Partly allowed

M/S Sai Consulting Engineers Pvt.Ltd. v. Chief Project Man. Rail Vik.Nig.andANR.

Chhattisgarh HC5 Jul 2012WPC/5599/2011

Case brief

AI extract

What is this about?

High Court of Chhattisgarh quashed a communication returning the petitioner's unopened tender, citing violation of fundamental rights. The court held the State cannot deny tender submission without passing a blacklisting order via due process, though consequential relief was limited as another bidder had already started work.

What did the court decide?

Impugned letter dated 18.7.2011 quashed by certiorari; Railway to pay Rs. 5,000 costs; liberty to claim damages separately.

M/S Sai Consulting Engineers Pvt.Ltd. Vs Chief… — Service and Employment | Chhattisgarh HC (2012)

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IN THE HIGH COURT OF CHHATTISGARH AT BILASPUR

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W.P. (C) No......'3^>..TJJ.........../2011

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PETITIONER: M/s SAI Consulting Engineers Pvt. Ltd., A Company incorporated under the Companies Act, 1956, Through its Executive Director / ^/ ^YT Authorized Signatory, -•;^ Shri Dhaval M. Parikh, ,^^ Office at SAI House, Satyam Square, ^i^ Behind Rajpath Club, Bodakdev, v^my ^^ Ahmedabad - 380 059 (Gujarat) ^ ^" VERSUS

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RESPONDENTS: The Chief Project Manager, Rail Vikas Nigam Ltd., Office No. 5 & 6, 2"d Floor, AshokaMilIennium, New Rajendra Nagar/ Raipur - 492 001 (C.G.) S.T Rail Vikas Nigam Ltd., 'rAA Goverrunent of L-idia Enterprise, Through The Managing Director, Office at 1st Floor, August Kranti Bhawan, Bhikaji Kama Place, New Delhi -110 066

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PETITION UNDER ARTICLE 226/227 OF THE CONSTITUTION ;OF INDIA FOR ISSUANCE OF APPROPRIATE WRIT(S) ^F PROHIBITION AND MANDAMUS AND FQR QTHER SUITABLEWRITS AND DIRECTIONS:-

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HIGH COURT OF CHHATTISGARH AT BILASPUR

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D.B.: Hon'ble Mr. Justice Abhay Manohar Sapre & Hpn'ble Mr. Justice G. Minhajuddin

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W.P.(C) No.5599of2011

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PETITIONER

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M/s. Sai Consulting Engineers Pvt. Ltd.

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Versus

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RESPONDENTS

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The Chief Project Manager and

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another

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WRITPETITION ARTICLE 226/227 OF THE CONSTITUTION OF INDLA

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Appearance :

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Mr. Abhinav Kardekar, Counsel for the petitioner.

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Mr. Abhishek Sinha, Counsel for the respondents.

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ORDER

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(05.07.2012)

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The following order of the Court was passed by

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Abhay Manohar Sapre, J.

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Heard.

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(2) By filing this.writ petition under Article 226/227 of the Constitution of India. the writ petitioner seeks to challenge the communication of the respondent dated 18.7.2011 (AnnexureP-1), by which, the respondents did not open the tender/proposal of the writ petidoner and returned to thera un-

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opened as it is on the ground that since the acdon against the writ petitioner for blacklisting and debarring them is under contemplation and hence, it is not possible to open the tender proposal^{submittedbythewrit} petitioner.

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(3) The impugned letter coinmunication reads as under :

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"To,

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Date.: 18.07.2011

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M/s. Sai Consulting Engineers Pvt. Ltd. "SAI House", Sayyam Corporate Square, Ahmadabad - 380 059 Gujarat (India)

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Sub.: PROJECT MANAGEMENT CONSULTANCY FOR^"Balance works of Construction of Road bed, Major and Minor Bridges and installation of track (excluding supply of rails, fhick web switehes and weldable CMS crossings), SignaUng and Electrical (Railway Elecfa-ification and General electrification) in connection wifh provision of 3rd line in Bhatapara-Urkura section (58.71) km) in the State of Chhattisgarh (India)." Reg.Submission of RFP for subject work opened on dt.21.06.2011.

