Dismissed

Vinoy Krishna v. The State Of Bihar and Ors.

Patna HC12 Feb 2013CWJC/1234/2013

Case brief

AI extract

What is this about?

The High Court dismissed a writ petition challenging the forfeiture of earnest money and blacklisting of a contractor. The court held the contractor failed to comply with tender terms and distinguished reliance on Erusian case as the blacklisting was an overriding power. However, to prevent disproportionate penalty, the blacklisting was modified to last six months.

What did the court decide?

Blacklisting limited to six months from the date of the impugned order; writ application otherwise dismissed.

Vinoy Krishna Vs The State Of Bihar and Ors. — Public Procurement and Tenders | Patna HC (2013)

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IN THE HIGH COURT OF JUDICATURE AT PATNA

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Civil Writ Jurisdiction Case No.1234 of 2013

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====================================================== 1. Vinoy Krishna S/O Late Damodar Prasad Sharma R/O 301 Aanand Devaki Apartment, Vir Shivaji Path, North S.K.Puri, Boring Road, Patna13, P.S.-S.K.Puri North), Distt-Patna .... .... Petitioner/s Versus 1. The State Of Bihar Through Secretary, Department Of Health, Government Of Bihar, Patna 2. The Secretary, Department Of Health, Government Of Bihar, Patna 3. The Superintendent , Patna Medical College And Hospital, Patna 4. The Apex Body, Medical College And Hospital, Patna .... .... Respondent/s ====================================================== Appearance : For the Petitioner/s : Mr. S.B.K. Manglam, Advocate Mr. Gopal Prasad Roy, Advocate For the Respondent/s : Mr. Avnish Nandan Sinha G.P.11 Mr. Shubhankar Sharma, A.C. to G.P.XI ====================================================== CORAM: HONOURABLE MR. JUSTICE RAMESH KUMAR DATTA ORAL ORDER 2 12-02-2013 Heard learned counsel for the petitioner and learned counsel for the State. The petitioner is aggrieved by and seeks quashing of the order dated 24.12.2012 communicated by the Superintendent, Patna Medical College & Hospital (hereinafter referred to as „P.M.C.H.‟) intimating the decision of the Apex Body of P.M.C.H. to forfeit the earnest money of Rs.1,00,000/- deposited by the petitioner and also to blacklist the petitioner agency and inform the Government.

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The petitioner had applied pursuant to a notice inviting

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Patna High Court CWJC No.1234 of 2013 (2) dt.12-02-2013

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tender dated 2.6.2012 to provide 76 ex-army security men for the PMCH. The terms and conditions were laid down in the notice inviting tender in which it was clearly provided that only ex- army man should be deployed for the said purpose, who should be mentally and physically healthy and below the age of 50 years and he would have to appear before the Medical Board with his documents regarding the age or the photo copy of the discharge book. The petitioner and others applied against the tender notice and the petitioner gave lowest rate of Rs.7,093.71 per month for deploying the security personnel. The petitioner was declared as a successful tenderer and his tender was approved by letter dated 19.9.2012. In the letter dated 19.9.2012, it was further provided that before the date of start of work with respect to ex-Army man found healthy by the Board, his photo, name, address and identity card along with character certificate should be submitted in the office. Thereafter, the work order shall be issued, otherwise another agency would be given the work at the same rate. It was also provided that all the conditions enumerated in the letter dated 19.9.2012 being acceptable to the contractor, the same should be submitted in the form of an affidavit by him so that the work order can be issued. The petitioner duly submitted the affidavit through his letter dated 24.9.2012. Thereafter, by letter dated 26.10.2012

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of the Superintendent of PMCH, the petitioner was directed to produce ex-army men for examination by the Medical Board on 1.11. 2012 and 2.11.2012 at 12.30 P.M. The petitioner, however, did not produce any ex-army men. By his letter dated 1.11.2012, the petitioner submitted that unless the work order is issued, the company cannot start the formalities of mustering the desired number of security personnel from various agencies, like District Soldier Board, Danapur Cantt. and/or through advertisement and the other formalities like medical examination of the security guards of PMCH can only commence thereafter. Therefore by his letter dated 6.11.2012, it was stated that the petitioner had made up his mind to decline from providing services of the PMCH on account of non-issuance of work order immediately after the agency was declared the lowest bidder and requested that the E.M.D. amount of Rs.1,00,000/- be returned to it. Again the dates were fixed on 16.11.2012 and 17.11.2012 for producing the exarmy men along with their certificates at 12.30 P.M. before the Superintendent of P.M.C.H., otherwise the tender of the petitioner would be cancelled and the work order would be given to L2 tenderer at the same rate. Thereafter, by letter dated 28.11.2012 after making reference to non-production of ex-army man pursuant to the letter dated 31.10.2012 and 7.11.2012, the

