Coastal Marine Construction And ... vs The Union Of India
2022 Latest Caselaw 4995 AP

                THE HON'BLE SRI JUSTICE D.RAMESH

                  WRIT PETITION No.15139 of 2022
ORDER:

This writ petition is filed under Article 226 of the Constitution of

India seeking to declare the action of the respondents in passing the

holiday listing order/communication dated 03.11.2021 and passing the

appellate authority's order of 9th May 2022 and issuing a communication

on 9th May 2022 rejecting the petitioner's bid as being illegal, arbitrary

and consequently set aside the holiday listing order/communication

dated 3rd November 2021 and the appellate authority's order dated 9th

May 2022 and quash the communication dated 9th May 2022 rejecting

the petitioner's technical bid and direct the respondents to evaluate the

petitioner's technical and price bids in the present Tender No.21000-963-

HD-46002 published on 9th March 2022.

2. Heard Sri Ashwin Sankar, learned counsel appearing on behalf of

Sri Sai Sanjay Suraneni, learned counsel for the petitioner and Sri

Srikanth Reddy Ambati, learned counsel appearing for 2nd respondent.

3. The petitioner is a company incorporated in 1995 rendering

specialized marine services relating to the oil, ports, power and marine

infrastructure domain with 300-odd employees founded by ex-Indian

naval officers and it is an ISO 9001 company with a sterling reputation

being the only Indian owned/controlled company engaged in the

business of marine terminals and seawater system management,

geosciences services including offshore surveys and geotechnical

investigation and erection, procurement and commissioning of marine

structures and seawater intake and outfall pipelines.

4. Pursuant to the tender notification dated 04.5.2018 invited by the

2nd respondent, the petitioner has participated with regard to operation

and maintenance of single point mooring system at Visakha Refinery and

the petitioner was successful bidder in that tender. The said tender

pertains to providing only one maintenance vessel and which would also

have to carry out oil spill response duties only when no maintenance

activity was being carried out. The term of the contract was for a period

of three years starts from 20.8.2018 to 19.8.2021. Basing on the said

contract, the petitioner has placed coastal Jaguar initially as per

requirement of the contract. But subsequently, the petitioner has

replaced vessel m.v.Kohinoor in the place of coastal Jaguar as a

maintenance vessel.

5. While things stood thus, on 11.8.2019 there was oil spill at the

SPM while the vessel m.t.Kalliopi was loading oil from the SPM. As per

the instructions from the 2nd respondent, Port authorities and coast

guard at the location, the petitioner's authorized vehicle i.e. m.v.Kohinoor

was engaged in containing the oil spill which was rapidly spreading,

rather than taking up the arresting of the leakage from the defective

marine breakaway coupling (for short MBC). To meet the situation, the

petitioner has also mobilized its other vessel i.e. m.v.Coastal Jaguar to

meet the oil spill response. The vessel that has been in dry dock and was

awaiting for certification, the respondents requested for mobilization of

this vehicle in addition to the maintenance vessel already at the site i.e.

m.v.Kohinoor. The said second vessel was not contemplated under the

terms of the contract. Next day i.e. on 12.8.2019 a fire broke out on the

vessel m.v.Coastal Jaguar when it was in the midst of oil spill combat

operations, resulting in loss of 4 crew members. After lapse of 18

months of the incident, the respondents have issued notice to the

petitioner on 26.02.2021 asking the petitioner to show cause as to why

action should not be taken against the petitioner for incident of fire on

board, m.v.Coastal Jaguar which action may extend to holiday listing.

On 27.4.2021, the respondent no.2 issued one more show cause notice

asking the petitioner to respond, failing which the petitioner would be

inter alia holiday listed. On 29.5.2021, the petitioner has responded to

the allegations made in the notice. Again on 30.9.2021 further notice

was issued asking the petitioner to respond to the allegations contained

therein and subsequently on 03.11.2021 an order was passed holiday

listing the petitioner for three years on the basis that the petitioner has

failed to respond to the show cause notice dated 30.9.2021.

