Bombay High Court
H. D. Enterprises, A Registered ... vs Western Coal Field Ltd. (Wcl) Thr. Its ... on 23 September, 2024
Author: M.S. Jawalkar
Bench: Avinash G. Gharote, M.S. Jawalkar
2024:BHC-NAG:10639-DB
WP No. 2677-24+Judgment 1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
NAGPUR BENCH, NAGPUR.
WRIT PETITION NO. 2677/2024
WITH
WRIT PETITION NO. 1310/2024
WITH
WRIT PETITION NO. 2997/2024
WITH
WRIT PETITION NO. 3090/2024
WITH
WRIT PETITION NO. 1143/2024
AND
WRIT PETITION NO. 2583/2024
WRIT PETITION NO. 2677/2024
M/s Harsha Constructions Private Limited,
(HCPL), Registered Office at League
Sujana Building, 2nd Floor, Sy. No. 36/A/9,
Gopanpally Road, Serilingampally (Mandal)
Hyderabad, Rangareddi, Telangana 500046,
Telangana
.... PETITIONER
// VERSUS //
Western CoalFields Limited,
Through its General Manager,
having office at Coal Estate,
Civil Lines, Nagpur
.... RESPONDENT
WITH
..ANSARI, Pethe and Khapekar
WP No. 2677-24+Judgment 2
WRIT PETITION NO. 1310/2024
M/s Gaurav Contracts Co.,
A registered Partnership Firm,
Through its Partner Shri Nikul Navin Dholu,
Aged about 32 years, Occ. Business,
having its Office at 122, Puja Complex,
Station Road, Bhuj-Kutch, Gujarat 370001
.... PETITIONER
// VERSUS //
Western CoalFields Limited (WCL),
Through its General Manager,
Coal Estate, Civil Lines, Nagpur 440001
.... RESPONDENT
WITH
WRIT PETITION NO. 2997/2024
M/s Shodha Constructions Private Limited,
8-2-293/82/L/356/A, Road No. 12,
Banjara Hills, Hyderabad 500034
.... PETITIONER
// VERSUS //
Western CoalFields Limited,
Through its General Manager,
having office at Coal Estate,
Civil Lines, Nagpur
.... RESPONDENT
WITH
..ANSARI, Pethe and Khapekar
WP No. 2677-24+Judgment 3
WRIT PETITION NO. 3090/2024
M/s Kaveri Engineering Projects Private Limited,
(KAVERI), Flat No. 203, #6-3-1089-1/1,
Pavani Avenue, Rajbhavan Road, Somajiguda,
Hyderabad 500082 (Telangana)
.... PETITIONER
// VERSUS //
Western CoalFields Limited,
Through its General Manager,
having office at Coal Estate,
Civil Lines, Nagpur
.... RESPONDENT
WITH
WRIT PETITION NO. 1143/2024
M/s H.D. Enterprises,
A Registered Partnership Firm,
Through its Partner Shri Harilal
S/o Devji Patel, Aged about 64 years,
Occ. Business, Office at 501-503,
Siddharth Complex, R C Dutt Road,
Vadodara, Gujarat
.... PETITIONER
// VERSUS //
Western CoalFields Limited (WCL),
Through its General Manager (CMC),
Office at Coal Estate, Civil Lines, Nagpur
.... RESPONDENT
..ANSARI, Pethe and Khapekar
WP No. 2677-24+Judgment 4
AND
WRIT PETITION NO. 2583/2024
C5 Engineering Private Limited,
Registered Office Plot No. 270-A,
MLA Colony, Road No. 12,
Banjara Hills, Hyderabad 500043
.... PETITIONER
// VERSUS //
Western CoalFields Limited,
Through its General Manager,
having office at Coal Estate,
Civil Lines, Nagpur
.... RESPONDENT
∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞
Mr. S.V. Manohar, Sr. Adv a/b Mr. Y.N. Sambre & Mr. S.O.
Ahmed, Advocates for the Petitioners in respective Petitions
Mr. C.S. Samudra, Mr. A.M. Ghare, Advocates for the
Respondent in respective Petitions
∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞∞
CORAM : AVINASH G. GHAROTE &
SMT. M.S. JAWALKAR, JJ.
CLOSED FOR JUDGMENT ON :- AUGUST 21, 2024
JUDGMENT PRONOUNCED ON :- SEPTEMBER 23, 2024
JUDGMENT :
- (PER: SMT. M.S. JAWALKAR, J.)
..ANSARI, Pethe and Khapekar
(1) Rule.
(2) Rule made returnable forthwith.
(3) Heard finally by the consent of learned counsel
appearing for the parties.
(4) The challenge raised in all the Petitions are the same
i.e. challenge to the order of black-listing. All the petitions are
taken up together to decide them by common judgment.
(5) All the Petitions question the communication by
which the Petitioners have been blacklisted and security deposits
of the Petitioners have been forfeited on the ground that bids of
the Petitioners violate Clause 4.2(d) of the NIT on account of the
Petitioners having business relationship with another bidder,
which put the Petitioners in a position to have access to the
information about or influence the bid of another bidder. As
similar question is involved in all the Petitions, they are taken up
for final hearing together.
