Gujarat High Court
J.M. Vaghasiya Through Its Partner Shri ... vs Gujarat Water Supply Sewerage Board on 8 April, 2025
Author: Umesh A. Trivedi
Bench: Umesh A. Trivedi
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 21197 of 2023
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE UMESH A. TRIVEDI
and
HONOURABLE MR. JUSTICE CHEEKATI
MANAVENDRANATH ROY
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Approved for Reporting Yes No
✔
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J.M. VAGHASIYA THROUGH ITS PARTNER SHRI
DIPAKKUMAR DEVCHANDBHAI MANGROLIYA
Versus
GUJARAT WATER SUPPLY SEWERAGE BOARD & ORS.
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Appearance:
PARAS K SUKHWANI(8284) with MS HONEY H. THAKKAR
for the Petitioner(s) No. 1
MR KEYUR GANDHI WITH ISA HAKIM with MS NITYA
JOSHI
for GANDHI LAW ASSOCIATES(12275) for the Respondent(s)
No. 1
MS MEGHA CHITALIYA, AGP for the Respondent(s) No.
NOTICE SERVED BY DS for the Respondent(s) No. 2,3
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CORAM:HONOURABLE MR. JUSTICE UMESH A. TRIVEDI
and
Page 1 of 57
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HONOURABLE MR. JUSTICE CHEEKATI
MANAVENDRANATH ROY
Date : 08/04/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE UMESH A. TRIVEDI)
1. By way of this petition under Article 226 of the Constitution
of India, petitioner has challenged an order dated 09.08.2023, which
is at Annexure 'E' to the petition, whereby, Earnest Money Deposit
(EMD), produced by way of Bank Guarantee, was ordered to be
encashed and deposited with the Gujarat Water Supply and
Sewerage Board (herein after referred to as "the Board") on
account of suppression of factum of debarment when Form 'H' and a
separate Undertaking submitted along with bid, which is in breach of
Terms of the Tender, which empowers "the Board" to forfeit the
EMD. At the same time, the petitioner has challenged an order
dated 05.10.2023, whereby, the petitioner is debarred for a period of
three years from the date of order, to participate in the Tender issued
by GWIL, "the Board" as also Water and Sanitation Management
Organization (WASMO). At the same time, order dated 16.09.2023,
which is referred to in the impugned order, which is passed against
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the petitioner - M/s. J. M. Vaghasiya - Joint Venture of Maruti
Enterprise, Rajkot, came to be cancelled.
The petitioner, which is a registered partnership firm and
carries on a business as Government approved contractors, is having
turnover of more than Rs.43 crores per annum for the past five
years. As projected in the petition, petitioner has also taken lead in
constructing a significant number of Water Treatment Plant and
Sewage Treatment Plant Project within Amrut Yojana initiated in the
State of Madhya Pradesh and petitioner has served millions of
residents across more than five States through out the Nation. As
claimed in the petition, the petitioner has completed number of
projects in the State of Gujarat as well as through out the Nation
without any litigation.
1.1 The petitioner participated in an online Tender which was
invited by Tender Notice No. 3/2023-24 for the Project of A-2,
Regional Water Supply Scheme based on Dholka Branch Canal Part-
1 (Telav Group) Package-1, District Ahmedabad, copy of which, is
annexed as Annexure 'A' to the petition. The name of the work was
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Design and Construction of various sizes RCC Sumps and RCC
ESR, Providing, Supplying, Lowering, Laying and Jointing of DI &
PVC Pipeline for Rising Main/Gravity Distribution Pipeline
Network including Providing, Supplying, Erecting and Testing
Pumping Machinery at main HW and Sub-HW at village level Sub-
stations, RCC Road, Staff quarters, Compound Wall, Electrification
Work and other Head Work Development Works at main HW and
Sub-HW and Operation and Maintenance of all types of Civil and
Mechanical Structures. The estimated contract value was
Rs.64,55,82,477.03. The period of completion was 24 months. The
bid document downloading start date was 29.05.2023 and the bid
document downloading end date was 27.06.2023, upto 18:00 hours.
