Chattisgarh High Court

M/S Beejo Sheetal Seeds Pvt. Ltd vs Chhatttisgarh Rajya Beej Avum ... on 14 October, 2022

                                                                  Page No.1


                                                              NAFR

           HIGH COURT OF CHHATTISGARH, BILASPUR

                   Reserved for Order on : 05.05.2022

                      Order Passed on : 14/10/2022

                        W.P.(C) No. 1788 of 2019
M/s. Beejo Sheetal Seeds Pvt. Ltd., A Private Limited Company
registered under the relevant provisions of Indian Companies Act,
through : its authorized Senior Manager Accounts namely Vijay
Vasantrao Chindhe, S/o. Vasantrao Chindhe, aged about 53 years, R/o.
Susmruti, Kashinath Ghyadnagar, Jalna (Maharashtra) 431203
                                                          ---- Petitioner
                                  Versus
1.    Chhattisgarh Rajya Beej Avam Krishi Vikas Nigam Limited,
      through : its Managing Director, Beej Bhawan, Ravigram,
      Telibandha, Raipur, District - Raipur (C.G.)
2.    Managing Director, Chhattisgarh Rajya Beej Avum Krishi Vikas
      Nigam Limited, Beej Bhawan, Ravigram, Telibandha, Raipur,
      District - Raipur (C.G.)
                                                       -----Respondents


For Petitioner                   : Mr. Manoj Paranjpe, Advocate
For Respondents                  : Mr. Animesh Tiwari, Advocate



                 Hon'ble Shri Justice Parth Prateem Sahu

                             C A V ORDER

1.    Petitioner a private limited company, by this petition has

      questioned the legality and sustainability of impugned order

      dated 03.05.2019 (Annexure P-1), whereby petitioner-company

      has been debarred for a period of five years from participation in

      future tender process of respondent No.1 and security amount
                                                                  Page No.2

     deposited towards rate contract offer 2016-17 has been directed

     to be forfeited.


2.   Facts

relevant for disposal of this petition are that respondent

No.1 invited an application for online Rate Contract Offer (E-

bidding) for supply of vegetable seeds in the State of

Chhattisgarh for the year 2015-16 and on wards till the validity of

rate contract. The validity of rate contract was for one year from

the date of agreement or execution of new rate contract offer,

which ever is later. Petitioner company along with others

submitted their applications pursuant to the notice inviting RCO

and after conclusion of proceedings, offer of petitioner was

accepted. Petitioner supplied vegetable seeds, subject matter of

the RCO and in terms of agreement executed between petitioner

and respondents. After completion of period of one year, new

rate contract was entered into for a period of one year i.e. for the

year 2016-17, which was also successfully completed by

petitioner. Petitioner company received notice issued by

respondents authorities on 01.12.2018 seeking explanation from

petitioner on audit objection. Petitioner submitted its reply to

notice and thereafter second notice dated 06.02.2019 was

issued, which was also replied by petitioner. Again notice dated

16.04.2019 was issued reply to which was also submitted by

petitioner and thereafter impugned order (Annexure P-1) has

been passed debarring petitioner from participation in any of

tender process of respondent No.1 for a period of five years. It is

this order (Annexure P-1) is under challenge in this petition.

Page No.3

3. Mr. Manoj Paranjpe, learned counsel for petitioner would submit

that show cause notice dated 16.04.2019 (final show cause

notice) was issued with premeditation mentioning violation of

Clause 4.5 of Pre Contract Integrity Pact and Clause 2.17 of

ROC without examining reply and explanation submitted by

petitioner-company. Impugned order (Annexure P-1) of debarring

is passed without issuance of proper show cause notice,

affording proper opportunity of hearing. There was no complaint

with regard to quality of seeds supplied by petitioner. Allegation

against petitioner-company is that petitioner-company in collusion

with M/s. Kalash Seeds Pvt. Ltd. had participated in the notice

inviting rate contract offer and thereby violated Clause "Collusive

Bidding of RCO". Both the companies are entirely different

entities, they deal in different products. Petitioner has not

suppressed any facts at the time of submission of online offer

and merely running of offices of two companies in one premises

will not lead to a presumption that companies are one and same.

