1. Since the issue involved in both these writ petitions is identical, both
the writ petitions are tagged and heard together, by consent of the respective
counsels and are disposed of by this common judgment.
2. For the purpose of convenience, the facts in W.P(C) No.1019 of 2026
are taken into account.
3. In the petition, the petitioner has come out with the following
prayers:-
4. Brief facts necessary for deciding the present petition are as under:-
provided that such FIR or chargesheet relates to allegations of
fraud, corruption, financial irregularity, or any other economic
offences arising directly out of or in connection with the
execution of works, procurement, contractual dealings, or
financial transactions of the Delhi Jal Board.
(b) Any bidder shall also be ineligible to participate in this tender
if on the date of submission of the bid, a First Information Report
has been registered against the bidder, or against any person
who is currently a Proprietor, Partner, Director, or Key
Managerial Personnel of the bidder, or against any former
holder of such office who was serving in that capacity at the time
of commission of the alleged offence, by the Delhi Jal Board or
by a specialized investigative agency such as the Anti-Corruption
Branch, Central Bureau of Investigation, Enforcement
Directorate, Economic Offences Wing, or any other competent
statutory authority in respect of offences involving corruption,
fraud or economic offences.
(c) Eligibility Condition relating to Criminal proceedings The
bidder shall submit a duly sworn affidavit, affirming compliance
with the above conditions and confirming that no such
chargesheet or FIR, as specified herein, is pending against the
bidder or any of the persons referred to above.
(d) Any suppression, concealment, or misrepresentation of facts
in the affidavit or bid document shall entail immediate rejection
of the bid, forfeiture of the earnest money deposit/bid security,
and may further result in blacklisting, debarment, or other penal
action in accordance with the applicable policies of the Delhi lal
Board and relevant provisions of law."
i. It is the case of the petitioner that the petitioner and its two directors,
i.e., Mr. Pankaj Verma and Mr. Deepak Kumar Jain, are accused in a
Prevention of Money Laundering case registered vide ECIR/DLZO-
I/12/2024, bearing Complaint Case No. 51/2025. The aforesaid case is
based on a predicate offence, which was registered on 11th May, 2024
vide FIR No. 10/2024 by the Anti-Corruption Branch, Delhi, for
offences punishable under Sections 7A, 9 and 13 of the Prevention of
Corruption Act, 1988 read with Sections 420, 409, 418 and 120B of
the Indian Penal Code, 1860, in relation to the award of tenders for
STPs.
j. It is the case of the petitioner that the aforesaid conditions, which
were introduced in the second notice inviting tender/offers, have
resulted into its disqualification because of aforesaid criminal
proceeding. As such, the petitioner has approached this Court
questioning the said conditions.
5. According to Mr. Amit Sibal, learned Senior Counsel appearing for
the petitioner, under Article 77(3) of the Constitution of India, the President
is empowered to frame rules for the transaction of Government business.
According to him, Article 266(3) of the Constitution of India mandates that
no money from the Consolidated Fund of India or of any State may be
appropriated except in accordance with law. He would submit that clause (1)
of Article 283 regulates the custody, payment, and withdrawal of public
monies through Parliamentary enactments and, in the absence thereof,
through Presidential Rules.
6. He would urge that in exercise of these powers, the General Financial
Rules, 2017 (hereinafter referred to as "GFR") have been framed by the
Government of India, which are binding on autonomous bodies, including
respondent no. 1. He would further urge that, in view of the Office
Memorandum dated 3rd November, 2021 issued by the Ministry of Finance,
debarment is prescribed under Rule 151 of the GFR, which reads thus:
(iii) A procuring entity may debar a bidder or any of its successors,
from participating in any procurement process undertaken by it, for a
period not exceeding two years, if it determines that the bidder has
breached the code of integrity. The Ministry/Department will
maintain such list which will also be displayed on their website.
(iv) The bidder shall not be debarred unless such bidder has been
given a reasonable opportunity to represent against such
debarment."
