Delhi High Court
M/S Otik Hotels And Resorts ... vs Indian Railway Catering And ... on 5 October, 2016
$~35 & 39
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 9159/2016 & C.M.Nos.37083-37084/2014
M/S OTIK HOTELS AND RESORTS PRIVATE LIMITED
..... Petitioner
Through Mr.Manjit Singh Ahluwalia,
Advocate.
versus
INDIAN RAILWAY CATERING AND TOURISM CORPORATION
LTD. ..... Respondent
Through Mr.Nikhil Majithia, Advocate.
+ W.P.(C) 9158/2016 & C.M.Nos.37081-37082/2016
M/S OTIK HOTELS AND RESORTS PRIVATE LIMITED
..... Petitioner
Through Mr.Manjit Singh Ahluwalia,
Advocate.
versus
INDIAN RAILWAY CATERING AND TOURISM CORPORATION
LTD. ..... Respondent
Through Mr.Nikhil Majithia, Advocate
% Date of Decision: 05th October, 2016
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
JUDGMENT
MANMOHAN, J: (Oral)
1. Present writ petitions have been filed challenging the termination
letters dated 28th September, 2016 passed by the respondent-IRCTC
terminating the temporary licences awarded to the petitioner of on-board
catering services in train nos.12832-24 and 12365-66 on the ground that the
petitioner failed to start the catering service w.e.f. 21st September, 2016 and
did not pay the security deposit and licence fee on or before 19th September,
2016. The respondent-IRCTC further in terms of Clause 4.8 of the tender
document has debarred the petitioner from participating in future projects of
respondent-IRCTC for a period of one year.
2. Mr.Manjit Singh Ahluwalia, learned counsel for the petitioner states
that vide three letters dated 16th September, 2016, the respondent-IRCTC
awarded temporary licences to the petitioner for three trains and the
petitioner was required to deposit the security deposit and licence fee on or
before 19th September, 2016. He, however, states that the letters dated 16th
September, 2016 were received by the petitioner on 21st September, 2016
and consequently it was impossible for the petitioner to pay the licence fee
on or before 19th September, 2016.
3. Learned counsel for the petitioner also submits that without any show
cause notice, the petitioner has been debarred for a period of one year. In
support of his submission, learned counsel for the petitioner relies upon the
judgment of the Supreme Court in Gorkha Security Services Vs.
Government (NCT of Delhi) and Others, (2014) 9 SCC 105 wherein it has
been held that before imposition of penalty of blacklisting/debarment, the
petitioner has to be given a specific notice stating that in the event the
authority is not satisfied with the reply it gives, it can be
blacklisted/debarred.
4. Mr.Ahluwalia also contends that the tender document itself postulates
late payment on behalf of the tenderer. In support of his contention, he relies
upon Clause 6.2 of the tender document which reads as under:-
6.2 Failure to deposit Licensee is required to deposit License
License fee - post Fee, in advance, as advised by IRCTC, for
commissioning of the period of temporary license, extended
licence of IRCTC. In case Licensee fails to
deposit the License fee within the
stipulated time frame, IRCTC shall
charge interest @ 18% per annum
calculated for the number of days of
default and in case of inordinate delay
IRCTC may initiate the termination
proceeding to terminate the contract at
the risk and cost of licensee.
5. Mr.Ahluwalia lastly states that the punishment of debarment for one
year is very harsh in the facts of the present cases. He points out that the
petitioner has been an empanelled caterer for the Railways since 2005 and as
of today is running five Base Kitchens and is employing two hundred and
fifty employees.
6. Per contra, learned counsel for the respondent-IRCTC states that as
the petitioner is an empanelled caterer, it has furnished its email address to
the respondent-IRCTC for the purpose of correspondence. He states that in
the present case temporary licence of catering for three trains, namely,
Amritsar Haridwar Jan Shatabdi, Patna Ranchi Jan Shadabdi and Durg
Nizammudin Sampark Kranti Express were issued for short duration.