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petitioner‟s tender was cancelled and a show cause was issued to the petitioner to inform as to why his agency should not be blacklisted. The petitioner by his letter dated 1.12.2012 filed his reply to the show cause notice stating that he had been continuously busy in mustering the Ex-Army Security Guards for putting them through a medical inspection at PMCH, as directed through various letters but had failed to gather the ex-army men for deploying them in the premises of PMCH at the rate approved by the Purchase Committee, i.e., Rs.7,093.71. It was further mentioned that the minimum wages of ex-army men, gun men and supervisors is notified by the Directorate General Resettlement (DGR) every six months, i.e., as on Ist April and Ist October every year and all ex-army security guards, who are earning their bread and butter through security services, keep a close watch on the prevailing/current DGR minimum wage and a photo copy of the DGR rates effective from 1.10.2012 was also enclosed. It was further stated that the petitioner was ready to provide the security service if he is paid the DGR rates or he may be permitted to deploy trained civilian guards in place of Ex-Army Security Guards. It was also submitted that the Agency should not be held responsible because the availability of ex-army security guards at the approved rates was not feasible and was beyond its control.

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Patna High Court CWJC No.1234 of 2013 (2) dt.12-02-2013

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Thereafter, by the impugned letter dated 24.12.2012, the petitioner was informed that the EMD has been forfeited and his agency has been blacklisted on the ground that even after the rates having been approved for security services, the petitioner had not done his work and accordingly, it was so decided by the Apex Body in its meeting held on 21.12.2012.

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Learned counsel for the petitioner submits that the impugned order does not refer to the show cause filed by the petitioner in response to the show cause notice and therefore, it is violative of the principle of natural justice. It is submitted that the petitioner has taken various grounds in his reply to the show cause notice and the same does not appear to have been considered before the impugned order was passed. It is also submitted by learned counsel that there is no condition in the notice inviting tender that the work order would follow physical verification by the Medical Board of the PMCH and certain condition was put for the first time by the letter dated 19.9.2012 and thus the default was committed on account of such action of the respondent authorities.

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Learned counsel for the petitioner also refers to clause 18 of the N.I.T. which provides that if ex-army man was not provided then the contract would be cancelled and the work order would be issued to L2 tenderer. It is, thus, submitted by learned counsel that

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Patna High Court CWJC No.1234 of 2013 (2) dt.12-02-2013

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the respondents cannot be permitted to impose penalty beyond the terms and conditions in the notice inviting tenders and only specific penalty in Clause-18 has been given.

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It is contended by learned counsel for the petitioner that no time limit was fixed for the contract and thus the rates after six months ought to have been revised in terms of the DGR rates published from time to time.

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Learned counsel for the petitioner also submits that the imposition of penalty visits the petitioner with civil consequences and it should be imposed in exceptional circumstances. He contends that the said proposition is supported by a decision of the Apex Court in the case of M/s. Erusian Equipment & Chemicals Ltd. vs. State of West Bengal and others: A.I.R. 1975 Supreme Court 266 in paragraph No.20 of which it been held as follows:-

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“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

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Patna High Court CWJC No.1234 of 2013 (2) dt.12-02-2013

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an opportunity to represent his case before he is put on the blacklist.”

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Learned counsel for the State, on the other hand, submits that Clause 7 and 10 of the tender notice read together make it clear that the ex-army man should be mentally and physically healthy and below 50 years of age and further such ex-army man would have to appear before the Medical Board along with documents regarding the age and his original discharge book and thus it cannot be said that the condition regarding appearance before the Medical Board had been, for the first time, raised in the letter dated 19.9.2012. Learned counsel further refers to the fact that the terms and conditions stated in the letter dated 19.9.2012 while accepting the tender of the petitioner clearly stipulate that the work order would be issued after such medical examination by the office of the respondents for which an acceptance of the terms and conditions had to be filed by the petitioner through an affidavit and the petitioner had, accordingly, submitted his affidavit by his letter dated 24.9.2012 and thus, it is not open to the petitioner to turn around to challenge any condition laid down in the letter dated 19.9.2012.

