Delhi High Court
M/S Himalaya Communications Ltd vs Bharat Sanchar Nigam Ltd on 3 July, 2017
$~6
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 5438/2017
M/S HIMALAYA COMMUNICATIONS LTD ..... Petitioner
Through: Mr Sakal Bhushan, Advocate.
versus
BHARAT SANCHAR NIGAM LTD ..... Respondent
Through: Mr Sameer Agrawal, Advocate.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
ORDER
% 03.07.2017
VIBHU BAKHRU, J
CM No.22895/2017
1. Allowed, subject to all just exceptions.
2. The application is disposed of.
W.P.(C) 5438/2017 & CM No.22894/2017
3. Issue notice. The learned counsel for the respondent accepts notice.
4. With the consent of the parties, the petition is taken up for final
hearing.
5. The petitioner has filed the present petition, inter alia, impugning the
communication/order dated 02.03.2017 (hereafter „the impugned order‟)
issued by the respondent as being arbitrary and against the principles of
natural justice.
6. The controversy in the present case concerns the question whether the
respondent could ban the petitioner from participating in tenders and from
entering into any transactions with the respondent for a period of three years
on account of the petitioner having failed to accept the Advance Purchase
Orders (APOs) placed on the petitioner. The APOs in question were issued
pursuant to a tender submitted by the petitioner in response to a notice
inviting tender dated 24.06.2016 (hereafter „the NIT‟).
7. The respondent had issued the NIT for inviting bids from eligible
bidders for supply of Optical Fibre Cables (OFCs). The petitioner had
participated in the aforesaid tender and was declared as the lowest bidder (L-
1). In terms of the NIT, APOs were placed on the petitioner on 28.10.2016
and the petitioner was called upon to furnish the performance bank
guarantees as required in terms of the NIT. Admittedly, the petitioner failed
to accept the said APOs and furnish the bank guarantees.
8. The petitioner claims that it was not in a position to accept the APOs
since the respondent had not granted approval for its product. It is further
claimed that the petitioner was entitled to participate in the tender while its
product was pending such approval. The approval having been denied, the
petitioner was, obviously, not in a position to supply the products (OFCs) to
the respondent.
9. The learned counsel for the petitioner has assailed the impugned order
essentially on three grounds. First, he submits that in terms of Clause 24.1
of the NIT, the respondent could not have placed the APOs on the petitioner
since the petitioner‟s products had not been approved. Second, he submits
that the impugned order is contrary to the terms of the NIT. And third, he
submits that the impugned order amounts to blacklisting the petitioner and is
in violation of the principles of natural justice, since no hearing was afforded
to the petitioner before the passing of the impugned order.
10. The NIT clearly lists out the circumstances in which a punitive
measure of banning participation of the bidders in future tenders can be
taken. Clauses 1(a), 2, 6, 7, 10 & 12 of the Instructions to Bidders are
relevant and are reproduced below:-
S.No. Defaults of the bidder/vendor Action to be taken
A B C
1(a) Submitting fake/forged i) Rejection of tender bid of
respective Vendor.
a) Bank instruments with the bid ii) Banning of business for
to meet terms & conditions of 3 years which implies
tender in respect of tender fee barring further dealing with
and/or EMD; the vendor for procurement
b) Certificate for claiming of Goods & Services
exemption in respect of tender fee including participation in
and/or EMD; future tenders invited by
and detection of default at any BSNL for 3 years from
stage from receipt of bids till date of issue of banning
award of APO/issue of PO/WO. order.
iii) Termination / Short
Closure of PO/WO, if
issued. This implies non-
acceptance of further
supplies/work & services
except to make the already
received material
work/complete work in
hand.
Note 1:- However, in this case the performance guarantee if
alright will not be forfeited.
Note 2:- Payment for already received supplies/completed work
shall be made as per terms & conditions of PO/WO.
XXXX XXXX XXXX XXXX
2. If vendor or his representative
uses violent/coercive means viz.
Physical/Verbal means to Banning of business for 3
threatens BSNL years which implies
Executive/employees and/or Barring further dealing
obstruct him from functioning in with the vendor for
discharge of his duties & procurement of Goods &
responsibilities for the following: Services including
a) Obstructing functioning of participation in future
tender opening executives of tenders invited by BSNL
BSNL in receipt/opening of tender for 3 years from date of
bids from prospective Bidders, issue of banning order.
suppliers/Contractors.
b) Obstructing/Threatening other
prospective bidders i.e. suppliers/
Contractors from entering the
tender venue and/or submitting
their tender bid freely.
XXXX XXXX XXXX XXXX
6. Submission of claims to BSNL i) Recovery of over
against a contract payment from the
a) for amount already paid by outstanding dues of Vendor
BSNL. including EMD/PG & SD
b) for Quantity in excess of that etc. and by invoking „Set
supplied by Vendor to BSNL off‟ clause 21 of Section 5
c) for unit rate and/or amount Part A or by any other legal
higher than that approved by tenable manner.
BSNL for that purchase. ii) Banning of Business for
3 years from date of issue
of banning order or till the
date of recovery of over
payment in full, whichever
is later.
Note 5:- The claims may be submitted with or without collusion
of BSNL Executive/employees.
Note 6:- This penalty will be imposed irrespective of the fact
that payment is disbursed by BSNL or not.
7. Network Security/Safety/ Privacy: i) Termination of PO/WO.
- If the vendor tampers with the ii) Banning of business for
hardware, software/firmware or in 3 years which implies
any other way that barring further dealing with
a) Adversely affects the normal the vendor for procurement
working of BSNL equipment(s) of Goods & Services
and/or any other TSP through including participation in
BSNL. future tenders invited by
b) Disrupts/Sabotages functioning BSNL for 3 years from
of the BSNL network equipments date of issue of banning
such as exchanges, BTS, order.
