Delhi High Court
Graphisads Pvt Ltd vs South Delhi Municipal ... on 1 June, 2018
IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: March 19, 2018
Judgment delivered on: June 01, 2018
+ W.P.(C) 5358/2017, CM Nos. 22657/2017, 36665/2017 &
42012/2017
GRAPHISADS PVT LTD
..... Petitioner
Through: Mr. Kirti Uppal, Sr. Adv. with
Mr. Nitin Mittal, Mr. Siddharth Chopra
and Mr. Pranvir Sethi, Advs.
versus
SOUTH DELHI MUNICIPAL CORPORATION
..... Respondent
Through:
Mr. Sanjay Poddar, Sr. Adv. with
Mr. Mukesh Gupta and Mr. Shivam
Goel, Advs.
+ W.P.(C) 5543/2017, CM Nos. 23316-23317/2017
M/S. GRAPHISADS PVT. LTD .
..... Petitioner
Through: Mr. Kirti Uppal, Sr. Adv. with
Mr. Nitin Mittal, Mr. Siddharth Chopra
and Mr. Pranvir Sethi, Advs.
versus
SOUTH DELHI MUNICIPAL CORPORATION
..... Respondent
Through:
Mr. Sanjay Poddar, Sr. Adv. with
Mr. Mukesh Gupta and Mr. Shivam
Goel, Advs.
+ W.P.(C) 6292/2017, CM Nos. 26073-26074/2017
M/S. GRAPHISADAS PRIVATE LIMITED
..... Petitioner
W.P.(C) No. 5358/2017 and connected matters Page 1 of 70
Through: Mr. Kirti Uppal, Sr. Adv. with
Mr. Nitin Mittal, Mr. Siddharth Chopra
and Mr. Pranvir Sethi, Advs.
versus
SOUTH DELHI MUNICIPAL CORPORATION
..... Respondent
Through: Mr. Sanjay Poddar, Sr. Adv. with
Mr. Mukesh Gupta and Mr. Shivam
Goel, Advs.
+ CONT.CAS(C) 544/2017
M/S GRAPHISADS PVT LTD
..... Petitioner
Through: Mr. Kirti Uppal, Sr. Adv. with
Mr. Nitin Mittal, Mr. Siddharth Chopra
and Mr. Pranvir Sethi, Advs.
versus
SOUTH DELHI MUNICIPAL CORPORATION
& ORS
..... Respondents
Through: Mr. Sanjay Poddar, Sr. Adv. with
Mr. Mukesh Gupta and Mr. Shivam
Goel, Advs.
AND
CONT.CAS(C) 521/2017, CM Nos. 26540/2017, 12568/2017
SOUTH DELHI MUNICIPAL CORPORATION
..... Petitioner
Through: Mr. Sanjay Poddar, Sr. Adv. with
Mr. Mukesh Gupta and Mr. Shivam
Goel, Advs.
Versus
W.P.(C) No. 5358/2017 and connected matters Page 2 of 70
MUKESH GUPTA & ORS
..... Respondents
Through: Mr. Kirti Uppal, Sr. Adv. with
Mr. Nitin Mittal, Mr. Siddharth Chopra
and Mr. Pranvir Sethi, Advs.
CORAM:
HON'BLE MR JUSTICE V. KAMESWAR RAO
JUDGMENT
V. KAMESWAR RAO, J
CM No. 26540/2017 in CONT.CAS(C) 521/2017
Exemption allowed subject to all just exceptions.
Application stands disposed of.
W.P.(C)Nos. 5358/2017, 5543/2017, 6292/2017, Cont.Cas(C) 544/2017 &
Cont.Cas(C) 521/2017
1. By this order, I shall dispose of three writ petitions filed by the
petitioner being W.P.(C)Nos. 5358/2017, 5543/2017, 6292/2017 and two
contempt petitions being Cont.Cas(C) 544/2017 & Cont.Cas(C) 521/2017.
BRIEF FACTS:-
W.P.(C) 5358/2017
2. This writ petition has been filed with the following prayers:-
"WHEREFORE, it is most respectfully prayed that this Hon‟ble
Court may be pleased to:
(I) Issue writ of MANDAMUS and/or for any other writ,
order or direction in the like nature-
(i) restraining the respondent from dismantling, removing
and/or defacing the installations and/or display advertisements
put up by the petitioner in furtherance of Concession Agreement
dated 17.06.2010 at subject cluster i.e Cluster No.2 - (IGI
Stadium & Jawaharlal Nehru Sports Complex) and Cluster
No.3 - (R.K. Khanna Tennis Complex).
(ii) Commanding the respondent to pass speaking order on
petitioner‟s letter dated 18.05.2017 (annexure P-4) for
extending contract period in terms of Article 2.2 of Concession
Agreement dated 17.06.2010.
(II) Award costs in favour of the petitioner and against the
respondent; and
(III) Pass such other and further order(s) as this Hon‟ble
Court may deem fit and proper in the facts and circumstances of
the case."
3. It is the case of the petitioner, that the respondent had undertaken the
task to beautify Delhi and various sites identified as such, including the
venues for Commonwealth Games 2010. Tenders were invited for installing
and maintaining street furniture on identified roads/locations on cluster basis.
The Petitioner‟s offer/bid was accepted for Clusters 2 and 3, i.e., IGI Stadium
and Jawaharlal Nehru Sports Complex and R.K. Khanna Tennis Complex
vide letter dated March 31, 2010. Upon fulfilling requisite compliances, the
Petitioner was allotted the subject clusters vide letter dated May 12, 2010.
Concession Agreement between the Petitioner and the Respondent was
executed on June 17, 2010, for maintenance of street furniture on roads
leading to and in vicinity of Commonwealth Games Venue vis-a-vis subject
clusters.
4. It is the case of the petitioner, that the tenure of the Agreement, as
defined by Article 2.2 was initially for a period of seven years w.e.f. June 17,
2010, with a right to the petitioner to seek extension, upon terms mutually
agreed upon. Notwithstanding the tenure and the right to seek extension, the
respondent also had the right to call for fresh bidding, with right of first
refusal to the Petitioner to match or exceed the fresh bid. It is the case of the
petitioner that in furtherance of the aforesaid Agreement, the Petitioner has
made huge investment in installing the street furniture as per specifications,
while also maintaining public toilets, vending kiosks, police booths, benches,
dustbins etc., and regularly paying the quarterly concession fee as per the
Agreement. The Petitioner had also entered into various commercial contracts
for display of advertisements on street furniture. That apart, vending kiosks
have been sub-licensed, wherefrom people are earning their livelihood.
5. It is the Petitioner‟s case that upon successful performance of
obligations under the contract, and for the huge investment incurred by the
Petitioner in the installation and maintenance of street furniture, they were
entitled to extension in terms of Article 2.2 of the contract. The Petitioner
therefore sent letter dated May 18, 2017 requesting the Respondent to renew
the Agreement for another period of seven years. The initial tenure of the
Concession Agreement dated June 17, 2010 was to expire on June 17, 2017,
and therefore the respondent was required to take a decision on the
Petitioner‟s request at the earliest. It is the petitioner‟s case that the
respondent, however, allegedly, slept over the request, and refused to take any
decision. The Petitioner sent a reminder vide letter dated June 02, 2017,
however, the same was not responded to by the Respondent. The Respondent
did not even call for fresh tenders in terms of Article 2.2 of the Concession
Agreement. It was only on June 20, 2017, that certain officers of the
Respondent arrived at the Lodhi Road Area and R.K. Puram Area
installations and started defacing/removing the display advertisements. The
said action, as informed by the officers present, was on orders of Shri P. S.
Jha, Additional Deputy Commissioner (Advertising), of the Respondent.
6. It is the petitioner‟s case that the Concession Agreement dated June 17,
2010 was executed for beautification of the site(s) falling in the subject
clusters by installation, maintenance and keep-up of street furniture and its
utilization in terms of the Agreement. The said beautification, according to
the Petitioner, was not period specific, but was in fact permanent in nature, for
uplifting the face of the site in the subject cluster. The Petitioner has further
stated that it has successfully completed the initial term of the Agreement, and
therefore claim a right to renewal of Agreement.
W.P.(C) 5543/2017
7. The present petition has been filed with the following prayers:-
"WHEREOF, it is most respectfully prayed that this Hon‟ble
Court may be pleased to:
(I) Issue writ of MANDAMUS and/or for any other writ,
order or direction in the like nature-
(i) Quashing, setting aside the order denying the renewal of
concessionaire agreement dated 17th June, 2010 communicated
vide ante dated letter no. D/AC/ADVT./2017-18/457 dated
22.06.2017 through e-mail dated 24.06.2017 and declaring the
same to be arbitrary, malafide and to renew/extend the
concessionaire agreement for further period as envisaged in the
agreement.
And/or
Direct the Respondent to not to dismantle, remove and/or
deface the installations and/or display advertisements put up by
the Petitioner in furtherance of Concession Agreement dated
17.06.2010 at subject cluster i.e Cluster No.2 - (IGI Stadium &
Jawaharlal Nehru Sports Complex) and Cluster No.3 - (R.K.
Khanna Tennis Complex) till the respondent conduct a fresh
bidding process and obtain the proposal in respect of the
project and give to the Concessionaire a Right of First Refusal
to match or exceed the bid of the identified preferred bidder.
(II) Award costs in favour of the petitioner and against the
respondent; and
(III) Pass such other and further order(s) as this Hon‟ble
Court may deem fit and proper in the facts and circumstances of
the case."
8. This is the second petition. The facts as narrated above being common
to this petition are not repeated for the sake of brevity. Suffice to state, it is
the case of the petitioner, in this writ petition that it had filed W.P.(C)
5358/2017 on June 21, 2017, challenging the action of removal/defacing of
street furniture and display ads put up by the Petitioner. The matter was heard
on the same day, and status quo orders were passed therein. The respondent
failed to abide by the status quo orders passed, and further proceeded to take
action against the installations put up by the Petitioner. The petitioner has
therefore filed a separate Contempt Petition challenging such conduct of the
Respondent. It is the case of the petitioner that upon finding their actions
being assailed by the Petitioner (W.P.(C) 5358/2017), the respondent passed
ante-dated orders dated June 21, 2017 and June 22, 2017, conveyed to the
Petitioner on June 24, 2017. The order dated June 21, 2017 is shown to have
declined the petitioner‟s request for renewal of registration, which was
applied for in March 2017, on the ground of blacklisting of the Petitioner, and
outstanding demand of `3 crores. The order dated June 22, 2017 is shown to
have declined the Petitioner‟s request for renewal/extension of Concessionaire
Agreement dated June 17, 2010 on the following grounds:
1. The petitioner was a blacklisted entity;
2. The petitioner had dues outstanding against it, to the tune Rs 3 Cr.;
3. The petitioner firm not being a registered advertiser with SDMC, as
request for renewal of registration was declined on account of blacklisting and
outstanding dues;
9. The petitioner duly responded to both the orders, refuting all allegations
and also pointing to arbitration proceedings pending, with respect to
blacklisting of the Petitioner, under the contract for maintenance and
operation of waterless urinals. Vide order dated May 17, 2017 the Ld.
Arbitrator had directed the Respondent to consider revocation of the order of
blacklisting, subject to furnishing of Bank Guarantee of Rs 40 lacs by the
Petitioner. The Petitioner had already furnished said Bank Guarantee on May
23, 2017. The Respondent however failed to reconsider revocation of the
order of blacklisting, in spite of the furnishing of the Bank Guarantee by the
Petitioner. Thus, arose the cause for filing of Contempt Petition by the
Petitioner under Section 27(5) of the Arbitration Act, 1996, for non-
compliance of order dated May 17, 2017 passed by the Ld. Arbitrator.
