M/S Vardan Associates Private Limited Vs Numaligarh Refinery Limited and 7 Ors.

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Page No.# 1/11

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GAHC010004202025

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2025:GAU-AS:6036

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THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

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Case No. : WP(C)/142/2025

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M/S VARDAN ASSOCIATES PRIVATE LIMITED

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A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956 HAVING ITS REGISTERED OFFICE AT G-7, ASSOCIATES PLAZA, I BLOCK, SHASTRI NAGAR, MEERUT-250004, UTTAR PRADESH, REPRESENTED BY ITS MANAGING DIRECTOR, MR. SACHIN KUMAR TYAGI, S/O RAKESH KUMAR TYAGI, R/O D-194, D BLOCK, SHASTRI NAGAR, MEERUT-250004

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VERSUS

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NUMALIGARH REFINERY LIMITED AND 7 ORS A GOVERNMENT OF INDIA ENTERPRISE REPRESENTED BY ITS EXECUTIVE DIRECTOR, PANKAGRAND, P.O.-NUMALIGARH REFINERY COMPLEX, DIST- GOLAGHAT, ASSAM, PIN-785699

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2:GENERAL MANAGER (COMMERCIAL) NUMALIGARH REFINERY LIMITED P.O.-NUMALIGARH REFINERY COMPLEX DIST- GOLAGHAT ASSAM PIN-785699

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3:HEAD (PROJECT-COMMERCIAL) NUMALIGARH REFINERY COMPLEX P.O.-NUMALIGARH REFINERY COMPLEX DIST- GOLAGHAT ASSAM PIN-785699

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4:GENERAL MANAGER (CONSTRUCTION) ENGINEERS INDIA LIMITED HOTEL MONARCH AACHAL BANANI COMPLEX

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NEAR BDO SHIV MANDIR SILIGURI-734011 WEST BENGAL

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5:RESIDENT CONSTRUCTION MANAGER ENGINEERS INDIA LIMITED HOTEL MONARCH AACHAL BANANI COMPLEX NEAR BDO SHIV MANDIR SILIGURI-734011 WEST BENGAL

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6:CENTRAL VIGILANCE COMMISSIONER SATARKTA BHAVAN BLOCK-A GPO COMPLEX INA NEW DELHI-110023

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7:M/S TRENCHLESS ENGINEERING SERVICES PRIVATE LIMITED (TESPL) REPRESENTED BY ITS DIRECTOR MR. BIPIN B GUPTA HAVING ITS REGISTERED OFFICE C-185 MAYAPURI PHASE-II NEW DELHI-110064

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8:BANK OF INDIA SECTOR-18 NOIDA BRANCH GAUTAM BUDDHA NAGAR-201301 REP. BY ITS BRANCH MANAGER

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Advocate for the Petitioner : MR B D DAS, MR J LOTHA,MR P UPADHYAYA,MR D BANIA,MRS R DEKA

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Advocate for the Respondent : MR. S S ROY (FOR CAVEATOR), MRS. R DEVI (C.G.C (R6)),MR. A DHANUKA (R-8),MR. A GANGULY(R-8),MS A DEKA(R-7),MR. D DOLEY (R-7),MR. R P SARMAH(R-7),MR. S BANIKYA(R-1,2,3,4,5),MR. M GOGOI (R-1,2,3,4,5),MR. N DEKA(R1,2,3,4,5),DY.S.G.I.

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Page No.# 3/11

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BEFORE HONOURABLE MR. JUSTICE MICHAEL ZOTHANKHUMA

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ORDER

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15.05.2025

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Heard Mr. B.D. Das, learned Senior Counsel for the petitioner assisted by Mr. J. Lotha, learned counsel. Also heard Mr. N. Deka and Mr. A. Garg, learned counsels for the respondent nos.1 to 5. Mr. R.K.D Choudhury, learned Dy. SGI appears for the respondent no.6. Mr. R.P. Sharma, learned Senior Counsel appears for the respondent no.7 assisted by Ms. A. Deka, learned counsel and Mr. A. Ganguly, learned counsel appears for the respondent no.8.