7. Learned counsel for the respondent-IRCTC also states that the letters
of intent dated 16th September, 2016 were sent to the petitioner by email and
were received by the petitioner on the same date. He contends that though
the last date for making payment for all three trains was 19th September,
2016, yet the petitioner paid the entire licence fee only for Amritsar
Haridwar Jan Shatabdi on 20th September, 2016 and for Patna Ranchi Jan
Shadabdi in two installments on 20th and 21st September, 2016. He points
out that for Durg Nizamuddin Sampark Kranti Express, the petitioner sought
extension of time to pay till 8th October, 2016.
8. He emphasised that even though the petitioner had paid only
Rs.25,35,445/- as against a total of Rs.60,47,844 (excluding security deposit
of Rs.9,57,600/-) for three trains, petitioner has been issued licence for
Amritsar Haridwar Jan Shatabdi after condoning the delay of one day.
9. Having heard learned counsel for parties and having perused the paper
book, this Court finds that since the petitioner had furnished its email address
and the letters of Award dated 16th September, 2016 were communicated to
the petitioner by way of email, which were admittedly received, the
petitioner cannot complain of lack of communication of the three letters of
Award. Consequently, it was possible for the petitioner to pay the licence
fee on or before 19th September, 2016.
10. This Court also finds that the tender documents in the present instance
itself clearly stipulated that in the event the licence fee was not paid in whole
or part, the applicant would be debarred from participating in any bidding
process for future projects of the respondent-IRCTC for a period of one year.
Clauses 4.8 and 1.1 of the General Conditions of License are reproduced
hereinbelow:-
4.8 Non acceptance In case the successful bidder fails to
of award accept the offer of award of licence
along with security deposit and licence
fee, within the stipulated time as advised
by IRCTC, the licence shall be
terminated along with forfeiture of
security deposit and licence fee, whole
or part thereof, as the case may be.
Further, he will be debarred from
participating in the bidding process of
future projects of IRCTC for a period of
one year.
Section two
1.1 Payment of License Bidders are required to quote License
fee Fee excluding service tax as
applicable, for a period of 06 months.
Successful bidder will be required to
deposit quoted license fee for a period
06 months along with applicable
Service Tax thereon, in advance,
before start of work and as advised by
IRCTC.
11. In fact, even while submitting its bids, the petitioner had specifically
agreed that on account of non-acceptance of Award or on account of non-
fulfillment of the tender conditions within the prescribed time, it shall stand
debarred by the respondent-IRCTC from participation in its future tenders
for a period of one year. Consequently, in the opinion of this Court, no
specific notice stating that the petitioner would be debarred on account of
non-payment of licence fee was required.
12. This Court is also of the opinion that Clause 6.2 has no application to
the facts of the present case as it only confers discretion upon IRCTC to
condone delay in depositing the licence fee, post commissioning of the
licence and that too, upon payment of interest @18% p.a. Consequently, the
initial licence fee has to be paid within the time prescribed and the same
cannot be extended upon payment of interest.
13. The judgment of Gorkha Security Services (supra) also does not help
the petitioner as in the said case the tender document did not provide
specifically for blacklisting/debarment of the contractor. In the present case,
Clause 4.8 of the tender document as well as the petitioner's own bid
documents specifically state that the petitioner can be debarred for a period
of one year on account of non-fulfillment of tender conditions within the
prescribed time.
14. Recently, the Supreme Court in Bakshi Security & Personnel
Services (P) Ltd. Vs. Devkishan Computed (P) Ltd., (2016) 8 SCC 446 has
held as under:-
"16. We also agree with the contention of Shri Raval that the
writ jurisdiction cannot be utilised to make a fresh bargain
between parties.