7. Based on the aforesaid Rule 151 of the GFR, he would urge that
debarment is attracted only in cases where: (a) there is a conviction of a
person or a company under the Prevention of Corruption Act or the Indian
Penal Code and (b) such debarment shall be for a maximum period of three
years and can be imposed only after affording a reasonable opportunity of
representation. He would submit that clause 16, which is the subject matter
of challenge in the present petitions and has been implemented in the case at
hand, has resulted in pre-conviction exclusion without adhering to the
safeguards provided under the GFR. According to him, clause 16, as such,
runs contrary not only to the GFR by expanding its scope, but is also
without any legal basis. He would further add that respondent no. 1 cannot
impose a stricter implementation of clause 16, which runs contrary to the
statutory mandate under Rule 151 of the GFR. That being so, he would urge
that clause 16 is arbitrary and disproportionate and is liable to be struck
down. Drawing support from the observations made in paragraphs 52 and 56
of Om Kumar v. Union of India &Ors. (2021) 2 SCC 386, he would try to
substantiate his aforesaid contentions. He would further urge that the Central
Vigilance Manual mandates debarment strictly in accordance with the
aforesaid Rule 151.
8. Mr. Sibal has also drawn support from clause 9.9.3(aa) of Chapter IX
of the CVC Vigilance Manual, 2021. According to him, once the GFR has
been adopted by the Central Vigilance Commission, there is no escape for
respondent no. 1 to implement the same and it cannot travel beyond the said
framework by incorporating clause 16, which is the subject matter of
challenge in the present petition.
9. According to Mr. Sibal, the mere pendency or registration of an FIR
or a charge-sheet, by itself, does not constitute proof of guilt so as to justify
a disqualification like the one in the present case. He would strenuously urge
that such conditions violate the presumption of innocence guaranteed under
Article 21 of the Constitution of India and further result in a pre-conviction
civil death. According to him, clause no. 16, which is under challenge in
these petitions, is required to be held arbitrary and discriminatory in exercise
of the powers of judicial review. He would further add that such conduct of
the respondent amounts to blacklisting/debarment, having grave civil
consequences. Such conduct of respondent no. 1 cannot be sustained, as the
same is arbitrary and imposes disqualification without there being any
finding of guilt by a competent criminal court.
10. Drawing support from the judgment of the Apex Court in Satender
Kumar Antil v. Central Bureau of Investigation (2022) 10 SCC 51,
particularly paragraphs 14, 15, and 19, he would claim that for the
presumption of innocence of a person, the fundamental rights guaranteed
under Article 21 is required to be relied upon. The burden of establishing
guilt is on the prosecution and this principle is of great significance having
regard to the criminal jurisprudence adopted in our country. In case of
implementation of impugned tender condition, the pre-trial disqualification
results in reversing the burden and amounts to imposing the punishment. He
would claim that an FIR is not a substantive piece of evidence and it only
sets investigation in motion, whereas a charge-sheet is the bundle of facts
collected by the Investigating Office based on his opinion. He has placed
reliance on the judgment of Apex Court in the case of Rajesh Yadav &Anr.
Vs. State of Uttar Pradesh (2022) 12 SCC 200.
11. He would urge that the implementation of clause no. 16 against the
petitioner results in blacklisting, which has enduring consequences and a
cascading effect on the future business of the petitioner with Government
entities. As such, he would submit that the impugned tender condition is
arbitrary and is liable to be quashed and set aside.
12. As against the above, Mr. Tushar Sannu, learned Senior Standing
Counsel appearing for respondent no. 1, Delhi Jal Board, in support of the
tender condition to be not arbitrary or discriminatory, submitted that the
tender authority is the best judge of its requirements and of the person with
whom it chooses to enter into a business. Drawing support from the
judgments of the Apex Court in Shilpi Construction v. Union of India
(2020) 16 SCC 489 and Monte Carlo Limited v. National Thermal Power
Corporation (2016) 5 SCC 272, he would urge that so long as the tender
condition is not tailor-made or mala fide, this Court cannot interfere with the
tender process.