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The petitioner’s case is that the petitioner was issued contract work for installation of pipeline by Horizontal Directional Drilling. The period of contract was for 20 (twenty) months. As the contract work could not be completed within the stipulated time period, the petitioner was issued 6 (six) Show-Cause Notices prior to termination of the contract work. Replies were submitted by the petitioner to the notices. Thereafter the contract was terminated prior to completion of the contract, vide termination order dated 12.12.2024. Subsequent to the termination of the petitioner’s contract work, an NIT was issued for concluding the petitioner’s balance contract work, which was awarded to the respondent no.7. The petitioner has put to challenge the termination order dated 12.12.2024 and the award of the balance contract work to the respondent no.7. The petitioner has also been put on the holiday list by the termination order dated 12.12.2024.

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The petitioner’s counsel submits that the petitioner has also been put on

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Page No.# 4/11

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the holiday list, vide termination order dated 12.12.2024, without initiating any process for blacklisting the petitioner, i.e. by issuing a separate Show-Cause Notice for blacklisting the petitioner. The petitioner’s counsel further submits that in view of there being an arbitration clause in the contract agreement executed between the parties which is Clause 8.7.2, the petitioner seeks to invoke the arbitration clause for settlement of all petitioner’s disputes between the parties. However, in respect of the petitioner being put on the holiday list/blacklisting, in terms of the termination order dated 12.12.2024, the petitioner’s counsel submits that a separate Show-Cause Notice has not been issued to the petitioner. As the petitioner has not been put to notice with regard to any specific default or breach of contract by the petitioner, detailing the alleged breaches and defaults for blacklisting the petitioner and allowing the petitioner to rebut the same, the petitioner cannot be blacklisted. In this respect, he has relied upon the judgment of the Supreme Court in the case of

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Gorkha Security Services vs. Government (NCT of Delhi) & Others, reported in (2014) 9 SCC 105.

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The petitioner’s counsel thus submits that the termination order dated 12.12.2024 should be set aside, insofar as it has put the petitioner in the holiday list.

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The learned counsels for the respondent nos.1 to 5 submit that the petitioner has been given due notice that the petitioner would be put on holiday list, in terms of the Show-Cause Notices dated 10.09.2024 and 13.11.2024. The petitioner has also been issued 4 other Show-Cause Notices, prior to the ShowCause Notices dated 10.09.2024 & 13.11.2024, stating the specific instances of

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breach and defaults on the part of the petitioner, while doing the contract work. As such, the petitioner was well aware of it’s defaults and the explanations required to made. The petitioner having also made replies to the Show-Cause Notices, it cannot be said that the petitioner was not aware of the imputations made against it and for which due opportunity for rebuttal has been given. They accordingly submit that there is no requirement of initiating a fresh Show-Cause Notice, for putting the petitioner on the holiday listing/blacklisting.

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The learned counsels for the respondent nos.1 to 5 submit that in the Show-Cause Notices dated 10.09.2024 & 13.11.2024, the petitioner was put to notice that not only would the petitioner’s contract be terminated, due to defaults and breach on the part of the petitioner in relation to it’s contract work, but that it’s business dealings would also be suspended/banned. They accordingly submit that the petitioner’s prayer for setting aside the impugned termination order dated 12.12.2024, in relation to placing the petitioner on the holiday listing/blacklisting, should not be interfered with.

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I have heard the learned counsels for the parties.

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As can be seen from the submissions made by the learned counsels for the parties, the only issue to be decided in the present case is whether the putting of the petitioner under holiday listing for a period of 2 years, vide the termination order dated 12.12.2024, has been done after issuance of a proper Show-Cause Notice by the respondents.