..ANSARI, Pethe and Khapekar
The contentions in the Writ Petitions are as follows:-
M/s Harsha Construction Pvt. Ltd. - Advocate Choubey
Vs
Western Coalfields Limited - Advocate Ghare
Tender No. - 21/2023-24
Bid No. - GEM/2023/B/ 3593161
Dated - 20/06/2023
Work - For Removal of all type of Material (SOB) in all
kinds of strata by Hiring of Equipment)
Joint Venture Between - Ms Kaveri Engineering Projects Limited,
M/s Harsha Construction Pvt. Ltd.
M/s C5 Engineering Pvt. Ltd.
M/s KAVERI-HCPL-C5
Disqualified for - Violating Clause 2(v)(d) of CIPP.
Impugned Order dated - 04/04/2024, Page No. 235, Annexure - N
Ground for passing impugned order - "The two bidders i.e. M/s M/s
KAVERI-HCPL-C5 and M/s HCPL-SHPPL JV have their partners namely
M/s Harsha Constructions Private Limited and M/s Sushee Hitech Projects
Private Limited respectively who had formed their own JV and obtained
work at Pauni II Expansion OCM of Ballarpur Area vide LOA No.
Wcl/GM(CMC)/E-837017/LOA/34/2022-23/52 dated 12/12/2022 and the
work is under progress/execution at present. As such, it appeared that M/s
KAVERI-HCPL-C5 JV and M/s SHODHA-SHPPL JV are in business
relation through common parties who are their partner companies in the JV
entity. As M/s Harsha Constructions Private Limited and M/s Sushee
Hitech Projects Private Limited are presently working as JV for a different
work, there is a high probability that they have access to information of
..ANSARI, Pethe and Khapekar
each other. Thus the bidders in present tender have access to information
through common parties and hence would fall under "conflict of interest"
as per clause 2(v)(d) of CIPP. Thus, there is apparent violation of CIPP
mentioned above especially when the two bidders have also given their
declaration as per Annexure-P.
Prayer - Quash and set aside impugned order dated 04/04/2024.
- Direct the respondent to refund earnest money.
- During pendency stay the operation impugned order dated
04/04/2024.
=======================================================
C5 Engineering Pvt. Ltd - Advocate A.S. Manohar
Vs
Western Coalfields Limited - Advocate Ghare
Tender No. - 21/2023-24
Bid No. - GEM/2023/B/ 3592316
Dated - 20/06/2023
Work - For Removal of all type of Material (SOB)
Joint Venture dated - 05/07/2023
Between - M/s Kaveri Engineering Projects Limited,
M/s Harsha Construction Pvt. Ltd.(HPCL)
and M/s C5 Engineering Pvt. Ltd.
"M/s KAVERI-HCPL-C5 Joint Venture"
Disqualified for - Violating Clause 2(v)(d) of COI
Impugned Order dated - 04/04/2024, Pg No. 216, Annexure - N
Ground for passing impugned order - It was alleged that, M/s
..ANSARI, Pethe and Khapekar
Shodha Constructions Private Limited and M/s Sushee Hitech
Projects Private Limited formed a Joint Venture by the name of
SHODHA-SHPPL JOINT VENTURE and have participated in the
above mentioned tender. M/s Kaveri-HPC.-C5 JOINT VENTURE, a
Joint Venture of which the petitioner is a partner, has one partner as
M/s Harsha Constructions Private Limited and M/s Sushee High-
tech Projects private Limited have formed another Joint Venture by
the name of M/s HCPL-SHPPL JOINT VENTURE and the said Joint
Venture has obtained work from the respondent at Paoni II
Expansion OCM of Ballarpur area which is presently going on.
Prayer - Quash and set aside Judgment and Order dated 04/04/2024
- Direct the respondent to refund earnest money
- During Pendency stay the effect of impugned order dated
04/04/2024
=======================================================
M/s Gaurav Contracts Co. - Advocate Sambre
Vs.
Western Coalfields Limited - Advocate Samudra
Tender ID - 2018-WCL-10219-1
Tender No. - 3/2023-24
Bid No. -
Dated - 06/04/2023
Joint Venture between - M/s Gaurav Contracts and
M/s H.D. Enterprises Company.
Disqualified for - Violating Clause 4.2(b) of JBD
Impugned Order dated - 08/02/2024, Pg No. 159, Annexure - XII
..ANSARI, Pethe and Khapekar
Ground for passing impugned order - The work being executed by
M/s HD Gaurav JV Neeljay Expansion OCM is a business venture
undertaken by M/s Gaurav Contracts Co.. and M/s H.D. Enterprises
in the present tender by forming a JV. As such it is evident that M/s
Gaurav Contracts Co. and M/s H.D Enterprises have business
relationship with each other and the said business relationship is
presently on going this is violation of clause 4.2(d) of the instruction
to the bidder as per the NIT no. 03/2023-24.
Prayer - Quash and set aside Order dated 08/02/2024
- During the pendency Stay the effect of Impugned
order dated 08/02/2024.
=======================================================
M/s Kaveri Engineering Project Pvt. Ltd. - Advocate A.S. Manohar
Vs.