10. The petitioner further stated that no such demand of `3 crores was ever
communicated to them, rather an amount of ` 33,91,767/- has to be recovered
by the Petitioner from the Respondent, for which a suit for recovery is still
pending. The petitioner therefore alleges the action of denial of
renewal/extension of the Concessionaire Agreement to be arbitrary,
mischievous, absolutely unreasonable, and having been passed with ulterior
motives, and therefore prays for the order dated June 22, 2017 to be
quashed/set aside, and thereby directing the Respondent to renew/extend the
term of the original Concessionaire Agreement.
W.P.(C) 6292/2017
11. This petition has been filed with the following prayers:-
"In the premises aforesaid, it is most respectfully prayed that
Your Lordships may grant the following relief (s) to the
Petitioner:-
Issue writ of CERTIORARI AND MANDAMUS and/or for any
other writ, order or direction in the like nature-
(I) Quashing, setting aside the order conveyed vide letter
no.AC (Advtt.)/2017/D-545 dated 11.07.2017 denying the
revocation of Blacklisting read with Order conveyed vide letter
no. AC(Advtt/.)/SDMC/2015/D-498 dated 12th June, 2015
whereby the Petitioner was blacklisted and declaring the same
to be arbitrary, malafide, illegal and to set aside, quash the
same.
And
(II) Direct the Respondent to pay Rs.1,00,00,000.00 (Rupees
One Crores Only) towards the compensation, damages for
keeping away the Petitioner from the intended contracts and
tarnishing the image and reputation of the Petitioner.
(III) Award costs in favour of the petitioner and against the
respondent; and
(IV) Pass such other and further order(s) as this Hon‟ble
Court may deem fit and proper in the facts and circumstances of
the case."
12. It is the case of the petitioner that the respondent floated a tender for
contract for operating and maintaining Waterless Public Urinals (WLUs), in
lieu of OOH Advertisement Media Display in MCD Zones for a period of 5
years, which was finally awarded to the Petitioner, covering Narela, Shahdara
South and South Zones, for a total of 234 urinals at ` 5,68,000/- per month,
vide letter dated May 28, 2010. The duly signed Contract was submitted vide
letter dated July 29, 2010 for South, Shahdara (S) Narela Zone. The
petitioner had been fulfilling its obligations under the Contract, when the
respondent issued a SCN on February 22, 2011, without any averment as to
any specific violation of the Contract on the part of the petitioner. The said
SCN was duly replied to, stating the WLUs were being properly maintained
and operated, and that no violation of the Contract had occurred. However,
the respondent never reverted back, nor was any investigation/inspection ever
conducted. Out of the 49 WLUs being operated by the petitioner, the SCN
was issued with respect to 27 such units. The petitioner, in its response,
further pointed out that due to construction and layout defects on part of the
respondent itself, there was severe drainage problem in the said units, which
was leading to complete blockage of drainage. The petitioner also pointed out
several other problems it was facing while operating WLUs at other sites.
Finding no resolution of the issues, the petitioner resorted to the dispute
resolution mechanism under the Contract. Vide its letter dated May 16, 2011,
the petitioner invoked Article 7.1(b) of the Contract, thereby seeking
appointment of the Steering Committee, and for reference of the dispute to the
said Steering Committee. In response, however, the respondent, vide order
dated May 26, 2011, cancelled the petitioner‟s Contract, without any speaking
order.
13. Being aggrieved by the arbitrary cancellation of the Contract, and for
completely bypassing the dispute resolution mechanism set forth in the
Contract, the petitioner filed OMP 447/2011, wherein, vide order date May
08, 2013, the parties were referred to arbitration, and the effect of order dated
May 26, 2011 was stayed till such time the Ld. Arbitrator modified/vacated
such stay under Section 17 of the Arbitration Act. Consequently, Shri Bharat
Bhushan was appointed the sole arbitrator to decide issues arising under the
Contract. During the pendency of arbitration proceedings, the respondent
issued a SCN dated June 01, 2015 alleging poor sanitation in the WLUs being
maintained by the petitioner and also under the garb of the stay granted in
OMP 447/2011, the petitioner had stopped paying the monthly license fee,
with dues amounting to ` 65,07,290/-. In fact, it is noted the SCN shows
several other violations. The petitioner was therefore asked to show cause as
to why it should not be blacklisted. The SCN was duly responded to by the
petitioner on June 09, 2015, refuting all allegations. It is the case of the
petitioner that the respondent, however, passed the order of blacklisting on
June 12, 2015, without considering the Petitioner‟s reply. Thereafter, the
respondent, vide letter dated June 23, 2015, directed the petitioner to
surrender all WLUs to the charge of the Respondent.
14. It is the case of the petitioner‟s that the order of blacklisting had been
passed mechanically, and with a pre-determined mind. The petitioner further
points to the respondent willingly defying the stay granted by the Court in
OMP 447/2011. The petitioner‟s case is that it was never given a breakup of
the amount so shown as outstanding against it, in the SCN dated June 01,
2015. Upon repeated representations, the outstanding amount was deposited
by the petitioner, without prejudice to its own rights and contentions, and the
respondent, vide order dated July 10, 2015 (conveyed vide letter dated July
13, 2015), further directed the petitioner to submit a bank guarantee of ` 40
lacs, following which further orders on the request for revocation of
blacklisting would be passed. The respondent, thereafter, started demanding
`1,96,11,611/- from the petitioner as dues under a different contract relating
to Unipoles. The petitioner further received a SCN dated October 07, 2016
with regard to the other contract, which was also ultimately terminated.
15. Finding no other remedy, the petitioner filed an application under
Section 17 of the Arbitration Act, 1996, before the Ld. Arbitrator Shri Bharat
Bhushan, seeking stay of the order of blacklisting. The Ld. Arbitrator, vide
order dated May 17, 2017, directed the petitioner to submit bank guarantee of
` 40 lacs, and the respondent to consider the request for revocation of order of
blacklisting. The petitioner submitted the said bank guarantee vide letter dated
May 23, 2017, and after several reminders, and the filing of a contempt
petition under Section 27(5) of the Arbitration Act, 1996, the respondent
declined the petitioner‟s request for revocation of the blacklisting order. The
denial was communicated vide letter dated July 11, 2017, with outstanding
dues to the tune of ` 3 Crores (approx.) being the cause for such denial.
Case of the Respondent/SDMC
16. The case of the respondent in these petitions is that the petitioner was
awarded various contracts from time to time, which included the following
contracts:
a. Contract for 20 flag sign at Basant Lok;
b. Contract for 2 unipoles at Basant Lok;
c. Contract for 4 signage at Basant Lok;
d. Contract for 2 unipole at Tilak Nagar Market;
e. Contract for 2 signage at Janak Parlour to Raja Garden;
f. Contract for 10 flat sign at Tilak Nagar Market:
g. Contract for 14 flag sign at Tilak Nagar;
h. Concessionaire agreement for operation, maintenance with advertisement rights in
respect of waterless urinals in South Zone; and
i. Concessionaire agreement for operation and maintenance of Street Furniture with
advertisement rights in Cluster No.2 and 3 in Central and South Zones of
answering respondent.
17. The contracts from seriatum a to g are „Advertising Contract‟; the
contract at Sl. No. h is „Waterless Urinal Contract‟ or „WLU‟, and the
contract at Sl. No.i is „Street Furniture Contract‟. The Advertising Contract
and WLU contracts were running simultaneously and the petitioner
committed various breaches and also failed to clear the monthly licence fee
and thus, notices for rectification of the defect as well as for payment of dues
in respect of both the sets of contract were issued to the petitioner.
Street Furniture Contract:-
18. It is the case of the respondent, in the year 2010, the respondent floated
a tender for the street Furniture contract. On May 12, 2010, pursuant to the
bidding process, the petitioner emerged successful in respect of Clusters No.2
and 3 at the quarterly licence fee of `8,53,050/- and `3,63, 350/- respectively.
On June 17, 2010, the parties executed a Concession Agreement, which was
to operate for a period of 7 years, i.e., from June 17, 2010 to June 16, 2017. It
is further averred, on May 18, 2017, the petitioner invoking Article 2.2 sent a
request seeking extension of the contract till infinity. On June 21, 2017, the
competent authority rejected the request of the petitioner owing to; (1) it
being a blacklisted entity, (2) having outstanding dues of more than `3
Crores, and (3) it is not being a registered advertiser with the SDMC. It is its
case, the petitioner on the very same day filed the petition being W.P.(C) No.
5358/2017 and sought a direction from this court asking for passing of a
speaking order on its request letter dated May 18, 2017 and this court,
noticing that the request had been rejected, though the same had not been
communicated, directed the maintenance of status quo. On June 22, 2017,
the respondent issued a letter to the petitioner communicating the rejection of
the request of the extension. It is the case of the respondent, that consequent
to the passing of the same, this petition (W.P.(C) No. 5358/2017) became
infructuous as the relief therein stood satisfied; however, the petitioner
malafidely continued the proceedings in order to reap the benefits of the
interim order. It is submitted by Mr. Poddar, after the passing of the interim
order, the petitioner again started running the site but failed to pay even the
agreed licence fee nor maintained the project facilities. The respondent‟s
case is, the petitioner filed independent writ petition bearing W.P.(C)
5543/2017 impugning the rejection order dated June 22, 2017 and seeking the
extension of the contract and the right to first refusal. On August 4, 2017,
pursuant to the request of the SDMC, this court allowed it to start the fresh
process of tendering. On August 25, 2017, pursuant to the liberty granted by
this court, the SDMC issued fresh tender notice in respect of two Clusters
being Nos. 1-B and 2 (Old Nos. 2 and 3 respectively). On October 3, 2017,
consequent to the bidding process, one M/s. Outdoor Communication Pvt.
Ltd. emerged as the successful bidder with a bid of `15,96,600/- for Cluster
No.2 (Old No.3), being more than 7 times the agreed fee of the petitioner and
an Offer Letter was issued. The contract could not be awarded owing to the
status quo order passed by this court and hence, the respondent also filed two
applications bearing CM. 36665/2017 and 42012/2017 seeking the vacation
of the interim order. On November 17, 2017, a letter was received from the
successful bidder by SDMC stating that it had invested a sum of more than
`1 Crore without any clear status on its investment. On December 12, 2017,
it was found that some persons were removing the Street Furniture at the
behest of the petitioner, which as per Article 11 of the Agreement vest
absolutely in the respondent, and a complaint was registered with the SHO,
PS-Lodhi Colony. The respondent avers that the petitioner is neither
maintaining the project facilities nor paying even the agreed licence fee.
Waterless Urinal Contract:-
19. The respondent‟s case is, in the year 2010, the respondent floated a
Tender for the contract of Waterless Urinals. After bidding process, the same
was awarded to the petitioner. On January 10, 2011, Concession Agreement
was executed in respect of Waterless Urinals for a period starting from
January 12, 2011 to January 11, 2016. Due to violation of terms of the
contract by the petitioner, show cause notices were issued to the petitioner on
April 4, 2011, April 6, 2011 and April 7, 2011. On May 26, 2011, the
contract was cancelled by the competent authority on account of committing
violation of the approved terms and conditions of the contact. An OMP
447/2011 was filed by the petitioner before this court. On June 2, 2011, the
operation of letter dated May 26, 2011 was stayed by this court. On May 8,
2013, the OMP was disposed of directing the interim order to continue by
this court until modification / vacation was directed by the ld. Arbitrator.
Armed with the interim order, the petitioner continued to run the contract and
reap the benefit without maintaining the urinals and paying regular monthly
licence fee, which was condition precedent for displaying any advertisement.
