Calcutta High Court (Appellete Side)

Pvt. Ltd. & Anr vs West Bengal Mineral Development & on 14 July, 2023

                      In the High Court at Calcutta
                     Constitutional Writ Jurisdiction
                              Appellate Side

The Hon'ble Justice Sabyasachi Bhattacharyya

                           W.P.A. No. 15088 of 2023

                    M/s. Dhansar Engineering Co.
                           Pvt. Ltd. & Anr.
                                  Vs.
                  West Bengal Mineral Development &
                   Trading Corporation Ltd. & Ors.

     For the petitioners             :     Mr. Ranjan Bachawat,
                                           Mr. Dwaipayan Basu,
                                           Ms. Amrita Panda,
                                           Mr. Arkaprava Sen


     For the respondents             :     Mr. Kishore Datta,

Mr. Sanjay Saha, Mr. Subhasish Bhattacharyya, Mr. Piyush Agarwal, Ms. Utsha Dasgupta, Ms. Shrivalli Kajaria

Hearing concluded on : 04.07.2023

Judgment on : 14.07.2023

Sabyasachi Bhattacharyya, J:-

1. The petitioners have challenged an order of debarment/blacklisting of

the petitioners for a period of five years in respect of transactions with

the respondent-Authorities. Learned senior counsel for the petitioners

argues that the impugned blacklisting tantamounts to a civil death of

the Company. If the company remains debarred from participating in

the tender floated by the respondents, which are Government

authorities, the petitioner-Company will suffer a stigma and will be

precluded from other similar tenders floated by other authorities as

well, because it is an usual clause in all such tenders that a

participant cannot offer a bid if blacklisted previously.

2. It is submitted that, although a hearing was given to the petitioner,

the order of blacklisting was passed mechanically without assigning

any reason in terms of Clause 9.7.1 of the Tender Document as well

as in contravention of principles of natural justice.

3. It is further submitted that since the provision of blacklisting is a

punitive one, the same should be interpreted strictly.

4. It is admitted by the petitioners that the petitioners have previously

suffered sudden set-backs, including one previous tender being

recalled, another resulting in forfeiture of the petitioners' earnest

money and the non-participation of the petitioner after initiation in a

third tender; but, none of those are germane in terms of the present

tender.

5. However, admittedly, the petitioner no. 1-company had previously

entered a joint venture with a third party and the said joint venture

was blacklisted for a term of five years in an earlier tender.

6. The petitioner has participated in the present tender by forming a joint

venture with a different company, which had no nexus with the said

earlier tender.

7. In terms of the conditions of the present tender, the bidder was to

disclose that none of the contracts of the bidder or any member of the

bidding group or the bidding consortium have been terminated or

foreclosed due to their default.

8. Scrutinizing the said provision, that is 7.8.3(a) of the Notice Inviting

Tender (NIT) closely, the joint venture, which is comprised of the

petitioner and a third party in the present tender process, was never

terminated or foreclosed previously. The joint venture which was

foreclosed, being comprised of the petitioner no.1 and an entirely

different company, was a separate entity altogether from either the

petitioner individually or the present joint venture, of which the

petitioner is a component.

9. Thus, it is argued that there is no applicability of Clause 9.7.1(c) of the

Techno Commercial Proposal attached with the NIT, which provides

that the bid security shall be forfeited and appropriated by the

respondent-authorities if any of the documents submitted by a bidder

as a part of the bid is found to be not genuine or forged or any of the

claims, confirmations, statements or declarations of the bidder is

found to be incorrect or inconsistent, including the declaration given

under Clause 7.8.3 or in case of any material misrepresentation of

facts at any point of time during the bid evaluation process as, in the

present case, there is no false statement or incorrect statement or

claim made in the bid document in terms of Clause 7.8.3 or its sub-

clauses.

10. Learned senior counsel for the petitioner cites Aquafil Polymers Co.

Pvt. Ltd. Vs. Gujarat Urban Development Company Limited, reported at

MANU/GJ/1979/2022, where it was observed that the conditions in

the tender document which could be said to be penal in nature have

to be construed and applied strictly. In the said case, a Division

Bench of the Gujarat High Court had observed that when the tender

bid contains eligibility criteria, the corresponding obligation to satisfy

the criteria arises. However, where the tender document does not

provide specifically about certain disclosure, the authorities cannot

scrutinize the tender document for what is not provided for. The word

"bidder" in relation to, and as applied to, in the said tender document

was held to mean the individual petitioner itself as tenderer. The

Division Bench observed that, strictly speaking, the petitioner was not

the tenderer in the concerned project and it could not be said that it

was the petitioner-entity which was debarred and blacklisted there.

