated without issuing any notice for termination and the bidder will also be debarred from participating in future catering tenders over IRCTC for a period of five (05) years. Learned counsel concludes that the decision of termination of license for stall is purely an administrative act as a policy matter under the mutually agreed and entered Master License Agreement.

¶99

Apparently, there was delay in payment of license fee by the Writ Petition for 5^th year, however, the same can be paid with interest at 18% per annum, therefore, the Writ Petitioner has got time till 14.07.2023. A perusal of the material filed by the Writ Petition goes to show that when the Writ Petitioner tried to pay the

¶100

SRK, J W.P.No.19327 of 2023

¶101

16

¶102

license fee on 14.07.2023, the web portal was under migration activity, due to which the said site was not available on 14.07.2023 and 15.07.2023 and the users were strictly advised not to use the portal during such time period. Further, a perusal of Clause 4.3 of the Master License Agreement dated 18.09.2019 goes to show that in case the licensee fails to pay the license fee within 90 days of the due date, the license will be terminated with all attendant liabilities by treating it as a breach of contract without issuing any notice for termination, and the bidder will also be debarred from participating in future catering tenders over Indian Railways and IRCTC Limited for a period of five (05) years. Article 18 of the Master License Agreement, dated 18.09.2019 only mandates that in the event of any dispute or difference between the parties as to the construction or operation of the contract, or the respective rights and obligations

¶103

of the parties on any matter in question, dispute or difference on any account, the same will be resolved in terms of the General Conditions of Contract for works of Railways as amended from time to time and as per the provisions of Arbitration and Conciliation (Amendment) Act, 2015 and the Rules made thereunder as amended from time to time, and as per the extant instructions issued by the Railway Board. As per the contention of learned counsel for the respondents, the Writ Petitioner committed breach

¶104

SRK, J W.P.No.19327 of 2023

¶105

17

¶106

of contract, and though it is mentioned in Article 18 of the Master License Agreement, dated 18.09.2019 that ‘in the event of any dispute or difference between the parties’, it was not specifically stated that the Breach of Contract can also be resolved in terms of the provisions of Arbitration and Conciliation (Amendment) Act, 2015. Therefore, in view of the same, the Writ Petition is maintainable.

¶107

Learned counsel for the Writ Petitioner would contend that the impugned Letter dated 27.07.2023 is contrary to the Guidelines issued by the respondent No.1 in Memorandum No.2021/RS(G)/779/17(E 3380016), dated 09.11.2022. It is further contended that Rule 151 of the General Financial Rules, 2017 and the Debarment Guidelines, 2022 laid down by respondent No.1, as the invocation of Article 16.1 (c) of Section D-Master License Agreement, to levy a penalty of debarment, can only be done in view of Rule 151 of the General Financial Rules, 2017 and the breach of question i.e. non-payment of license fee on time, does not meet the aforementioned conditions. According to learned counsel, a debarment proposal has to be sent to the Railway Board

¶108

in a prescribed format for examination and in the event, the proposal is accepted by the Railway Board, a show-cause notice, in the prescribed format, shall be issued to such a bidder, where the

¶109

SRK, J W.P.No.19327 of 2023

¶110

18

¶111

charges against the bidder would clearly be identified, and if the bidder sends a reply to the show-cause notice, an opportunity, to be heard through oral hearing, shall be fixed, and on the basis of the above, the decision to debar a bidder shall be taken.

¶112

13. In M/s. Techno Prints v. Chhattisgarh Textbook

¶113

Corporation & Anr.,¹ , wherein it was held as under:

¶114

“Ordinarily, a writ court should not entertain any petition, seeking to challenge a show cause notice unless the Court is convinced that the same has been issued by an authority having no jurisdiction, or the same is tainted with mala fides. The guiding principles as to when and in what circumstances a blacklisting order can be passed, should be borne in mind by the Authority at the time of issuing a show cause notice. There is always an inherent power in the Authority to blacklist a contractor but there should be reasonable ground to exercise such power. Whether show cause notice makes out a case for blacklisting, should be the test to determine whether it is a genuine case to blacklist a contractor or visit him with any other penalty, like forfeiture of EMD, recovery of damages. Once an order of blacklisting is passed, the same would put an end to the business of the person concerned, it is a drastic step, while the debarment itself may not be permanent and may only remain effective for a limited, predetermined period, its negative effect continues to plague the business of the debarred entity for a long period of time. If a contractor is to be visited with the punitive measure of blacklisting on account of an allegation that he has committed a breach of a contract, the nature of his conduct

¶115

1 [2025] 3 S.C.R. 208 : 2025 INSC 236.