On June 1, 2015, pursuant to inspections carried out, a Show Cause Notice
was issued to the petitioner seeking reply as to why it should not be
blacklisted owing to poor and average conditions of the waterless urinals and
outstanding dues to the tune of `65,07,290/-. On June 9, 2015, reply to show
cause notice was furnished by the petitioner. On June 12, 2015, petitioner
was blacklisted in respect of the Waterless Urinals Contract owing to
unsatisfactory conditions, dues of `65 lacs and irregularities like
encroachment, additional coverage etc. On June 23, 2015, the petitioner was
directed to hand over the possession of the Waterless Urinals and the
petitioner voluntarily handed over the same. On July 13, 2015, pursuant to
the representations made by the petitioner, SDMC asked it to first submit a
bank guarantee of `40 lacs before any final decision could be taken by the
competent authority. Petitioner failed to furnish the bank guarantee as per the
letter of respondent and merely furnished a bank guarantee of ` 10 lacs and
hence, the condition order lapsed as having not complied with. It is
submitted by Mr. Poddar that even the bank guarantee of ` 10 lacs expired. It
is its case, in the meanwhile, notices in respect of Advertising Contracts were
also issued asking the petitioner to clear the outstanding dues and also for
initiation of blacklisting proceedings. On October 28, 2015, the petitioner
filed his statement of claim before the Ld. Arbitrator. It is submitted by Mr.
Poddar though the matter was referred for arbitration vide order dated May 8,
2013, but, with a view to enjoy the interim order, the petitioner dragged the
litigation and filed the statement of Claim after more than 2 ½ years and also
after surrendering the site. This shows that the petitioner was never serious
about the adjudication of its claim, but was only interested in keeping the
litigation pending.
Advertising Contracts:-
20. It is the case of the respondent, between 2009-2010 the advertising
contracts were granted to the petitioner vide letters dated May 15, 2009,
December 7, 2009, May 26, 2010 and May 31, 2010. From the year 2010
onwards, petitioner failed to clear its dues and various demand notices were
issued to the petitioner. On October 22, 2013, consequent to the
reconciliation of accounts, a sum of `2.56 Crores on account of monthly
licence fee was found to be due against the petitioner and a demand notice
was issued requiring the petitioner to clear the dues within 7 days. On
October 30, 2013, the petitioner in its reply sought details of the outstanding
amount. On November 11, 2013 while enclosing the statement of accounts,
the petitioner was again asked to pay the said amount within 7 days. On
December 3, 2013, the petitioner failed to pay his dues, another demand
notice was issued directing the clearance of dues to the tune of `2.56 Crores.
As the petitioner neither cleared the dues nor furnished any reply a show
cause notice was issued to the petitioner on December 16, 2013 to show
cause as to why the contracts should not be cancelled. On December 27,
2013, petitioner again raised a false plea of non-receipt of statement of
accounts. In order to put an end to such a false plea, another set of statement
of accounts was furnished to the petitioner, which was received by its
representative Mr. Deepak Saini under acknowledgement. It is stated by Mr.
Poddar that along with the letter, the petitioner paid a meager amount of `15
lacs. On February 13, 2014, even after obtaining the statement of accounts,
the petitioner failed to make the payment, thus, a final show cause notice was
issued annexing statement of accounts once again for cancellation of
contracts. On March 10, 2014, petitioner replied to the Final Show Cause
Notice now vaguely stating that there are discrepancies in the statement of
accounts and seeking reconciliation of accounts without furnishing its own
calculation sheet or highlighting specifically the alleged discrepancies. On
March 24, 2014 finding no payment from the petitioner, another notice was
sent by e-mail again attaching the dues statement by SDMC. On July 2,
2014, the reply dated March 10, 2014 was found to be unsatisfactory,
however, another opportunity was granted to the petitioner to clear the dues.
On November 18, 2014, the competent authority cancelled the contracts and
further directed the petitioner to clear its dues. It is pertinent to mention
herein that even this cancellation order was accepted by the petitioner. Only
July 23, 2015, owing to non-clearance of dues, a final demand notice-cum-
show cause notice was issued for blacklisting of the petitioner. The
respondent‟s case is, petitioner malafidely and in an attempt to mislead this
court has suppressed all these notices / reminders and has made a false
averment in Para 4.19 in W.P.(C) 5543/2017 that none of the dues were ever
communicated to it. The respondent‟s states, on July 30, 2015, petitioner
replied to the show cause notice raising frivolous disputes. It is its case, by
this time, the petitioner was already suffering a blacklisting order dated June
12, 2015. On March 21, 2016, in order to participate in the tender dated
February 26, 2016, the petitioner sought No Dues Certificate from SDMC,
which was rejected on account of outstanding amount of `1,96,11,611/-. As
a result of this, the petitioner became ineligible to participate in any future
tender. This shows that the SDMC never gave up its claim for the aforesaid
outstanding dues. On June 23, 2016, petitioner discussed the matter with
SDMC and agreed to withdraw its claim for remission of solar panel to the
tune of `89,25,740/- out of the outstanding dues of `196,11,611/-. As an
afterthought, the petitioner filed Civil Suit bearing No. 139/2016 before the
ADJ (Central District), Tis Hazari Court inter alia seeking quashing of the
demand of the SDMC and further recovery of `33 lacs. On November 12,
2016, an application under Section 17 of the Arbitration Act was filed before
the Ld. Arbitrator seeking stay of the blacklisting order dated June 12, 2015.
On May 17, 2017, the application was disposed of by the Ld. Arbitrator
observing that the SDMC may consider revocation of the blacklisting order
as suggested earlier in its letter dated July 13, 2015 on the petitioner
furnishing a bank guarantee of `40 lacs. The respondent‟s case before the
learned Arbitrator, while relying on the judgment of this Court in the case of
M/s Sai Consulting Engineers Pvt. Ltd. v. Rail Vikas Nigam Ltd. 198
(2013) DLT 507 that the learned Arbitrator is vested with the jurisdiction to
decide the above application.
21. The respondent‟s averment is, the petitioner filed another application
under Section 27 of the Arbitration Act alleging that though it has submitted
the bank guarantee of `40 lacs, in terms of the directions dated May 17, 2017,
but SDMC is not complying with the said direction. The petitioner also
sought stay of the blacklisting order dated June 12, 2015. On July 11, 2017,
SDMC declined to revoke the blacklisting order on the ground that the offer
given in the letter dated July 13, 2015 does not stand inasmuch as the
petitioner owes more than `2 Crores in respect of other contracts as
mentioned above. Thereafter, petitioner filed a petition being W.P.(C)
6292/2017 impugning the order dated July 11, 2017. On September 6, 2017,
the learned Sole Arbitrator, noticing that the petitioner owes more than `3
Crores to the respondent as mentioned in the letter dated July 11, 2017 itself,
dismissed the application of the petitioner seeking initiation of contempt and
also refused to grant relief staying the blacklisting order. It is submitted by
Mr. Poddar that the petitioner suppressed this order even during the course of
arguments though the same is part of record.
22. Mr. Kirti Uppal, learned Senior Counsel appearing for the petitioner in
his oral submissions stated that the petitioner had got three contracts from the
respondent. The contract regarding Waterless Urinals was awarded to the
petitioner in the year 2010. In the said contract, the petitioner had to
maintain the waterless urinals and to generate the revenue from the said
waterless urinals sites by way of advertising and to pay licence fees so agreed
thereunder. He sated, contract regarding Street Furniture in Clusters 2 and 3
was awarded to the petitioner in the year 2010 and in the said contract, the
petitioner had to install, erect the street furnitures such as Kiosks, MUPI,
Dustbin, Toilets etc. and by advertising on the same or letting out the Kiosks
with advertisement, the petitioner had to generate revenue for himself and for
making the payment of licence fees to the respondent. It is further his case,
that, no permission was granted by the respondent to the petitioner to display
the advertisements in the parking sites allotted by then MCD for which
tripartite agreement was entered between the petitioner, MCD, and the
parking site contractor. He stated, in the said contract, the petitioner had to
pay pre-agreed licence fees of display to the respondents by generating
revenue from advertisement displays of their client.
23. It is his case, that the initial dispute started between the petitioner and
the respondents when the respondent terminated the contract of waterless
urinals so awarded to the petitioner on May 26, 2011 against which the
petitioner had filed an OMP No. 447/2011 wherein the petitioner was granted
stay of operation of cancellation letter dated May 26, 2011 vide its order
dated June 02, 2011. The said OMP was finally disposed of on May 08, 2013
with the direction that the respondent shall appoint the arbitrator in terms of
their contract with the petitioner and till the interim order so granted by this
Court is vacated / modified by the learned Arbitrator, the same shall continue
to operate.
24. Mr. Uppal submitted that, the respondent on June 01, 2015 had issued
a show cause notice to the petitioner seeking reply as to why it should not be
blacklisted owing to poor and average conditions of the waterless urinals and
outstanding dues to the tune of `65,07,290/-. Mr. Uppal submitted that, the
petitioner replied to the show cause notice on June 09, 2015 stating that
nothing is due and even the waterless urinals are well maintained without any
deficiency. Mr. Uppal submitted, that the respondent without considering the
reply as submitted merely saying that the reply was unsatisfactory had passed
the order of blacklisting against the petitioner on June 12, 2015 and
whereafter the petitioner was forced to handover the possession of Waterless
urinals which were handed over on June 23, 2015 by the petitioner.
25. It is submitted by Mr. Uppal, that it continued to make representations
for consideration and revocation of order of blacklisting and consequent
thereto, the respondent vide its letter dated July 13, 2015, informed that
pursuant to the representation made by the petitioner, the competent authority
acceded to the request of revocation of blacklisting of the petitioner and had
only issued direction to the petitioner to submit bank guarantee of `40 lacs
only till the accounts are reconciled by the respondent.
26. According to Mr. Uppal, there were no outstanding dues of `40 lacs
payable by the petitioner to the respondent and the petitioner had furnished
the further details of the payment so made by the petitioner vide its letter
dated July 13, 2015 and even furnished the bank guarantee of `10 lacs to the
respondent. He stated, the respondent failed to issue formal letter of
revocation of blacklisting in spite of repeated requests so made by the
petitioner time and again which was already revoked vide letter dated July
13, 2015.
27. It is further argued that the respondent had filed an application under
Section 17 of the Arbitration and Conciliation Act, 1996 with the learned
Arbitrator so belatedly appointed by the respondent in terms of order dated
May 08, 2013 wherein the petitioner prayed for stay of the order of
blacklisting. The Ld. Arbitrator vide his order dated May 17, 2017 had
allowed the application and had directed the respondent to consider the
revocation of blacklisting of the petitioner on deposit of `40 lacs as Bank
Guarantee. According to him, the petitioner immediately on May 23, 2017
had deposited the Bank Guarantee of `40 lacs with the respondent under
acknowledgement and had requested to comply with the order dated May 23,
2017 passed by the Ld. Arbitrator. It is the case, that since in spite of deposit
of Bank Guarantee of `40 lacs as per directions of learned Arbitrator, the
respondent is not taking any decision in terms of order dated May 17, 2017
passed by the Ld. Arbitrator, the petitioner had filed a petition under Section
27 of the Arbitration and Conciliation Act, 1996 against the respondent for
committing contempt of the order dated May 17, 2017. In pursuant to the
said contempt petition so filed by the petitioner, the respondent had issued
letter dated July 11, 2017 which reads as under:
"In pursuance of the Order dated May 17, 2017 passed by
the Learned Sole Arbitrator, Shri. Bharat Bhushan in the
above cited arbitration proceedings, this department has
considered and examined all the aspects and facts in the
regards of revocation of blacklisting thoroughly. However,
it is not found possible to revoke the blacklisting of M/s
Graphisads Private Limited having regard to outstanding
dues amounting to more than Rs.3.00 Cr. (approx.) including
interest w.r.t other contracts to South Zone and West Zone
under South Delhi Municipal Corporation which includes
dues which are not the subject of pending arbitration
proceedings. The outstanding dues are pending in the
following contracts:
(i) Two Unipole at Vasant Lok Complex, Vasant
Vihar (South Zone).
(ii) 4 Signages at Basant Lok, Complex (Priya), South
Zone.
(iii) 20 Flat signage at Basant Lok, Complex (Priya),
South Zone.
(iv) 10 Flat signage at Tilak Nagar (West Zone).