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Page No.# 6/11

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Out of the 6 Show-Cause Notices that had been issued by the respondent nos.1 to 5 to the petitioner, with regard to the defaults/breaches of the petitioner’s contractual obligations, the Show-Cause Notice dated 10.09.2024 has stated that the petitioner was required to show-cause as to why the business dealings with the petitioner should not be suspended/banned. The relevant portion of the Show-Cause Notice dated 10.09.2024 is reproduced hereinbelow, as follows :

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“Since the above facts reflects default/breach of contractual obligations, you are hereby required to Show Cause in writing within 15 calendar days from the date hereof as to why the contract should not be terminated and Business dealings with you be suspended/banned/”

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A perusal of the above notice dated 10.09.2024 shows that the petitioner had been put to notice as to why his business dealings with the respondents should not be suspended/banned. There is no clause in the tender documents or the agreement executed between the parties, with regard to suspending or banning a contractor, though Clause 3.14 of the General Conditions of Contract (GCC) provides for holiday listing/blacklisting of a contractor, which states as follows :

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“3.14 HOLIDAY LISTING : The guidelines and procedures for holiday listing as adopted by NRL shall be applicable”

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The policy/guidelines of the NRL, for putting a contractor for holiday listing, provides that the term holiday listing, banning of firm, suspension,

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blacklisting etc. will convey the same meaning as debarment.

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Keeping the above in view, it can be said that the Show-Cause Notice dated 10.09.2024 had put the petitioner to notice, with regard to the intention of the State respondents to put the petitioner on holiday listing. The problem however arises with the subsequent and last Show-Cause Notice dated 13.11.2024.

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The last Show-Cause Notice dated 13.11.2024 issued by the respondents, has put the petitioner to notice that it’s contract was liable to be terminated and that the following actions could be initiated against the petitioner under Clause 30.3.2 of the Special Conditions of Contract/General Purchase Conditions to the tenderer, which are as follows :

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“i. Offload the entire job and carry out such portion of the job through any other agency (ies) at your risk and cost;

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ii. Forfeit the Security Deposit/Retention Amount Deposit, deposited against the LOA/PO;

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iii. Initiate any other penal action as per tender terms/NRL policies, including without limitation place your firm on holiday listing for a period of two (2) under Clause 2.1(h) of the NRL ‘Holiday Listing’ policy.”

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The use of the words in Clause iii “ initiate any other penal action ” indicates that the other penal action including putting a firm on holiday listing for a period of 2 years, has not been done and could be initiated. Clause2.1(h) of the NRL “Holiday Listing Policy” provides for placing an Agency including the holiday list, on the grounds of the Contractor/Agency having committed breach

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of contract or having abandoned the contract.

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The respondents cannot be allowed to blow hot and cold in terms of the Show-Cause Notice dated 10.09.2024 vis-a-vis the final Show-Cause Notice dated 13.11.2024. While the earlier Show-Cause Notice appears to have put the petitioner to notice regarding the proposal to ban the petitioner, there is nothing stated as to the period during which the petitioner would be banned. The last Show-Cause Notice dated 13.11.2024 has however stated that the respondents could initiate any other penal action for putting the petitioner on holiday listing for 2 years. Thus, in terms of the last Show-Cause Notice dated 13.11.2024, initiating the process for putting the petitioner on holiday listing would require issuing a fresh Show-Cause Notice to the petitioner.

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The respondents cannot be allowed to blow “hot and cold”, In this regard it would be profitable to refer to the judgment of the Supreme Court in the case of Union of India & Others vs. N. Murugesan , reported in (2022) 2 SCC 25 , where it has been held that no person can be allowed to blow “hot and cold” or “approbate and reprobate” at the same time.

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With regard to the issue of blacklisting and the requirement of a notice prior to blacklisting, it would be profitable to refer to the judgment of the Supreme Court in the case of M/s Erusian Equipment & Chemicals Ltd. vs. State of West Bengal & Another , reported in (1975) 1 SCC 70 .