1.2 By Corrigendum dated 16.06.2023, last date and time for
submission of bid was revised. The petitioner submitted the Tender
online on 26.06.2023. The bid validity period was 180 days and
Preliminary Stage Bid Opening date was 28.06.2023, Technical
Stage Bid Opening date was also 28.06.2023. The petitioner, in the
Joint Venture of Maruti Enterprise, Rajkot (stake 60:40), submitted
online Tender along with EMD of Rs.64,55,825/- in the form of
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Bank Guarantee dated 23.06.2023 issued by Kotak Mahindra Bank
Limited, Ahmedabad.
1.3 As coming out from the petition itself, the petitioner
participated in online Tender process of Bihar Urban Infrastructure
Development Corporation Ltd. (BUIDCO), invited vide Tender
Notice No. 33 dated 27.09.2022 for Barahia I&D & STP. There, the
petitioner again submitted Tender by Joint Venture partner M/s.
Jainam Construction (Now Jainam Engicon Private Limited). The
petitioner states that said M/s. Jainam Construction (Now Jainam
Engicon Private Limited) has submitted two Experience Certificates
for Contract dated 11.04.2020, allegedly issued by the Executive
Engineer, Nagar Parishad, Beawar. The Chief General Manager,
BUIDCO sent these Certificates for verification to the office of the
Executive Engineer, Beawar. The Executive Engineer, Beawar
informed the Chief General Management, BUIDCO that no such
work was executed by M/s. Jainam Construction (Now Jainam
Engicon Private Limited).
1.4 Therefore, by an Office Order dated 20.06.2023, Chief
General Manager, BUIDCO blacklisted Joint Venture lead partner
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M/s. J. M. Vaghasiya i.e. the petitioner herein and M/s. Jainam
Construction (Now Jainam Engicon Private Limited) for a period of
ten years. Copy of blacklisting order passed by the BUIDCO is
annexed with the petition at page 14 of the compilation.
1.5 As coming out from the order itself, despite notice issued prior
to passing of blacklisting order though M/s. Jainam Engicon Private
Limited through e-mail informed that within 10 days, comprehensive
and detail response would be submitted, however, neither the Joint
Venture nor M/s. J. M. Vaghasiya i.e. the petitioner individually
filed any reply to the blacklisting notice issued by BUIDCO.
1.6 As revealed in the petition, in the present case, for submission
of online Tender pursuant to Tender Notice No. 3/2023-2024 for
which Bank Guarantee obtained on 23.06.2023, at that time, because
of short time, Office Order dated 20.06.2023 passed by Bihar
authority blacklisting the petitioner Joint Venture for a period of ten
years, skipped and inadvertently, required information about
blacklisting by other Government could not be provided in the
present Tender.
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1.7 Thus, though the knowledge of the petitioner in respect of
passing of blacklisting order prior to furnishing details before online
Tender submitted in the present case, despite that, petitioner himself,
as an authorized person of Joint Venture with Maruti Enterprise,
Rajkot, submitted false Undertaking in Form 'H' as also a separate
Undertaking which are at page 73 and 75 of the petition.
1.8 The petitioner further submitted that in fact they had not
submitted any false or fabricated document to BUIDCO and the
petitioner being a lead partner of Joint Venture, was also served with
Office Order dated 20.06.2023 which is the blacklisting order passed
by the BUIDCO. It is further submitted that by a communication
dated 08.08.2023, the Managing Director of BUIDCO was apprised
by the petitioner with the facts of bid submission with the request to
review the case and reconsider the decision of debarment based on
authenticate document submitted by the petitioner. However, since
the department did not respond, the petitioner filed a Civil Writ
Jurisdiction Case No. 12494 of 2023 in the High Court of Judicature
of Patna and vide order dated 01.09.2023 Division Bench of High
Court stayed the impugned order dated 20.06.2023 till the next date
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of hearing. It is further submitted that thereafter, vide order dated
06.11.2023 said order dated 20.06.2023 (wrongly mentioned date as
28.06.2022 in the order of the Patna High Court) came to be set
aside directing the authority to issue fresh show-cause notice with a
particular period of blacklisting or debarring the petitioner.