(v) 2 signage at Janak Parlour to Raja Garden (West
Zone).
(vi) Two Unipole at Tilak Nagar market (West Zone).
(vii) 14 Flat Signage at Tilak Nagar (West Zone).
2. Earlier, on reconciliation of the accounts, you were
asked to clear the amount of Rs.1,96,11,611,00 so that your
request for revocation of blacklisting could be processed
vide this Department‟s letter no. AC(ADvtt.)/SDMC/2016/D-
1603 dated March 21, 2016. In response, the vide your letter
dated June 23, 2016, you submitted that you were ready to
clear the amount of Rs.89,25,740.00 which was the solar
remission amount, out of which you had already remitted
Rs.15,72,069.00. It had also been requested that an
arbitrator may be appointed to settle the issue of disputed
amount. But this request was not accepted by the competent
authority.
3. On consideration of the Order dated May 17, 2017 and
your request, you were informed that the competent authority
would consider not revoking the blacklisting only on
submission of Bank Guarantee of Rs.40 lakhs as you had
already agreed to pay Rs.89,25,740.00 when dues was
Rs.1,96,11,611.00.
4. Now, please note that the situation has changed after
review and the finding that dues of more than Rs.3.00 Cr.
(approx.) including interest remain pending. Kindly note
that whatever may have been the original basis of
blacklisting, once a firm has been blacklisted the blacklisting
cannot be removed during such period as the firm continues
to be in default of any dues.
5. This is issue with the approval of the Competent
Authority".
28. Mr. Uppal submission was the continuation of blacklisting against the
petitioner is bad in law and as well as on facts.
(a) No show cause notice of the grounds so taken by the respondent in
their letter dated July 11, 2017 for non-revocation of blacklisting
was ever issued by the respondent.
(b) The said letter / order of the respondent is against the own
guidelines for registration / renewal of advertiser in advertisement
department of SDMC which provides as under:
(i) D. Blacklisting and cancellation of registration : the
Advertiser, if found on five occasions involved in any kind of
malpractices / violations of site including default in payment
of licence fee shall be liable for cancellation of the site and
for repetition of violation by the same advertiser at other sit /
s, the advertiser shall be blacklisted with the approval of the
competent authority. The decision of the competent authority
shall be final and binding to all. In case of above his security
amount / earnest money deposit shall be forfeited and
registration of Advertiser shall be cancelled.
The Five Violation had also been spelled out in the said
guidelines, as under: -
Violations Penalty
1) First violation 10% of amount of Annual
Licence fee of site.
2) Second 15% of amount of Annual
violation Licence fee of site.
3) Third violation 20% of amount of Annual
Licence fee of site.
4) Fourth 25% of amount of Annual
violation Licence fee of site.
5) Fifth violation Cancellation of NOC of
respective site. Forfeiture
of security of site & other
deposits, if any, with
SDMC for the site.
Even the violation had been defined in the regulation as
under:
i. Any of the violation of guidelines of Registration /
Renewal.
ii. Any of the violation of terms and conditions of NIT
iii. Any of the violation of contract agreement / affidavit &
other declarations made by the advertiser.
iv. Any violation / deviation from the guidelines for the
purpose of display of advertisement.
v. Non-compliance of defiance of the directions / orders
of the competent authority.
vi. Violation of provisions of DMC Act & Delhi Municipal
Corporation (Tax on advertisement other than the
advertisement published in the newspapers) byelaws,
1996 framed under the DMC Act, 1957 as amended
from time to time.
vii. Any other violation which the competent authority may
decide from time to time.
In the impugned orders dated July 11, 2017 and June 12,
2015, the respondent failed to specify any violations as detailed
above made by the petitioner and as such the impugned order dated
July 11, 2017 and June 12, 2015 whereby the petitioner was
proceeded to continue to be blacklisted is illegal, bad in law.
(c) Even in none of the contract with the petitioner, the
respondent had any power to blacklist the petitioner for violation of
any of the terms of the contract and they had been only vested with
the right to cancel / terminate the contract.
(d) The respondent wanted to continue the petitioner to be
blacklisted till perpetuity without any end to it.
(e) As per the violation so defined above, the respondent had
no right to blacklist the petitioner or continue the blacklisting of the
petitioner merely on account of non-payment of the any of the dues if
any.
(f) The respondent had concealed that the outstanding which had
been made the subject matter of continuing the blacklisting of the
petitioner is already in dispute and even sub-judice in civil suit for
recovery filed by the petitioner which is pending in the Civil Court as
Tis Hazari Courts, Delhi filed at Page 67-86 in the compilation filed
by the respondent.
(g) The respondent even in the written statement filed by them
(Page 87-110) of compilation) had made no such demand of any
such dues as claimed in letter dated July 11, 2017.
(h) The respondent had passed the order dated June 12, 2015
read with order dated July 11, 2017 arbitrary with malafide
intentions which is quite apparent.
(i) Even the petitioner had filed the report of local commissioner so
appointed by this Court in the aforesaid OMP whereby all the
waterless urinals were inspected and they are found to be well
maintained and as such the allegations of the respondent in the order
dated June 12, 2015 whereby the petitioner was blacklisted on the
ground of non-maintenance of waterless urinals is found be baseless.
29. It is further submitted by Mr. Uppal that the respondent had decided
not to renew the concessionaire agreement dated June 17, 2010 with respect
to Street Furniture vide letter dated June 22, 2017 only on the ground that the
petitioner is blacklisted, is itself contrary to their office noting filed with
compilation at pages 239 to 240. Mr. Uppal stated, by perusing the said
office noting and the letter dated June 22, 2017, it can be seen that the entire
proceedings had been manipulated by the respondent as the grounds so taken
in letter dated June 22, 2017 are not contained in the office noting and vice
versa. He would submit, even otherwise since the blacklisting is taken as one
of the ground for not extending the concessionaire agreement so the entire
fate of the said writ petition regarding concessionaire agreements of street
furniture will rest on the decision of this Court regarding blacklisting of the
petitioner.
30. He submitted, in case, this Court comes to a conclusion that the
blacklisting of the petitioner is bad on the aforesaid counts or any other
grounds on which this Court may arrive at, then the order dated June 22,
2017 whereby the extension of the concessionaire agreement was declined is
required to be reconsidered by the respondent and the petition may be
allowed. In the end, Mr. Uppal, in support of his contentions, had relied upon
the following judgments:
1. 113 (2004) Delhi Law Times 70 SPS Engineering Ltd. v. Indian Oil
Corporation Ltd.
2. 128 (2006) Delhi Law Times 417 (DB) Indian Oil Corporation Ltd. v.
SPS Engineering Ltd.
3. W.P.(C) 8234/2015, Prabhatam Advertisement Pvt. Ltd. v. Municipal
Corporation of Delhi
(south Zone), New Delhi
4. 169 (2010) DLT 664, Prakash Atlanta JV & Ors. V. National
Highways Authority of India & Ors.
5. 2003 (71) DRJ 376, Mekaster Trading Corporation v. Union of India
& Ors.
6. (2014) 14 SCC 731 Kulja Industries Limited Vs. Chief Gen.
Manager, W.T. Proj. BSNL & Ors.
7. (2014) 9 SCC 105, Gorkha Security Services v. Government of NCT
of Delhi) & Ors.
31. On the other hand, Mr. Sanjay Poddar, learned Senior Counsel
appearing for the respondent, submitted that the petitioner was awarded
various contracts from time to time which included; (a) Contract for 20 flag
sign at Basant Lok; (b) Contract for 2 unipoles at Basant Lok; (c) Contract
for 4 signage at Basant Lok; (d) Contract for 2 unipole at Tilak Nagar
Market; (e) Contract for 2 signage at Janak Parlour to Raja Garden; (f)
Contract for 10 flag sing at Tilak Nagar Market; (g) Contract for 14 flag sing
at Tilak Nagar; (h) Concessionaire agreement for operation, maintenance
with advertisement rights in respect of waterless urinals in South Zone; and
(i) Concessionaire agreement for operation and maintenance of street
furniture with advertisement rights in cluster Nos.2 and 3 in Central and
South Zones of respondent. He would submit, the contracts from seriatim (a)-
-.(g) are being collectively referred as „Advertising Contract‟; the contract at
S1. No. (h) is being referred as „Waterless Urinal Contract‟; and the contract
at S1. No.(i) is „Street Furniture Contract‟.
W.P.(C) 5358/2017:-
32. In so far as W.P.(C) 5358/2017 is concerned, Mr. Poddar, submitted
that the writ petition has become infructuous as the same arose out of the
contract in respect of Street Furniture, which was awarded on June 17, 2010 a
period of 7 years, i.e. till June 16, 2017 and W.P.(C) 5358/2017 had been
filed by the petitioner primarily seeking a mandamus to the respondent for
passing a speaking order on the petitioners letter dated May 18, 2017 seeking
the extension of Concessioning Agreement dated June 17, 2010 in terms of
Article 2.2. Mr. Poddar would submit, the said prayer has already become
infructuous inasmuch as vide order dated June 21, 2017 passed by the
respondent and communicated to the petitioner vide Letter dated June 22,
2017, the request of renewal of licence period was declined. It is pertinent to
mention herein that this Court in its order dated June 21, 2017 had observed
as under:
"...Fact, thus, remains that even the reasons for rejection are
not yet communicated to the petitioner. Of course, the
petitioner, when communicated the reasons for rejection of its
representation for extension, may assail such rejection, as, it
may advised, for assertion of any of right(s), if any, vesting in
it."
33. It is submitted by Mr. Poddar, as the life of the petition was till the
time reasons for rejection were conveyed, which have been conveyed vide
communication dated June 22, 2017 and this order has been impugned by the
petitioner in an independent writ petition being W.P.(C) 5543/2017, the
petition has become infructuous.
34. Mr. Poddar submitted, no purpose would be served in keeping the writ
petition alive as the same having become infructuous on June 21, 2017, has
been kept alive by the petitioner only owing to the interim order passed by
this Court on June 21, 2017 and continued from time to time. In this regard,
it is submitted by Mr. Poddar that as the main petition itself has become
infructuous, the petition deserves to be dismissed. It is submitted by Mr.
Poddar that no interlocutory order can survive after the original proceedings
have come to an end and the main petition cannot be kept pending to keep the
interim order alive. In this regard, he would rely upon the judgment of the
Supreme Court in Shipping Corporation of India Ltd. v. Machado Brothers
and Others,(2004) 11 SCC 168.
35. It is the case of Mr. Poddar, that the petitioner has contended during
the course of arguments that the Petition should be kept alive owing to the
false averments made by the respondent in its counter affidavit regarding the
date of the rejection order being June 22, 2017 and not June 21, 2017 as
represented before this Court on June 21, 2017. He stated that the said
submission of the petitioner is mala fide, devoid of merit and factually
incorrect. As stated in the counter affidavit, the competent authority had
rejected the request on June 21, 2017 and the same was merely
communicated on June 22, 2017 and thus, the contention is liable to be
rejected.
W.P. (C) 5543/2017:
36. In so far as W.P.(C) 5543/2017 is concerned, it is his case, the
petitioner filed the second writ petition impugning the letter dated June 22,
2017 wherein the petitioner sought; (1) quashing of letter dated June 22, 2017
and extension of the Agreement; and (2) conduct a fresh tendering process
and grant Right of First Refusal to the petitioner.
37. Mr. Poddar submitted, that the petitioner has no right to enforce against
the respondent as the second writ petition, being W.P. (C) 5543/2017, is
primarily for seeking specific performance of Article 2.2 of the
Concessioning Agreement dated June 17, 2010. In this regard, it is submitted
by Mr. Poddar that the sole and absolute discretion to extend/renew the
licence period vest in the respondent and that too on "mutually agreed
terms". He would submit, the Agreement does not stipulate any obligation
on the part of the respondent and in the absence thereof, there cannot be any
direction to the respondent to perform the same as sought by the petitioner.