6. As against the said orders, the petitioner has preferred an appeal

on 03.12.2021 before the appellate authority and sought for a personal

hearing with the following grounds:

a. The holiday listing order is contrary to clause 8 of Respondent no.2's holiday listing guidelines. The holiday listing process was to be completed within six months of initiation. This was not done. The first show cause notice was issued on 26 th February, 2021. The holiday listing order is 3rd November, 2021.

b. The holiday listing order blatantly turns a blind eye to the petitioner's defences to holiday listing. It proceeds on the basis that the petitioner has admitted the contents of the show cause notice dated 30th September 2021 and that respondent no.2 is, thus, entitled to take an ex-parte decision. This is incorrect. The petitioner has responded in detail t the two prior show cause notices which raised the same allegations and threatened the same consequences and respondent no.2 was not entitled to take an ex-parte decision.

c. The holiday listing order is unreasoned and does not deal with the petitioner's various contentions. The order does not state why respondent no.2 considers the petitioner an undesirable entity to deal with-which is the very basis for issuance of holiday listing order.

d. As per respondent no.2's holiday listing guidelines, a holiday listing order is passed because if respondent no.2 deems it undesirable to deal with a party. In the present case, respondent no.2 continued dealing with HPCL post the incidence on 12th August 2019. HPCL also renewed the contract with COMACOE in August 2021 for a year, with price escalation. It would not have done this if it considered the petitioner an undesirable entity.

e. The holiday listing order travels beyond the show cause notices. This is impermissible. It proceeds on the basis of allegations not found in the show cause notices.

f. One of the allegations against the petitioner is that the petitioner mobilised the m.v.Coastal Jaguar without respondent no.2's knowledge and authorisation and even though she was in dry dock. This is incorrect. Respondent no.2 knew about and had sanctioned the mobilisation of m.v.Coastal Jaguar. All authorities knew that the vessel was being deployed since it was done at their insistence. Port movement permission was given. The vessel was permitted to operate and combat the oil spill at site for several hours without any objection. That all authorities had, in principle, given clearance is evident from the fact that no contemporaneous objection was raised by anyone-they were, in fact, glad to have the vessel at site. The petitioner did not stand to gain anything from having the vessel there-the petitioner's contractual obligation had been fulfilled by having the m.v.Kohinoor at site. The vessel was mobilised at respondent no.2's officials' instruction-respondent no.2 and the concerned officials, understandably, have now washed their hands off the mobilisation.

g. The marine spread was insufficient as the bidder had raised the issue in pre-bid. The tender ought to have provided for two vessels at site. This had been flagged by the petitioner during the pre-bid meeting but respondent no.2 did not heed the petitioner's suggestions. It is also pertinent to note that the current tender has a requirement of two vessels-one for maintenance and one for oil spill response.

h. The vessel loading the oil, m.t.Kalliopi was at fault. In addition, the marine breakaway couplings, which was supposed to control the oil spill, was defective.

i. Holiday listing should not only be restored to as a last measure and where the conduct of the contractor is contumacious. It definitely cannot be restored to in a situation where respondent no.2 has not terminated the contract for more than 2 years after the incident and, on the contrary, has extended the contract. The petitioner has a stellar track record for the past 11 years, wherein there have been a lot of appreciations and not a single adverse remark on its performance or services. The petitioner's only fault that when called upon to do it, it promptly rushed to avert an environmental disaster. The petitioner is now being offered as a scapegoat.

j. The holiday listing order sullies the reputation of the Master of the m.v.Coastal Jaguar who lost his son in the incident of 12th August, 2019. To formally and on the record accuse him and hold him responsible for the death of his son crosses all bounds of human decency, considering that the Master set out to prevent an environmental disaster. The master's reputation should not be sacrificed just so that respondent no.2 personnel can shift the entire blame for the incident on to the petitioner and distance themselves from the events of 12th August, 2019.

k. The facts of the matter evidence that there is no fault on the part of the petitioner. Respondent no.2's primary complaint is that the petitioner, on its own, took the m.v.Coastal Jaguar out of drydock and to the site without the permission of the port, Coast Guard and respondent no.2 without any tangible benefit to it and

risking several violations. This is, in itself, absurd. More absurd, however, is the suggestion that respondent no.2 and Coast Guard allowed an unauthorised vessel to enter the site of an active pollution incident, go up to the SPM and try to arrest the spill-without raising any contemporaneous query or protest as to what an unauthorised vessel was doing at site. Without the relevant permissions/instructions from the concerned authorities, it would simply have been impossible to mobilize a vessel from drydock to site. This is a classic case of res ipsa loquitor-the fact that the m.v.Coastal Jaguar was there, assisting at site, itself is enough to show that the requisite permissions/instructions were given.

7. Even according to the holiday listing guidelines prescribed by the

respondent Corporation, the appeal should be heard and decided within

45 days of filing of the same. But the same was not done. Hence the

petitioner was constrained to approach this Court by way of filing writ

petition no.11432 of 2022 and the same was disposed of on 26.4.2022

directing the 2nd respondent to provide a personal hearing to the

petitioner and decide its appeal within 10 days of receipt of the order and

tender process was stalled.

