Delhi High Court
Municipal Corporation Of Delhi vs Narender H. Chandwani on 31 January, 2012
Author: Rajiv Sahai Endlaw
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 31st January, 2012.
+ LPA 495/2009
% MUNICIPAL CORPORATION OF DELHI ...Appellant
Through: Ms. Shyel Trehan with Mr. Nikhil
Pillai, Advs.
Versus
NARENDER H. CHANDWANI ..... Respondent
Through: Mr. Rahul Gupta and Mr. Raghav
Tandon, Advs.
CORAM :-
HON'BLE THE ACTING CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
JUDGMENT
RAJIV SAHAI ENDLAW, J.
1. The appeal impugns the judgment dated 30th March, 2009 of the
Single Judge of this Court allowing the review of the judgment dated 4 th
July, 2008 (dismissing W.P.(C) No. 4684/2008 preferred by the respondent)
and thereafter proceeding to allow the writ petition by setting
aside/quashing the decision of MCD contained in Circular dated 19th May,
2008 impugned in the said writ petition. Notice of this appeal was issued.
On 10th November, 2009 the appeal was admitted for hearing though the
application of the appellant MCD for stay of the judgment of the Learned
Single Judge dismissed. The counsels have been heard.
2. The respondent as the sole proprietor of M/s Sona Consultant &
Contractors was an approved contractor of the appellant MCD for over 20
years prior to the filing of the writ petition in the year 2008. The appellant
MCD however vide its Circular dated 19th May, 2008 (supra) removed the
respondent from the approved panel of contractors "on account of non
execution of work awarded against two work orders both dated 25 th January,
2007". The writ petition impugning the same was earlier dismissed vide
judgment dated 4th July, 2008 (supra) finding that the respondent had been
negligent in undertaking the works under the aforesaid work orders and the
Circular dated 19th May, 2008 had been issued in accordance with the
principles of natural justice. However, it was also observed that the effect of
the Circular dated 19th May, 2008 was only to remove the name of the
respondent from the current enlistment and the same did not debar the
respondent from applying afresh for enlistment with the appellant MCD and
if the respondent so applied his application was to be considered in
accordance with the enlistment rules/instructions.
3. The respondent applied for review contending that as per the
"Instructions for Enlistment/Revalidation of Contractors in MCD" issued
vide circular letter dated 11th March, 2008 (hereinafter called Enlistment
Rules 2008) removal from the approved list of contractors disentitled from
enlistment action. It was thus contended that the respondent was not eligible
to re-apply for enlistment and on which premise the writ petition had been
dismissed. It was further contended that the Circular dated 19th May, 2008
had the effect of permanently debarring the respondent from enlisting
himself with the appellant MCD and consequently from taking any work
from the appellant MCD. On acknowledgment of the said position by the
counsel for the appellant MCD also, the review application was allowed and
the writ petition heard afresh.
4. The Learned Single Judge in the judgment dated 30th March, 2009
(supra) has observed/held:-
A. that the registration/enlistment of the respondent as a
Class II (Civil Contractor) enabled the respondent to take
up contracts having tendering limit of `1 crore;
B. that the two work orders both dated 25th January, 2007
for the reason of default whereunder the respondent had
been so debarred were issued by the MCD on the
respondent under the Unit Rate Method (URM) system
and for which a separate registration under the URM
scheme had been granted to the respondent and
whereunder the limit of each single work was `5 lacs
only;
C. that the empanelment of contractors under the URM
system is distinct from enlistment of contractors under
the Enlistment Rules 2008; while under the URM system
registration is done zone wise, enlistment under the
Enlistment Rules is valid for all areas/zone in MCD;
D. though for registration as a URM contractor, enlistment
as a contractor is a precondition but nevertheless URM
registration was distinct from enlistment;
E. failure to perform the URM contracts could not have
invited disciplinary action under the Enlistment Rules
2008; though a enlistment contractor also registered as a
URM contractor, upon being blacklisted/barred for
future tendering under the Enlistment Rules was to lose
registration as a URM contractor also - however the
converse was not possible;
F. that the action taken by the appellant MCD was highly
disproportionate to the gravity of the default committed
by the respondent.