Reliance is placed on judgment titled Gesture Hotels and Food Pvt. Ltd. v.
New Delhi Municipal Council, 209 (2014) DLT 784 (Paras 17-19 & 26-29);
Gesture Hotels and Food Pvt. Ltd. v. New Delhi Municipal Council, 210
(2014) DLT 359 (Paras 19-22); and Indian Hotels Co. Ltd. v. New Delhi
Muncipal Council, 234 (2016) DLT 409 (Paras 44-47). He would submit,
the petitioner does not have any right in respect of site in question after the
expiry of the initial licence, which can be enforced in the present petition.
38. Mr. Poddar submitted, no injunction for specific performance can be
granted to the petitioner as compensation is adequate relief. He submitted, as
per Article 8.6, the parties have agreed that, in the event of early
determination of the agreement by the respondent without consent of the
petitioner or in the absence of any default by the petitioner, the petitioner will
be entitled to Termination Payment as specified in Article 8.3; thus, even in
cases of wrongful Termination Payment only is the remedy. He stated, this is
in consonance with Section 64 of the Indian Easements Act, 1882, Section
41(e) read with Section 14(1) (a) of the Specific Relief Act, 1963 and the law
laid down in the cases of Gesture Hotels and Food Pvt. Ltd. v. New Delhi
Municipal Council, 2014 (209) DLT (Paras 38-40); and Gesture Hotels and
Food Pvt. v. New Delhi Municipal Council, 210 (2014) DLT 359 (Paras 10-
14).
39. On the issue of non-payment and suppression of facts, it is the case of
learned Senior Counsel that the request of the petitioner was rejected vide
Communication dated June 22, 2017 for the following reasons:
"1. As on date, your firm is a blacklisted entity and as a result,
your contract cannot be extended.
2.You have dues outstanding against your name w.r.t. other
contracts in South Zone and West Zone amounting to more than
Rs.3.0 Cr. (approx.) including interest.
3. Also your firm is not registered with SDMC as on date as your
application for renewal of registration was rejected by the
Committee constituted for Registration and Renewal on account of
outstanding dues and your firm being blacklisted entity. As the by-
laws prescribe that only a registered advertiser can put up display
advertisements within the jurisdiction of SDMC. The exact
amount outstanding against you will be intimated to you in due
course of time."
(Emphasis Supplied)
40. It is his case, from the aforesaid, it is clear that the request for
extension was declined owing to the petitioner; (1) a blacklisted entity; (2)
having pending dues against it; and (3) not being a registered advertiser. As
far as the first ground is concerned, he reiterates detailed submissions as
made in respect of W.P. (C) 6292/2017, which are noted hereinafter. In
response to the remaining grounds, the petitioner in Para 4.19 of the
petitioner [W.P. (C) 5543/2017] has stated as under:
"4.19.....Further no demand of Rs.3.00 Crores as alleged by the
respondent had been communicated to the Petitioner till date.
As such the order denying the extention/renewal is arbitrary,
malafide and mischievous and had been passed with ulterior
motives against the Petitioner."
41. He submitted, while making the above statement, the petitioner is not
only guilty of suppression of material facts, but also suggestion falsi and thus,
has rendered itself disentitled to a discretionary relief from this Court. He
would submit, as narrated in Paras 24 to 34 of the counter affidavit, adequate
and sufficient demand notices were issued to the petitioner from time to time
and statement of accounts were also furnished. He stated, apart from this, the
request of the petitioner seeking „No Dues Certificate‟ enabling it to
participate in the tender was also refused by SDMC vide letter dated March
21, 2016. It was submitted that as a result of this, the petitioner became
ineligible to participate in any tender floated by the SDMC. He would
submit, the letter is still operating as the same has neither been set-aside nor
stayed by any competent court and the petitioner deliberately suppressed
these documents from this Court and on the contrary, made a blatantly false
statement that no demand was ever received by the petitioner. Reliance is
placed on the decision of the Supreme Court in Rajmas Foundation and
Anr. v. Union of India and Ors., (2010) 14 SCC 38 (Paras 21-29).
42. He submitted, in view of the above, it is clear that the second ground
for rejection of renewal as to outstanding dues stands satisfied. As far as the
third ground is concerned, it is his case, admittedly, the registration of the
petitioner stands cancelled, communicated to it vide Order dated June 21,
2017. As per Rule 15 of the Delhi Municipal Corporation Tax on
Advertisements (Other than Advertisement Published in Newspapers) Bye-
Laws, 1996, no person except licenced or registered advertisers or agency is
allowed to undertake display of advertisements on behalf of others.
43. Learned Senior Counsel submitted, that, even the right of first refusal
cannot be granted to the petitioner. It is submitted by Mr. Poddar that the
petitioner has already in Para 45 of the Rejoinder in W.P. (C) 5543/2017
categorically stated that it is not ready to take the area, which reads as under:
"4.5...The Petitioner is still ready to take the area under the
Concessaire Agreement enjoyed by them and not the area for
which the bid of Rs. 16 lakhs had been taken by the
Respondent."
44. He would state, even otherwise, the petitioner would not have any right
of first refusal as the respondent is bound to secure maximum consideration
as the respondent transacts property in a fiduciary capacity for the general
public. He states, Section 200(d) of the Delhi Municipal Corporation Act,
1957 enjoins the respondent to adopt measures which ensure the maximum
revenue [Ref. Indian Hotels Co. Ltd. v. New Delhi Municipal Council, 234
(2016) DLT409 (Paras 51-52); and Asha Chitkara v. North Delhi Municipal
Corporation, 228 (2016) DLT 395 (Paras 14 N-O)]. He would submit, the
grant of right of first refusal would obviously have an adverse impact on the
bid amount as the bid of the highest bidder would be subject to a right of the
petitioner herein [Ref. Indian Hotels Co. Ltd. v. New Delhi Municipal
Council, 234 (2016) DLT 409 (paras 59)]. It is stated by Mr. Poddar that the
decision in Indian Hotels (Supra) has been upheld by the Supreme Court in
SLP (C) 33397/2016.
45. It is stated by Mr. Poddar that the case of the petitioner can at best be
one of breach of contract, for which the relief can only be sought before the
learned Arbitrator appointed under Article 12.2 of the Agreement and the
present proceedings are not maintainable.
46. He submitted, the respondent had, in view of the liberty granted by
this Court on August 4, 2017 had issued a Tender Notice dated August 30,
2017 and M/s Outdoor Communications Pvt. Ltd. has submitted the highest
bid at ` 15,96,600/- per month in respect of the new Cluster No.2 (previously
Cluster No.3) as opposed to `3,63,350/- per quarter agreed by the petitioner;
even which admittedly is not being paid by the petitioner. He stated, the stand
of the petitioner remains that the increase in licence fee is owing to the
increase in area, however, even accounting for the same, the offered licence
fee is more than 7 times of the petitioner. He submitted, it is also an admitted
fact that the petitioner is neither maintaining the facilities, which are now in a
dilapidated condition, nor is paying even the agreed licence fee since the
expiry of the original licence period on June 16, 2017.
47. It is stated by Mr. Poddar, that the plea of the petitioner to the effect
that the respondent has extended the area of Cluster No.2, which is beyond
the order of this Court is liable to be rejected as the Project Facilities falling
in the area under the jurisdiction of the respondent are required to be put in
such a manner to achieve maximum return. The respondent being custodian
is obliged under law to put the resources to secure maximum yield, which is
being done by the respondent as apparent from the bid received by it. The
same is in no manner contrary to the Concessioning Agreement or in
contempt of the order of this Court. It is stated by Mr. Poddar, that the
petitioner has no right, much less a legal right which can be sought to be
enforced before this Court, the existence of which is the foundation of a
petition under Article 226 [Ref. State of Orissa v. Ram Chandra Dev and
Anr., AIR 1964 SC 685 (Para 8)].
W.P. (C) 6292/2017:
48. In sofar as W.P.(C) 6292/2017 is concerned, it is the submission of Mr.
Poddar that the petitioner is precluded from challenging the order dated June
12, 2015 of blacklisting which was on account of non payment of dues and
violation of terms in respect of WLU Contract. The petitioner initially sought
revocation of the blacklisting order, which request was considered vide letter
dated July 13, 2015 by respondent directing the petitioner to first furnish a
bank guarantee of `40 lacs before any final decision is taken by the
respondent. He would submit, the petitioner failed to submit the bank
guarantee and the offer in the said letter lapsed. He stated, the petitioner also
failed to pay the dues in respect of Advertising Contracts and various notices
and Show Cause Notice were issued as to why the petitioner should not be
blacklisted.
49. It is his case, that the petitioner after facing disability to participate in
the tenders filed an application under Section 17 of the Arbitration and
Conciliation Act on November 12, 2016 seeking the following relief:
"(A) That the order dated June 12, 2015 whereby the
petitioner/claimant was blacklisted by the respondent-SDMC may
kindly be stayed and also respondent-SDMC be restrained to not
act in accordance with their said letter.
(B) The respondent-SDMC may be directed to remove the order of
blacklisting so uploaded by them on their website,
mcdonline.gov.in."
50. The aforesaid application was disposed of by the Ld. Arbitrator vide
order dated May 17, 2017. The learned Arbitrator accepted the contention of
the petitioner that he is vested with the power to decide the application
seeking stay of the blacklisting order by relying on the judgment of this Court
in Sai Consulting Engineers Pvt. Ltd. v. Rail Vikas Nigam Ltd., 198 (2013)
DLT 507. The learned Arbitrator relying upon the letter dated July 13, 2015,
instead of granting the relief as claimed by the petitioner in its application,
only directed the respondent to consider the request of the petitioner for
revocation of blacklisting order. Mr. Poddar submitted, the Ld. Arbitrator did
not; (1) stay the blacklisting order or (2) set-aside the same or; (3) directed
the respondent not to act upon the same and therefore, the blacklisting order
dated June 12, 2015 continued to operate.
51. He further submitted, that, thereafter, the petitioner filed another
application under Section 27 of the Arbitration and Conciliation Act alleging
that though it had submitted the bank guarantee of `40 lacs in terms of the
directions dated May 17, 2017, but respondent is not complying with the said
direction. He would submit, the petitioner once again sought stay of the
blacklisting order dated June 12, 2015. On July 11, 2017, the respondent
declined to revoke the blacklisting order on the ground that the offer given in
the letter dated July 13, 2015 does not stand inasmuch as the petitioner owes
more than `2 Crores in respect of other contracts as mentioned above.
52. It is the submission of Mr. Poddar, that the learned Arbitrator in his
order dated September 06, 2017, noticing that the petitioner owes more than
`3 Crores to the respondent as mentioned in the letter dated July 11, 2017
itself, dismissed the application of the petitioner seeking initiation of
contempt and also refused to grant relief staying the blacklisting order. He
submitted that the petitioner suppressed this order even during the course of
arguments though the same is part of record.
53. Mr. Poddar submitted the Order dated June 12, 2015 whereby the
petitioner was blacklisted has become final and cannot be challenged in the
present proceedings. He submitted that the petitioner having opted and
availed an efficacious alternative remedy before the learned Arbitrator and
having suffered an order in the said proceedings is not entitled to file the
present writ petition seeking similar relief. He submitted that the petitioner
having elected a remedy available to it in law is now precluded from
proceeding under Article 226 of the Constitution; particularly in view of the
stand taken by the petitioner that it is satisfied and not aggrieved with the
order of the learned Arbitrator. He stated, this writ petition, which is a
challenge to the order dated June 12, 2015 is liable to be dismissed. He
placed reliance on the judgments of this Court in the cases Sai Consulting
(Supra) (Paras 18,19,22 and 31) and Prabhatam Advertisement Pvt. Ltd. v.
Municipal Corporation Pvt. Ltd., MANU/DE/2674/2015 (Paras
5,6,7,8,9,11,15-18, 21 and 22.