8. It is not out of place to mention that while pending appeal, the

respondents have issued tender notification i.e. 21000963-HD-46002

dated 09.3.2022 seeking bids for interested contractors for operation and

maintenance of single point mooring system of Visakha Refinery. When

the appeal is pending, the petitioner has also participated in the tenders

and the technical bid of the petitioner was rejected.

9. After disposal of the writ petition, on 05.02.2022, the 2nd

respondent has sent an e-mail to the petitioner fixing the personal

hearing on 06.5.2022 and through video conferencing, the petitioner has

represented his case and after that on 09.5.2022, the appellate authority

has passed the orders, reducing the period of holiday listing to one year

from three years and on the same day, the respondents have rejected the

technical bid of the petitioner. Assailing the said orders, the present writ

petition has been filed.

10. Initially at the time of admission, this Court has passed the

following order on 26.5.2022:

When the matter is called before the vacation bench on 19.5.2022, at request it was posted to this day for filing counter but today when the matter is called, the learned counsel for the respondents seeks time to file counter.

Post after Summer Vacation, 2022.

The counsel for the petitioner contended that in the meantime, if the respondents award contract pursuant to the tender process, the petitioner would have to face irreparable loss and the petitioner's right to participate in the tender will be defeated. It is stated that the petitioner is the existing contractor and the present work is still in existence till August, 2022.

Taking into consideration of the facts and circumstances of the case, any decision taken pursuant to the tender notification will be subject to the result of this writ petition.

11. After notice, 2nd respondent has filed his counter. As per the

averments made in the counter, the writ petitioner's company is holiday

listed under the Hindustan Petroleum Corporation Limited (for short HPCL)

guidelines on holiday listing for the issues under an earlier contract between

the parties. The petitioner neither challenged the holiday listing guidelines

of the earlier tender nor the present tender, but seeks the holiday listing to

be set aside as bad and further seeks to allow him to participate in the

present tender after the tender evaluation process has commenced. The

petitioner has no right whatsoever to interfere in the process of the tender.

Once it has commenced when there being any illegality or arbitrariness. As

of 15th June 2022, HPCL has completed Priced Bid evaluation also.

12. The holiday listing guidelines are applicable across HPCL and forms

part of all the tenders. Such guidelines are incorporated to see that

contractors adopt ethics of highest standards and a very high degree of

integrity, safety, quality, commitment and sincerity towards the work

undertaken. Such guidelines are implemented since it is not in the interest

of the Corporation to deal with the agencies who commit deception, fraud or

other misconduct in the tendering and execution process.

13. As per the extended period, the petitioner has valid contract up to

19.8.2022 and the successful bidder has to be given a minimum of 60 days

to mobilize at the site of the single point mooring (SPM) as per the terms of

tender. So in view of the same, the successful bidder has to mobilize one

maintenance vessel, one support vessel and one oil spill response vessel

along with specially skilled manpower and supervisory staff. Further the

successful bidder will have to take mandatory and necessary clearances

from the port authorities, coast guard and other statutory authorities,

before mobilizing and commencing any activity at SPM. Hence if the tender

gets cancelled or delayed, HPCL will be forced to once again negotiate for

contract extension with the petitioner. Hence the petitioner is attempting to

have a windfall gain in the tender without being qualified and having to

participate competitively. Further stated that the holiday listing of the

petitioner would continue till 02.11.2022 i.e. beyond 19.8.2022 and hence,

HPCL cannot extend the contract of the petitioner.

14. The petitioner was successful bidder in the earlier tender for the very

same work of SPM. While the contract was subsisting, on 12.8.2019 during

the operation and maintenance of SPM, there was fire onboard MV coastal

jaguar at the HPCL Visakha Refinery SPM off shore location. The fire was

extinguished with the help of port and coast guard vessels. The incident

unfortunately resulted 4 fatalities among two crew members of the writ

petitioner. Due to the said incident, the HPCL was constrained to issue

show cause notice on 26.02.2021 communicating that the writ petitioner

has inter alia violated clause no.18.1 i.e. responsibility of contractor and

clause 3.15 of general terms and conditions by mobilizing unauthorized and

unseaworthy vessel i.e. m.v.Coastal Jaguar from dry/dock/fishing harbour.

In view of the said incident, the HPCL caused huge loss and reputation.

Though the petitioner has responded in his reply dated 23.3.2021 refuting

the claim against which the HPCL reverted back by letter dated 27.4.2021

reiterating that the root cause of fire incident was the unauthorized action

of writ petitioner in deploying an uncertified and unseaworthy vessel with

gaps in deck plates leading to oil entering the engine room. Though in the

reply he has submitted that the coastal Jaguar was deployed as per the

instructions of HPCL was false and the petitioner could not present any

evidence in this regard during investigation of PNGRB as well as OISD.