13. According to him, the tender condition, in any case, cannot be said to
be discriminatory, arbitrary, or mala fide, as tender condition, clause no. 16,
which is impugned herein, creates an altogether independent class of parties
against whom an FIR, charge-sheet, or prosecution is pending at the behest
of the respondent. According to him, it is an admitted position on record, as
could be substantiated from the very pleadings of the petitioner himself, that
the petitioner and its Directors are accused in a substantive offence referred
to in the foregoing paragraphs, not only under the provisions of the
Prevention of Corruption Act but also under the Indian Penal Code.
14. He submitted that since there is an element of money laundering, the
provisions of the PMLA have been invoked and an ECIR is already pending
against the petitioner. He would urge that since the respondents have
sufficient material against the petitioner to form an opinion that the
petitioner and its directors have indulged in criminal activity in the
execution of contracts with respondent no. 1, they are justified in imposing
the impugned condition. He would submit that such a condition is in the
better interest of the execution of Public works like the one which has a
large scale ramification over the living conditions. He would further urge
that this Court should always give weight to the opinion of experts and
should not sit in an appeal over the decision of the authority in framing
tender conditions, as in the matter of framing the tender condition, the
respondent are the best placed to appreciate its requirement.
15. According to him, similar conditions were the subject matter of
challenge before this Court so also before the High Court of Allahabad. This
Court in the matter of Trident Infosol Pvt. Ltd. Vs. Union of India 2022
SCC OnLine Del 2314 not only held that the condition is neither arbitrary or
violative of Article 14, but also observed that same constitutes to maintain
legitimate integrity in the matter of execution of sensitive project like the
one in hand. He has also drawn support from the judgment delivered by
High Court of Allahabad in the matter of Kkspun India Ltd. Vs. U.P. Jal
Nigam (2021) SCC OnLine All 1219 in support of the very same
proposition.
16. Furthermore, according to him, the petitioner was involved in large-
scale corruption in its establishment in relation to the work of augmentation
and upgradation of ten sewage treatment plants across four packages, valued
at approximately Rs. 1,493 crores. The petitioner company and its Directors
were alleged to have functioned as a conduit for illegal gratification,
resulting into registration of FIR No.10/2014 (referred supra).
17. Drawing support from the Apex Court's judgment in the matter of
Jagdish Mandal Vs. State of Orrisa (2007) 14 SCC 517, he would urge that
judicial review cannot be invoked to protect private commercial interest at
the cost of lager public interest. According to him, in exercise of judicial
review, this Court cannot re-write or relax the tender condition unless such
tender conditions are arbitrary or mala fide. In view of above, he has sought
dismissal of both these petitions.
18. We have considered the rival claims.
19. In both these petitions, the petitioner-company and/or its directors are
accused of offences punishable under Sections 7A and 9 and 13 of the
Prevention of Corruption Act, 1988 and Sections 420, 409, 418, and 120B
of the IPC, for which the substantive offence was registered on 11th May,
2021. The period during which the alleged offences were committed is
stated to be from October, 2021 onwards.
20. The complainant in the aforesaid case is Mr. Praveen Jain, Assistant
Director (Vigilance). The said complaint is based on an alleged scam
involving hundreds of crores of rupees, allegedly committed by officials of
the respondent as well as the petitioner-company and its directors, in
relation to the augmentation of ten Sewage Treatment Plants.
21. Based on the aforesaid predicate offence, the Directorate of
Enforcement has registered ECIR No. ECIR/DLZO-I/12/2024 in respect of
offences being committed under the provisions of the Prevention of Money
Laundering Act, 2002 ('PMLA'). The said ECIR is pending consideration
before the Court of the Special Judge, PC Act, Rouse Avenue District
Courts, New Delhi.
22. Identical and similar appears to be the case, in both the petitions.
23. The learned senior counsel for the petitioner has relied upon the
provisions of Rule 151 of the General Financial Rules framed by the
Ministry of Finance, as well as the Central Vigilance Commission Manual,
to contend that the debarment contemplated in the present tender process,
pursuant to the mandate of Clause 16 framed by the respondent, is in excess
of the aforesaid rules.