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Ref.: RVNL Corporate Office L.No.CII/Sbowcause notice/Sal/2011/81 dated 28.06.2011.

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As fhe directives of the Bid per Evaluation Conunittee and accepting authority, the financial bid for the subject work is left unopened aad returned herewith. The bid security will be returned soon.

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Encl.: One Un-opened packet containing Financial Bid."

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(4) Like wise the letter dated 28.6.2011 (Annexure-P-2) referred to in the impugned letter quoted supra and which was made basis for issuing the aforesaid impugned letter reads as under:

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.:^A^V^ ..»><.fc

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"All DGMs, JGMs & AGMs,

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AU CPMs/GMs, ALL EDs,

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RVNL

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Sub.: Banning of Business wifh PMC, M/s. Sai Consulting Engineers Pvt. Ltd., 4, Kuldeep Society, Near Ishwar Bhavan, Navarangpura, Ahmedabad (Gujarat) 380 009 engaged in "Constmction of Roadbed, Major and Minor Bridges and Installation of Track, Signaling and Electric (Railway Electrification and General Electrification) in connection wifh Bhatapara^-Urkura Section in the State of Chhattisgarb."

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Ref.: This office letter of even nuinber dated 22.06.2011

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M/s. Sai Consulting Engineers Pvt. Ltd. were served with a Show Cause Notice fhrough CPM/Raipur for banning business dealing for 5 (Five) years stating the deficiencies in the Consultancy work for the above project.

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The Competent Aufhority has dedded in the interest of RVNL not to enter into fresh business with M/s. Sai Consulting Engineers Pvt. Ltd. pending banning of business proceedings. Action raay be taken accorduigly.

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(P.K. Singh) Executive Director/Infra

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Copy for infonnation to

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DF, DP,DO, DPE, AGM/CC (CVO)"

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(5) The short question which arises for consideration in this writ petition is whether respondents were justified in issuing the impugned communication dated 18.07.2011 (Annexure-P-1) and in consequence were jusdfied in their action contained therein ?

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(6)

Facts of the case are these.

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(7) On 18.5.2011 (Annexure-P-8), the respondent - a Government of India undertaking known as "Rail Vikas Nigam Limited formed for the purpose of effective working of railways in our country invited sealed proposal from persons at large for "PROJECT providing to the railways MANAGEMENT CONSULTANCY SERVICES" for their railway line [ 3RD LINE IN BHATAPARA-URKURA • SECTION (58.71 KM) ]. The writ petitioner claiming to be the person eligible for dong this work submitted their proposal/tender and offered to do the work for the Railways. Several othera persons also submitted. their proposals/tenders.

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(8) The respondent by aforementioned impugned letter dated 18.7.2011 informed to the writ petitioner that it is not possible for the Railways to entertain or/and accept the tender /proposal submitted by the writ petitioner because it is decided internally not to have any business dealing in future with the writ petitioner due to writ petitioner's poor and unsatisfactory performance in past in other or/and similar work. The respondent, therefore returned the sealed proposal as it is to the writ petitioner without opening it. The respondent then proceeded to open all other proposals received by them from other persons (tenderers) and accepted one tender/proposal and accordingly, granted them the contract for the work in question. It is this action of the respondent i.e not opening their tender and not considering it on merits, is under challenge in this writ petition by the writ petitioner.

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(9) The notice of the writ petition was served on the respondents. They have filed their return supporting their action inter alia in the light of their internal letter dated 28.6.2011 quoted supra as also by contending that since

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previous work given to the writ petidoner by the respondents was found poor and further found far from satisfactory on account of several reasons and hence, it was decided internally not to give any contract in question to the writ petitioner and it is with this background, the impugned communication was sent to the writ petidoner by the respondent.