He also submits that even if any one or more directors of two

companies are same, then also both the companies have

submitted their offer for different variety of seeds and both

companies are having their own laboratories. Issuance of

impugned order of blacklisting is completely misuse of powers

vested with the authorities and would amount to colourable

exercise of power. Due to arbitrary issuance of order of debarring

petitioner from participation in tender proceedings, petitioner has

been punished. He contended that petitioner can not be punished Page No.4

vide order dated 03.05.2019 invoking clause of Pre Contract

Integrity Pact of the agreement when it has already come to an

end. Before passing an order, proper opportunity of hearing was

not afforded to petitioner. No fact finding enquiry has been

initiated to ascertain as to whether there was any collusive

bidding. He contended that even if the allegation as leveled in

the notice is stated to be correct then also it would not fall within

the definition of corrupt practice or fraudulent practice as

mentioned under Clause 2.17 of notice inviting RCO. In alternate

it is submitted that even if the respondents concluded that there

was collusive bidding by petitioner then also the debarment for

maximum period of five years as mentioned in the Pre Contract

Integrity Pact is harsh and arbitrary. He submits that for the

forgoing reasons, the impugned order (Annexure P-1) be

quashed. In support of his contention, he places reliance upon

the judgment of Hon'ble Supreme Court in case of Kulja

Industries Limited Vs. Chief General Manager, Western

Telecom Project Bharat Sanchar Nigam Limited & Ors.,

reported in (2014) 14 SCC 731, Vetindia Pharmaceuticals

Limited Vs. State of Uttar Pradesh & Another, reported in

(2021) 1 SCC 804, in case of Gorkha Security Services Vs.

State (NCT of Delhi), reported in (2014) 9 SCC 105, Oryx

Fisheries Pvt. Ltd. Vs. Union of India, reported in (2010) 13

SCC 427, judgment of Madhya Pradesh High Court in case of

Bombay Intelligence Security (India) Ltd. Vs. State of M.P. &

Ors., reported in 2021 (4) JabLJ 631 and judgment of High Court Page No.5

of Delhi in case of Emami Power Limited Vs. NTPC Limited &

Anr., reported in 2018 SCC OnLine Del 6525.

4. Mr. Animesh Tiwari, learned counsel for respondents would

submit that action taken against petitioner is in accordance with

clauses mentioned under Rate Contract Offer (E-bidding)

document and Pre Contract Integrity Pact signed by petitioner.

He submits that period of supply, subject matter of case was for

the year 2015-16. Period of contract was for one year and life of

Pre Contract Integrity Pact was for a period of five years.

Respondent with the vision to stimulates progress in the field of

agricultural in the State provides high yielding variety of seeds to

the farmers in the State, agricultural machinery, organic

biofertilizers, agricultural micronutrients and bio-pesticides etc. at

fare price. The nature of supply of commodities is seasonal and

large quantities of seeds is required to be supplied just before

onset of Monsoon. After expiry of period of RCO, while

scrutinizing during audit the documents submitted by petitioner, it

revealed that address, contact number and fax number of M/s.

Beejo Sheetal Pvt. Ltd. and Ms. Kalash Seeds Private Limited

were same. It also revealed that director of petitioner firm M/s.