Western Coalfields Limited - Advocate Ghare
Tender No. - 21/2023-24
Bid No. - GEM/2023/B/ 3592316
Dated - 20/06/2023
Joint Venture Between - Ms Kaveri Engineering Projects Limited
(KAVERI),
M/s Harsha Construction Pvt. Ltd. and
M/s C5 Engineering Pvt. Ltd
"M/s KAVERI-HCPL-C5"
Joint Venture dated - 05/07/2023
Disqualified for - violating Clause 2(v)(d) of COI
Impugned order dated - 04/04/2024, Annexure - N, Pg. 219
Ground for passing impugned order - The two bidders I.e M/s
..ANSARI, Pethe and Khapekar
KAVERI-HCPL-C5 and M/s HCPL-SHPPL JV have their partners
namely M/s Harsha Constructions private limited and M/s Shushee
Hitech Projects Private Limited respectively who had formed their
own VJ and obtained work at Pauni II Expansion OCM of Ballarpur
Area vide LOA No. WCL/GM(CMC)/E-837017/LOA dated
12/12/2022 and the work is under progress /execution at present. As
such, it appreared that M/s KAVERI-HCPL-C5 JV and coompanies in
the JV entity.As M/s Harsha Construction private limited and M/s
Sushee hitech Project Private Limited are presently working as JV for
a different work, there is a high probability that they have access to
information through common parties and hence would fall under
"conflict of interest" as per clause 2(v)(d) of CIPP. Thus, there is
apparent violation of CIPP mentioned above especially when the two
bidders have also given their declaration as per Annexure -P.
Prayer - Quash and set aside impugned order dated 04/04/2024
- Direct respondent to refund earnest money
- Stay the effect of order dated 04/04/2024
============================================================
M/s Shodha Construction Pvt. Ltd. - Advocate A.S. Manohar
Vs.
Western Coalfields Limited - Advocate Ghare
Tender Notice No. - 21/2023-24
Bid No. - GEM/2023/B/ 3592316
Dated - 20/06/2023
Joint Venture Between - M/s Shodha Construction Pvt. Ltd.,
M/s Sushee Hi-tech Project Pvt. Ltd.
"SHODHA-SHPPL JOINT VENTURE"
..ANSARI, Pethe and Khapekar
Disqualified for - Violating Clause 2(v)(d) of COI
Impugned order dated - 04/04/2024, Annexure - K, Pg. 210
Ground for passing impugned order - The two bidders I.e M/s
KAVERI-HCPL-C5 JV and M/s SHODHA -SHPPL JV have their
partners namely M/s Harsha Construction Pvt Ltd and M/s Shushee
Hitech Projects Pvt Ltd respectively who had formed their own JV
and obtained work at Pauni II Expansion OCM of Ballarpur Area
vide LOA No. WCL..dated 12/12/2022 and the work is under
execution at present. As such, it appeared that M/S SHODHA-
SHPPL Joint Venture and M/S KAVERI-HCPL-C5 JV are in business
relation through common parties who are their partner companies in
the Jv entity. As M/S Harsha Construction pvt ltd and M/s Sushee
Hitech Projects Pvt Ltd are presently working as JV for a different
work and there is a high probability that they have access to
information of each other. Thus the bidders in present tender have
access to information through common parties and hence would fall
under the "conflict of interest" as per clause 2(v)(d) of CIPP.
Prayer - Quash and set aside impugned order dated 04/04/2024
- Direct respondent to refund earnest money
- Stay the effect of order dated 04/04/2024
=======================================================
M/s H.D. Enterprises Pvt. Ltd. - Advocate Sitani & Advocate Ahmed
Vs.
Western Coalfields Limited - Advocate Samudra
E - Tender No. - 03/2023-24
Dated - 06/04/2023
Joint Venture Between - M/s H.D. Enterprises and
M/s Gaurav Contracts Company
..ANSARI, Pethe and Khapekar
Disqualified for - Violating Clause 4.2(d) of
Instructions to bidder
Impugned order dated - 08/02/2024, Annexure - M, Pg. 90/95
Ground for passing impugned order - It was observed that
M/s H.D. Enterprises and M/s Gaurav Contracts Co. have been
awaded HOE work at Neeljay Expansion (Deep) OCM of Wani Area
by CMC department , WCL, Nagpur as a JV entity in the name M/S
H.D. GAURAV JV vide LOA Ref. No. WCL/.....and the work is
under progress. The work being executed by M/s H.D. Enterprises
and M/s Gaurav Contracts Co. in the present tensder by forming a
JV. As such, it is evident that M/s H.D. Enterpises and M/s Gaurav
Contracts Co. have business relationship with each other and the said
business relationship is presently going on. This is violation of clause
4.2(d) of the instruction to the bidder As per the NIT.
Prayer - Quash and set aside impugned order dated 08/02/2024.
- During pendancy stay the effect of order dated 08/02/2024.