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(10) Having heard the learned counsel for the parties and on perusal of the record of the case, we are inclined to allow the writ and quash the impugned communication (Annexure P-1). (11) In our considered opinion, the action on the part of the respondents in not opening the tender proposal submitted by the writ petitioner pursuant to the offers invited by the respondent and returning the said closed' envelope to the writ pedtioner^{isonthefaceof itbadinlawanddeservestobeset-} aside being legally unsustainable.

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(12) The State or/and their authorities cannot deprive the citizen from entering in business with the State and thereby, cannot deprive them from pardcipating in the tender process initiated by the State for any work. If it does then it constitutes a case of violation of citizen's rights guaranteed under Ardcle 14 read with Article 19( 1 ) (g)of the Constitution of India .The State cannot discriminate inter se cidzens when it enters into the field of business and has to give every citizen an equal opportunity to participate with all alike him. However, no citizen has a right to insist upon the State that he should be awarded the contract/work to fhe exclusion of others and nor this Court can issue a mandamus of this nature against the State but certainly a citizen has a right to insist that he should be allowed to submit his tender to the State and on that basis has a legitimate right to claim participation in such tender process along with others alike hiin. If this right of citizen is violated or /and taken away by the State without there being any

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~> 1

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justifiable reasons then he has a right to seek an appropriate writ against the State and its authorities.

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(13) It is only when the State after giving an opportunity to the person concerned decide to blacklist or/and debar him from entering into any future business with them and communicate its reasons for doing so as per law laid down in such type of cases, then, and in that event, the State would be justified in not permitting such person to deal with the State but not otherwise.

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(14) Indeed the question as to when and in what circumstances and by which manner/mode , the State and its agencies can debar and blacklist any person from entering and dealing with the business with the State /authorities, remains no more resintegra and stands answered by series of decisions rendered by the Supreme Court reported in M/s. Erusian Equipment and Chenucals Ltd. v. State of West Bengal and another, AIR 1975 SC 266 and Raghunath Thakur v. State ofBihar and others. AIR 1989 SC 620.

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(15) This is what the Supreme Court held in M/s. Erusaian Eoruipment and Chemicals Ltd. ISupra) :

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"19. Where the State is dealing with individuals in transactions of sales and purchase of goods,^{thetwoimportantfactorsarethatan} individual is entitled to ta-ade with the Govemment and an individual is entitled to a fair and equal treatment with others. A duty to act fairly can be interpreted as meaaing a duty to observe certain aspect of rules of natural justice. A body may be under a duty to give fair consideration to the facts and to consider the representations but not to disclose to those persons details of information in its possession. Sometimes duty to act fairly can also be sustained without providing opportunity for an oral hearing. It will depend upon the nature of the interest to be affected, the circurastances in which is power is exercised and the nature of sanctions involved therein.

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'' \

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s-.;

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Blacklisting bas fhe effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Govemment 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 concemed should be given an opportunity to represent his case before he is put on the blacklist."

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(16) The saine principle was then reiterated by their Lordships in Raghunath Thakur fSutira) in the same words as under :

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Indisputably, no notice had been given to the appellant of the proposal of blacklisting the appellant. It was contended on behalf of the State Govemment that there was no requirement in the rule of giving any prior notice before blacklisting any person. In' so far as the contention that fhere is no requireinent specifically of giving any notice is concemed, the respondent is right. But it is an implied principle of the rule of law that any order having civil consequence should be passed only after following the principles of nature justice. It bas to be realized that blacklisting any person in respect of business ventures has civU consequences for the future business of the person concemed in any event. Even if the rules do not express so, it is an elenientary principle of nature justice that parties affected by any order should have right of being heard and making representations against the order. In that view of the matter, fhe last portion of the order in so far as it directs blacklisting of the appellant in respect of future contracts, cannot be sustained in law. In the premises, fhat pordon of fhe order directing fhat the appeUant be placed in the blacklist in respect of future contracts under fhe Collector is set aside. So far as the cancelladon of the bid of the appeUant is concemed, that is not affected. This order, will, however, not prevent fhe State Govemment or the appropriate authorities from taking any future steps for blacklisting the appellant if the Govemment is entitled to do so in accordance wi£h law, i.e. giving fhe appeUant due notice and an opportunity of makiug representation. After hearing the appeUant, the State Govemment will be at liberty to pass any order in accordance with law indicatmg the reasons therefore. We, however, raake it quite clear that we are not expressing any opinion on the correctoiess or

