The Single Bench of the Delhi High Court in the case of VA Tech Wabag Limited vs Delhi Jal Board consisting of Justice Prathiba M. Singh reiterated that no prejudice is caused to the person complaining of the breach of natural justice where such person does not dispute the case against him or it.
Facts:
This Writ Petition was filed on behalf of the Petitioner challenging the blacklisting order dated 15th October 2020 issued by the Respondent (hereinafter referred to as “DJB”) debarring the Petitioner from participating in future works/ tenders/bids of the DJB for three years. i.e., till 15th October 2023.
Procedural History:
The Petitioner was awarded a contract (hereinafter referred to as “Project”) involving two components i.e., construction of the treatment plant and its maintenance and operation for 10 years thereafter. The construction was stated to have been completed on 31st January 2016. Thereafter, the maintenance and operation of the Project were to be carried out by the Petitioner as per the terms of the contract. In respect of the same, disputes arose between the parties.
Contentions Made:
Appellant: It was contended that the blacklisting order was for a breach of contractual performance, however, no notice had been given by the DJB regarding the said breach. DJB failed to invoke the Contractual Dispute Resolution Clause and no penalty or liquidated damages were imposed by the DJB for the said breach of contractual performance. It was also contended that the Petitioner’s reply to the show cause notice of June 2020, regarding the deficiencies illustrated by IIT Delhi and explanation as to why the Petitioner ought not to be debarred, was rejected by giving six grounds that were completely alien to the grounds specified in the reply. Moreover, since the Blacklisting order was issued by the Executive Engineer and the hearing was done by a different set of officials, the impugned Blacklisting order was invalid as per Automotive Tyre Manufacturers Association v. Designated Authority. Further, as per Indian Oil Corporation v. SPS Engineering, this would at best be an arbitrable dispute and certainly not a case for debarment for three years.
Observations of the Court:
Regarding the violation of Principles of Natural Justice, the Bench noted that the Petitioner had multiple opportunities and the impugned debarment order was a culmination of long-drawn correspondence, inspections, and time given to take remedial measures – all of which did not yield results. A personal hearing was also granted to the Petitioner. Thus, it could not be claimed that the DJB did not follow the principles of natural justice.
Regarding the contention of proper procedure not being followed, it opined that adequate opportunities were given to the Petitioner to rectify the deficiencies. However, the Petitioner over 5 years, continued to blame the DJB and the problem did not get resolved. The Debarment Committee itself consisted of many senior officials of the DJB. The Executive Engineer prepared the note for Debarment Committee. It held meetings on 7th September 2020, 16th September 2020, and 28th September 2020. In the last meeting, the Managing Director of the Petitioner was even given a personal hearing. Thus, it could not be alleged that the required procedure was not followed by the DJB.
Regarding the period of debarment, it further opined that the contract executed by the DJB with the Petitioner was governed by the CPWD Works Manual, 2019. Chapter 9 Clause 16 of the said manual provided for the factors leading to the debarment and the period of debarment. So, the DJB had the power to debar the Petitioner for 3 years. Moreover, as per M/S Daffodills Pharmaceuticals Ltd. & Anr v. State of U. P. & Anr. the same is a reasonable period for debarment depending upon the facts of the case.
The decision of the Court:
This Court was not inclined to either quash the debarment or to reduce the period of debarment. However, it clarified this judgment was broadly based on the correspondence and various documents on record. The Court did not conduct a fact-finding exercise in this case as the parties were already in arbitration. These findings shall have no bearing on the merits of the dispute between the parties, pending before the Learned Sole Arbitrator. The writ petition was accordingly dismissed with no order as to costs. Accordingly, the Blacklisting order was to operate for the period from 15th October 2020 to 15th October 2023.
Case Title: VA Tech Wabag Limited vs Delhi Jal Board
Coram: Justice Prathiba M. Singh
Case No: W.P.(C) 8342/2020 & CM APPL. 27045/2020
Advocates for Petitioner: Mr. Sandeep Sethi, Sr. Advocate with Mr. Neeraj Kumar and Mr. Meenakshi Jha.
Advocates for Respondent: Mr. Kunal Anand, Ms. Surabhi Katyal, Ms. Shivani Sharma, and Ms. Saloni Mahajan.
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