Beejo Sheetal Pvt. Ltd, Mr. Sameer Suresh Agrawal is also the

director of M/s. Kalas Seeds Pvt. Ltd and thereby Sameer Suresh

Agrawal has submitted dual bid. The audit objection was raised

and thereafter show cause notice seeking explanation was

issued to petitioner. Petitioner submitted its reply. Dissatisfied

with the reply, again show cause notice was issued to petitioner Page No.6

making specific pleading that documents shows collusive bidding

for taking action for forfeiture of earnest money deposit and

debarring petitioner for a period of five years as provided under

Clause - 7 of Pre Contract Integrity pact. Petitioner again

submitted reply, which was found to be non-satisfactory and

again notice was issued mentioning the clauses of Pre Contract

Integrity Pact and conditions of RCO as final show cause notice

and only thereafter, the impugned order is passed taking action

against petitioner of debarring for a period of five years from

participating in new tender process and forfeiting the amount of

EMD. Respondents have complied with all clauses as mentioned

in the RCO documents as well as the clauses of Pre Contract

Integrity Pact. Submission of counsel for petitioner that procedure

as prescribed was not followed, action taken against petitioner is

arbitrary, there is violation of principles of natural justice as

proper opportunity was not given before taking any action against

petitioner, therefore, is wrong. He contended that petitioner after

knowing all the clauses of RCO documents as well as clauses

under Pre Contract Integrity Pact agreement has participated in

the bid and also signed the Pre Contract Integrity Pact

agreement. Period of five years of debarment for violation of

conditions/clauses of tender documents or Pre Contract Integrity

Pact agreement is the minimum and respondents considering

entirety of facts have debarred petitioner only for minimum

period.

Page No.7

5. I have heard learned counsel for parties and also perused the

documents placed on record.

6. Annexure P-2 filed along with writ petition is Rate Contract Offer

(E-bidding) documents for supply of horticulture hybrid vegetable

seeds for the year 2015-16. Under Clause 2.2 under the head of

"Submission Of Rate Contract Offer' in sub-clause (a) it is

mentioned as under :-

"a. Not more than one Rate contract offer will be accepted from any bidder. If an individual participates in the rate contract offer, representing more than one organization in one or different names, such offer (s) will not be entertained."

7. Clause 2.7 provides for validity of rate contract. Clause 2.17

deals with Warning Against Use of Corrupt and Fraudulent

Practices, which reads as under :-

"2.17. WARNING AGAINST USE OF CORRUPT AND FRAUDULENT PRACTICES:

The C.G. B.K.V.N. requires all the Bidders should observe the highest standard of ethics.

In pursuant to this policy, following has been defined "Corrupt Practice" means behavior on the part of officials in the public or private sector by which they improperly and unlawfully enrich themselves and or those close to them, or induce others to do so, by misusing the position in which they are placed, and includes the offering, giving, receiving or soliciting of anything of value. 'Fraudulent Practice' means a misrepresentation of facts in order to influence an evaluation process of execution to the determent of Page No.8

the Government and includes collusive practice among Bidders (prior to and after bid submission) designed to establish bid price at artificial non- competitive level.

The C.G. B.K.V.N. will not execute any rate contract, if it is determined that the Bidder was engaged in corrupt or fraudulent practices."

8. Petitioner also submitted Pre- Contract Integrity Pact. As per

Clause 4.5 of Pre Contract Integrity Pact the "BIDDER will not

collide with other parties interested in the contract to impair the

transparency, fairness and progress of the bidding process, bid

evaluation, contracting and implementation of the contract".

Clause 6.2 deals with the validity of earnest money for a period of

five years or the complete conclusion of the contractual

obligations to the complete satisfaction of both the BIDDER AND

BUYER, including warranting period, which ever is later. Under

Clause - 7, sanctions for violations includes debarment of bidder

from participating in future bidding process for "minimum period

of five years". Clause -13 of Pre Contract Integrity Pact provides

for validity of five years from date of its signing or the complete

execution of the contract to the satisfaction of both the buyer and

the Bidder/Seller, whichever is later.

9. In the light of the aforementioned conditions of the documents

and the clauses of Pre Contract Integrity Pact, it is to be seen

whether the proceedings initiated by respondents is in

accordance with the conditions mentioned in the RCO documents

and clauses of Pre Contract Integrity Pact and order impugned is Page No.9

passed after giving proper opportunity of hearing.

10. As mentioned above Clause 2.2 provides that if an individual

representing more than one organization in one or different

names such offer will not be entertained. Clause 2.17 talks about

Fraudulent Practices which means misrepresentation of facts in

order to influence an evaluation process of execution to the

detriment of the government.