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otherwise of fhe allegations made against the appeUant. The appeal is fhus disposed of."

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(17) In our opinion, keeping these well known principles laid down by the Supreme Court in our mind and applying them to the undisputed facts of the case in hand, we find fhat the action on the part of the respondent (State) in not allowing the writ petitioner from submitting their tender and not considering such tender on its merits by not even opening it has resulted in causing infringement of writ petidoner's fundamental rights guaranteed to them under Article 19 (1) (g) read with Article 14 of the Constitution because admittedly, as on the date, no orders for their black lisdng/debarring from doing any business had been passed and nor any proceeding for their blacklisting had been initiated bythe respondents. In these circumstances, till the writ petidoners had been actually debarred from doing business with the State in accordance with the procedure prescribed, they had every right to participate in all business deals of the respondent by atleast submitting their tenders/proposals and the respondent was equally bound to open such tender/proposals as and when submitted and consider them on its merits with a view to find out as to whether they were worth accepting on merits or rejecting it. It was not done in this case and hence, the impugned communication cannot legally sustain.

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(18) In the light of the aforesaid discussions, we are of the view that the impugned communication dated 18.07.2011 deserves to be quashed.

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(19) It was, however, brought to our notice that in the meantime, the respondent had already awarded the contract to one tenderer and they have also started working by investing their money. In the light of this subsequent developinent occurred during pendency of the writ petition and further due to intervention of third party rights, who are not parties to this writ petition, we are of view that it is not possible for this Court

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to pass any kind of consequential writ against the respondents except to quash the impugned letter referred supra.

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(20) We, however, grant liberty to the writ petitioner to take recourse to any other legal remedy against the respondents for recovery of daraages /compensation, if they claim to have suffered due to impugned action of the respondents, which prevented them from doing business with the respondents in relation to transaction in question by filing proceedings in appropriate forum and claim compensation on its proving as per law from the respondents.

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(21) We, however, also wish to make it veiy clear that we have set-aside the impugned action purely on legal ground as would be clear frora our finding and hence, the respondents would be free to take appropriate action in future against the writ petitioner in case if they so wish in relation to blacklisting or/and debarring from doing business which they have in contemplation by giving to the writ petitioner a show cause notice keeping in view the law laid down in the two Supreme Court decisions quoted supra and setting out therein the proper facts and grounds without any prejudice or/and bias and after giving to the writ petitioner the proper opportunity to file reply to such show cause notice then to pass appropriate orders accordingly. In so doing, this order would not come in their way. (22) It is with these observations, the writ petition succeeds and is allowed in part. The impugned letter dated 18.7.2011 (Annexure-P-1) issued by the respondents is quashed by issuance of writ of certiorari.

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(23) Cost of Rs. 5000/- is payable to the writ petitioner by the respondents.

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Sd/i) ^- (Abhay Manohar Sapre) (G. Minhajuddin) JUDGE JUDGE

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shyna

M/S Sai Consulting Engineers Pvt.Ltd. v. Chief Project Man. Rail Vik.Nig.andANR.

Case brief

What is this about?

What did the court decide?

M/S Sai Consulting Engineers Pvt.Ltd. v. Chief Project Man. Rail Vik.Nig.andANR.

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