Allowed

The Infrastructure Consultant Engineers Architects and Planners v. The Bihar Rajya Pool Nirman Nigam Ltd. and Anr.

Patna HC18 Feb 2013CWJC/376/2013

Case brief

AI extract

What is this about?

High Court quashed a debarment order passed without show-cause notice due to natural justice violations. Court also held the contractor's tender was valid and must be considered despite the refusal of the authority to accept hand-delivered drafts.

What did the court decide?

Impugned debarment letter dated 18.12.2012 quashed; petitioner's tender directed to be considered.

The Infrastructure Consultant Engineers… — Contract and Commercial Disputes | Patna HC (2013)

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IN THE HIGH COURT OF JUDICATURE AT PATNA Civil Writ Jurisdiction Case No.376 of 2013

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====================================================== The Infrastructure Consultant Engineers Architects & Planners (ICEAP) a proprietorship firm, through its proprietor namely Sandhya Rai daughter of Sri A.N. Rai having its Office at Flat No. 902, Block 17, East End Apartment, Mayur Vihar Phase-I (Extension) New Delhi

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.... .... Petitioner Versus 1. The Bihar Rajya Pool Nirman Nigam Ltd., through ots Managing Director, 7, Sardar Patel Marg, Patna 2. The Managing Director, Bihar Rajya Pool Nirman Nigam Ltd., 7, Sardar Patel Marg, Patna

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.... .... Respondents ====================================================== with Civil Writ Jurisdiction Case No.378 of 2013 ====================================================== The Infrastructure Consultant Engineers Architects & Planners (ICEAP) a proprietorship firm, through its proprietor namely Sandhya Rai daughter of Sri A.N. Rai having it‟s Office at Flat No. 902, Block 17, East End Apartment, Mayur Vihar Phase-I (Extension) New Delhi

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.... .... Petitioner Versus 1. The Bihar Rajya Pool Nirman Nigam Ltd., through its Managing Director, 7, Sardar Patel Marg, Patna 2. The Managing Director, Bihar Rajya Pool Nirman Nigam Ltd., 7, Sardar Patel Marg, Patna .... .... Respondents ====================================================== Appearance : (In both the cases) For the Petitioner/s : M/S J.S.Arora, Manoj Kumar & Ajay Kumar, Advocates For the Respondent/s : Mr. Lalit Kishore, Sr.Advocate with Mr.Md.Nadim Seraj, Advocate ====================================================== CORAM: HONOURABLE MR. JUSTICE RAMESH KUMAR DATTA ORAL ORDER

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5 18-02-2013 Heard learned counsel for the petitioner and learned Additional Advocate General No.1 appearing for the respondents. Both the writ applications filed by the same petitioner are

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Patna High Court CWJC No.376 of 2013 (5) dt.18-02-2013

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interconnected in the sense that the order of debarment dated 18.12.2012 under challenge in CWJC No.376 of 2013 has resulted in the petitioner‟s tender not being considered in the fresh tender notice which is the subject matter of the second writ petition being CWJC No.378 of 2013 and they have accordingly been heard together and are being disposed of by this common order.

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The petitioner claims to be a consultant duly empanelled with the Ministry of Road Transport and Highway, Government of India since 2007 and has been working for several Government organizations of different States, such as, Rajasthan, Haryana and Union Territory of Delhi to their full satisfaction. The petitioner entered into an agreement dated 2.12.2010 with the respondent Bihar Rajya Pul Nirman Nigam Ltd. for a period of two years and the said agreement expired on 1.12.2012. It is the stand of the petitioner that the agreement signed between the parties was of five pages only and apart from the same nothing else was contained in the said contract although there is reference to General Conditions of Contract (GC), Special Conditions of Contract (SC) and other Appendices which have been treated as integral part of the contract. It is stated that the petitioner during its tenure of working as consultant for quality assurance had been pointing out from time to time to the respondents and

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Patna High Court CWJC No.376 of 2013 (5) dt.18-02-2013

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their officers with regard to non-discharge of their duties and obligations which were essential for the quality of the bridge and it‟s strength and which were necessarily required to be observed as per IRC Code which had displeased the respondents. After the expiry of the agreement on 1.12.2012 the petitioner received a letter dated 18.12.2012 which was signed on 13.12.2012 by which it had been debarred from working as consultant with the respondents in terms of Clause 7.4.2 of the contract referring to earlier letters dated 9.7.2012, 6.8.2012 and 5.10.2012 and the alleged default found in the reports of May, June and July, 2012 which was not rectified and further non-supply of the monthly report from July, 2012 to October, 2012 as also the lacuna found in the laboratory with respect to men and equipments on inspection made on 24.7.2012. Aggrieved by the same the petitioner has filed CWJC No. 376 of 2013 challenging the debarment order.