xxx xxx xxx xxx
xxx xxx xxx xxx
19. It is also well to remember the admonition given by this
Court in Michigan Rubber (India) Ltd. v. State of Karnataka
[Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8
SCC 216] in cases like the present, as under: (SCC p. 228,
para 21)
"21. In Jagdish Mandal v. State of Orissa [Jagdish Mandal
v. State of Orissa, (2007) 14 SCC 517] , the following
conclusion is relevant: (SCC p. 531, para 22)
„22. Judicial review of administrative action is intended to
prevent arbitrariness, irrationality, unreasonableness, bias
and mala fides. Its purpose is to check whether choice or
decision is made "lawfully" and not to check whether choice
or decision is "sound". When the power of judicial review is
invoked in matters relating to tenders or award of contracts,
certain special features should be borne in mind. A contract is
a commercial transaction. Evaluating tenders and awarding
contracts are essentially commercial functions. Principles of
equity and natural justice stay at a distance. If the decision
relating to award of contract is bona fide and is in public
interest, courts will not, in exercise of power of judicial
review, interfere even if a procedural aberration or error in
assessment or prejudice to a tenderer, is made out. The power
of judicial review will not be permitted to be invoked to protect
private interest at the cost of public interest, or to decide
contractual disputes. The tenderer or contractor with a
grievance can always seek damages in a civil court. Attempts
by unsuccessful tenderers with imaginary grievances, wounded
pride and business rivalry, to make mountains out of molehills
of some technical/procedural violation or some prejudice to
self, and persuade courts to interfere by exercising power of
judicial review, should be resisted. Such interferences, either
interim or final, may hold up public works for years, or delay
relief and succour to thousands and millions and may increase
the project cost manifold. Therefore, a court before interfering
in tender or contractual matters in exercise of power of
judicial review, should pose to itself the following questions:
(i) Whether the process adopted or decision made by the
authority is mala fide or intended to favour someone;
OR
Whether the process adopted or decision made is so
arbitrary and irrational that the court can say: "the decision
is such that no responsible authority acting reasonably and in
accordance with relevant law could have reached";
(ii) Whether public interest is affected.
If the answers are in the negative, there should be no
interference under Article 226. Cases involving blacklisting or
imposition of penal consequences on a tenderer/contractor or
distribution of State largesse (allotment of sites/shops, grant of
licences, dealerships and franchises) stand on a different
footing as they may require a higher degree of fairness in
action."
15. In a recent study on „Ease of Doing Business, 2016‟ by World Bank,
India has been ranked 178th out of 179th countries on the enforcing contracts
indicator.
16. Keeping in view the aforesaid facts and the mandate of law, the plea
for extension of time cannot be entertained as in the opinion of this Court,
present proceedings cannot be used for renegotiation of contract and for
fixing new dates for deposit of licence fee. In any event, if the respondent-
IRCTC has wrongly debarred the petitioner, as claimed by the petitioner,
then in the opinion of this Court, the petitioner would only be entitled for
damages.
17. However, this Court is in agreement with the contention of learned
counsel for the petitioner that the punishment of debarment for a period of
one year is not proportionate to the facts of the present case, especially
keeping in view the fact that the petitioner has been an empanelled
contractor/caterer with the Railways for more than ten years and is at the
moment running five base kitchens.
18. The concept of proportionality of punishment is not unknown to law.
The Supreme Court in Kulja Industries Limited vs. Chief General
Manager, Western Telecom Project Bharat Sanchar Nigam Limited &
Ors., (2014) 14 SCC 731 has held as under:-
"26. In the case at hand according to the respondent BSNL,
the appellant had fraudulently withdrawn a huge amount of
money which was not due to it in collusion and conspiracy
with the officials of the respondent Corporation. Even so
permanent debarment from future contracts for all times to
come may sound too harsh and heavy a punishment to be
considered reasonable especially when (a) the appellant is
supplying bulk of its manufactured products to the respondent
BSNL, and (b) the excess amount received by it has already
been paid back."
19. A Coordinate Bench of this Court in M/s. Sai Consulting Engineers
Pvt. Ltd. Vs. Rail Vikas Nigam Ltd. & Ors., 198 (2013) DLT 507 has held
as under:-
"32. As far as ban of 5 years on the basis of second show-
cause notice is concerned, this court is of the view that the
same is imposed for larger period in view of peculiar facts of
the present case and particularly earlier ban on the basis of
first show-cause for only one year and the same was already
spent by the petitioner. Considering the overall facts and
circumstances of the present case, I reduce the period of ban
from five years to two years with effect from 30th June, 2011."
20. Consequently, the punishment of debarment of the petitioner in the
peculiar facts of the present case is reduced to one month w.e.f. 28th
September, 2016. The amount of Rs.15,55,799/- deposited by the petitioner
with regard to Patna Ranchi Jan Shadabdi shall be refunded to the petitioner
within a period of one week.
21. With the aforesaid directions and conclusions, present writ petitions
and applications stand disposed of.
Order dasti.
MANMOHAN, J
OCTOBER 05, 2016
KA