=======================================================
(6) As Writ Petition No. 1143/2024 is treated as lead
Petition, the facts and contentions of the said Petition have been
considered for adjudication of the issue involved in all the
Petitions:-
(7) That, on 06/04/2023, the Respondent floated a tender
bearing E-Tender No. 03/2023-24 inviting bids for the said
Project i.e. removal of all types of materials (Hard OB) in all
..ANSARI, Pethe and Khapekar
kinds of strata. The Petitioner submitted its bid on 24/04/2023 at
10:37 am and the last date for submission of the bid was
24/04/2023 at 11:00 hrs. However, at the last moment, the
Respondent published a Corrigendum and the last date for
submitting the bids was extended upto 04/05/2023. On
04/05/2023, the Respondent opened the technical bid and
disqualified the present Petitioner for violating Clause 4.2(d) of
the Instructions to Bidders on 23/05/2023. The same was
communicated to the Petitioner and immediately on 24/05/2023,
the Petitioner filed its objection before the Respondent. The
Respondent issued a Show Cause Notice dated 21/06/2023 to the
present Petitioner calling for an explanation from the present
Petitioner as to why action should not be taken against the
Petitioner for violating Clause 4.2(d) of the Instructions to
Bidders as per the E-Tender No. 03/2023-24. The said Show
Cause Notice was duly replied by the Petitioner on 03/07/2023
thereby explaining that the Petitioner is a Partnership Firm and
its working place/office was earlier at Bhuj, but after earthquake
..ANSARI, Pethe and Khapekar
in the year 2001, the Petitioner shifted the office at Vadodara
where-from it is operating its office.
(8) It needs to be noted here that by way of the Show
Cause Notice dated 21/06/2023, the Respondent, relying on
Clause 4 of the Instructions to Bidders, has observed that M/s
H.D. Enterprises and M/s Gaurav Contracts Company have been
awarded HOE Work at Neeljay Expansion (Deep) OCM of Wani
area by CMC Department, WCL, Nagpur as a JV Entity in the
name M/s HD Gaurav JV vide LOA Ref. No.
WCL/GM(CMC)/LOA/04/2018-19/20 dated 03/05.01.2019 and
the work is under progress/execution. From this, it is held that it
is evident that M/s H.D. Enterprises and Gaurav Contracts
Company have business relationship with each other and the
said business relationship is presently ongoing and the same
cannot be construed as being made at an "arm length" in the
usual course of business, so far as this Tender is concerned. Thus,
Clause 4.2(d) of the Instructions to Bidders appears to be
violated.
..ANSARI, Pethe and Khapekar
(9) It is further alleged that the Noticee has not made any
correct disclosure in Annexure-P and has furnished a false
undertaking. It was informed that the following action might be
initiated against the Petitioner:-
"1. Forfeiture of Earnest Money deposited by you for
participation in NIT No. 03/2023-24.
2. Debarment of you i.e. M/s H.D. Enterprises and all your
Partners for a period of 12 (twelve) months from the date of
issue of such letter from participating in any future tenders in
WCL either in individual capacity or as partner in
partnership / JV firm."
(10) The Petitioner, by way of the reply, explained that
there is no violation of Clause 4.2(d) of the Instructions to
Bidders. The said Clause 4.2(d) specifies that it may be
considered that there is conflict of interest if the bidders are in
business relationship with each other and it should be such "that
puts them in a position to have access to the information about or
influence on the bid of another bidders". It is also submitted that
Clause 4.2(d) of the Instructions to Bidders therefore, postulated
that the business relationship with each other should be such that
..ANSARI, Pethe and Khapekar
one party has natural access to the information of the other or can
influence the other which requires some functional integrity
between the two or commonality between the
Director/Partners/CEO or Management of the Company. In
absence of such commonality or functional integrity, it cannot be
said that one party has access to the information or can influence
the business of the other and requested for withdrawal of the
said Show Cause Notice dated 21/06/2023. Personal hearing was
granted to the Petitioner on 08/07/2023. In spite of the
explanation given by the Petitioner, the Respondent passed an
order dated 26/08/2023 thereby holding that the present
Petitioner has violated Clause 4.2(d) of the Instructions to
Bidders as per NIT E-Tender No. 03/2023-24 and hence forfeited
earnest money deposited by the Petitioner amounting to Rs.
50,00,000/- and further the Petitioner and all its Partners are
debarred from participating in the future tenders floated by the
present Respondent in their individual capacity or
Partnership/Joint Venture Firm for a period of 12 months from
..ANSARI, Pethe and Khapekar
the date of the said order. The said order was challenged by filing
Writ Petition No. 5900/2023. This Court granted interim relief in
terms of the Prayer Clause (d). On 30/11/2023, this Court
remanded the matter back to the Respondent directing to decide
afresh. Even after remand, the reply of the Petitioner was not
considered and earlier order was confirmed.
(11) Mr. S.V. Manohar, learned Senior Advocate appearing
for the Petitioner submits that for the present NIT, the Petitioner
submitted the bid on 24/04/2023 at 10:37 am. The last date for
submission was 24/04/2023 till 11:00 am. This was extended
upto 04/05/2023. On 03/05/2023, one Gaurav Contracts
Company, with whom the Petitioner had an earlier Joint Venture
in respect of the work with WCL, also submitted its bid which is
the reason for the impugned communication. According to the
learned Senior Advocate, the very fact that the bid was to closed
on 24/04/2023 at 11:00 am and the bid of the Petitioner was
submitted was 24/04/2023 at 10:37 am, itself was indicative of
the fact that there was no nexus between the Petitioner and
..ANSARI, Pethe and Khapekar
Gaurav Contracts Company. He further submits that not even
the Petitioner and Gaurav Contracts Company were aware that
any decision regarding extension of time period of bid would be
taken by WCL and merely because the other member of the Joint
Venture dated 24/05/2018 which was only for singular work,
had submitted a bid on 03/05/2023, that does not indicate
satisfaction of the requirement of Clause 4.2(d) of the NIT. It is
further submitted that in the earlier round of litigation filed by
the Petitioner i.e. Writ Petition No. 5900/2023, while disposing of
the same on 30/11/2023, this Court had specifically directed this
position to be taken into consideration, which has not been done.