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In the meantime, the respondents have come out with a fresh NIT dated 3.12.2012 against which the petitioner filed its tender electronically on 25.12.2012 but it is alleged by the petitioner that the Bank Drafts towards EMD were not received in the office of the respondents on 27.12.2012, whereas the last date for submission of the same was 28.12.2012 and accordingly the

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Patna High Court CWJC No.376 of 2013 (5) dt.18-02-2013

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petitioner was compelled to send the drafts by registered post on 27.12.2012. It is the stand of the petitioner that the said Bank Drafts were received in the office of the respondents on 28.12.2012 on the basis of certain notes put on the said letter but according to the respondents the same was received on 1.1.2013 after the last date of filing of tender and the tender is not being taken into consideration on that ground. For the said refusal of the respondents CWJC No. 378 of 2013 has been filed by the petitioner.

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Learned counsel for the petitioner submits that the impugned order of debarment which amounts to blacklisting has been passed without issuing any show cause and without providing any opportunity of being heard to the petitioner and thus the order which visits the petitioner with serious civil consequences is violative of the principles of natural justice and fit to be quashed for the said reason alone.

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In support of the aforesaid stand learned counsel relies upon a decision of the Apex Court in the case of M/s. Erusian Equipment and Chemicals Ltd. vs State of West Bengal and another : AIR 1975 SC 266, in paragraph-20 of which it has been held as follows :

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“Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful

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Patna High Court CWJC No.376 of 2013 (5) dt.18-02-2013

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

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He also relies upon a decision of the Apex Court in the case of Southern Painters vs. Fertilizers & Chemicals Travancore Ltd. and another: AIR 1994 SC 1277 in which similar proposition has been laid down.

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Learned counsel also submits that the entire action of the respondents is mala fide in the sense that the letter of debarment was signed on 13.12.2012 but was deliberately delayed to be sent till 18.12.2012 knowing fully well that the High Court would be closing after 19.12.2012 leaving no room for the petitioner to approach the same for protection of his rights. It is also pointed out by learned counsel that pursuant to the same the respondents did not accept the Bank Draft although the details of the Bank Draft had been clearly mentioned in the tender filed electronically and thus the same was definitely in the hands of the petitioner on 25.12.2012 and there was no reason for the petitioner not to send the same by hand delivery on 27.12.2012, whereas he was compelled by the action of the respondents to send the same by registered post on the same day. It is thus submitted that the

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Patna High Court CWJC No.376 of 2013 (5) dt.18-02-2013

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respondents are totally unjustified in not considering the fresh tender of the petitioner on the ground of delay in sending drafts.

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It is also submitted by learned counsel that no debarment is possible without adjudication by third party.

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Learned counsel also submits that the respondents have no power to blacklist the petitioner and no such power has been conferred upon them like the Central Government or the State Government under Article 298 of the Constitution or to the statutory corporate body under the statute in that regard, rather they are merely Government corporate body, whereas such orders of debarment are being used by them to blacklist a private contractor which visits the petitioner in the present matter with serious civil consequences and affects the fundamental right to even carry on trade, business or occupation under Article 19 of the Constitution which can only be limited by exercise of legislative powers by Parliament or the State Legislatures under Article 19(6) of the Constitution.

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Learned AAG-1 appearing for the respondents, on the other hand, refers to the various omissions and commissions of the petitioner which led to the order of debarment being passed. He, however, is unable to meet the point of the petitioner regarding violation of natural justice but submits with reference to various

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Patna High Court CWJC No.376 of 2013 (5) dt.18-02-2013

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correspondences between the parties that the order of debarment has been passed after giving proper opportunity to the petitioner.