1.9 It is further submitted that vide communication dated
09.08.2023 an order came to be passed forfeiting the EMD in view
thereof, Bank Guarantee was presented to encash the same and to be
credited into the account of the respondent authority. The said order
is annexed at page 24 of the petition. Pursuant to that order of
forfeiture of EMD, encashing the Bank Guarantee vide
communication dated 14.08.2023, the respondent authority informed
the bank encashing the same and credit the said amount into the
account of the respondent authority. The petitioner requested vide
communication dated 14.08.2023 to the Chief Engineer, Technical
Cell, Jal Seva Bhavan, Gandhinagar to exempt from forfeiture of
Bank Guarantee as letter dated 20.06.2023 blacklisting/debarring the
petitioner Joint Venture by BUIDCO came to be noticed after
submission of the bid and therefore, as per Tender clause,
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information could not be provided. The petitioner, in the said letter,
reiterated that because of constituent partner of Joint Venture, who
produced false documents, order came to passed to blacklist/debar
the petitioner Joint Venture along with M/s. Jainam Engicon Private
Limited. He has further informed that since action of producing false
documents was by the constituent partner of Joint Venture, petitioner
claimed to be wrongly debarred and therefore, he made a
representation to the BUIDCO and its name was removed from the
list of debarred parties, which is available on the website of
BUIDCO. However, such release order would be received within a
short time. Therefore, vide said letter, it claimed amount of EMD be
refunded back to him.
1.10 It is further submitted that vide show-cause notice dated
23.08.2023 issued to the petitioner, calling for the explanation for
submitting misleading, containing wrong facts in Form 'H' with a
view to get qualified in the present Tender and therefore, as per the
Terms of the Tender Document, why no action for breach thereof in
the form of disqualification, forfeiture of EMD and debarment for 3
years should not be initiated against the petitioner.
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1.11 Vide order dated 16.09.2023, though explanation called for is
submitted on 29.08.2023, the respondent authority passed an order
debarring the petitioner Joint Venture with Maruti Enterprise, Rajkot
for a period of 3 years for participation in tenders by GWIL,
GWSSB as also WASMO. As further coming out from the petition,
the constituent partner of Joint Venture Maruti Enterprise, Rajkot
vide letter dated 20.09.023, addressed to respondent No. 2 herein the
circumstances under which the Office Order dated 20.06.2023 was
passed by BUIDCO, wherein, the petitioner was a lead partner of
Joint Venture. The said communication is at Annexure 'K', page 45
of the petition. It requested that since the order of debarment passed
by BUIDCO is stayed by the Patna High Court, and it is not
involved in misleading or fraudulent statement, the order debarring
Maruti Enterprise also along with M/s. J. M. Vaghasiya is required
to be reconsidered.
1.12 Surprisingly, the respondent authority passed an order dated
05.10.2023 debarring only M/s. J. M. Vaghasiya, the petitioner
herein for the breach of Terms of the Tender Notice for a period of 3
years as stated herein above and simultaneously, cancelled the order
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dated 16.09.2023, referred into that order at serial No. 4 in the
reference, where by M/s. J. M. Vaghasiya, Joint Venture with Maruti
Enterprise, Rajkot came to be debarred. Thus, the day on which
present petition came to be filed, M/s. J. M. Vaghasiya, the
petitioner herein was blacklisted/debarred vide order dated
05.10.2023, which is challenged by the petitioner along with an
order dated 09.08.2023, whereby, EMD in the form of Bank
Guarantee, came to be encashed by the respondent Board.
2. Pursuant to issuance of notice by this court, affidavit-in-reply
on behalf of the respondent authority came to be filed contending
that vide letter dated 29.08.2023, maybe pursuant to notice for
blacklisting/debarment, the petitioner admitted its mistake of filing a
false Undertaking as also in a Notice issued by the petitioner through
its Advocate dated 10.11.2023, order of blacklisting/debarment
dated 20.06.2023 received through e-mail on 24.06.2023 i.e. before
submission of Form 'H' and the Undertakings at page 73 and 75
without disclosing and deliberately suppressing the order of
debarment, though known to it, so that it's Tender be accepted. It is
further submitted that for the breach of Terms of the Tender upon
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which petitioner is expected to make its offer considering the
conditions therein, which entails action in disqualifying, forfeiture of
EMD as also blacklisting in case any false facts are stated in Form
'H' or false declaration is filed pursuant to Notice Inviting Tender
(NIT). It is further contended in the affidavit-in-reply that
subsequent grant of stay order or quashing of the order passed by a
reasoned order, remitting the matter back to the authority for
specifying the period of proposed debarment in the show-cause
notice, is of no consequence as the order of debarment was already
in existence when the petitioner filed Form 'H' as also the
Undertaking at pages 73 and 75 signed before the Notary Public.
