Delhi High Court
Anand And Co vs Union Of India on 2 June, 2021
$~3
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Judgment: 2nd June, 2021
+ O.M.P.(I) (COMM.) 151/2021
ANAND AND CO ..... Petitioner
Through Mr Ratan Kumar Singh, Senior
Advocate with Mr Kunwar
Chandresh, Mr Rajeev
Gurung and Ms Poonam Prasad,
Advocates.
versus
UNION OF INDIA ..... Respondent
Through Mr Vikram Jetly, CGSC with Mr
Akshat
Singh, GP and Mr P.P.Singh, EE
CPWD
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
ORDER
% 02.06.2021
[Hearing held through videoconferencing]
VIBHU BAKHRU, J. (ORAL)
1. The petitioner has filed the present petition under Section 9 of
the Arbitration and Conciliation Act, 1996 (hereafter the „A&C Act‟),
inter alia, praying that the operation of the letter dated 22.04.2021,
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whereby the respondent has rejected the petitioner‟s tender and
blacklisted it for a period of one year from participating in any CPWD
tenders, be stayed.
2. The disputes between the parties stem from the tender floated
by the respondent for "Comprehensive Maintenance Work at CGO
Complex Lodhi Road, New Delhi 2020-23 (SH: Civil and Electric
work)". On 03.12.2020, the respondent (hereafter the „CPWD‟) issued
a Notice Inviting Tenders (NIT) for providing comprehensive
maintenance of the CGO Complex, which houses offices of various
organisations of the Central Government. The petitioner‟s bid was the
lowest and by a Letter of Acceptance dated 30.12.2020 (hereafter the
„LoA‟), CPWD accepted the petitioner‟s tender at a value of
₹18,31,33,102/-.
3. In terms of the NIT, the successful bidder was required to
submit a Performance Guarantee within a period of seven days from
the date of the LoA. The petitioner was also required to submit
documents from the Associated Specialized
Agencies/OEM/Authorized Service Provider of Specialised E&M
Services along with the bid. The NIT also expressly provided that if
the same were not furnished prior to or at the time of submission of
the tender, the same could be submitted along with the Performance
Guarantee after the tender was accepted. However, an undertaking to
the aforesaid effect was required to be submitted along with the
tender. An agreement/ understanding with the Specialised Agencies
that they would continue to extend support and provide spares, was
essential as the same was necessary for maintenance of equipment
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sourced from them.
4. The relevant clause of the NIT requiring the petitioner to submit
an undertaking is set out below:-
"An undertaking that if "I/We shall become the
lowest tenderer then I/We shall submit the
documents of Associated specialized
Agencies/OEM/Authorised service provider of
the specialized E&M services as per the
eligibility criteria mentioned in the "special
conditions of NIT for association of specialized
agencies" after acceptance of tender alongwith
Performance Guarantee otherwise department
may reject my/our tender & may forfeit the
deposited EMD absolutely & debar me/us from
re-tendering for this work"
5. There is no dispute that the petitioner had submitted an
undertaking in terms of the aforesaid clause of the NIT.
6. The controversy in the present case relates to the submission of
the MoUs/Letters of Consent by the two OEMs - M/s Cummins Sales
and Services Pvt. Ltd (hereafter referred to as „Cummins‟) and M/s
OTIS Elevator Company (India) Ltd. (hereafter referred to as "OTIS")
7. In terms of the NIT, the Performance Guarantee was required to
be furnished within a period of seven days of the LoA and therefore,
the petitioner was also required to submit the MoUs/Letters of
Consent from the OEMs - including OTIS in respect of elevators, and
Cummins in respect of DG Sets - within a period of seven days from
the LoA.
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8. Undisputedly, the petitioner submitted the Performance
Guarantee within the said period of seven days from the date of LoA.
The allegation against the petitioner is that it did not submit the MoUs
in respect of certain Specialised Agencies, in particular Cummins and
OTIS within the stipulated time.