¶116

SRK, J W.P.No.19327 of 2023

¶117

19

¶118

must be so deviant or aberrant so as to warrant such a punitive measure. Mere allegation of breach of contractual obligations without anything more, per se, does not invite any such punitive action.”

¶119

Learned counsel for respondents would contend that

¶120

the terms of the tender themselves constitute an essential and fundamental condition and failure in compliance of the condition within the time bound, leads to debarment, and for such default, no show-cause notice needs to be issued. It is further contended that the provisions of the General Financial Rules, 2017 have no application for debarment arising under the SBD for GMUs, which constitutes a self-contained contractual framework.

¶121

It is pertinent to refer Rule 151 of the General Financial Rules, 2017 issued by the Government of India, Ministry of Finance, Department of Expenditure, which is extracted hereunder:

¶122

“Rule 151: Debarment from bidding. (i) A bidder shall be debarred if he has been convicted of an offence – (a) under the Prevention of Corruption Act, 1988; or (b) the Indian Penal Code or any other law for the time being in force, for causing any loss of life or property or causing a threat to public health as part of execution of a public procurement contract.

¶123

SRK, J W.P.No.19327 of 2023

¶124

20

¶125

(ii) A bidder debarred under sub-section (i) or any successor of the bidder shall not be eligible to participate in a procurement process of any procuring entity for a period not exceeding three years commencing from the date of debarment. Department of Commerce (DGS&D) will maintain such list which will also be displayed on the website of DGS & D as well as Central Public Procurement Portal.

¶126

(iii) A procuring entity may debar a bidder or any of its successors, from participating in any procurement process undertaken by it, for a period not exceeding two years, if it determines that the bidder has breached the code of integrity. The Ministry/Department will maintain such list which will also be displayed on their website.

¶127

(iv) The bidder shall not be debarred unless such bidder has been given a reasonable opportunity to represent against such debarment.

¶128

A plain reading of the above Rule goes to show that a bidder

¶129

shall be debarred if he has been convicted of an offence under the Prevention of Corruption Act, 1988 or the Indian Penal Code or any other law for the time being in force, for causing any loss of life or property or causing a threat to public health as part of execution of a public procurement contract. Even under Rule 151 (iii) a procuring entity may debar a bidder or any of its successors, from participating in any procurement process undertaken by it, for a period not exceeding two years, if it determines that the bidder has

¶130

SRK, J W.P.No.19327 of 2023

¶131

21

¶132

breached the code of integrity. Admittedly, the Writ Petitioner has not been convicted of an offence punishable either under the Prevention of Corruption Act, 1988 or the Indian Penal Code, 1860 or any other law. Indeed, the Writ Petitioner was debarred for a period of Five (05) years, which is against the Rule 151 (iii) of the General Financial Rules, 2017. Above all, under Rule 151 (iv), the bidder shall not be debarred unless such bidder has been given a reasonable opportunity to represent against such debarment. Indisputably, the Writ Petitioner was not provided with a reasonable opportunity of being heard to represent against the debarment, which is against the principles of natural justice.

¶133

Vide No.2021/RS (G)/779/17 (E3380016), dated 09.11.2022, the Government of India, Ministry of Railways issued Debarment Instructions for Ministry of Railways, wherein, it was specifically stated that the debarment in Ministry of Railways shall be dealt with, as per guidelines issued by the Department of Expenditure. The Competent Authority for approval for debarment for the Ministry of Railways shall be the Additional Member concerned and in case, the Additional Member is not in position,

¶134

the Board Member concerned may nominate the Principal Executive Director concerned or Executive Director, as Competent Authority. The second Guideline goes to show that the proposals

¶135

SRK, J W.P.No.19327 of 2023

¶136

22

¶137

for debarment shall be sent by procuring units to the Directorate concerned in Railway Board and proposals for debarment out of Vigilance/ SPE/CBI cases shall be sent by the Vigilance of Railway Board concerned to the Directorate concerned in Railway Board. As per 7^th Guideline, it was specifically stated that the debarment proposal will be examined in Board by the concerned Directorate to examine the adequacy of the facts necessary for issue of Show Cause notice to the firm concerned. Further, the ninth Guideline issued by the authority goes to show that the Show Cause Notice (Format as per Annexure-II) shall be issued to the delinquent firm indicating clearly the charges (based on the facts as can be proved) through registered post (and also e-mail, if available) and in case no reply to the show cause notice is received from the firm within the stipulated time (30 days), following by reminder for 10 days more, action for processing the case ex parte against the firm should be initiated. Subsequently, an opportunity shall be given to the firm for in-person hearing (oral hearing) by fixing a date for hearing and the hearing should be held at the level of minimum Director (or Joint Director if Director is not posted) Level Officer in Board. It is further stated in the said Guideline that brief for the same shall be prepared and jointly signed by the Director (or Joint Director as applicable) and representative of the firm attending the