That Court observed that when the information of the instant tender

was to the furnished, the non-mention on the part of the bidder about

the joint venture bidder in Rajasthan having been stated as debarred

could not be fatal.

11. The Gujarat Division Bench also held that the appellant before the

court in M/s. Gammon India Limited Vs. Commissioner of Customs,

Mumbai [(2011) 12 SCC 499], a joint venture, could be treated as a

legal entity with the characteristics of a partnership. The Gujarat

High Court held that the suppression of pending litigation could not

be a ground for disqualifying the appellant in the said case on the

principle as laid down above, since a joint venture is an independent

legal entity.

12. It is, thus, argued that the blacklisting of the petitioner was palpably

without authority and in violation of law and it should be set aside.

13. Learned senior counsel appearing for the respondents relies on a

notice of debarment dated June 16, 2017 issued by the Western Coal

Fields Limited to a joint venture which was comprised of the petitioner

and a different company. It is submitted that in the said order of

debarment, it was clearly mentioned that the joint venture, jointly and

severally, along with the Directors/partners of both the companies,

individually, jointly and severally, were debarred from participation in

future tenders of the said authority for twelve months.

14. In the present case, the said incident was relevant within the

contemplation of Clause 7.8.3 of the NIT but was suppressed by the

petitioner in its bid document, for which forfeiture was effected.

15. Hence, the blacklisting following the same was fully justified.

16. It is argued that false information was given by the present joint

venture/bidder, in the bid document, suppressing the said germane

incident of blacklisting of one of its members, contrary to the

provisions of the NIT.

17. The present impugned blacklisting was effected after duly giving a

show-cause notice and hearing the petitioner at length and by giving

appropriate reasons. It is, thus, submitted that the blacklisting was

not vitiated in any manner.

18. That apart, learned senior counsel for the respondents argues that the

impugned decision of blacklisting, in any event, was one of the

plausible views in the context; as such, there ought not to be any

interference with such due exercise of discretion by the respondent-

authorities by the writ court.

19. Learned senior counsel also seeks to distinguish the cited judgment

on factual score.

20. Heard learned counsel for the parties.

21. One of the contentions urged by the petitioner is that the condition

regarding disclosure of previous blacklisting was not an essential

condition of the tender document and, as such, exempted within the

purview of Aquafil Polymers (supra). It is submitted that, as opposed

to the "Qualification Requirements" stipulated in the tender

document, the provision as to disclosure of prior termination or

foreclosure was stipulated under "Other Terms and Conditions". More

importantly, it has been argued that the absence of genuineness or

inconsistency or incorrectness of the documents leading to forfeiture

was stipulated in Item 9 of the tender document, which pertains to

contents of Techno-Commercial Proposal, and are not a part of the

essential criteria or qualification requirements. Hence, the blacklisting

for alleged contravention of such non-essential condition of the tender

is bad.

22. However, such argument is not supported by the judgments cited by

the petitioners.

23. The relevant paragraph of Aquafil Polymers (supra), in the context, is

paragraph 5.6 thereof. We find from paragraph 5.1 that there were

several limbs of conditions for blacklisting.

24. One of the limbs was that the bidder shall be disqualified if it had

made misleading or false misrepresentation in the forms, statements

and attachments submitted as proof of "Qualification Requirements".

25. The other limb was that the bidder should provide accurate

information on litigation and/or arbitration resulting from contract

completed or under execution by him over the last five years. A

consistent history of arbitration awards/judgments against the

applicant or any partner of a joint venture, it was stipulated, may

result in disqualification for proposed work. If the details of litigation

history are hidden by the applicant and later on come to the

knowledge of the employer, the bidder shall be disqualified for the

proposed work and other appropriate action shall be taken against the

bidder, as per the relevant clause therein. In such perspective, the

Gujarat High Court went on to decide on the first limb and observed

that a joint venture is a different entity and as such, the non-mention

of previous blacklisting of the joint venture could not be germane as

suppression.

26. Paragraph 5.6 of the report, however, dealt with the second limb of the

relevant clause in the said case, which contained the ground of

suppression of pending litigation, which was held by the Gujarat High

Court to be without substance. That apart, there was an arbitration

proceeding between the joint venture, which was awarded the

contract, and the Rajasthan Infrastructure Project, which culminated

in an arbitral award in favour of the said bidder. Even otherwise, the

aspect about alleged non-disclosure of those details by themselves

could not be said to be any violation of an essential condition of the

tender document. Such conclusions in the cited judgment followed

from the initial observation in paragraph 5.1 thereof.