(11.1) Learned counsel for the petitioner pointed out that in
subsequent tender, clause 4.2 is amended deleting the word "all
business relation". On perusal of said amendment it also
supports the contention of petitioner. Though this amendment
can not be invoked in this present tender, however, from the fact
of amendment itself it is evident that the interpretation of said
clause is unreasonable.
..ANSARI, Pethe and Khapekar
(11.2) Learned Senior Advocate appearing for the Petitioner,
in support of his contentions, relied on the following judgments:-
"(i) Sarku Engineering Services SDN BHD, A
Company registered under the laws of Malaysia vs.
Union of India, Through the Secretary, Ministry of
Petroleum & Natural Gas & another reported in
2016 SCC OnLine Bom 5233; and
(ii) Blue Dreamz Advertising Private Limited &
another vs. Kolkata Municipal Corporation &
others reported in 2024 SCC OnLine SC 1896"
(12) Mr. C.S. Samudra, learned Counsel for the
Respondent in Writ Petition Nos. 1143/2024 and 1310/2024
vehemently argued that the word 'business' is purposely used in
Clause 4.2(d) of the Instructions to Bidders which covers all
business relationships.
(12.1) The decision of banning from dealing in any business
with the respondent company for a period of one year is in terms
of NIT and it is an administrative decision which is taken after
careful scrutiny of the facts and material placed before it. Full
opportunity to the petitioner was granted, therefore, the decision
..ANSARI, Pethe and Khapekar
is not open to challenge. The Court is under obligation to confine
itself to the question of legality of decision making process and
not the decision itself. There is no error committed by the
Respondent nor there is any scope to say that principles of
natural justice are defeated.
(12.2) It is submitted that the petitioner M/s. H.D.
Enterprises have uploaded several documents amongst others
and undertaking as stipulated in Clause 4.2(b), 4.2(e), similarly
M/s Gaurav Contract Company also uploaded undertakings. It is
contended that during the evaluation of the bids submitted by
the petitioner and by the M/s Gaurav Contract Company the
Tender Committee noticed that these two bidders have been
awarded HOE work of Neeljay Expansion (d) OCM of Vani area
by WCL as a Joint Venture entity in the name of "M/s H.D.
Gaurav J.V." vide LOA dated 01/08/2018 and work order dated
03/01/2019. It is alleged that the said work is presently under
execution, whereas, in the present tender 3/2023-24, these two
bidders are competing against each other.
..ANSARI, Pethe and Khapekar
(12.3) Thus, these two bidders have violated Clause 4.2(d)
regarding conflict of interest as stipulated in instructions to
bidder, therefore, Tender Committee proceeded to disqualify the
said bidder. It is submitted that M/s Gaurav Contract Company
did not challenge the decision and thus, it has become final.
Therefore, petitioner is disqualified and estopped from
challenging the impugned order of ban.
(12.4) There was a show cause notice in which it is
specifically mentioned about intended action of forfeiture of
EMD and debarment of petitioner for a period of twelve months
from participating any future tender and for not furnishing
correct disclosure in terms of Annexure - P. The petitioner
submitted his reply, personal hearing was granted. There are
deliberations made at different levels. As such, decision making
process of banning the petitioner from dealing with the
respondent WCL is taken after scrutiny of all the papers,
deliberations made at different levels and also due application of
mind, as such, no fault can be attributed.
..ANSARI, Pethe and Khapekar
(12.5) It is submitted by the learned Counsel Shri Samudra
for Respondent Company that Clause 4.1 of instruction to bidder
mandates that each bidder shall submit only one bid either
individually or as a proprietor or as partner in the partnership
firm or as member in the Joint Venture or as Company registered
under the Companies Act, otherwise the bidder would be
disqualified. Clause 4.2 (d) in the present tender is substantially
different from erstwhile Clause 4.2 (d) that was existing in earlier
tender. The insertion of the word "business" in Clause 4.2 (d) in
the NIT has made substantial difference thereby making the
intention of the authority very loud and clear. The intention of
the authority is that bidders should not have "business
relationship with each other" and also should not have "any
business association with each other" so as to have an access to
the information of another bidder.
(12.6) It is also submission of learned Counsel Shri Samudra
that incidentally, if such relationship direct or indirect does exist
then the likelihood of forming a "cartel" is not at all ruled out.
..ANSARI, Pethe and Khapekar
Clause 4.2 (d) prohibits such unfair practice of forming a "cartel"
by the bidder, as the same is unfair trade practice which is not in
the public interest. All the compliances are duly made by the
authority before the impugned order is passed. No interference is
warranted at the hands of this Court.
(12.7) In response to the contention of the petitioner that the
petitioner submitted its bid on 24/04/2023 at 10:37 a.m., whereas
the other bidder M/s Gaurav Contract submitted it's bid on
03/05/2023 at 18:50 p.m. during the extended period for
submitting the bid, he submitted that the time and date of the
bidding by the bidders is not the relevant factor for establishing
conflict of interest. The knowledge about the participation of the
other bidder in the tender at the time of bidding is not the
relevant factor, even when petitioner got its knowledge
subsequently, the undertaking and the clause gets automatically
attracted. The said clause needs to be interpreted in such a
manner that it will give commercial sense and meaning so as to
..ANSARI, Pethe and Khapekar
ultimately achieve the object of inserting the word "business" in
Clause 4.2 (d) for the first time.