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I have considered the rival submissions of learned counsels for the parties. From the facts and materials available on

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Patna High Court CWJC No.1234 of 2013 (2) dt.12-02-2013

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the record it is evident that the petitioner had applied pursuant to the tender notice dated 2.6.2012 and had quoted the rates which had been accepted at Rs. 7,093.71 per month for each ex-army man. There was nothing in his application to show that he had laid down any such terms and conditions that the rate quoted was to be revised every six months in tune with the rate laid down by the DGR. It is, thus, not open to the petitioner to raise a fresh plea on the basis of the rates revised by DGR. All terms were mentioned in the notice inviting tender and in the letter dated 19.9.2012, which the petitioner ought to have considered at the time of filing of his tender paper and submitting his affidavit.

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So far as the issuance of work order after the medical examination is concerned, it is true that the NIT is not very specific as to the sequence in which the medical examination of the ex-army man is to be done and the discharge book produced vis-à-vis the issuance of the work order but the same was duly clarified in letter dated 19.9.2012 which the petitioner accepted by filing an affidavit. Since the petitioner has accepted the said condition, it is to be presumed that the reference in the notice inviting tender dated 2.6.2012 was understood by him in the same sense as in the letter dated 19.9.2012 and having accepted the terms and conditions and filed an affidavit before the respondent

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authorities it is not open to the petitioner to turn around and challenge the same.

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So far as reliance made by learned counsel for the petitioner on clause 18 of the tender condition is concerned, it does not prescribe any penalty rather it merely states that on the failure of the lowest tenderer to provide ex-army man his tender would be cancelled and it would be given to the L2 tenderer. Such condition cannot be held to be a penalty. It is clearly mentioned in the notice inviting tender that the EMD would be forfeited on the failure to comply with the tender procedure.

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So far as the blacklisting of the petitioner is concerned, it is a overriding power exercised by the authority in case of any misconduct or failure of a grave nature on the part of the tenderers/ contractors including in the matter of complying with the terms and conditions of the tender/contract. The same may be on account of any action of the tenderer/contractor vis-a-vis the contract in question or with respect to any other conduct of the contractor which may make him liable for such blacklisting in terms of the normal practice in this regard. Hence, reliance made on the decision in Erusian Equipments case (supra) for the said purpose is of no avail.

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Now, the question of violation of principles of natural

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justice is to be seen. The show cause was issued to the petitioner only with respect to non-compliance of part of the terms and conditions in accordance with the notice inviting tender which had been awarded to him by not producing the ex-army men on the dates on which they were to be produced as per two letters dated 26.10.2012 and 7.11.2012 issued by the respondent authorities. If the petitioner in his reply to show cause raised several extraneous issues, it was not necessary for the respondents to answer each and every such issue in the final order.

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So far as the main issue is concerned, the petitioner could not show that after accepting the tender he has, as a matter of fact, proceeded to execute the terms and conditions of his tender. The said basic fact has been considered in the impugned order dated 24.12.2012 blacklisting the petitioner and thus mere non-reference to any irrelevant point in the show cause of the petitioner does not make the order illegal or invalid.

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The only issue, which remains to be considered, is that the impugned order dated 24.12.2012 does not fix a time limit with respect to the blacklisting of the petitioner. It is evident that a blacklisting order cannot normally operate permanently or for an indefinite period of time. It was incumbent upon the respondents to have applied their mind as to for what period the petitioner

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Patna High Court CWJC No.1234 of 2013 (2) dt.12-02-2013

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ought to be blacklisted as otherwise it would amount to imposing a disproportionate penalty.

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Normally, I would have remanded the matter to the authorities concerned to fix a time limit of blacklisting but on a consideration of the entire facts and circumstances of the case and the fact that the DGR rates have been revised substantially with effect from 1.10.2012, I feel that the ends of justice would be met if the blacklisting order dated 24.12.2012 is limited to a period of six months from the date of that order.

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The writ application is, accordingly, dismissed but subject to the aforesaid modification of the impugned order dated 24.12.2012.

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V.P.Sinha/-

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(Ramesh Kumar Datta, J)

Vinoy Krishna v. The State Of Bihar and Ors.

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Vinoy Krishna v. The State Of Bihar and Ors.

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