24. The fact remains that the provisions contained in the GFRs,
particularly Rule 151, as well as those in the Central Vigilance Commission
Manual, can be termed as basic requirements. However, there is no embargo
created by the aforesaid rule on the right of the respondents to frame
additional tender conditions which suits its requirement.
25. The Apex Court in the matter of the Afcons Infrastructure Ltd. vs.
Nagpur Metro Rail Corporation Ltd. & Anr. (2016) 16 SCC 818 has held
that the tendering authorities and the technical experts are the best judge of
the project requirements and the Courts should be slow in causing
interference involving the technical, financial and commercial evaluation.
The Court is not an expert body and should not substitute its own decision
for that of the tendering authority.
26. The Apex Court in the matter of Jagdish Mandal vs. State of Orissa
(2007) 14 SCC 517 has consistently held that the judicial review in the
contractual matter should be based on the principles of self-restraints by the
Courts.
27. Furthermore, it is a consistent view of the Apex Court, starting from
Tata Cellular v. Union of India, (1994) 6 SCC 651 that the terms of
invitation to a tender are generally not open to judicial scrutiny, as the
invitation to the tender is in the realm of the contract and the parties like the
respondent should have free hand in setting the terms of the tender.
28. The same view has been reiterated by the Apex Court in M/S
Michigan Rubber (I) Ltd vs State Of Karnataka &Ors 2012 (8) SCC 216,
wherein the aforesaid principles have been reaffirmed.
29. The only rider to judicial interference with tender conditions is in the
case if such conditions are arbitrary, discriminatory, mala fide, or actuated
by bias. The only issue sought to be raised in these petitions is that the
condition in question is arbitrary.
30. Though the learned senior counsel for the petitioner, by relying on the
judgment of the Apex Court in Om Kumar(supra), has sought to impress
upon this Court that clause no. 16 of the tender conditions is arbitrary and
disproportionate, however, we are equally required to be sensitive to the
nature of the conduct of the petitioner and the nature of the work sought to
be executed under the tender by the respondents.
31. With regard to the conduct, the petitioners are not disputing that they
are accused in the aforesaid offences, for which the complaint was
registered at the behest of the DJB.
32. The fact that the petitioners have not been convicted and as such are
entitled to participate in the tender process in view of the Rule 151 of the
GFRs, when evaluated in light of their conduct as reflected in the ECIR and
the FIR, reveals that the petitioners have allegedly engaged in activities
prejudicial and detrimental to the interests of the DJB, respondent herein.
33. Based on its past experience with contractors such as the petitioners,
the respondents have incorporated the condition which is under challenge in
the present petition.
34. It is not the case of the petitioners that the respondents have sought to
victimize them, or that there was any mala fide approach on the part of the
respondent in filing a false complaint against them.
35. Furthermore, the respondent-Delhi Jal Board, intends to execute the
work in question, which is a high-value public health and sanitation project.
They have specifically contended that for the purpose of execution of the
work in question, which is of great public importance and directly impacting
health and sanitation conditions, they are required to exercise due caution
and preventive measures in the matter of selection of the tenderer. The
nature of the work involves the design, build, and operation of Decentralized
Sewage Treatment Plants and pumping stations.
36. It also includes long-term operation and maintenance. In case the
work is not executed within the stipulated time and with the utmost quality,
it would directly affect sewage treatment outcomes, the quality of
groundwater being getting polluted and adversely impact the pollution levels
of the Yamuna River, which will have a large-scale effect on the public
health of the urban population.
37. The decision of respondent to implement and execute the project is to
safe-guard and guarantee Fundamental Rights of the citizens. To maintain
adequate public health, sanitation, and sewage facilities is a part of the
constitutional obligation of the respondents, as can be read from Articles 21
and 47 of the Constitution of India.