Considering the said reply, the petitioner has issued one more letter dated

29.5.2021 raising certain new points trying to divert the issue. The HPCL

has replied to all the new issues raised by the petitioner and further

asserted that requirement of MV Coastal Jaguar would not have been felt by

the petitioner and the replacement & maintenance vessel Kohinoor been

capable of handling the situation arising out of parting of MBCs and the

resultant minor oil spill. Hence one more notice has been issued on

30.9.2021 to show cause in writing within 15 days as to why it should not

be debarred from entering into any future contracts with HPCL for the

unsafe act/omissions committed by it. For the same the petitioner has not

submitted any response and the petitioner asked for more time for

responding and did not respond even after extra time slot. Since no

response to the final notice dated 30.9.2021, accordingly holiday listing

order was passed on 03.11.2021 debarring the petitioner from entering into

any future contract with HPCL for a period of three (3) years.

15. Further, the plea raised by the petitioner that the petitioner raised an

issue and the pre-bid queries that he suggested additional vessel for storage

of additional OSR, is misplaced and misconceived. The details of

requirement of OSR equipment was clearly indicated in tender document.

The query raised by the petitioner for deployment of OSR equipment in

addition to equipment list given in tender was addressed by providing

response indicating that OSR equipment to be deployed as indicated in

tender. It is a matter of record that the petitioner had accepted all the

tender conditions without deviations before awarding of the contract. Thus,

having accepted the tender and scope of work without any deviation, the

writ petitioner is estopped in taking such plea that one vehicle is not

sufficient to meet the requirements. Considering the petitioner's appeal as

per clause 10, the committee has given a personal hearing and after

considering all the points raised by the petitioner and disposal of the appeal

vide order dated 09.5.2022 observing that they did not find any infirmity in

the impugned order of holiday listing as the irregularities committed by the

writ petitioner are substantiated. Taking the circumstances in totality,

executive committee took a compassionate view and reduced the period of

holiday listing from three years to one year with effect from 03.11.2021.

The disposal of the appeal within 45 days is not mandatory as per clause

10.3 of the holiday listing guidelines. It only says may be completed within

45 days from the date of the receipt of the appeal. Pursuant to the order

dated 26.4.2022 passed by this court, the appellate authority has disposed

of the appeal vide order dated 09.5.2022.

16. Infact they have denied that the executive committee has not

considered various grounds raised by the petitioner and clause 8 of the

guidelines were strictly adhered by giving ample opportunity to the

petitioner and further, prior to issuing show cause notice, investigation was

done by PNGRB & OISD. But the petitioner has not availed the opportunity

given by the HPCL, however the order was passed basing on the available

record. While passing the impugned holiday listing order, the competent

authority has considered the writ petitioner's earlier replies dated 22.3.2021

and 29.5.2021. Thus the petitioner's contentions have no merits. In view of

the above said reasons, the respondents requested to dismiss the writ

petition as devoid of merits.

17. With the above facts, learned counsel for the petitioner has assailed

the said order on the following grounds. While considering the appeal filed

by the petitioner, the appellate authority has not considered the ground

raised by the petitioner properly. The grounds raised by the petitioner while

filing the appeal that the primary authorities order dated 03.11.2021 is

contrary to clause 8 of HPCL's holiday listing guidelines. More particularly

clause 8.7 clearly mandates that the tendering process should be completed

within six months period from the initiation of the case by concerned

ECI/department responsible for initiation of bids. But in the instant case,

the first show cause notice issued by the respondent on 26.02.2021 and the

orders were passed on 03.11.2021 which is beyond the period prescribed

under the guidelines more specifically clause 8.7 of the holiday listing

guidelines. Hence in view of the above said guidelines, the six months

period is a mandatory requirement which the respondents have not done or

completed within six months, hence the holiday listing order passed on

03.11.2021 vitiated the procedure contemplated under the guidelines.

Though the petitioner has submitted that explanation twice responding the

notice issued by the HPCL, but in the impugned order invoking clause 8.3 of

the guidelines of holiday listing, passed an order by taking exparte decision.

The same is against to the principles of natural justice. To cover up the

same, the appellate authority has erroneously recorded that though the

matter was decided exparte, but the petitioner's contentions were

considered while passing the holiday listing order is not correct. At most as

contended by the petitioner that after the accident, the contract of the

petitioner was extended twice and even with price escalation. The

respondents have failed to consider this aspect while taking the action

against the petitioner under clause 8.7 of the guidelines.

18. Further, the holiday listing order is a quasi-judicial order passed

under the quasi-judicial capacity and it has to be treated independently by

rebutting each and every point claimed by the petitioner. But in the holiday

listing order the respondents have not considered or would not given any

reasons raised by the petitioner except saying that 'considered the reply

given by the petitioner'. So no reasons were recorded on this ground, the

order has to come.