(13) Learned Counsel Shri A.M. Ghare for Respondent in
Writ Petition Nos. 2677/2024, 2583/2024, 3090/2024 and
2997/2024 supported the argument advanced by learned Counsel
Shri Samudra. In addition, it is submitted that in Writ Petition
No. 2583/2024, the petitioner HCPL had participated through a
Joint Venture comprising of itself with M/s Kaveri Engineering
Projects Limited (KAVERI) and C-5 Engineering Private Limited
(C5). In the same process another Joint Venture had submitted
bid comprising of firms by the name of Shodha Constructions
Private Limited (SHODHA) and M/s Sushee Hitech Projects
Private Limited made it (SHPPL). The firms of SHPPL and
petitioner had formed a joint venture by the name of M/s HCPL-
SHPPL in a bid floated at Pauni II Overcast Mine at Ballarpur
Area of the respondent and having successful in securing a
contract, which is still in subsistence, having been awarded on
12/12/2022. It is submitted that therefore, it is clear that one
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partner of the C5-KAVERI- HCPL JV was in direct business
relations with one partner of SHODHA- SHPPL JV, and both had
applied for the same tender. He further submitted that as this
subsisting business relation was not disclosed in the list, the
technical bid of C5-KAVERI- HCPL was rejected for breach of the
CIPP. The said disqualification has not been questioned by the
petitioner or it's J.V. and has attained finality. It is submitted that
the order of debarment is a consequential action to the
disqualification. As there is no challenge to the disqualification,
the order of debarment which is a consequential action to the
disqualification would not be maintainable. He relied on
Edukanti Kistamma (Dead) through L.Rs. Vs. S. Venkatareddy
(Dead) through L.Rs. And others, 2010 (1) SCC 756.
(14) We have heard both the parties at length, considered
documents placed on record and citations referred. The question
which falls for our consideration is whether in the facts and
circumstances of the case, order of the Respondent Company
dated 08/02/2024 (Annexure - M), debarring the petitioner for a
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period of twelve months is valid and justified in the eye of law.
Another question which falls for our consideration is whether
there is any violation of Clause 4.2 at the hands of petitioners.
(15) In foregoing Paragraphs this Court has already
recorded what are the contentions of the parties and why the
respondent Company is saying that there is a violation of Clause
4.2(d). The impugned order is the result of such violation. Now
let us turn to the clause itself to see whether there is any
conclusive presumption spelt out in the clause so as to conclude
that if petitioners and other bidder have business relationship,
that by itself, puts them in a position to have access to
information about or influence on the bid of another bidder. It
would be appropriate to reproduce Clause 4.2 for the sake of
convenience.
Clause 4.2 Conflict of Interest.
"A Bidder may be considered to have a conflict of interest with
one or more parties in this bidding process, if:
a) They have controlling partner(s) in common: or
b) They receive or have received any direct or indirect
subsidy/financial stake from any of them: or
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c) They have the same legal representative/agent for purpose of
this bid: or
d) They have business relationship with each other, directly or
through common third parties, that puts them in a position to
have access to information about or influence on the bid of
another Bidder, or
e) A Bidder or any of its affiliate participated as a consultant in
the preparation of the design or technical specification of the
contract that is the subject of the Bid; or
f) In case of a holding company having more than one
subsidiary/sister concern having common business
ownership/management only one of them can bid. Bidders must
proactively declare such sister/common business/management in
same/similar line of Business.
All such Bidders having a conflict of interest shall be
disqualified."
(16) The opening words of Clause 4.2 says that a bidder
'may' be considered to have a conflict of interest. As such, there
is no conclusive presumption that if they have business
relationship with each other it would be conclusive proof of
having a conflict of interest with one or more parties in the
bidding process. So simple business relationship is not sufficient
to conclude that the parties are having conflict of interest unless
there is functional integrity or commonality.
(17) The petitioner in reply to show cause specifically
submitted that they do not have any common partners with M/s.
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Gaurav Contracts Company (M/s. GCC) and working
place/office of the petitioner is at Vadodara, Gujarat which is at a
distance of 400-500 kms away from the office of M/s. GCC whose
office/work place situated at Bhuj, Gujarat. Moreover, the last
date for submission of bid was 24/04/2023 till 11.00 Hrs. and the
petitioner had submitted the bid on 24/04/2023 at 10.37 Hrs.
Thereafter, the respondent extended the last date for submission
of bid till 04/05/2023 and said M/s. GCC submitted their bid on
03/05/2023 at 18.50 Hrs. It is an admitted fact that the entire
tender process is floated on the Government GEM portal and it is
completely online and no participant is having access to know
who all are participating.
(18) In view of the above facts, one cannot conclude that
there was any knowledge to the petitioner-company of any
company/entity/firm, with which it had a JV participating, in
the tender. If there would have been such intention, the said
constituent of the JV would have submitted its bid within time
and not in extended period. All the constituents of the JV are the
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distinct entities and having separate legal status. The Joint
Venture had been entered into only for the earlier tender notice
of a project. However, it appears that there was no functional
integrity between entities which had formed the JV and they
were independent entities. That JVs were for a single venture and
not for a continuing business, is a position not disputed by the
learned counsel for the respondents. On perusal of Clause 4.2 (d),
"all business" relationships are not covered by the clause. It
disqualifies only those business relationship that would put a
bidder in a position to have access to the information about or
influence the bid of another bidder. There is no absolute
presumption to the effect that if there is business relationship, it
would be considered to have conflict of interest with one or more
parties in the bidding process.