54. On the issue of impugned order dated July 11, 2017, learned Senior
Counsel for the respondent submitted, as far as the order dated July 11, 2017
is concerned, as submitted in Para 4 of the counter affidavit, the same is not
an independent order, but was passed in view of the direction given by the
Ld. Arbitrator whereby declining to revoke the blacklisting order dated June
12, 2015. He stated, since the order dated June 12, 2015 has become final,
thus, no ground has been made out by the petitioner warranting any
interference therein. He stated, in any case, even in the absence of the order
dated July 11, 2017, the petitioner would remain blacklisted in view of the
order dated June 12, 2015.
55. On the issue of revocation of blacklisting order dated June 12, 2015 on
furnishing of bank guarantee in terms of letter dated July 13, 2017 and order
of the learned Arbitrator dated May 17, 2017, it is the submission of Mr.
Poddar that during the course of arguments, the petitioner had placed reliance
on letter dated July 13, 2015 to submit that upon furnishing a bank guarantee
of ` 40 lacs, the blacklisting order dated June 12, 2015 stood revoked. It is
stated that the submission is completely misplaced and is premised on a
partial and selective reading of the letter dated July 13, 2015. The relevant
portion of the letter reads as under:
"Now, therefore keeping in view the above noted facts and
circumstances competent authority vide its orders dated July 10,
2015 has considered your request for revocation of blacklisting
and with a directin to have bank guarantee of Rs. 40 lakh for six
months before taking further decision. Hence you are directed to
submit a Bank Guarantee of Rs. 40 Lakh with validity of 6
months."
(Emphasis Supplied)
56. Mr.Poddar submitted, on a bare perusal of the letter, it is seen that the
petitioner was asked to furnish the requisite bank guarantee before any
further decision is taken. Admittedly, no final decision was taken as the
petitioner failed to furnish the bank guarantee. He stated, for this reason, the
petitioner approached the learned Arbitrator by way of the aforesaid
application under Section 17 of the Act. He stated, the letter cannot be
construed as a conditional order inasmuch as the blacklisting order dated June
12, 2015 would automatically be revoked on the furnishing of the bank
guarantee. He submitted that the argument of the petitioner is contrary to its
own understanding inasmuch as in case the petitioner was under the
impression that the blacklisting order stood revoked there was no need for it
to file an application under Section 17 of the Arbitration and Conciliation Act
seeking stay of the blacklisting.
57. It is the submission of the learned Senior Counsel that, even the
learned Arbitrator in his order dated May 17, 2017 took note of the letter
dated July 13, 2015 and directed that the respondent may consider the request
of revocation on the petitioner furnishing a bank guarantee of `40 lacs. The
said order merely directed the respondent to consider the request and not that
upon furnishing the bank guarantee, the blacklisting order dated June 12,
2015 would be revoked. He stated, on the contrary, the Ld. Arbitrator
declined to grant the stay of the blacklisting as sought for in the Application
under Section 17 of the Arbitration and Conciliation Act. It is submitted by
Mr. Poddar that the blacklisting order dated June 12, 2015 was neither
revoked by the respondent nor set-aside /stayed by the Ld. Arbitrator. He
submitted, pursuant to the order dated May 17, 2017, the respondent
considered the request of revocation of blacklisting and rejected the same on
July 11, 2017. He states, the petitioner once again approached the Ld.
Arbitrator by filing an application seeking initiation of contempt and stay of
blacklisting, which request was once again declined by the Ld. Arbitrator on
September 06, 2017. Accordingly, as on date, neither the Ld. Arbitrator has
stayed/set-aside the blacklisting order dated June 12, 2015 nor has the same
been revoked by the respondent and accordingly, the same operates against
the petitioner. He states, thus, the contention of the petitioner is liable to be
rejected by this Court.
58. Insofar as the issue of guidelines dated April 23, 2013 are concerned,
Mr. Poddar submitted that the petitioner had during the course of arguments
relied upon said guidelines, more particularly Clause 17(D). He submitted,
this objection of the petitioner, is liable to be rejected inter alia for the
following reasons:
(i) The petitioner in Para 4.11 at Pg 21 of the Writ Petition vaguely stated
that the order of blacklisting can be passed only on three consecutive
defaults. However, during the course of hearing, the guidelines were
placed before the Hon‟ble Court, which do not support the said averment.
Apart from this, no such plea was taken before the Ld. Arbitrator at the
first instance.
(ii) The above submissions were made while ignoring the provisions of
Clause 2.B (Pg 223 of the Convenience Paperbook), which entitles the
competent authority to blacklist any person who is a defaulter in making
payments or is having outstanding dues of
SDMC/EDMC/NDMC/erstwhile MCD. In any case, as submitted above,
enough notices in respect of dues were issued to the petitioner before the
blacklisting orders were passed. Apparently, for the said reason, the
issue was not agitated before the Ld. Arbitrator.
59. In the end, Mr. Poddar submitted that the petitions having been filed
with a view to delay the payment of public dues and also causing loss to the
public exchequer, need to be dismissed as the petitioner not only withheld the
dues, but also kept the public utilities locked thereby depriving the public of
its user. He stated, apart from this, the petitioner is preventing the successful
bidder from taking over the facilities and in this way, the petitioner in order to
secure private gain has caused huge public loss. He seeks dismissal of the
petitions with heavy costs.
60. Having heard the learned counsel for the parties, three issues arise for
consideration; they are (i) whether the W.P.(C) 5358/2017 has on the issuance
of order dated June 22, 2017 become infructuous; (ii) whether the letter dated
June 12, 2015 of the SDMC blacklisting the petitioner and July 11, 2017
denying the revocation of blacklisting are malafide, illegal; (iii) whether the
denial of renewal of the Concessional Agreement dated June 17, 2010 vide
order dated June 22, 2017 (communicated through e mail dated June 24,
2017) by the respondent is justified.
61. Before I venture to answer the aforesaid three issues, suffice to state the
aforesaid three issues are primarily related to Waterless Urinal Contract (Issue
No.2) and Street Furniture Contract (Issue Nos.1 and 3).
Issue No.1
62. This issue arises from W.P.(C) No. 5358/2017. The prayer primarily is
for a direction to the respondent to pass a speaking order on the petitioner‟s
letter dated May 18, 2017 for extending the Contract period in terms of
Article 2.2 of the Concessional Agreement dated June 17, 2010. There is no
doubt that the request of the petitioner has been decided by the respondent
vide letter dated June 22, 2017 wherein it has been stated as under:-
"This is with reference to the request made by you vide the
aforesaid letters w.r.t. the contract under reference.
In this connection, it is to inform you, your request cannot be
acceded to on the following grounds:-
1. As on date, your firm is a blacklisted entity and as a
result, your contract cannot be extended.
2. You have dues outstanding against your name w.r.t. other
contracts in South Zone and West Zone amounting to more
than Rs.3.0 Cr. (approx.) including interest.
3. Also, your firm is not registered with SDMC as on date
as your application for renewal of registration was rejected by
the Committee constituted for Registration and Renewal on
account of outstanding dues and your firm being blacklisted
entity. As the by-laws prescribe that only a registered
advertiser can put up display of advertisements within the
jurisdiction of SDMC. The exact amount outstanding against
you will be intimated to you in due course of time.
You are, therefore, hereby advised to handover the sites
including street furniture to the department at the earliest."
63. It was argued by Mr. Poddar that in view of the letter dated June 22,
2017 based on an order of Competent Authority of June 21, 2017, the
W.P.(C) NO. 5358/2017 has become infructuous and needs to be dismissed.
According to him, the attempt of the petitioner is to keep this writ petition
alive only because of interim order dated June 21, 2017, which continued
from time to time. He also stated, as the main petition has become
infructuous, no interlocutory order can survive. He relied upon the judgment
of the Supreme Court in the case of Shipping Corporation of India Ltd.
(supra).
64. On the other hand, Mr. Uppal had contended that the writ petition
should be kept alive owing to the false averments made by the respondent in
its counter affidavit regarding the date of rejection order being of June 21,
2017 as represented in the Court on the said date. In other words, it is his
submission a false statement was made on June 21, 2017 that the
representation had been rejected. According to him, the status quo order of
June 21, 2017, when the representation was not rejected would enure to the
benefit of the petitioners.
65. To answer this, it is necessary to see the order that was passed on June
21, 2017. In the said order, it was clearly stated by Mr. Gupta, learned
counsel for SDMC that the representation of the petitioner came to be
declined. In support of the said order, during arguments Mr. Poddar has
referred to the relevant notings of the record (at pages 239 and 240 of the
convenience file) to contend that in fact the Competent Authority has rejected
the request of the petitioner for renewal. On a perusal of note sheet at page
240 of the convenience file, the proposal that was put to the Competent
Authority, reads as under:-
"In view of the above, if agreed to- (1) we may intimate the
applicant advertiser that his request cannot be acceded to
unless and until the firm clears all out outstanding dues and
(2) that since the firm is blacklisted, it has lost the right to
claim grant of right of First Refused to match or exceed the
offer of the identified preferred bidder. Draft letter placed
opposite for kind perusal and approval before issue please."
66. The ADG (Advertisement) has on June 21, 2017 approved the same. In
fact, a note dated June 22, 2017 clearly suggest that the approval has been
given by the Competent Authority. If that be so, the letter dated June 22,
2017 to the petitioner was only a communication of the respondent conveying
the decision taken on June 21, 2017. I agree with the submission of Mr.
Poddar that in view of the request of the petitioner dated May 18, 2017 having
been decided and conveyed to the petitioner on June 22, 2017, the said writ
petition being W.P.(C) No. 5358/2017 has become infructuous. Accordingly,
W.P.(C) No. 5358/2017 is dismissed as being infructuous.
Issue No.2
67. The case of the petitioner is that the Contract of WLU was awarded to
the petitioner in the year 2010. The Contract was terminated on May 26,
2011 against which the petitioner filed OMP No. 447/2011 wherein the
petitioner was granted stay of operation of cancellation letter dated May 26,
2011 by this Court on June 02, 2011. The said OMP was finally disposed of
with a direction that the respondent shall appoint an Arbitrator in terms of the
Contract and till the interim orders granted by this Court are vacated/modified
by the learned Arbitrator, the same shall continue to operate. It is a matter of
fact, on June 01, 2015 a show cause notice was issued to the petitioner
seeking reply as to why it should not be blacklisted owing to poor and average
conditions of the WLU and outstanding dues to the tune of `65,07,290/- to
which a reply was given by the petitioner on June 09, 2015. On June 12,
2015, an order of blacklisting was passed against the petitioner. It is a
conceded case of the petitioner that the possession of WLU was handed over
to the respondent June 23, 2015. Despite that the petitioner continued to
make representations for consideration and revocation of order of blacklisting
and consequent thereto the respondent vide its letter dated July 13, 2015
informed that pursuant to the representation made by the petitioner, the
Competent Authority acceded to the request of revocation of blacklisting of
the petitioner and had issued direction to the petitioner to submit a Bank
Guarantee of `40 lacs till the accounts are reconciled by the respondent. Even
though, Mr. Uppal during his submission had denied that an amount of `40
lacs are due to the respondent, he stated the petitioner had furnished the Bank
Guarantee of `10 lacs to the respondent despite that the respondent had not
honoured the letter dated July 13, 2015 by issuing any formal letter of
revocation of blacklisting.
68. It is the case of the respondent that as the petitioner has not adhered to
the letter dated July 13, 2015 and furnished the Bank Guarantee for `40 lacs,
the letter dated July 13, 2015 is unimplementable. It is also noted that an
application was filed by the petitioner under Section 17 of the Arbitration &
Conciliation Act before the learned Arbitrator wherein they have prayed for
the stay of the order of blacklisting dated June 12, 2015. The learned
Arbitrator vide his order dated May 17, 2017 had allowed the application and
had directed the respondent to consider the revocation of blacklisting of the
petitioner on deposit of `40 lacs as Bank Guarantee. It is also stated by Mr.