19. The other ground raised by the petitioner is that it is not desirable to

initiate action against the petitioner though after incident on 12.8.2019, the

respondent no.2 has renowned the contract with the petitioner and in fact

in August, 2021 for a period of one year with price escalation. If the

petitioner is undesirable indeed, the respondent would not have considered

for extension that too with price escalation. But the said act was not

considered either by the holiday listing order or by the appellate authority.

20. The respondents have failed to consider the aspect that the

m.v.Coastal Jaguar was not deployed with the contract. In fact, the

contractual vessel at that point of time was m.v.Kohinoor and it was

performing duties as per the terms of the contract. The deployment of

m.v.Coastal Jaguar was done by the petitioner as a volunteer outside the

contract. There was no obligation on the part of the petitioner to deploy the

2nd vehicle. M.V.Jaguar was deployed only to circumvent the conditions

prevailing as on that date. Hence the petitioner has not violated any terms

of the contract and accordingly, the respondents are not entitled to initiate

action for holiday listing. In fact, at the time of oil spill, as per the

contractual obligation m.v.Kohinoor is at site and it is not the case of the

respondents that m.v.Kohinoor is not able to handle the situation. When it

is impossible to prevent the oil spill from spreading as well as clean flow of

the spill with one vessel and the said quarry was also raised by the

petitioner in his pre-bid meeting and the same was not considered by the

authorities in perspective manner.

21. With the above grounds, the learned counsel has mainly concentrated

his argument that the authority has violated the mandatory procedure

contemplated under the guidelines more specifically guideline no.8.7 that

after initiation of the proceedings, the process should be completed within

six months. Hence when there is a specific guideline mandating the

authorities to complete the process within six months, the authorities are

not entitled to pass holiday listing order after six months from the date of

initiation. Learned counsel has mainly relied on the report submitted by the

Visakhapatnam Port Trust. According to the report on the following day i.e.

12.8.2019, the first day light leak was noticed from the inner string of MBC.

When MBC is activated it is to shut 100% as per design as a safety measure

to measure no leakage of oil. However in the present case, it is observed that

the inner string of the MBC had not closed completely and oil was found

leaking. The extent of leakage should not be ascertained as end of the

string was submerged. In the finding it was stated that the precautions was

taken by surrounding the house area with absorbent sorbent booms, oil has

seeped through the polythene which was spread over the deck to the engine

room which was directly under the stitched deck plate. Finally it has found

that HPCL must have separate crafts to attend their daily

maintenance/operation at SPM and for oil spill response with fire righting

near SPM. In the report it clearly discloses that the inner string MBC was

with no visible petal gap but the MBC attached on the outer hose string

there was a visible petal gap.

22. Further learned counsel appearing for the petitioner has placed

reliance on the enquiry report submitted by the committee. According to

the said committee report the lapses and shortcomings are that the use of

MV Ocean Jaguar was done by the petitioner with passive understanding of

HPCL and board. Finally according to the said report paragraph 8 clearly

says that fixation of responsibility, the incident happened due to a major

system failure on account of lapses by HPCL/Contractor. While passing the

impugned orders by the concerned respondent on 03.11.2021, the

observations of the two reports were not considered by the authority. Even

the internal enquiry committee report also clearly discloses that the

M.V.Ocean Jaguar was deputed by the petitioner with a passive

understanding on HPCL and board and responsibility was also fixed on both

HPCL and contractor for major system failure. As per the Visakha Port

Trust report, it is observed that the leakage was noticed from the inner

string of MBC and it should shut 100% as per its design. Hence taking the

two reports it clearly discloses that the leakage is continued and only to

circumvent the conditions, the petitioner has deployed M.V.Ocean Jaguar

that to as per the observations of the report it clearly discloses that the

passive understanding of HPCL and board. Hence without the permission of

the board, the petitioner cannot move the vehicle. In fact, the same was

brought to the notice of the respondent in the reply dated 22.3.2021 and

also 29.5.2021 stating that basing on the circumstances and information

coming from HPCL, board and coast guard representatives, the moment of

M.V.Coastal Jaguar for the above work was termed by the Visakha Port

Trust and the vessel was mobilized to site for work. The deployment of

M.V.Coastal Jaguar was an additional vessel and not the discarding vessel

as per the contract. The deployment was done under the pressure from

authorities that the object of ensuring with the oil spill does not escalate in

view of the leakage from the defective MBC. The said aspects were not

considered by the authority and no cogent reasons were not given in the

orders passed by the authorities holiday listing the petitioner.

