Sahakar Global Limited And Anr vs The State Of West Bengal And Ors
2022 Latest Caselaw 1449 Cal

24.03.2022
 KC(AD3)
                                 M.A.T. 580 of 2021
                          Sahakar Global Limited and Anr.
                                       -versus-
                          The State of West Bengal and Ors.

             Mr.   Anindya Kumar Mitra,
             Mr.   Jishnu Saha,
             Mr.   Zeeshan Haque,
             Mr.   Tanay Agarwal,
             Mr.   Tirthankar Nandi...................For the appellants.

             Mr. T.M. Siddique,
             Mr. Raja Saha,
             Ms. Tanusri Chanda,
             Mr. Srikanta Paul......................For the respondents.

The appellant company (hereinafter the appellant)

on 29th November, 2017 received a workorder from the

respondent Government of West Bengal. Under it, for a

period of 730 days from 30th November, 2017 it was

given the responsibility of collecting toll from vehicles

crossing the Ajoy bridge over the Ajoy river at Ilambazar

in the district of Birbhum. The contractor was required

to pay Rs. 5,13,000/- per day and about Rs.

76,95,000/- per fortnight to the government as

consideration to collect the toll which was about Rs.

20/- for a private vehicle and much more for heavy

vehicles.

According to Mr. Anindya Kumar Mitra, learned

senior advocate appearing for the appellant, at one

point of time the bridge became very weak and unable

to withstand the load of traffic plying over it. The

government was compelled to divert the traffic through

another route as a result of which the traffic flow over

the bridge diminished. As a result of this, the collection

of toll came down substantially.

At this stage, we are not required to go into the

performance of the contract or its breach by the parties

except to a very limited extent.

For alleged breach of contract, the appellant was

suspended for a period of two years from participating

in any tender process initiated by the government and

ultimately debarred for two years from such

participation by the impugned order of the Joint

Secretary to the Public Works Department, Government

of West Bengal dated 26th December, 2019.

At this point of time it is necessary to discuss

some terms and conditions of the tender notice which

became part of the contract prompting this action by

the government. The contract was subject to the

procedure for debarment of suppliers, contractors and

consultants, issued by the Public Works Department of

the Government dated 16th November, 2015, which was

grafted into the contract as Clause 17.

Clause 17(c) sub-clause 4 of the tender notice

relating to the procedure for suspension and debarment

is very important. Particularly important in this case is

sub-clause 4.13 which is inserted hereunder:

"Failure by the contractor to fully and faithfully comply with its contractual obligations without valid cause, or failure by the contractor to

comply with any written lawful instruction of the procuring entity or its representative(s) pursuant to the .........."

Also relevant are sub-clauses 5.1 and 6.1 which

are also set out below:

"5.1. First degree of offence; Sl. No. 4.1 to 4.16 to be considered as first degree of offence.

6.1. For committing 1 "Degree of offence; Disqualifying a bidder from participating in any procurement process under the Public Works Department, Government of West Bengal up to 2(two) years."

Learned counsel for the appellant has attacked

the debarment order dated 26th December, 2019 on

many grounds, but the salient grounds are these.

Referring to sub-clause 4.13 learned counsel

submitted that the provision in the clause "without

valid cause" had a special meaning. In case of ordinary

breach of contract, the ground for suspension and

debarment would not be attracted. Only when the

breach was wilful and blatant, that is to say, without

valid cause, would this penalty be attracted. He

contended that this allegation was neither put forward

to the appellant to answer nor gone into by the

authority pronouncing the debarment order. The

allegation or charges against his client, according to

well established principles of natural justice had to be

laid in the form of a show cause notice. The answer to

the show cause notice ought to have been considered by

the authority and only if the answer was considered to

be unacceptable by it, could proceedings for suspension

and debarment have been initiated, learned counsel

added.