Uppal that despite depositing `40 lacs, no decision was taken in terms of the
order of the learned Arbitrator dated May 17, 2017. It is only after a
contempt petition was filed before the learned Arbitrator, the respondent
issued letter dated July 11, 2017 wherein it was stated that as dues to the tune
of `3 crores approximately including interest remain pending, whatever may
be the original basis of blacklisting, once a firm has been blacklisted, the
blacklisting cannot be revoked till such period, the firm continues to be in
default of any dues. Mr. Poddar had justified the blacklisting order dated
June 12, 2015 so also the order dated July 11, 2017 whereby the request of the
petitioner for revoking the blacklisting was rejected by stating that the
petitioner had filed an application under Section 27 of the Arbitration &
Conciliation Act alleging that though it had submitted the Bank Guarantee of
`40 lacs in terms of the directions dated May 17, 2017 but the respondent has
still not complied with the said direction. The learned Arbitrator in his order
dated September 06, 2017 noticing that the petitioner owes more than `3
crores to the respondent as mentioned in the letter dated July 11, 2017, itself
dismissed the application of the petitioner seeking initiation of contempt and
also refused to grant relief staying the blacklisting order. The said order reads
as under:-
" ORDER
06.09.2017
The present pending Arbitral proceedings are with regard to
the disputes arising out of the tender Bearing No. NIT
No.1/WU/2010-15 whereby contract was awarded for
maintain & operating Waterless Public Urinals in lieu of OOH
Advertisement Media Display in MCD Zones for a period 5
years.
However, during the pendency of the aforesaid arbitral
proceedings, the Claimant/petitioner had filed an Application
dated 12.11.2016 U/s. 17 of the Arbitration & Conciliation
Act, 1996 (hereinafter called „the Act‟) praying therein for
grant of interim directions against the blacklisting of the
Claimant firm in respect of the Blacklisting orders passed by
the Asstt. Commissioner of the South Delhi Municipal
Corporation (in short called the „SDMC‟) on 12.06.2015.
Besides other things, it was also averred by the Claimant in
the said application that, prior to this order of revocation, the
SDMC vide their letter dated 13.07.2015 had agreed to
consider their request for revocation of Blacklisting on the
condition of their submitting Bank Guarantee of Rs.40 lakhs
with a validity period of six months. But, since the Claimant
was unable to furnish the requisite Bank Guarantee, no orders
for revocation of Blacklisting were passed by the SDMC.
Now, before this Tribunal too, the Claimant in the said
application dated 12.11.2016 while making his submissions for
the revocation of the orders of Blacklisting had made a prayer
for directing the SDMC to again consider his request for
revocation of Blacklisting order. The said application of the
Claimant was however disposed off by the undersigned vide
order dated 17.05.2017.
The Claimant/petitioner by moving the present application
dated 16.06.2017 U/s 27(5) of the „Act‟ seeks the initiation of
contempt proceedings against the respondents allegi9ng
therein the violation and disregard to the above order dated
17.05.2017 passed by this Tribunal.
The relevant portion of the order which according to the
Claimant/petitioner has been flouted/disobeyed by the
Respondents as contained in the said order dated 17.05.2107
at pages 6/7 is reproduced herebelow:-
................."Hence, having regard to the totality of the
circumstances, I am of the view that the principles of
natural justice too warrant grant of at least one more
opportunity to the Claimant to comply with the conditions
imposed by the SDMC vide its letter dated 13.07.2015, as
this is not likely to cause any prejudice to the
Respondent. Accordingly, it is ordered that the SDMC
may consider the request of the Claimant for the
revocation of blacklisting on his furnishing a Bank
Guarantee of Rs.40 lakhs with validity of 6 months at
least from a Scheduled Bank within a period of 15 days."
.....................
Heard arguments of the Ld. Counsel for the parties.
It has been argued on behalf of the Petitioner that after
the passing of the order dated 17.05.2017 by this
Tribunal, the Claimant/petitioner on his part had
submitted the Bank Guarantee of the requisite amount of
Rs.40 lakhs with validity of six months and then had also
approached the Respondent requesting for the issuance
of the letter for revocation of Blacklisting and even sent
the reminders to them, but, they failed to pass any orders,
although they were supposed to pass such orders within a
period of 15 days w.e.f 17.05.2017, as per the directions
of the Tribunal. Hence, it has been argued that the
Respondents had utterly disregarded the directions of this
Tribunal by not passing orders on his request.
Consequently, in the present application, the
Claimant/petitioner has prayed as under:-
(a) That the reference be made to the Hon‟ble
High Court of Delhi to initiating contempt
proceedings against the
Respondent/Contemnors immediately for
defiance of the interim orders dated
17.05.2017 passed by this Hon‟ble Tribunal
with a request to punish the
contemnors/respondent in accordance with
law/contempt of Courts Act, as applicable.
(b) That in the totality of circumstances, during
the pendency of the present application, this
Hon‟ble Tribunal may stay the order dated
12.06.2015 passed by the respondent
No.1/SDMC whereby the
Petitioner/Claimant was blacklisted.
........................
........................
On the other hand, the Ld. Counsel for the Respondent
has argued that the Respondent had of course complied
with the order dated 17.05.2017 of the Hon‟ble Tribunal
by passing a detailed order dated 11.07.2017 on the
prayer of the petitioner seeking revocation of the
Blacklisting order in respect of the Claimant/Petitioner
M/s Graphisads Pvt. Ltd but he has very fairly admitted
there was some delay on their part in passing such order.
And for that matter, the Ld. Counsel tendered an
unqualified apology on behalf of the Respondents stating
that such delay was neither knowing nor intentional, but
had occurred only because of the fact that being Govt.
Deptt., they had to undergo various formalities before
taking a final decision. Hence, he sincerely regretted for
such delay on their part. It has further been argued by
him that at present dues of more than Rs.3 crores
(Rupees Three Crores) approx. including interest were
pending against the petitioner in respect of 7 different
contracts, the mention of which already been made in the
order dated 11.07.2017 itself, hence, he has contended
that under such facts and circumstances no good grounds
existed which warranted the revocation of the
Blacklisting of the firm. He has further informed that the
said huge amount has not been paid by the Claimant even
till date.
After having given my considered thought to the rival
contentions, I am of the view, that there has of course
been delay on the part of SDMC in considering and
deciding the prayer of the Claimant/Petitioner regarding
the revocation of Blacklisting even after their submission
of Bank Guarantee of Rs.40 lakhs as ordered by this
Tribunal, but the fact can not be lost sight of that it has
not been proved on record by the Claimant that the
Respondent had any intention to disobey the orders of
this Tribunal or that there was any malafide, willful or
intentional default on their part and further that the
Respondent have also tendered unqualified apology for
delay on their part and that the delay according to them
has been caused unintentionally by the Respondents,
which is a Govt. Body where they had to undergo various
procedures before arriving at the final decision.
Hence, finding no intentional or willful default on the
part of the Respondents and also the fact that huge
arrears to the tune of more than Rupees Three Crores are
still stated to be pending, I am of the view that the
prayers made by the Claimant/Petitioner i.e M/s
Graphisads Pvt. Ltd. in their Application dated
16.06.2017 being devoid of any merits, are hereby
dismissed. However, the observations made in this order
shall have no bearing on the merits of the case."
69. So, the plea of Mr. Poddar, that the learned Arbitrator by observing
"huge arrears to the tune of `3 Crores are stated to be pending" had not
interfered with the order dated July 11, 2017, as such the challenge with
regard to the said order need to be rejected does not impress me for the simple
reason, the Tribunal has in the last line made a clear observation that the said
order shall not have any bearing on the merits of the case. In other words, the
Ld. Arbitrator had not considered the merits of the order dated July 11, 2017.
So, it need to be seen, that the order dated July 11, 2017, apart from June 12,
2015 are justified.
70. During the submission, Mr. Uppal had strongly relied on the contents
of the letter dated July 13, 2015 by stating that upon furnishing of Bank
Guarantee of `40 lacs, the blacklisting order dated June 12, 2015 stood
revoked. The said argument is without any merit and I agree with the
submission of Mr. Poddar that the letter dated July 13, 2015, which reads as
under, clearly stipulates the direction to submit a Bank Guarantee of `40 lacs
for a period of six months is a prerequisite to enable the respondent take a
further decision in the matter.
"M/s Graphisads Pvt. Ltd
AB-House No. 4/24A,
I Floor, Asaf Ali Road, New Delhi Gate
New Delhi-110002
Subject: Order of Revocation of blacklisting of M/s
Graphisads Pvt. Ltd. panel of MCD/SDMC
Whereas M/s Graphisads Pvt. Ltd House No. 4/24A, I
Floor, Asaf Ali Road, near Delhi Gate, New Delhi-110002 was
blacklisted vide orders of competent authority dated 12/6/2015
and communicated to you vide order No.
AC/(Advtt.)/SDMC/2015/D-498 dated 12/6./2015.
Whereas an amount of Rs.65,07,290/- was worked out to
be outstanding against you and same was also communicated
to you vide aforesaid orders.
Whereas you have further deposited two DDs dt.
29/6/2015 and 1/7/2015 amount of Rs.26,21,035/-.
Whereas you have produced G-8 towards deposit of an
amount of Rs.29,61,376/-.
Whereas the G-8 receipts submitted by you require
verification and some of them pertain to the period of
erstwhile MCD also the process is likely to take some time.
Now, therefore, keeping in view the above noted facts and
circumstances competent authority vide its orders dated
10/7/2015 has considered your request for revocation of
blacklisting and with a direction to have bank guarantee of
Rs.40 lakh for six months before taking further decision.
Hence you are directed to submit a Bank Guarantee of Rs.40
lakh with validity of 6 months."
71. Surely, in the absence of any deposit of Bank Guarantee of `40 lacs,
the respondent was within its right not to take a decision on the revocation of
blacklisting. I also agree with the submission of Mr. Poddar, that had it been
the impression of the petitioner on deposit of `40 lacs, blacklisting stands
revoked , then there was no need for the petitioner to file an application under
Section 17 of the Arbitration & Conciliation Act seeking stay of the
blacklisting order. And even the learned Arbitrator in his order dated May 17,
2017 took note of the order dated July 13, 2015 and directed the respondent
"to consider" the request of the petitioner for revocation of the blacklisting of
the petitioner on furnishing a Bank Guarantee of `40 lacs.
72. Insofar as the plea of Mr. Uppal that no show cause notice on the
grounds so taken by the respondent in their letter dated July 11, 2017 for non
revocation of blacklisting was ever issued by the respondent is concerned,
suffice to state the said order was passed by the respondent on the directions
given by the learned Arbitrator on May 17, 2017 on an application filed by
the petitioner itself for grant of interim directions against the blacklisting of
the claimant/petitioner firm vide order dated June 12, 2015 and there is no
dispute that show cause notice dated June 01, 2015 was issued before the
order dated June 12, 2015 was passed. It is noted from the order of the
learned Arbitrator that the respondent had also taken a stand before the
learned Arbitrator that the huge arrears to the tune of more than `1.96 crores
of other works undertaken by the claimant are also pending against the
claimant i.e the petitioner herein and it was also on this ground, which was the
basis for the respondent to reject the request of revocation of the blacklisting
of the petitioner.
73. The guidelines of April 23, 2013 relied upon by the petitioner also
empowers the SDMC to debar from registration, renewal or blacklist any
person, if he is a defaulter in making payments/having outstanding dues of
SDMC. It is in tune with the stipulation that the respondent had refused to
revoke the blacklisting of the petitioner.