9. It is the petitioner‟s case that the MOUs with OTIS and
Cummins could not be submitted within the specified period as the
said OEMs claimed that a large sum was payable and outstanding
against the maintenance work performed by them for a period, which
accrued prior to the tender. Thus they were reluctant to enter into an
MoU to provide maintenance services in respect of facilities for which
payments due to them had not been cleared by CPWD.
10. The said issue was escalated with the concerned Executive
Engineer, CPWD (hereafter the Executive Engineer) and he sent
letters dated 28.01.2021 to the two OEMs, Cummins and OTIS,
informing them that the award of work was held up on account of their
failure to respond to the request made by the petitioner and requested
them to provide a quotation and consent letter to the petitioner so that
their existing agreements could be foreclosed and a new composite
tender could be awarded in favour of the petitioner. The identically
worded passage from the aforementioned letters dated 28.01.2021 is
set out below:
"........In this regard, M/s Anand & Co. has intimated
to this office that your agency is not responding the
request made for offer/quotation and consent letter
through above referred email. Due to not responding
by your office this office is unable to award the work
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to M/s Anand & Co. Moreover, this office is facing
difficulty to operate & maintain other Electric &
Civil services due to not awarding the tender.
Keeping in view of above, it is requested to provide
offer/quotation and consent letter to M/s Anand &
Co. so that your existing agreement may be
foreclosed under Clause-13 and new composite
tender in favour of M/s Anand & Co may be
awarded as soon as possible for smooth functioning
of various Electrical & Civil installation at such a
VVIP CGO Complex where various Hon‟ble
Ministers and Senior Government Dignitaries offices
are situated.
11. Thereafter, Cummins sent a letter dated 15.02.2021 to the
petitioner confirming that it would supply spare parts for the three DG
Sets installed at the CGO Complex. This was furnished to CPWD.
However, the impasse with OTIS remained unresolved.
12. On 31.03.2021, the Executive Engineer sent a letter to OTIS.
The contents of the said letter are relevant and are reproduced below:
"With reference to above work, it is agreed that
expected balance payment shall be made as per
already conveyed schedule vide above letter No.
413 dated 12-02-2021. However it may differ some
little as per budget allotment. During March, 2021
payment for Rs.24,95,891/- has been made.
Balance payment of March, 2021 shall be made
during April, 2021 and remaining payment shall be
made as per expected schedule vide above letter
No. 413 dated 12-02-2021.
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Keeping in view as above, now it is requested to
give your consent letter and draw MOU with M/s
Anand & Co. at earliest positively by 10-04-2021."
13. The said letter indicates that CPWD had made a payment of
₹24,95,891/- to OTIS during the month of March, 2021 and had
assured OTIS that the remaining payment will be made as per the
accepted schedule. Keeping in view of the aforesaid assurances, the
concerned Executive Engineer once again requested OTIS to give its
consent and draw an MoU with the petitioner at the earliest, and
positively by 10.04.2021.
14. In view of the assurance set out by Executive Engineer to OTIS,
OTIS also entered into an MOU with the petitioner and the same was
furnished to CPWD on 10.04.2021, which was within the time period
as provided by the Executive Engineer.
15. There is no dispute that the petitioner had complied with all the
conditions as required, that is, by providing the necessary MOUs with
the OEMs. The controversy revolves around the question of delay in
doing so.
16. At this stage, it is relevant to refer to the reasons as stated in the
impugned letter dated 22.04.2021 for terminating the contract/tender.
The said reasons are set out below:
"(1) As the contractor has failed to submit the
documents of associated specialized agency/OEM,
which is a part of eligibility criteria in tender; they
have not fulfilled the basic requirement per NIT.
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(2) Giving additional time to the contractor will
not be fair to others, who could not participate in
tender due to non-fulfillment of their conditions.
(3) There is no provision in NIT as well as in
manual for relaxing the conditions in contract after
opening of tender in favor of particular tenderer."