As indicated above, having a mere business
relationship by itself is not a ground for disqualification, in light
of the language of Clause 4.2 (d), for it further requires that such
business relationship has put them in a position to have access to
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information about or influence on the bid of another bidder.
Therefore, for disqualifying a bidder it has to be established that
the latter part of Clause 4.2 (d) has been fulfilled and a mere
business relationship cannot be the basis for holding that there is
a conflict of interest within the meaning of the expression as
occurring in Clause 4.2 of the Conditions of the NIT. There has to
be subjective satisfaction of the Bidding Authorities.
(19) Clause 16 of the NIT Conditions contain guidelines
on debarment of firm from bidding. The learned counsel for
WCL sought to justify the action of debarment relying upon this
Clause, which reads as under:-
"16. Guidelines on Debarment of Firms from Bidding
CIL and its Subsidiary Companies shall follow the following
guidelines for effecting 'Debarment of firms from Bidding' with a
contracting entity in respect of Works and Services Contracts.
1. Observance of Principle of Natural Justice before debarment of
firm from Bidding.
2. The Bidder/Contractor may be debarred in the following
circumstances:
i)...
vi) Willful suppression of facts or furnishing of wrong
information or manipulated or forged documents by the Agency
or using any other illegal/unfair means."
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(20) It is submitted that the petitioner as well as M/s.
GCC have not made correct disclosure in Annexure-P and has
furnished a false undertaking. It is not disputed that Annexure-P
is submitted by M/s. H.D. Enterprises on 15/04/2023. The
undertaking was to the effect that if it has any relationship with
another bidder directly or through another parties, that would
put a bidder in a position to have access to the information about
or influence the bid of another bidder or if not of its bid affiliate
participation as a consultant in the preparation of the relevant
document which is a subject of the bid, it would stand
disqualified. This would indicate that till the submission of
undertaking, the petitioner HDE was not aware that the period is
going to be extended and GCC would also file a bid. Thus,
Annexure-P cannot be said to be incorrect and false so as to claim
that a false undertaking had been submitted. Even if this
undertaking is given, the petitioner and GCC are both different
entities and there is no functional integrity. Even if they were
allotted a tender in one, joint venture that does not stop them
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from pursuing their independent business. Clause 16(2)(b)(vi)
refers to willful suppression of facts or furnishing of wrong
information for disqualification. In view of the position, then
existing, there is no reason to conclude that the disclosure made
therein was incorrect and false undertaking had been submitted.
The respondent while passing the impugned order assumed that,
"the very existence of business relationship between the Bidders
is itself sufficient to infer and establish that the Bidders are in a
position to have an access to the information about or influence
on the Bid of another Bidder." Such presumption cannot be
drawn unless it is spelt out in the relevant provision. It has to be
decided in the facts and circumstances of the case. Only because
there is business relationship of the petitioner with GCC will not
automatically lead to conclude that they are in a position to have
an access to the information about or influence on the Bid of
another Bidder.
(21) Being a construction company, the petitioner may
have 'N' number of business relationship, however, it is not
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necessary that, it would be in a position to have an access to the
information about or influence on the Bid of another Bidder
unless it is found that there is functional integrity. It is
unreasonable to expect the bidder to give details of the business
relationship with each and every such other entity.
(22) The learned counsel for the respondent vehemently
submitted that the relationship of the petitioner with GCC is not
at "arm's Lenth" by virtue of the work being executed by them at
Neeljay Expansion OCM. It is also the contention that, if such
business association is there between two bidders, either directly
or indirectly, either past or present, then the likelihood of
forming a 'cartel' is not at all ruled out.
(23) The "arm's Lenth transaction" refers to a business
deal in which two parties act independently without one party
influencing the other. There is no such finding or evidence on
record to conclude that such position was not in existence. Even
if plea of possibility of 'cartel' is considered, it cannot readily be
inferred. Whether in a given case, there was formation of 'cartel'
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depends upon the available evidence and surrounding
circumstances. It is merely a suspicion. Only because GCC also
submitted its tender, it cannot be concluded that a cartel was
formed. There has to be some reasonable apprehension, in
addition to a mere business relationship, to establish this, which
is absent here. In fact, till the last date, GCC was not in the fray. It
has submitted its tender in extended period. There is no other
material except that they were having one Joint Venture which is
not sufficient to show that they are in a position to influence the
bid of each other. Similar position avails in other petitions, where
the blacklisting has been done merely on account of a JV having
been entered into in view of what has been discussed above
would equally apply there too.
(24) In Sarku Engineering Services SDN BHD, A Company
registered under the laws of Malaysia (supra), this Court placed
reliance on the judgment of the Hon'ble Apex Court in the case of
Erusian Equipment and Chemicals Limited V/s. State of West
Bengal [(1975) 1 SCC 70] wherein it is held that,
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"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."