74. Insofar as the argument of Mr. Uppal that the order/letter dated July 11,
2017 of the respondent for non revocation of the blacklisting is against the
guidelines dated April 23, 2013 more specifically 17D is concerned, it is
necessary to reproduce the said provisions hereunder:-
"17(D) Blacklisting and cancellation of registration: The
Advertiser, if found on five occasions involved in any kind of
malpractices/violations of site including default in payment of
license fee shall be liable for cancellation of the site and for
repetition of violation by the same advertiser at other site/s, the
advertiser shall be blacklisted with the approval of the
competent authority. The decision of the Competent Authority
shall be final and binding to all. In case of above his security
amount/earnest money deposit shall be forfeited and
registration of Advertiser shall be cancelled."
75. The said plea is overlooking the provision of (B) of the guidelines. The
same reads as under:-
"B. Competent authority may, without assigning any reason,
debar from registration renewal or blacklist, any person as
detailed from (I) to (VI) below:
I. Who is a dismissed employee of SDMC / EDMC / NDMC
/ erstwhile MCD,
II. Who has been black -listed / removed from the approved
list of Advertisers by SDMC / EDMC / NDMC / erstwhile MCD,
III. Who is having business banned / suspended by SDMC /
EDMC / NDMC / erstwhile MCD in the past,
IV. Who is convicted by a Court of Law,
V. Who has been declared insolvent,
VI. Who is a defaulter in making payments/is having
outstanding dues of SDMC / EDMC / NDMC / erstwhile MCD.
76. The argument of Mr. Uppal by relying on 17(D) of the guidelines is
that only on initial five violations of default in payment of license fee, shall
entail cancellation of site and for repetition of violation by the same advertiser
at other site(s) the advertiser can be blacklisted. His argument being, as five
violations have not taken place, no blacklisting can be resorted to. I am
unable to accept such a plea, for the following reasons:-
(1) The petitioner‟s case in the writ petition is, only on three violation
blacklisting order can be passed.
(2) It is the case of the respondent in the counter affidavit filed in W.P.(C)
No. 6292/2018 that demand notices in respect of the various contracts were
issued from 2010 itself. However, petitioner failed to clear the dues on time
and the respondent Corporation repeatedly sent numerous reminders in
respect of individual sites/contracts and ultimately it issued a demand of `2.56
crores vide letter dated October 22, 2013. The same was followed by further
notices. In response to one notice on October 24, 2013, the petitioner paid an
amount of `15 lacs. It is also the stand of the respondent from time to time,
opportunities were granted to the petitioner both for payment as well as
reconciliation of accounts. The respondent refers to a final demand notice
dated July 23, 2015, asking petitioner the deposit of outstanding dues of
`2,47,45,756/-. It was on, non-payment that the blacklisting order dated June
12, 2015 was issued. It is also stated on representation of the petitioner, the
accounts were duly verified and upon reconciliation an amount of
`1,96,11,611/- was found pending against the petitioner as on March 15,
2016. It is also stated during the pendency of the writ petition, it was found
that an amount of `4,55,10,951/- is pending against the petitioner as on
September 06/07, 2017. It is important to mention here, the petitioner in its
letter dated June 23, 2016 has stated as under:-
"This refers to our discussions with Sh. P.S. Jha, (ADC.
Advertisement Department) on 15.06.16 & 22.06.16 regarding
above.
Your department has shown an outstanding of Rs.1,96,11,611/-
including Solar remission amount of Rs.89,25,740/-. We have
already submitted our objections to the said outstanding.
We are ready to clear the amount of Rs.89,25,740/- which is the
Solar Remission amount, Out of which we have already
remitted Rs.15,72,069/- vide P.O. No. 009517 dated 17.03.2016
drawn on Standard Chartered Bank.
You are requested to issue us formal letter certifying revocation
of our blacklisting and appoint the arbitrator to settle the issue
of disputed amount.
We assure you that we will abide by the decision of the
arbitrator and pay the balance amount, if any."
77. A reading of the above clearly shows that, demand notices are being
issued since 2010. A perusal of the statements in tabular form (pages 111-
125, convenience file) filed by the respondent shows the alleged defaults are
more than five occasions. Further, there is no challenge by the petitioner to
the demand notices of the respondent, so also to the letter dated March 21,
2016 of the respondent rejecting the request of the petitioner for issuance of
"No dues Certificate" for participation in NIT. That apart, one of the grounds
for blacklisting is, the petitioner has committed irregularities like
encroachment, additional coverage, unauthorized advertisements etc. No
arguments have been advanced, to contradict the said grounds.
78. Insofar as the judgments relied upon by Mr. Uppal are concerned, the
same are on the propositions; (a) when the dispute is pending adjudication
before Arbitrator, the same cannot be the basis for placing the party in
"Holiday List"; (b) Blacklisting without a show cause notice notifying the
reasons for blacklisting and the period for which the contractor is proposed to
be blacklisted and without giving opportunity of hearing and for an indefinite
period is bad; (c) summary rejection of replies in a slip shod manner without
giving any reason is in violation of principles of natural justice; (d) permanent
debarment from future contracts for all times to come may sound too harsh;
(e) excess amount received by a party already paid back, the period of
blacklisting order to be determined by the Competent Authority. None of the
judgments on the aforesaid propositions are applicable to the facts of this
case, as I have already held, principles of natural justice have been followed.
There is no challenge to the demand notices as referred above of the
respondent by the petitioner and as such the demand stands. The action of
blacklisting is as per guidelines referred to above.
79. On the plea of Mr. Uppal that, the blacklisting cannot be in perpetuity
is concerned, suffice to state till such time the demand of the respondent for
dues stands against the petitioner, the blacklisting is justified unless the same
held to be bad through a process, initiated by the petitioner in accordance with
law. I may state here, the pendency of the suit filed by the petitioner before
the District Court for recovery and rendition of accounts/perpetual injunction
would also have no bearing on the blacklisting of the petitioner as the said suit
is only with regard to the contracts relatable to „a‟ to „g‟ and not „h‟ above.
So, if the dues are payable for the contract „h‟, the respondent would be
justified in taking action of blacklisting against the petitioner. In fact, in the
arbitration proceedings with regard to waterless urinals (h), the challenge is,
to the cancellation of the contract on the ground of non-maintenance of the
urinals, which prayer is different and distinct from a challenge to the recovery
of dues in the said Contract. Even otherwise, it is not the case of the
petitioner that there are no dues payable by it to the respondent under the
contract (i) above i.e street furniture contract. The note dated June 19/21,
2017 (pae 239-240 of Convenience File) stipulates so, which I reproduce
hereunder:-
"In view of the above, if agreed to- (1) we may intimate the
applicant advertiser that his request cannot be acceded to
unless and until the firm clears all out outstanding dues and (2)
that since the firm is blacklisted, it has lost the right to claim
grant of right of First Refused to match or exceed the offer of
the identified preferred bidder. Draft letter placed opposite for
kind perusal and approval before issue please."
In view of the above, the order of blacklisting dated June 12, 2015 and refusal
to revoke blacklisting vide order dated July 11, 2017 cannot be faulted. The
issue No.2 is decided against the petitioner.
Issue No.3:-
80. Insofar as the issue No.3 is concerned, the blacklisting having been
upheld, the same is a justifiable ground for the respondent not to renew the
contract of street furniture dated June 17, 2010. In view of this conclusion, it
would not be relevant for this Court to go into the following judgments
referred to by Mr. Poddar in support of his contention that the petitioner has
no right of first refusal.
(i) Indian Hotels Co. Ltd. v. New Delhi Municipal Council, 234 (2016)
DLT409 (Paras 51-52); and
(ii) Asha Chitkara v. North Delhi Municipal Corporation, 228 (2016) DLT
395.
81. That apart, there is no dispute that the petitioner firm has been
blacklisted vide order dated June 21, 2017. I have not been shown any
document, revealing a challenge to the same. In the absence of a registration,
the plea of renewal cannot be accepted.
82. In view of my above discussion, the aforesaid three petitions are
without any merit. The same are dismissed. No costs.
CONT.CAS(C) 544/2017
83. This contempt petition has been filed by the petitioner M/S Graphisads
Pvt. Ltd alleging violation of order dated June 21, 2017. The relevant
averments are in paras 4 to 6 of the petition. The relevant part of the order
dated June 21, 2017 reads as under:-
"Adverting to the above-said term of the agreement, it
is strenuously contended by Mr. Uppal, Ld. Sr.
Counsel that, though, the period of seven years from
the date of commencement of agreement has expired
on 16.6.2017, the petitioner was vested with a right of
First Refusal to match or exceed the bid of the
identified preferred bidder for the second time, in the
event, there was no extension of the Concession
period of further seven years. In that regard, Mr.
Uppal, ld. Sr. Counsel has also drawn attention to the
fact that in exercise of such right, the petitioner had
made a representation for extension vide its
communication dated 18.5.2017, followed by a
reminder dated 2.6.2017, but, has not received any
response, till now. During the course of hearing, Mr.
Gupta, ld. Counsel for the respondent states that the
said representation has come to be declined, as of
today, in the morning only, but, it is yet to be
communicated to the petitioner. He is however,
oblivious of the reasons for rejection inasmuch as, he
states that said instructions he has received only
telephonically and no record has come to be made
available to him, till now. Mr. Gupta, also states that
no further bidding process has come to be
undertaken. Fact, thus, remains that even the reasons
for rejection are not yet communicated to the
petitioner. Of course, the petitioner, when
communicated the reasons for rejection of its
representation for extension, may assail such
rejection, as, it may advised, for assertion of any of
right(s), if any, vesting in it.
Mr. Gupta, on instruction, also states that
advertisement displays have already been removed in
entirety. It is however, disputed on behalf of the
petitioner.
Issue notice. Mr. Gupta accepts notice and seeks time
to file reply. As prayed, reply be filed by 27th June,
2017 with advance copy to the other side. Rejoinder,
if any, be filed within three days thereafter. Keeping
in view the totality of the facts and circumstances, it is
ordered that till the adjourned date, the parties shall
maintain status quo."
84. A perusal of the aforesaid order would show that it is the case of the
respondents that the request of the petitioner for extension of the permission
with respect to the Concession Agreement has been rejected in the morning of
June 21, 2017. It was also represented by the learned counsel for the
respondents that the advertisement displays have already been removed in
entirety. In fact, the petitioner also in W.P.(C) 5358/2017 has stated that on
June 20, 2017, certain officers of the respondent arrived at Lodi Road area
and R.K. Puram area installations and started defacing / removing the display
advertisements.
85. I note in the contempt petition filed by the respondents herein against
the petitioner here, photographs of June 20, 2017 and June 21, 2017 have
been annexed, which does reveal that on June 21, 2017 when the status quo
order was passed, there were no advertisement displays on the project
facilities. Surely, the intent of passing the status quo order by the Court is,
whatever the status quo which was prevailing on June 21, 2017 must
continue. In fact, the averments in paras 4 to 6 of contempt petition No.
544/2017 relates to happenings on June 27, 2017, June 28, 2017 and July 04,
2017. The said allegations have to be seen in the context of a positive
statement made by the SDMC in their contempt petition that when inspection
took place on June 27, 2017, its Officers found that the respondents getting
the display re-fixed in violation of order dated June 21, 2017 and thus stopped
further reinstallation of the advertisements. So, it is clear there were no
advertisements on display on June 21, 2017 when the status quo order was
passed.
86. Notice has not yet been issued in Cont.Cas(C) No. 544/2017, even
though, there was a direction to file an affidavit, which has also not been filed
by the respondents, be that as it may, since the SDMC has also filed a
contempt petition being Cont.Cas(C) No. 521/2017 and noting the averments
made therein, I am not inclined to continue the petition. I close Cont.Cas(C)
No. 544/2017. Further, in view of the order passed in writ petitions being
W.P.(C) No.5358/2017, W.P.(C) No. 5543/2017 & W.P.(C) No. 6292/2017, I
close the Cont.Cas(C) No. 521/2017 as well.
Crl.M.A. 12568/2017 (under Section 340 Cr.PC) in CONT.CAS(C)
521/2017
Dismissed as infructuous.
V. KAMESWAR RAO, J
JUNE 01, 2018/ak