11. After receiving the audit objection, respondents issued notice on

01.12.2018 specifically mentioning that the objection is with

regard to collusive bidding and why action should not be taken

against petitioner. Notice was addressed to two companies,

petitioner and another M/s. Kalash Seeds Pvt. Ltd. Notice dated

01.12.2018 was replied on 05.12.2018. Dissatisfied with reply

submitted to show cause notice, another notice dated 06.02.2019

was issued specifically mentioning the reasons in detail as to why

EMD submitted by petitioner be not forfeited and debarred

petitioner for a period of five years from participating in any of

tender process. This notice was also replied by petitioner on

18.02.2019. Considering the reply, again final show cause notice

was issued on 16.04.2019 mentioning the provisions of tender

documents and Pre Contract Integrity Pact clauses specifying the

action to be taken against it. It is only thereafter, when petitioner

could not convinced, respondents have passed the order

(Annexure P-1). The plea of respondent is that not only the office

premises of two company are same but the telephone number

and fax number are also same.

Page No.10

12. From the aforementioned provisions it is apparent that before

passing order (Annexure P-1) taking action against petitioner

proper notice was given, reply was called and only thereafter

order has been passed.

13. Hon'ble Supreme Court in case of Gorkha Securities (supra)

has held that opportunity of hearing in context of proceedings

initiated against petitioner of barring from participating any tender

proceedings and forfeiting earnest money deposited is issuance

of show cause notice calling explanation and thereafter to pass

order. In the case at hand the procedure prescribed for passing

order of blacklisting/debarring in the opinion of this Court has

been complied with.

14. Perusal of reply would show that petitioner has only mentioned

that there may be offices of more than one company in one

premises, allegation of same phone number and fax number

have not been explained in any manner. Sameer Suresh Agrawal

is common director in both the companies is accepted.

15. Though the period of supply of seeds was for one year, but as

per Clause 13 of Pre Contract Integrity Pact, the validity of

agreement is from the date of signing and extend up to five years

or the complete execution of contract to the satisfaction of both

buyer and bidder, whichever is later and therefore, the

submission of counsel for petitioner that proceedings have been

initiated after conclusion of period of one year is not sustainable.

Submission of counsel for petitioner that act of petitioner Page No.11

company will not fall within the purview of Clause 2.17 i.e. corrupt

and fraudulent practices is also not sustainable in view of its clear

wordings used under it specifying what is fraudulent practice

means misrepresentation of facts in order to influence an

evaluation process. Petitioner suppressed the fact that Sammeer

Suresh Agrawal is director of both the companies, which

participated in the subject rate contract offer. Hence, in the facts

of the case, this submission of counsel for petitioner is also not

sustainable. Other alternate submission made by learned counsel

for petitioner that even if the respondents found some mistake on

the part of petitioner violating the conditions of RCO documents

and clauses of Pre Contract Integrity Pact, the period of

debarment is highly excessive, is also not sustainable because

according to Clause 7.1 (vii) of the Pre Contract Integrity Pact,

the period of debarring is mentioned as "minimum period of

five years". The minimum period for debarring is provided as five

years, which was agreed by petitioner at the time of executing the

documents.

16. The case law relied upon by petitioner in case of Kulja

Industries Limited (Supra) is on different facts. The appellant

there in permanently banned and Hon'ble Supreme Court while

upholding the order of blacklisting has held in para 2-, which is as

under

"25. Suffice it to say that "debarment" is recognized and often used as an effective method for disciplining deviant suppliers/contractors who may have Page No.12

committed acts of omission and commission or frauds including misrepresentations, falsification of records and other breaches of the regulations under which such contracts were allotted. What is notable is that the "debarment" is never permanent and the period of debarment would invariably depend upon the nature of the offence committed by the erring contractor."

17. In the aforementioned facts of the case, Hon'ble Supreme Court

while upholding the order of blacklisting had remanded the case

to the authorities for determining the period of debarment afresh

on the basis of guidelines to be formulated by the corporation for

that purpose.

18. In case of Bombay Intelligence Security India Limited (Supra)

the period of blacklisting was reduced for the period already

undergone, however, the judgment does not reflect as to the

minimum period was provided in the agreement or the tender

documents therein. In case of Vetindia Pharmaceuticals

Limited (Supra) Court came to conclusion that order of

blacklisting to be not sustainable for want of proper show cause