23. Learned counsel further submitted that being a quasi-judicial,

authorities have to give valid reasons to such order. But on perusal of the

impugned order passed by the 2nd respondent would not reveal any reasons

to pass such orders. Except replies given by the petitioner. On perusal of

the impugned order it is nothing but summation of the notices issued by the

respondents. Even on perusal of the orders, it clearly discloses that the

reports given by the Port Trust authorities was not at all considered. Hence

the block listing order which is far reaching consequences, the petitioner's

business activities cannot sustain and has to be set aside. To support his

contention learned counsel has relied on two judgments. Judgment of the

Bombay High Court reported in between Sarku Engineering Services SDN

BHD vs. Union of India and another1 wherein in an identical issue the

High Court held that:

As observed by the Hon'ble Supreme Court of India in the case of Erusian Equipment & Chemicals Ltd. (supra), relied upon by learned Senior Counsel for the Petitioner, "blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for the purposes of gains. The fact that a disability is created by the order of black-listing indicates that the relevant authority is to have an objective satisfaction." Hence, while passing such an order, which is having far reaching effect on the business of the Petitioner, the objectivity and the fair play on the part of the authority issuing such order is of paramount importance, which is found conspicuously lacking in the present case.

34. The learned Senior Counsel for the Petitioner has then relied upon the decision of the Hon'ble Supreme Court of India in the case of Kulja Industries Limited Vs. Chief General Manager, Western Telecom Project, Bharat Sanchar Nigam Limited and Ors.6, wherein it was held that, "though the power to black-list a contractor is inherent in the party allotting the contract, such decision of black-listing is open to scrutiny not only on 6 (2014) 14 SCC 731 WP-913-16.doc the touchstone of the principles of

2016 SCC Online Bom 5233

natural justice, but also on the Doctrine of Proportionality. A fair hearing to the party being blacklisted thus becomes an essential precondition for a proper exercise of the power and a valid order of blacklisting made pursuant thereto. The order itself being reasonable, fair and proportionate to the gravity of the offence, is similarly examinable by a Writ Court".

35. Apex Court was pleased to further observe in this decision that, "it is also well settled that even though the right of the writ petitioner is in the nature of a contractual right, the manner, the method and the motive behind the decision of the authority whether or not to enter into a contract is subject to judicial review on the touchstone of fairness, relevance, natural justice, non- discrimination, equality and proportionality. All these considerations that go to determine whether the action is sustainable in law have been sanctified by judicial pronouncements of this Court and are of seminal importance in a system that is committed to the rule of law."

40. Thus, this authority, in the first place, pertains to the revenue and taxation matters and, secondly, even in such matters, the Hon'ble Supreme Court has held that the principles of natural justice cannot be given go-by. It will depend on the facts and circumstances of the particular case; whether the authority has taken into consideration all the facts and circumstances of the case. Hence, even if it is accepted that an opportunity of final hearing, or, personal hearing is not mandatory in each and every case, even then, the fact remains that the impugned order of WP- 913-16.doc the State instrumentality should speak of the reasons for dispensing with such opportunity of oral hearing, or, at-least, the order should speak of the reasons, which can be found to be borne out from the material on record and does not smack of any mala fides. It need not be pointed out that under different situations and conditions, the requirement of compliance of the principles of natural justice vary.

Further following the said observations, the Hon'ble High Court of

Andhra Pradesh in W.P.No.9437 of 2014 dated 23.4.2014 reported in

between Techno Industries vs. Indian Oil Corporation Ltd2 wherein the

Court has held that:

The Holiday List has an impact of depriving the petitioners from the privilege and advantage of entering into lawful relationship. Both the petitioners are empanelled vendors for supply of heat shrinkable preformed PVC seals as well as safety caps for LPG cylinders. On account of the impugned order they are prohibited from participating in the future contracts for next three years. Thus, the impugned order has the effect of depriving the petitioners equality of opportunity in the matter of public contracts by public corporation. It can also have the impact of

(2014) 4 ALD 453

denying such contracts from any other similar Corporation. It is not uncommon practice that whenever tenders are called the persons who respond to the tenders are subjected to scrutiny by the company. They also look into the past performance of the tenderer with the same company or any other entity and if the reports received by the company about the past performance with any other company or with the same company on earlier occasion are negative, the company refuses to enter into contract even if the tenderer offered the lowest price. Thus, the consequences of the Holiday List are more severe. It has civil and evil consequences. It would not only affect the entitlement of the petitioners to participate in the future contracts with the respondent Corporation, but it would also deprive such participation with any other similar Corporation or entity, private or public.