17. Prima facie, none of the grounds as set out in the said letter are
sustainable. While it is correct that the petitioner had not submitted the
documents of the associated Specialised Agencies, which were
required to be submitted within the period of seven days of the LoA,
but it appears that the reasons for the same are mainly attributable to
the CPWD since it had not cleared the earlier outstanding payments of
the concerned agencies and/or had apprised them of the fate of the
extant contracts. The letters issued by the Executive Engineer clearly
indicate that the problems faced by the petitioner were understood
and, further time was provided to the petitioner to furnish the MOUs.
The petitioner was given time to take the necessary steps to enter into
the MOUs with the concerned agencies so that the work could be
handed over to it. The petitioner was provided time till 10.04.2021 to
enter into the last remaining MOU with OTIS as is evident from the
letter dated 31.03.2021 sent to OTIS.
18. Mr Jetly has opposed the present petition on, essentially, three
grounds. First, he submitted that there was no conclusive contract
between the parties and therefore, there existed no agreement to refer
the disputes to arbitration. He contended that in this view, the present
petition was not maintainable. Second, he submitted that the petitioner
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had concealed the letter dated 28.01.2021 addressed by the Executive
Engineer to the petitioner pointing out certain deficiencies. He stated
that apart from the MoUs with Cummins and OTIS, the petitioner had
not submitted the Letter of Consents/MOUs in regard to the
Addressable Fire Alarm System and with regard to the EPABX
System of Coral make. Third, he contended that the Executive
Engineer was not authorized to grant any time to the petitioner to
comply with the conditions of the NIT as in terms of the NIT, the
Accepting Authority is the Additional Director General, CPWD. He
submitted that the competent authority was the Accepting Authority
and he had found that the petitioner had not complied with the terms
and conditions of the NIT and therefore, had taken the decision to
terminate the petitioner‟s tender and to blacklist the it.
19. The contention that there is no agreement between the parties to
refer the disputes to arbitration is unpersuasive. The NIT specified
that the term of the contract be for a period of 36 months and work
would commence from the 10th day of the Letter of Acceptance (LoA).
The LoA also expressly states the same. Clause 19 of the NIT
provided that the successful bidder/contractor would sign the contract
within fifteen days from the stipulated date of the start of the work.
Clearly, once the LoA communicating the acceptance of the
petitioner‟s tender was communicated to the petitioner, the contract
between the petitioner and the CPWD came into existence. The
petitioner was obliged to sign the specified contract documents and it
was not open for the petitioner to avoid the said obligation. It is
important to note that the petitioner was required to sign the contract
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documents within a period of fifteen days after the maintenance work
had been handed over to the petitioner and the term of the contract in
question had commenced. The agreement to arbitrate is a part of the
terms and conditions of the contract accepted by the parties.
20. Mr Jetly‟s contention that the petitioner had not furnished two
other MOUs/Letters of Consent apart from those from OTIS and
Cummins, is seriously disputed by the petitioner. Mr Singh had
contends that in terms of the NIT, the petitioner was required to
furnish MOUs/Letters of Consent from either the OEMs or their
authorized representative. He submitted that the petitioner had
submitted the letter from the authorized representative in respect of the
EPABX system. The condition relating to the fire alarm system was
also duly complied with and the necessary clarifications in this regard
had been accepted. He submitted that there was no default on the part
of the petitioner in that regard.
21. The impugned letter does not disclose any specific MOU/Letter
which was not furnished by the petitioner. It does not specify the
condition that has not been met by the petitioner. The communications
placed on record prima facie indicates that the controversy was finally
reduced to the MOUs/Letter of consent from OTIS. As noticed above,
the said issue was also addressed within the time provided by CPWD.