38. The said work under the tender has a direct impact on environmental
safety. In such an eventuality, the contractor who is required to execute the
work should be a person of integrity and capable of discharging the duties,
which are to be entrusted under the tender in question. As such, the
respondents are required to adopt a cautious and preventive approach.
39. In this background, if we appreciate the condition incorporated by the
respondent in the tender documents, the very object sought to be achieved is
the execution of a project of public importance with qualitative approach
and to ensure that the work is taken to its logical end within the time
stipulated.
40. As such, once the petitioners have come out with a case that they are
not alleging any mala fides, victimization, or that they are being targeted
through the present tender conditions, it is not in the interest of the
respondent, which is executing a project of public importance, to hold that
the tender conditions have been framed so as to non-suit the petitioners.
41. The petitioners have relied upon the constitutional mandate under
Article 21 of the Constitution of India to contend that they are entitled to
participate in the tender process. It is well settled that participation in a
tender or compelling the Government to enter into a business relationship
with an individual is not a fundamental right. In this regard, appropriate
support can be drawn from the judgment of the Apex Court in Eurasian
Equipment & Chemicals Ltd. v. State of West Bengal &Anr., (1975) 1
SCC 70, in paragraph No. 14.
42. The petitioners have further relied upon the judgment of the Apex
Court in Satender Kumar Antil (supra) to claim that unless and until they
are convicted, the presumption of innocence operates in their favour.
Reliance has also been placed on the Constitutional mandate of Article 21 of
the Constitution of India in support of the said contention.
43. The presumption of innocence sought to be relied upon is attracted
only in the context of criminal trials and criminal proceedings.
44. The provisions of Section 24 of the PMLA under which the petitioner
or its directors are being prosecuted is worth referring to. The same reads
thus:
"24. Burden of proof.--In any proceeding relating to
proceeds of crime under this Act,--
(a) in the case of a person charged with the offence of
money-laundering under section 3, the Authority or Court
shall, unless the contrary is proved, presume that such
proceeds of crime are involved in money-laundering; and
(b) in the case of any other person the Authority or Court,
may presume that such proceeds of crime are involved in
money-laundering."
45. Section 24 of the PMLA provides for a presumption against parties,
like the petitioner, in case if they are charged with the offence of money
laundering under Section 3 of the PMLA, it contemplates the proceeds of
crime are involved in the money laundering. It is for the parties like present
petitioner or its marital, in the capacity of accused persons, to discharge the
burden during the course of trial.
46. This can be considered as one of the reason why the condition which
is under challenge was incorporated.
47. As regards the tender matter, the issue of eligibility is distinct from
the principles governing criminal law and the same are based on the
provisions of the commercial contracts.
48. The work executed under such contracts is in the fiduciary capacity
and it is always open to the respondents to adopt principles of preventive
governance and to take decisions based on risk assessment.
49. The respondent - DJB, being the executing agency, which has invited
the tender in question, has every right to frame tender conditions within its
realm to suit its requirements.
50. No doubt, the contention of the petitioners holds good, particularly
with respect to whether they can be said to have been convicted or not.
51. DJB, a statutory body, have noted that the conduct of the petitioners is
not above board and that the petitioners acted in connivance with the
officials of the DJB by indulging in cheating and practicing fraud, thereby
involving in a criminal offence. Merely because the petitioners have not
been convicted, or because a conviction may lead to disqualification for a
period of three years, does not by itself confer any leverage upon the
petitioners to claim that they are being discriminated against or treated
arbitrarily.
52. The respondent, in our opinion, while framing the condition in
question, adopted a preventive and not a punitive approach against the
petitioners. The same is in the nature of a prophylactic measure so as to
avoid the future damages which shall be caused to the public interest.
53. That being so, it cannot be said that the petitioners are proceeded
against, under tender clause no. 16, on the premise that they are convicts and
are accordingly being punished by not permitted to participate in the tender
process.
54. Apart from above, the offences are registered based on the complaint,
which preceded with technical audit, vigilance enquiries, financial scrutinies
and the multiple analytical approvals.