27. In the said case, misleading and false information as to previous

blacklisting was a condition of blacklisting in the relevant contract,

but insofar as the details of litigation were concerned, the same were

comprised of a different provision altogether. On such aspect, the

Gujarat High Court held that improper disclosure or non-disclosure of

litigation details was not an essential condition of the tender

document. Moreover, the outcome of the litigation in the said case

went in favour of the joint venture, as such, was not a factor which

went against the bidder.

28. However, as opposed to such distinguishing circumstances, in the

present case, the relevant condition that is Clause 7.8.3 was a part of

Item 7.8 (Other Terms and Conditions), which Item was a sub-item of

Clause 7 of the NIT, pertaining to "Qualification Requirement". Hence,

the disclosure as contemplated in Clause 7.8.3(a) of the tender

document in the present case fell within the qualification

requirements and, thus, was definitely an essential requirement of the

tender.

29. That apart, there are other distinctions between the Aquafil Polymers

(supra) and the present case. In Aquafil Polymers (supra), the previous

blacklisting pertained only to the joint venture, which was treated to

be a separate entity. However, even the treatment as a separate

entity, it is relevant to mention, was dealt with in details, in Aquafil

Polymers (supra). A close scrutiny would reveal that although a joint

venture can be taken, under certain circumstances, as a separate

juristic entity, the same is in the nature of a partnership, as observed

in Aquafil Polymers (supra) itself. It is important to note that a

partnership casts joint and several liabilities on all the partners.

30. Much more importantly, in the present case, the notice of debarment

dated June 16, 2017 issued by the Western Coal Fields Limited in a

previous tender entered into by the petitioner, as a component of a

joint venture with a third company, clearly discloses as follows:

"iii) You i.e. M/s DBL-DECO (JV), jointly & severally along with their

directors/partners of M/s Dilip Buildcon Limited, Bhopal and M/s

Dhansar Engineering Company (Private) LTD are individually, jointly

& severally debarred from participation in future tenders of WCL for

a period of 12 (Twelve) Months."

31. Hence, it was not merely the joint venture, as an individual entity,

which was blacklisted but both the members of the said joint venture,

including the petitioner no.1 herein, jointly and severally, along with

their directors/partners. In fact, the petitioner no.1 and its other

partners in the joint venture were separately mentioned and were

"individually, jointly and severally" debarred for twelve months in the

said tender. Hence, the said act was absolutely germane and fell

squarely within the contemplation of Clause 7.8.3 which was one of

the qualification requirements in the case at hand. Clause 7.8.3(a)

stipulated that, for being eligible to participate, none of the contracts

of the bidder or any member of the bidding group or the bidding

consortium could have been terminated or foreclosed due to their

default.

32. Clause 9.7.1 requires an affidavit by the bidder, including each

member of the bidding group or the bidding consortium to the effect

that none of their contracts have terminated or foreclosed due to their

default. The bidder, including each member of the bidding group or

the bidding consortium, as per Clause 9.7.1, additionally, have also to

declare that if it is found at any point of time that their documents are

not genuine or are false or forged, then the tender will be rejected,

earnest money deposited and forfeited and the participants will be

debarred from participating in further/future tenders of the

respondent-Authorities. As per sub-clause (d) of the said Clause, the

decision in that regard taken by the respondent-Authorities, based on

verification, would be final and binding on the bidder.

33. Although a doubt has been sought to be cast by the petitioner on the

issue as to whether the documents being "not genuine or false or

forged" covers the present incidents of incorrect statement.

34. However, three separate expressions have been used in the relevant

Clause, that is, sub-clause (c) of Clause 9.7.1, being "not genuine",

"false" and "forged".

35. As opposed to "not genuine" and "forged", the expression "false"

specifically pertains to the averments or declarations or statements

made in the said affidavits or declarations. Whereas forgery or

genuineness can be characteristics of the process of documentation,

falsity, as opposed to the said two expressions, and used in addition

and independently to such expression, can only relate to the

statements made in the documents.

36. Hence, such line of argument of the petitioner cannot also be

accepted. A false statement which goes to the root of the tender,

inasmuch as it hits the essential qualification requirements thereof,

was rightly not pardoned by the respondent-Authorities in the present

case. The respondents are, in any event, justified in arguing that they

had a reasonable discretion and the authority to decide on the

outcome of the verification regarding the genuineness or falsity of the

declarations. However, in the present case, such discretion is not

required to be gone into at all, since the suppression of the petitioners

ex facie shows that the petitioner was rightly blacklisted.

37. The unreported judgments of the Nagpur Bench of the Bombay High

Court cited by the respondents is not germane in the present case,