Accordingly the Circular dated 19th May, 2008 of the appellant MCD
removing the name of the respondent from approved panel of contractors
was set aside/quashed giving liberty to the appellant MCD to take
appropriate action on account of the respondent‟s default in performing the
two URM contracts.
5. The counsel for the respondent has contended that
enlistment/empanelment with the appellant MCD as a contractor merely
enables participation in the tenders floated by the appellant MCD from time
to time of the value depending on the category of empanelment/enlistment;
that URM contracts are the petty contracts of the maximum value of `5 lacs
for which no tenders are floated; only the enlisted/empanelled contractors
are entitled to be registered as a URM contractor also; that URM contracts
are awarded on the basis of draw of lots on rotation; that in fact the
contractor does not earn anything in a URM contract; that the URM rules do
not provide for any disciplinary action for default therein; that
empanelment/enlistment is the parent registration and for default in URM
contracts the parent registration cannot be cancelled.
6. We have enquired from the counsel for the respondent whether a
default in a URM contract is to go scot free. The counsel has fairly admitted
that he has also struggled with the said question and the only answer with
which he can come up is that default of URM contract can lead only to
forfeiture of the registration amount/security deposit therefor.
7. We are unable to agree. The very fact that enlistment/empanelment
under the Enlistment Rules 2008 is essential for registration as a URM
contractor also is indicative of the URM contracts being also governed by
the Enlistment Rules 2008. Clause 4.1 of the said Rules prescribes that the
appellant MCD enlists contractors who intend to work with it so as to have a
ready list of suitable and competent contractors for the appellant MCD‟s
works so as to minimize requirement of verification of credentials of
contracts each time. The Enlistment Rules lay down the eligibility criteria
for enlistment and the procedure for enlistment. Similarly the URM Rules
2008 prescribe the eligibility for being empanelled/enlisted contractors for
registration thereunder. Rule 9 of the URM Rules provides that the general
conditions of contracts, special conditions and other conditions as provided
in the forms prescribed for contracts awarded on tender shall be applicable
to URM system also save that the payment of bills thereunder will depend
upon availability of funds and the arbitration clause is deleted.
8. The aforesaid rules leave no doubt whatsoever that URM is merely a
system under the umbrella of empanelment and else is to be governed by the
Empanelment Rules. It would even otherwise be incongruent that
defaults/breaches under URM are to go unpunished. The situation that
notwithstanding repeated defaults/breaches in URM a contractor shall
remain empanelled and entitled to participate in the tenders for contracts of
much higher value cannot be accepted or upheld.
9. We thus set aside the judgment of the Learned Single Judge in so far
as holding the Enlistment Rules to be not applicable to URM contracts.
10. We however are in tandem with the Learned Single Judge that the
harsh penalty of debarring the respondent from dealing with the appellant
MCD for all times in future is disproportionate to the default in two URM
contracts especially when there is no case of any default/breach on the part
of the respondent. The counsel for the appellant MCD however informs and
it is not disputed by the counsel for the respondent also that upon restoration
of empanelment of the respondent pursuant to the judgment of the Learned
Single Judge (and of which no stay was granted) the respondent has
defaulted in another URM contract and for which he has again been
debarred, this time for a period of five years and which is the subject matter
of another writ petition pending before the Learned Single Judge. It is also
informed that there is no stay of the said debarment for five years.
11. After having considered all the facts we are of the view that for the
defaults on account whereof the respondent was permanently debarred, the
punishment of debarment for a period of three years will be appropriate; out
of the said period of three years, the respondent has already remained
debarred from 19 th May, 2008 (supra) till the judgment dated 30th March,
2009 i.e. approximately for a period of one year. The respondent shall
remain debarred for the balance two years w.e.f. 31st January, 2012 and
which period is to run concurrently with the debarment aforesaid for five
years if continues; else the said period will exhaust on 30th January, 2014.
12. The appeal is partly allowed on the aforesaid terms. No order as to
costs.
RAJIV SAHAI ENDLAW, J
ACTING CHIEF JUSTICE
JANUARY 31, 2012
„PP‟