55. The respondents, perhaps, were of the considered view that the very
basis on which the petitioners are proceeded against through an ECIR for
offences punishable under the provisions of the PMLA and the predicate
offences under the IPC and the Prevention of Corruption Act, 1988 is
founded upon the material available with the respondent-DJB against the
petitioners.
56. Perhaps, the aforesaid has prompted the respondents to frame the
impugned tender conditions, which in any case, in our opinion, is based on
the contractual principles.
57. Rightly so, the respondents have contended that the tender condition
has been framed in public interest. It is not the case that the condition debars
only the petitioners but it is equally applicable to all such parties intending
to do business with the respondent who are facing criminal
investigation/inquiry, as in the present case upon the complaint by the
respondent, DJB.
58. In such an eventuality, the claim put forth by the petitioner that the
conditions are unreasonable, discriminatory, or arbitrary cannot be accepted.
59. The next limp of submission of Mr. Sibal, Senior Advocate is that the
act of the respondents amounts to blacklisting and same has adverse civil
consequences.
60. In support of aforesaid contention, Mr. Sibal, Senior Advocate has
drawn support from the judgment of the Apex Court in the matter of Gorkha
Securities Services vs Govt of NCT of Delhi and ors.(2014) 9 SCC 105.
61. The element of blacklisting presupposes serious and intentional
failure on the part of the parties, such as the petitioners, to perform
obligations agreed by them under the orders of the respondent. There is no
question of the petitioner being blacklisted in the case in hand. The fact
remains that there is no concluded contract in favour of the petitioner owing
to which the petitioner was proceeded for blacklisting. Rather we have
already observed that petitioner can do business with other parties.
62. The claim that the decision to frame tender clause no. 16 amounts to
blacklisting the petitioners, in our opinion, cannot be accepted, for the
reason that as already observed that the petitioners cannot claim any
fundamental right to participate in the tender process or to carry on business
with the respondents. We have equally observed that it is within the realm of
respondent to frame the tender conditions which are suited to it.
63. We have already held the impugned clause no. 16 to be non-arbitrary,
as the respondent has created a separate class of parties such as the
petitioners based on an intelligible differentia, as the parties like the
petitioners are facing investigation based on the vigilance complaint lodged
by the respondent.
64. That being so, the contention that the respondent's decision has
adverse civil consequences or that the incorporation of clause no. 16 has
resulted in the civil death of the petitioners, cannot be said to rest on any
legal foundation. With such a background, the contention that the petitioners
have been blacklisted without adhering to the principles of natural justice,
cannot be accepted. Rather, the petitioners can continue to carry on their
business with other entities, and the respondents, as already observed herein,
were justified in framing the tender conditions having regard to its past
experience.
65. In any case, where a conflict is noticed between private commercial
interests and public interest, the latter must always prevail.
66. The Apex Court in the matter of the Tejas Construction And
Infrastructure Private Limited Vs. Municipal Council, Sendhwa, 2012 6
SCC 464 has held that the Court must follow judicial restraint as the
interference by the Court results into the delaying of the critical project
affecting public health and welfare.
67. In our opinion, the decision taken by the respondent in framing clause
no. 16 is not a targeted one and is a bona fide decision taken in the public
interest, which does not warrant any interference. Apart from above, the
specific work of public importance, like that of essential public services in
relation to the water supply, will always have overriding public interest.
68. The Court is required to resist interference at the instance of an
unsuccessful or prejudiced bidder to protect private commercial interests at
the cost of public interest.
69. For the reasons stated hereinabove, we are of the view that no case for
interference in the exercise of extraordinary jurisdiction is made out. These
petitions, as such, fail and stand dismissed.
70. Pending applications, if any, stand disposed of.
71. Judgment be uploaded on the website of this Court.
NITIN WASUDEO SAMBRE
(JUDGE)
AJAY DIGPAUL
(JUDGE)
FEBRUARY 05/ 2026/ay/sky/pr/sk