23. The facts in issue in the decision of Delhi High Court in Mekaster Trading Corporation (3 supra) are identical to the facts in this case. It was also a case of blacklisting. The order blacklisting the petitioner therein did not assign reason for such blacklisting. On exhaustive consideration of the principles of law on the issue of assigning reasons and of providing an opportunity, the Delhi High Court held that it is now well settled proposition of law that even the administrative authority is required to support its decision by reasons. The most impelling consideration for insistence upon disclosure of reasons in support of an order or decision is that it ensures proper application of mind, reduces the possibility of casualness and minimizes whim and caprice, and thereby serves to provide legal protection to persons against arbitrary official conduct. It is held as under:

In short, the reasons must show that the decision maker successfully came to grips with the main contention advanced by the parties, and must tell the parties in broad terms why they lost, or as the case may be won. Reasons are links between materials on which certain conclusions are based and the actual conclusion drawn. They would disclose how the mind is applied to the subject matter; whether done relevantly or rationally. Therefore, it would be sufficient if reasons indicate application of mind is discernible and mental process leading from the dispute to its solution is found in the order.

24. Learned counsel has submitted that in identical cases, the Court has

interfered that the holiday listing is a serious issue and as it would for

deprive the petitioners from future course of business. But in the instant

case, the respondents have not followed the strict principles of natural

justice and not passed the cogent reasoned order though the petitioner has

submitted replies on earlier occasions, the respondents have invoked clause

8.3 of the guidelines and passed an exparte decision. Hence requested to

allow the writ petition by setting aside the orders dated 03.11.2021 and

09.5.2022 and requested to consider the case of the petitioners and also the

communication dated 09.5.2022 rejecting the petitioner's technical bid and

requested to allow the petitioner to consider and participate in the technical

bid and also final bid and tender notification.

25. Per contra, learned standing counsel appearing for 2nd respondent has

submitted that the impugned order passed by the respondent on

03.11.2021 is not an exparte order. Though the petitioner has not

submitted any reply to the third notice dated 30.9.2021 but the reply

submitted by the petitioner on 22.3.2021 and 29.5.2021 were considered

and passed the reasoned order. Reply to the contentions raised by the

petitioner that the respondents have strictly adhere to the holiday listing

guidelines and the authorities have to complete the process within six

months stipulated under clause 8.7 of the said guidelines. First time the

respondents have issued notice initiating the action for holiday listing in

their notice dated 30.9.2021. To support his contention he has submitted

that in notice dated 30.9.2021 company has issued show cause giving an

opportunity to submit reply as to why he should not be debarred from

entering into any future contract with HPCL for the unsafe act/omissions

committed by it. Hence the initiation of action under clause 8 is only starts

from 30.9.2021. Accordingly, they have completed the process within six

months as contemplated under clause 8.7 of the guidelines. Hence there is

no deviation to the guidelines of the Corporation.

26. Further learned counsel has relied on the observations made by the

enquiry committee and stated that on 12.8.2019 morning some oil spills

were reported. To curtail the oil spill COMACOE i.e. petitioner herein has

deployed m.v.Kohinoor for oil spill response and again the petitioner has

mobilised m.v.Ocean jaguar for attending the hose string at 9 a.m. on

12.8.2019. During work on hose string, some oil spilled on the deck of MV

Coastal Jaguar. At about 11.30 a.m. on 12.8.2019, a fire was reported on

MV Coastal Jaguar and due to the fire some of the personnel suffered burn

injuries and in view of the same, there was a fire accident. During the

interaction with HPCL senior officials, HPCL conveyed that post parting of

hawser and MBC on 11.8.2019 they were in constant touch with port,

offshore O&M contractor and coast guard regarding oil spill situation at

SPM area. However, they informed that they were not aware of mobilization

of MV Ocean Jaguar (which was under dry dock) by offshore O&M

contractor i.e. petitioner on 12.8.2019 morning. They also informed that

they were not aware of the maintenance activity planned at the SPM site on

12.8.2019. He has also relied on the observations that none of the

petitioner's personnel were forthcoming on the actual source of the fire and

were not providing further details. Regarding moment of MV Ocean Jaguar

the board is of the opinion that sine the movement of MV Jaguar was within

the port limit in the fishing harbour to SPM, no port clearance is required

which was taken as shifting of vessel. Basing on the observations of the

report and also considering the reply submitted by the petitioner on earlier

two occasions, the authorities have passed the impugned orders on

03.11.2021 for the entire incident happened on 12.8.2019 is only the root

cause for the accident on 12.8.2019 is only unauthorized action of

petitioners in deploying the uncertified and unseaworthy vessels in the dock

which lead to oil entering into the engine room and accordingly the

impugned orders were passed fixing the responsibility on the petitioner.