BSC/MSC, Control equipment iii) Recovery of any loss
including IN etc., transmission incurred on this account
equipments but not limited to from the Vendor from its
these elements and/or any other PG/SD/O/s bills etc.
TSP through BSNL. iv) Legal action will be
c) tampers with the billing related initiated by BSNL against
data/invoicing/account of the the Vendor if required.
Customer/User(s) of BSNL and/or
any other TSP(s).
d) hacks the account of BSNL
Customer for unauthorized use i.e.
to threaten others/spread improper
news etc.
e) undertakes any action that
affects/endangers the security of
India.
XXXX XXXX XXXX XXXX
10. If the vendor does not i) Take action to appoint
return/refuses to return BSNL‟s Arbitrator to adjudicate the
dues: dispute.
a) inspite of order of Arbitrator. i) Termination of contract,
if any.
ii) Banning of business for
3 years which implies
barring further dealing with
the vendor for procurement
of Goods & Services
including participation in
future tenders invited by
BSNL from date of issue of
banning order or till the
date by which vendor
clears the BSNL‟s dues,
whichever is later.
iii) Take legal recourse i.e.
filing recovery suite (sic) in
appropriate court.
b) inspite of Court Orders. i) Termination of contract,
if any.
ii) Banning of business for
3 years which implies
barring further dealing with
the vendor for procurement
of Goods & Services
including participation in
future tenders invited by
BSNL from date of issue of
banning order or till the
date by which vendor
clears the BSNL‟s dues,
whichever is later.
XXXX XXXX XXXX XXXX
12. The following cases may also be
considered for Banning of
business:
a) If there is strong justification
for believing that the proprietor,
manager, MD, Director, partner, i) Banning of business for 3
employee or representative of the years which implies
vendor/supplier has been guilty of Barring further dealing
malpractices such as bribery, with the vendor for
corruption, fraud, substitution of procurement of Goods &
tenders, interpolation, Services including
misrepresentation with respect to participation in future
the contract in question. tenders invited by BSNL
b) if the vendor/supplier fails to for 3 years from date of
execute a contract or fails to issue of banning order.
execute it satisfactorily beyond
the provisions of para 4.1 & 4.2.
c) If the vendor/supplier fails to
submit required documents
/information, where required.
d) Any other ground which in the
opinion of BSNL is just and
proper to order for banning of
business dealing with a
vendor/supplier.
Note 7:- The above penalties will be imposed provided it does not clash
with the provision of the respective tender.
Note 8:- In case of clash between these guidelines & provision of
invited tender, the provision in the respective tender shall prevail over
these guidelines.
Note 9:- Banning of Business order shall not have any effect on the
existing/ongoing works/AMC/CAMC which will continue along with
settlement of Bills.
11. It is apparent that none of the aforesaid clauses are applicable in the
facts of the present case. There is also much merit in the petitioner‟s
contention that having specified the particular grounds on which an order
banning the bidder from participation in future tenders can be passed, the
respondent had impliedly excluded cases not specifically covered under the
said clauses.
12. The petitioner‟s contention that the impugned order amounts to
blacklisting is also merited. It is well settled that such orders, which
adversely affects a party, cannot be passed without affording a fair hearing
to the party so affected.
13. In Erusian Equipment & Chemicals Ltd. v. State of West Bengal
and Anr.: (1975) 1 SCC 70, the Supreme Court had held as under:-
"Article 14 speaks of equality before the law and equal
protection of the laws. Equality of opportunity should
apply to matters of public contracts. The State has the right
to trade. The State has there the duty to observe equality.
An ordinary individual can choose not to deal with any
person. The Government cannot choose to exclude persons
by discrimination. The order of blacklisting has the effect
of depriving a person of equality of opportunity in the
matter of public contract. A person who is on the approved
list is unable to enter into advantageous relations with the
Government because of the order of blacklisting. A person
who has been dealing with the Government in the matter of
sale and purchase of materials has a legitimate interest or
expectation. When the State acts to the prejudice of a
person it has to be supported by legality.
xxxx xxxx xxxx xxxx
20. Blacklisting has the effect of preventing a person from
the privilege and advantage of entering into lawful
relationship with the Government for purposes of gains.
The fact that a disability is created by the order of
blacklisting indicates that the relevant authority is to have
an objective satisfaction. Fundamentals of fair play require
that the person concerned should be given an opportunity
to represent his case before he is put on the blacklist."
(Also see: Grosons Pharmaceuticals (P) Ltd. and Anr v. The State of
Uttar Pradesh and Ors.: (2001) 8 SCC 604 and Gorkha Security Services
v. Government (NCT of Delhi) and Ors : (2014) 9 SCC 105).
14. In view of the position that the petitioner has not been afforded
sufficient opportunity of being heard prior to the passing of the impugned
order, this Court is of the opinion that the impugned order is liable to be set
aside on this ground alone.
15. Accordingly, the present petition is disposed of by setting aside the
impugned order and directing that in the event the respondent desires to
impose a ban on the petitioner from participating in future tenders or future
dealings with the respondent, the respondent shall afford the petitioner
sufficient opportunity of being heard and pass such speaking orders, as it
considers fit.
16. It is clarified that this Court has not examined whether the APOs
could not be placed on the petitioner in terms of the NIT. The said question
is left open.
17. The petition and the pending application are disposed of.
VIBHU BAKHRU, J
JULY 03, 2017
MK