(25) In Sarku Engineering Services SDN BHD, A Company
registered under the laws of Malaysia (supra), this Court also
placed reliance on the judgment of the Hon'ble Apex Court in the
case of Kulja Industries Limited Vs. Chief General Manager,
Western Telecom Project, Bharat Sanchar Nigam Limited and
Ors. [(2014) 14 SCC 731], 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 the touchstone of the principles
of 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".
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(26) In Blue Dreamz Advertising Pvt. Ltd. And another Vs.
Kolkata Municipal Corporation and others, 2024 SCC OnLine
SC 1896, the Hon'ble Apex Court observed as under:
"22. Blacklisting has always been viewed by this Court as a drastic
remedy and the orders passed have been subjected to rigorous scrutiny.
In Erusian Equipment & Chemicals Ltd. v. State of West Bengal
(1975) 1 SCC 70, this Court observed that
"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...."
23. In Mr. B.S.N. Joshi (supra), this Court while observing disasterous
effect of debarment held that
"41. ... When a contractor is blacklisted by a department he is
debarred from obtaining a contract, but in terms of the notice inviting
tender when a tenderer is declared to be a defaulter, he may not get any
contract at all. It may have to wind up its business. The same would,
thus, have a disastrous effect on him. Whether a person defaults in
making payment or not would depend upon the context in which the
allegations are made as also the relevant statute operating in the field.
When a demand is made, if the person concerned raises a bona fide
dispute in regard to the claim, so long as the dispute is not resolved, he
may not be declared to be defaulter."
25. What is significant is that while setting out the guidelines
prescribed in USA, the Court noticed that comprehensive guidelines
for debarment were issued there for protecting public interest from
those contractors and recipients who are non-responsible, lack business
integrity or engage in dishonest or illegal conduct or are otherwise
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unable to perform satisfactorily. The illustrative cases set out also
demonstrate that debarment as a remedy is to be invoked in cases
where there is harm or potential harm for public interest particularly
in cases where the person's conduct has demonstrated that debarment
as a penalty alone will protect public interest and deter the person
from repeating his actions which have a tendency to put public interest
in jeopardy. In fact, it is common knowledge that in notice inviting
tenders, any person blacklisted is rendered ineligible. Hence,
blacklisting will not only debar the person concerned from dealing
with the concerned employer, but because of the disqualification, their
dealings with other entities also is proscribed. Even in the terms and
conditions of tender in the present case, one of the conditions of
eligibility is that the agency should not be blacklisted from anywhere.
26. In other words, where the case is of an ordinary breach of contract
and the explanation offered by the person concerned raises a bona fide
dispute, blacklisting/debarment as a penalty ought not to be resorted
to. Debarring a person albeit for a certain number of years
tantamounts to civil death inasmuch as the said person is
commercially ostracized resulting in serious consequences for the
person and those who are employed by him."
(27) Thus, the proper and fair opportunity of hearing and
showing cause is the essential concomitant of the principle of
natural justice, which is required to be followed, considering the
drastic, damaging and far reaching impact, which an order of
black-listing or banning has on the contractor. It is in the nature
of a civil death as it affects his goodwill and reputation in the
business. If Clause 4.2(d) is interpreted, in such a fashion that a
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mere business relationship is sufficient to conclude that they are
in a position to influence other's bid without anything more, it
would literally infringe the right of a person to pursue his
business, it would be in the nature of a civil death as it affects his
goodwill and reputation in the business. The facts and
circumstances shows that the petitioner as well as GCC are
independent entities, there is no functional integrity. In our
considered opinion, though an opportunity of hearing was
granted, the respondent failed to consider the merit of Clause
4.2(d). The conclusion drawn is only on the basis of Joint
Venture of the petitioner and GCC. True, it is that there are
powers of black-listing or debarring the contractor available,
they, however, are to be exercised only in certain conditions, and
there has to be strong, independent and overwhelming material
on record to resort to this power given, as it has the drastic
consequences on a contractor. Thus, for all the reasons set out
hereinabove, the orders of black-listing/debarring dated
08/02/2024 are liable to be quashed and set aside.
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(28) All Writ Petition Nos. 2677/2024, 1310/2024,
2997/2024, 3090/2024, 1143/2024 and 2583/2024 are allowed and
impugned orders dated 04/04/2024, 08/02/2024, 04/04/2024,
04/04/2024, 08/02/2024 and 04/04/2024 respectively are hereby
quashed and set aside.
(29) Rule is made absolute in the aforesaid terms. No order
as to costs.
(SMT. M.S. JAWALKAR, J.) (AVINASH G. GHAROTE, J.)
At this juncture, Shri A.M.Ghare, learned
counsel for Western Coalfields Limited requests for continuation
of interim orders dated 17/04/2024 in Writ Petition Nos.
2583/2024, dated 08/05/2024 in Writ Petition No. 3090/2024,
dated 22/04/2024 in Writ Petition No. 2677/2024 and dated
06/05/2024 in Writ Petition No. 2997/2024, however, as the
impugned order is set aside, we do not see any reason to extend
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such protection. As such, there is no need to continue the interim
orders in relation to Western Coalfields Limited. The request for
continuation of aforesaid interim orders is rejected.
(SMT. M.S. JAWALKAR, J.) (AVINASH G. GHAROTE, J.)
Signed by: Mr. B.T. Khapekar
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Designation: PA To Honourable Judge
Date: 24/09/2024 18:13:37