22. The communications on record clearly indicate that the
Executive Engineer had, on more than one occasions, called upon the
petitioner to furnish the MOUs/letters from various OEMs. The letter
dated 28.01.2021 addressed by the Executive Engineer to the
petitioner also request the petitioner to furnish the MOUs/Letters as
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mentioned therein. Thus, even at that stage, CPWD was not
contemplating terminating the contract on the ground that the
petitioner had not met the conditions of the NIT.
23. Plainly, if the CPWD was of the view that the failure of the
petitioner to furnish certain MOUs/Letters as required in terms of the
NIT was uncurable and fatal to the contract, there was no occasion for
CPWD to pursue with the petitioner to furnish the same. Prima facie,
it would not be open for CPWD to now completely change its stand
and insist on taking a punitive action against the petitioner for not
furnishing the MOUs/Letters of Consent.
24. As noticed above, by the letter dated 31.03.2021, the Executive
Engineer had given time till 10.04.2021 for the petitioner to furnish
the necessary MOU from OTIS. It had also cleared certain dues of
OTIS, which was proving to be the stumbling block for the petitioner
to enter into the MOU with OTIS. The Executive Engineer had also
assured OTIS that the balance payments would be made. After the
petitioner has complied with the demands of the Executive Engineer
and has furnished the MOUs/Letters, prima facie, it would not be open
for CPWD now to completely change its stand.
25. Mr Jetly‟s contention that the Executive Engineer was
unauthorized to issue letters as he was not the competent authority and
therefore his letters are of no relevance, is also unpersuasive. It is also
noteworthy that the communications sent by the Executive Engineer to
the petitioner as well as the OEMs were also marked to the Additional
Director (General), CPWD and he is admittedly the Accepting
Authority under the NIT. Thus, the Accepting Authority was fully
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aware of the communications and of the further time being provided to
the petitioner to enter into the MOUs with the concerned agencies.
26. The Executive Engineer was the authority that had issued the
NIT. It is also seen that all communications were also issued by him
including the impugned letter dated 22.04.2021. No disciplinary action
has been taken against the Executive Engineer, CPWD as yet for
writing letters in excess of his authority. Or against the ADG CPWD
for ignoring thus being a party to lead the petitioner act on them. None
of the relevant letters indicated that they were subject to further
decision by any other authority.
27. Curiously, the contract is sought to be terminated after the
petitioner had fully complied with all of the conditions within the time
as provided by CPWD.
28. This Court is now informed that the order of blacklisting the
petitioner has also been placed on the website of CPWD. Admittedly,
no Show Cause Notice has been issued to the petitioner prior to
blacklisting the petitioner and he was not afforded any opportunity of
being heard, which is necessary (Eurasian Equipment and Chemicals
Ltd. v. State of W.B.: (1975) 1 SCC 70 and Gorkha Security Services
v. Govt. (NCT of Delhi): (2014) 9 SCC 105)
29. Mr Jetley submits that the blacklisting of the petitioner would
automatically follows on its failure to comply with the conditions of
the tender. Prima facie, this contention is unmerited. The factors that
must be weighed for blacklisting a contractor are materially different
those to recognise non-performance of any obligation. The Supreme
Court in the case of Kulja Industries v. Chief General Manager,
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Western Telecom Project Bharat Sanchar Nigam Ltd.: (2014) 14
SCC 731 has listed certain factors (on a non-exhaustive basis) that are
required to be considered before blacklisting a contractor. Prima facie,
none of the same have been considered.
30. In view of the above, the present petition is allowed and the
impugned order is stayed for a period of six months from today. The
CPWD (respondent) is also directed to forthwith remove the order
from its website blacklisting the petitioner.
31. It is clarified that the observations made in this order are solely
for the purposes of considering grant of interim measures of protection
under the A&C Act. The Arbitral Tribunal, as and when constituted,
shall decide the disputes uninfluenced by any observation made in this
order.
32. All rights and contentions of the parties are reserved.
33. The petition is disposed of in the aforesaid terms.
VIBHU BAKHRU, J
JUNE 02, 2021
pkv/nn
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