¶138

SRK, J W.P.No.19327 of 2023

¶139

23

¶140

hearing Firm’s reply to show cause notice and their submission in oral hearing will be examined.

¶141

A perusal of the aforesaid Guidelines further goes to show that the debarment order shall also indicate the reason(s) in brief that led to debarment of the firm and the fact that the representation has been considered and oral hearings have also been conducted (as applicable) should invariably be mentioned in the debarment order and if no representation was received in response to the show cause notice or the firm has not availed the opportunity of oral hearing given to it, the same should invariably be indicated in the debarment order.

¶142

Apparently, a perusal of the impugned Debarment Letter dated 27.07.2023 is quite contra to the Debarment Guidelines vide No.2021/RS (G)/779/17 (E3380016), dated 09.11.2022, issued by the Ministry of Railways, Government of India and the same is not in accordance with Rule 151 of the General Financial Rules, 2017. There is no reason in the impugned Debarment Letter dated 27.07.2023 as to what led them to debar the Writ Petitioner. More so, the impugned letter does not contain as to when the oral hearings have been conducted. Even, the details as to whether show-cause notice was issued to the Writ Petitioner or not, and as to whether the Writ Petitioner availed the

¶143

SRK, J W.P.No.19327 of 2023

¶144

24

¶145

opportunity of oral hearing or not, are lacking in the said letter. The action of respondents in debarring the Writ Petitioner through the impugned Debarment Letter dated 27.07.2023, which is not preceded by any show cause notice or oral hearing as contemplated under the subject Guidelines. The same is not only contrary to the Guidelines, but also is in violation of the principles of natural justice, specifically audi alteram partem , as the Writ Petitioner, being the affected party, lost a reasonable opportunity to put-forth its defence before suffering the consequences. In view of the aforesaid facts and circumstances, the impugned Debarment Letter, dated 27.07.2023 does not stand in the eye of law and

¶146

deserves to be set-aside. Accordingly, the impugned Letter No.GN1/C 79/PF Staff/PF 4 & 5/GNT, dated 27.07.2023 is setaside.

¶147

The Writ Petitioner sought the consequential relief to direct the respondents to permit her to reopen the catering stall/SMU-3 at Platform Nos.4 and 5 of Guntur Railway Station by giving an opportunity to pay the license fee for the year 2023-2024. Admittedly, the period for which the Writ Petitioner sought a direction for permission to reopen the said stall, is over. Therefore, the consequential prayer sought by the Writ Petitioner, to reopen the catering stall/SMU-3 at platform Nos.4 and 5 in Guntur Railway

¶148

SRK, J W.P.No.19327 of 2023

¶149

25

¶150

Station, cannot be granted. However, since the impugned Letter, dated 27.07.2023 debarring the Writ Petitioner from the participation in further catering tenders, is set-aside, it is needless to state that the Writ Petitioner can as well participate in the tenders called for, if any, by the Railways and IRCTC.

¶151

Accordingly, the Writ Petition is allowed in part. There shall be no order as to costs of the Writ Petition.

¶152

As a sequel thereto, the miscellaneous applications, if any, pending in this Writ Petition shall stand closed.

¶153

________________________ JUSTICE K. SREENIVASA REDDY

¶154

12^th March, 2026.

¶155

DNB

G Bharathi v. the Union of India

Case brief

What is this about?

What did the court decide?

G Bharathi v. the Union of India

Case brief

What is this about?

What did the court decide?

Why is it important?

What the court decided

Issues for consideration

Cases cited

Statutes considered

Procedural history

Parties & counsel

Coram

Case details

Similar cases

Pasupuleti China Chennaiah Vs the Union of India

Bhumireddy Rama Krishna Reddy Vs the Union of India

G Venkatesh Vs the Union of India

Polasi Vasudeva Rao Vs the Union of India

Yendrapalli Srinivasa Rao Vs The Union of India

Yarlagadda Abbulu, Vs Union of India