Next, reference was made by learned counsel to

sub-clause 8 of the tender notice which laid down that

the procedure for suspension and debarment had to be

initiated by the Engineer-in-charge and referred to the

Bid Evaluation Committee. The Bid Evaluation

Committee could recommend initiation of proceedings

for debarment. Only then could the proceedings for

suspension or debarment be started. In this case this

procedure was not followed.

The main cause of grievance of the appellant is

this. The period of suspension is long over. The period

of debarment is also over. Theoretically, the appellant

does not face any bar to participate in a tender process

in West Bengal or in other parts of the country.

Mr. Mitra submitted what was affecting the

appellant was the impugned order of debarment dated

26th December, 2019. It stared on the face of the

appellant, he said. In any invitation to tender by the

government, whether in West Bengal or elsewhere in the

country a declaration has to be made by a tenderer as

to whether he was debarred or black-listed in the last

five years. This order of debarment has to be declared

by the appellant in all tender participation by them till

the end of 2024. This would have a prejudicial effect

and is quite likely to result in contracts not being

awarded to the appellant.

Mr. Siddique, learned advocate appearing for the

respondent State tried to support the impugned order

by pointing out the various breaches of the contract

committed by the appellant. He also tried to show that

the finding of the learned judge in the impugned

judgment and order, based on such facts, was correctly

arrived at. He submitted that the period of suspension

and debarment was over and that the appellant had

become eligible to get contracts from the respondent

government as well as from the governments of other

states and statutory agencies.

We have carefully examined the impugned

debarment order dated 26th December, 2019. We agree

with learned counsel for the appellant that the proper

procedure for deciding whether a debarment

proceedings could be initiated or not, by issuance of a

show cause notice had not been followed.

An adjudicating authority gets the jurisdiction to

decide provided the jurisdiction is properly vested in it.

Here the jurisdiction could have been vested with the

adjudicating authority had the alleged acts of

commission or omission been referred by the Engineer-

in-charge to the Bid Evaluation Committee and

thereafter recommended by the Committee for action to

the Debarment Committee. Since this procedure was

not followed, there was lack of jurisdiction of the

adjudicating authority to embark upon the impugned

decision making process.

Furthermore, there was no application of mind of

the adjudicator to sub-clause 4.13 of the said terms and

conditions. There is neither any enquiry nor discussion

as to whether the appellant contractor had breached

the terms and conditions of the contract willfully and

blatantly without any valid cause necessitating the

penalty of debarment.

If an adjudicator had to address a particular

question and has not addressed that question and has

come to the conclusion answering the wrong question,

the decision falls within the error contemplated by the

Wednesbury case. This kind of an error has been

committed by the adjudicator in the impugned order,

which is apparent on its face.

We are of the view that the learned trial court in

its writ jurisdiction ought not to have gone into the

performance or breach of the agreement save and

except what was necessary to decide the issue of

debarment. On examination of the facts, as stated

above, we have found a grave procedural error in the

conduct of this debarment proceedings. We are not

commenting on the performance or breach of the

contract by the parties.

On the above ground of failure to observe the

principles of natural justice and the rules of fairness the

impugned debarment order dated 26th December, 2019

is set aside. However, we give an opportunity to the

respondents to revise its order, if it so desires, by

initiating the proceedings de novo by issuing a show

cause notice and upon following the procedure laid

down in clause 17(c), sub-clauses 4, 5, 6 and 8 of the

terms and conditions, pass a reasoned order after giving

an opportunity of hearing to the appellant within a

period of three months from this date.

We make it clear that the order of suspension or

debarment cannot be reimposed or extended. The

previous order, now set aside may only be reaffirmed, if

warranted. We are giving an opportunity to the

respondents to start the proceedings afresh as the

impugned order gave them a valuable right not to award

any contract to the appellant for five years.

The impugned judgment and order of the learned

single judge dated 11th June, 2021 is set aside.

The appeal (M.A.T. 580 of 2021) is allowed.

(I.P. MUKERJI, J.)

(ANIRUDDHA ROY, J.)