27. Considering the grounds raised and also the facts noticed by the

appellate authority has reduced the period from three years to one year.

Hence at any rate one year period is completed by the end of August, 2022.

In view of the said circumstances and no interference of this Court and by

strongly complying the procedure contemplated under the guidelines and

also following the principles of natural justice by taking all relevant material

in to consideration, the orders were passed. Hence requested to dismiss the

writ petition and relied on the following judgments.

i) Judgment of the Hon'ble Apex Court reported in between State of

Odisha and others vs. Panda Infraproject Limited3 in hwihc the Hon'ble

Apex Court has held that:

It is contended that the High Court has erred in holding that the order of blacklisting was in violation of the principles of natural justice.

ii) Judgment of the Hon'ble Apex Court reported in between

N.G.Projects Limited vs. Vinod Kumar Jain and Others4 wherein the

Hon'ble Apex Court has held that:

In view of the above judgments of this Court, the Writ Court should refrain itself from imposing its decision over the decision of the employer as to whether or not to accept the bid of a tenderer. The Court does not have the expertise to examine the terms and conditions of the present day economic activities of the State and this limitation should be kept in view. Courts should be even more reluctant in interfering with contracts involving technical issues as there is a requirement of the necessary expertise to adjudicate upon such issues. The approach of the Court should be not to find fault with magnifying glass in its hands, rather the Court should examine as to whether the decision-making process is after complying with the procedure contemplated by the tender conditions. If the Court finds that there is total arbitrariness or that the tender has been granted in a malafide manner, still the Court should refrain from interfering in the grant of tender but instead relegate the parties to seek damages for the wrongful exclusion rather than to injunct the execution of the contract. The injunction or interference in the tender leads to additional costs on the State and is also against public interest. Therefore, the State and its citizens suffer twice, firstly by paying escalation costs and secondly, by being deprived of the infrastructure for which the present-day Governments are expected to work.

(2022) 4 Supreme Court Cases 393

(2022) 6 Supreme Court Cases 127

28. Considering the extensive arguments made by counsel for the

petitioner as well as the standing counsel for 2nd respondent and also on

perusal of the record and the impugned order, it is no doubt that the

accident was happened on 12.8.2019 due to oil spill at SPM area. On

perusal of the report of the Visakha Port Trust and also the enquiry report

has pointed out lapses on all the sides and there is a lapse on the part of

HPCL with regard to leakage at MBC and also the deployment of MV Ocean

jaguar by the petitioner and also not having sufficient vessels to deal with

the situation. But without going into the merits that the impugned orders

were passed by the authorities strictly not following the principles of natural

justice though they had issued notices twice and the petitioner has

submitted the replies point-wise but the impugned orders were passed

undoubtedly by invoking clause 8.3 of the holiday listing guidelines and

passed an exparte order. On perusal of the impugned orders though they

have extracted the response of the petitioner but no reasons were given for

passing such order. Hence as observed by the Bombay High Court in

Sarku Engineering Services SDN BHD vs. Union of India and another

(referred supra) that block listing holiday listing of a contractor is a far

reaching decision. Hence fair hearing is essential and also the order should

speak the reasons for passing such order. But in the instant case, on

perusal of the order passed by the 2nd respondent reveals that no other

reasons are recorded except fixing the responsibility on the petitioner for the

said incident and passed the holiday listing order. In the identical instances

were also considered by the composite High Court of Andhra Pradesh in

Techno Industries vs. Indian Oil Corporation Ltd (referred supra) and on

the same grounds holiday listing orders were set aside.

29. Considering the above aspects and taking the observations made by

both the courts and also on perusal of the impugned order clearly discloses

that the respondent authorities have not considered properly, the report

submitted by both the authorities in the accident and also the reply

submitted by the petitioner. No doubt though the standing counsel has

submitted that the authorities have complied the mandatory condition of

clause 8.7 of the holiday listing guidelines. But undisputedly, the initiation

of the action by the respondents i.e. issuance of show cause notice on

26.02.2021 and final orders were passed on 30.9.2021 which is contrary to

the mandatory conditions stipulated in clause 8.7.

30. Taking the above aspects into consideration, the holiday listing order

dated 03.11.2021 and also the rejection order dated 09.5.2022 were set

aside and, the respondents are directed to consider the case of the petitioner

pursuant to the tender notification dated 09.3.2022.

31. Accordingly, the writ petition is allowed. No costs.

Miscellaneous petitions, if any, pending in this petition shall stand

closed.

_____________________ JUSTICE D.RAMESH Date: 04.8.2022 RD

THE HONOURABLE SRI JUSTICE D.RAMESH

WRIT PETITION No.15139 of 2022 Dated 04.8.2022

RD