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In the case of M/s Eurasian Equipments Ltd. (supra) , the Supreme

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Court has held that blacklisting involves civil consequences and that it has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for the purpose of gain. 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. The Supreme Court further held that the exercise of powers and functions in trade by the State is subject to Part-III of the Constitution. Article 14 speaks of equality before the law and equal protection of the laws. Equality of opportunity should apply to matters of public contracts. The State has the right to trade and the duty to observe equality. An ordinary individual can choose not to deal with any person. However, the Government cannot choose to exclude any person by discrimination. The order of blacklisting has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is not on the approved list is unable to enter into an advantageous relation with the Government, because of the order of blacklisting. A person who has been dealing with the Government in business ventures has a legitimate interest or expectation keeping the above decision of the Supreme Court in view. It has to be kept in mind that a person has a right to carry on any trade and business. If the State takes a decision which affects the livelihood/business of the petitioner, which could amount to a civil death, the affected person has to be given an opportunity of hearing. The blacklisting of a person without being heard amounts to doing away with the principles of natural justice. Further, there is a difference between notices sent prior to termination of a contract and notices sent prior to debarment/blacklisting. One affects a particular contract, while the other can

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affect his livelihood and the livelihood of his employees.

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In the case of UMC Technologies Private Limited vs. Food Corporation of India & Another, reported in (2021) 2 SCC 551, the Supreme Court has held that in the context of blacklisting of a person or an entity by the State Corporation, the requirement of a valid, particularized and unambiguous Show-Cause Notice is particularly crucial, due to the severe consequences of blacklisting and the stigmatisation that accrues to the person/entity being blacklisted. It further held that for a show cause notice to constitute a valid basis of a blacklisting order, such notice must spell out clearly, or its contents be such that it can be clearly inferred there from, that there is intention on the part of the issuer of the notice to blacklist the noticee. Such a clear notice is essential for ensuring that person against whom the penalty of blacklisting is intended to be imposed, has an adequate, informed and meaningful opportunity to show cause against his possible blacklisting.

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On considering the judgments of the Supreme Court referred to above, this Court is of the view that the final Show-Cause Notice issued by the respondents with regard to termination of the petitioner’s contract is the ShowCause Notice dated 13.11.2024, wherein it has been clearly stated that the respondents could initiate other penal action, including placing the petitioner on holiday listing for a period of 2 years, under Clause 2.1(h) of the NRL holiday listing policy. The above clearly indicates that the respondents have not initiated any action for placing the petitioner on holiday listing for a period of 2 years till date and as such, the Show-Cause Notice dated 13.11.2024 would have to be considered to be a Show-Cause Notice only in respect of termination of the

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contract. As such, the Show-Cause Notice dated 10.09.2024 and the ShowCause Notice dated 13.11.2024 could not have been the basis for putting the petitioner on holiday listing for a period of 2 years, vide the impugned termination order dated 12.12.2024. In view of the reasons above, the termination order dated 12.12.2024 is hereby set aside, only to the extent that the petitioner firm has been put on holiday listing for a period of 2 years.

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The legality of the termination notice/order dated 12.12.2024, terminating the contract and all other contractual issues/disputes would be decided by an Arbitrator, as the petitioner’s counsel has taken a stand that the petitioner would be invoking the arbitration clause for redressal of all other grievances of the petitioner. Thus all other issues with regard to the termination of the contract and the consequential allocation of the balance contract work to the respondent no.7 shall remain open for the Arbitrator to decide, as it is the stand of the respondents that the disputes should be decided in terms of the arbitration clause.

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It is needless to add that the respondents have the liberty to initiate the action for putting the petitioner on holiday listing, if so advised.

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The writ petition is accordingly disposed of.

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JUDGE

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Comparing Assistant

M/S Vardan Associates Private Limited v. Numaligarh Refinery Limited and 7 Ors.

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M/S Vardan Associates Private Limited v. Numaligarh Refinery Limited and 7 Ors.

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