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It is also the contention of learned counsel for the respondents that the bank drafts having been sent on 27.12.2012 at 8.23 P.M. and considering the normal course of time in which registered letters and parcels are being delivered by India Post, it would be practically an impossibility for the registered post having been received on 28.12.2012, which justifies the stand of the respondents that it was received beyond the last date fixed for the said purpose.

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It is also the contention of learned counsel that the petitioner‟s performance not having been found satisfactory the respondents should not be compelled to again take the work from them as a large number of projects is being carried by the respondent Corporation which would have serious impact on the quality of the work.

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I have considered the submissions of learned counsels for the parties. So far as the impugned order of blacklisting (debarment) dated 18.12.2012 is concerned, the same has to go in view of the non-compliance of the principles of natural justice as has been laid down by the Apex Court in the case of M/s. Erusian Equipment and Chemicals Ltd. (supra). Since the letter dated

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Patna High Court CWJC No.376 of 2013 (5) dt.18-02-2013

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18.12.2012 is being quashed on the ground of non-compliance of the principles of natural justice, it would be open to the respondents to pass a fresh order after issuing a proper show cause indicating the grounds on which the order is proposed to be passed and giving a reasonable opportunity to the petitioner in the matter and thereafter on the basis of the same arrive at an objective satisfaction on the facts and materials on the record.

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So far as the power of blacklisting/debarment by such Government companies like Bihar Rajya Pul Nirman Nigam Ltd. is concerned, I have held today in CWJC No. 20965 of 2012 HCL Infosystems Ltd. vs. Bihar State Electricity Board & Ors. that in the absence of Constitutional power under Article 298 or statutory power to such organization or bodies it is not open to them to blacklist any party having effect beyond the organization itself. Such orders of blacklisting by an organization having not been conferred statutory power of a similar nature as under Article 298 of the Constitution must remain confined to that particular organization and cannot be utilized by any other public organization or by the State or the Central Government for the purpose of debarring a person from participating in bids before them. The said decision will apply squarely to the present matter and if any order of blacklisting/debarring is ultimately passed by

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Patna High Court CWJC No.376 of 2013 (5) dt.18-02-2013

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the respondents it must remain confined only with respect to the respondent Corporation and cannot be utilized for the purpose of disqualifying the petitioner in any contract by another organization. The respondents shall not also communicate any such decision to other public bodies.

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I may also point out that the debarment order in the present matter does not provide any period of limitation for which it has to remain in effect. The debarment order visits the petitioner with serious civil consequences and the respondent Corporation being „State‟ under Article 12 of the Constitution it is required to act reasonably and not arbitrarily and cannot give a punishment which is disproportionate to the nature of the guilt or misconduct alleged and proved. Thus any such order if passed must indicate the period for which the debarment order will operate and such period must be fixed keeping in view that it is in accord with the gravity of the charges alleged and found objectively to be correct.

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So far as the participation of the petitioner in the present tender process is concerned, it is evident that the petitioner had down loaded the e-tender within time on 25.12.2012 which fact is not denied and in the same he had mentioned the number of bank drafts which shows that the bank drafts were ready and in the possession of the petitioner and, therefore, there would be no

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Patna High Court CWJC No.376 of 2013 (5) dt.18-02-2013

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reason for the petitioner not to send the same by hand to the office of the respondents on 27.12.2012. Thus considering the normal course of human conduct it is evident that the stand of the petitioner that the bank drafts were sought to be delivered by hand in the office of the respondents and on refusal of acceptance the same was sent by registered post appears to be correct.

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In the said circumstances, the petitioner cannot be excluded from the present tender process under NIT 840 dated 3.12.2012.

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In the light of the aforesaid discussions, both the writ petitions are allowed. The letter dated 18.12.2012 is quashed with the liberty granted above. It is directed that the tender of petitioner shall be considered along with that of others in accordance with law.

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(Ramesh Kumar Datta, J)

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spal/-

The Infrastructure Consultant Engineers Architects and Planners v. The Bihar Rajya Pool Nirman Nigam Ltd. and Anr.

Case brief

What is this about?

What did the court decide?

The Infrastructure Consultant Engineers Architects and Planners v. The Bihar Rajya Pool Nirman Nigam Ltd. and Anr.

Case brief

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