2.1 It is further disclosed in the affidavit-in-reply that revoking the
order of blacklisting against the petitioner Joint Venture in case of
Maruti Enterprise, Rajkot, cannot be used by the petitioner to claim
parity since the two are not similarly situated, claiming that
Maruti Enterprise, Rajkot has not been blacklisted by any agency.
An attempt is made by the respondent Board to justify their action of
revoking the order of blacklisting against Maruti Enterprise, Rajkot.
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2.2 The petitioner filed affidavit-in-rejoinder to the reply
submitted by the respondent herein reiterating that due to shortage of
time, the order debarring the petitioner dated 20.06.2023 by
BUIDCO skipped and inadvertently, required information about
blacklisting by any other government could not be provided. It is
further claimed that the petitioner has not submitted any false,
fabricated document to BUIDCO. It was asserted that Tender was
submitted by Joint Venture and the petitioner being Lead partner of
Joint Venture, it was also served with the Office Order dated
20.06.2023. It is further claimed that BUIDCO vide communication
dated 25.01.2024, set aside the order dated 20.06.2023 and decided
to seek the explanation from the petitioner and accordingly, Notice
has been served on 12.02.2024 to the petitioner, to which, reply has
been given by the petitioner. However, the said fresh show-cause
notice came to be issued by BUIDCO pursuant to order passed by
the High Court of Judicature at Patna. By way of further rejoinder
affidavit, the petitioner has placed on record an order dated
16.05.2024 passed by BUIDCO claiming that it has released the
order of debarment and also released the EMD. By Additional
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Affidavit, the petitioner has quoted certain clauses of the tender
document for consideration.
2.3 Yet there is Additional Affidavit-in-reply on behalf of the
respondent authority stating therein that the respondent Board has
decided to take steps against the Joint Venture constituent of the
petitioner by issuing show-cause notice dated 06.03.2025 to Maruti
Enterprise, Rajkot, who was the part of Joint Venture along with
petitioner that participated in the Tender. The respondent also
placed on record show-cause notice dated 06.03.2025 wherein, the
constituent partner Maruti Enterprise, Rajkot is also informed that it
is proposed to recall the order dated 05.10.2023 lifting the
blacklisting imposed upon Maruti Enterprise, Rajkot to that extent.
2.4 Pursuant thereto, Maruti Enterprise, Rajkot has submitted its
reply.
3. On the aforesaid pleadings, the learned advocate for the
petitioner has made submissions extensively which are recorded here
under.
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3.1 Mr. Paras Sukhwani, learned Advocate submitted that the
order of debarment dated 16.09.2023, which is at page 42 of the
compilation, is passed against M/s. J. M. Vaghasiya, Joint Venture
with Maruti Enterprise, Rajkot. Order dated 05.10.2023, which is at
page 48 of the compilation, passed only against the petitioner,
whereas, the respondent authority has revoked the order dated
16.09.2023 against the constituent partner of Joint Venture Maruti
Enterprise, Rajkot, which is discriminatory and in breach of Article
14 of the Constitution of India. He vehemently submitted that if
constituent partner of Joint Venture is to be exonerated, no action
could be taken either for debarring or for forfeiture of EMD only
against the petitioner.
3.2 He has further vehemently submitted that since the order of
debarment/blacklisting is the harshest punishment, which deprives
the petitioner of its business leading to civil death, maybe for a
particular period, the alternative thereof by disqualifying the
petitioner, if at all any Undertaking or an Affidavit is found to be
false, should have been resorted to.
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3.3 It is further submitted that even forfeiture of EMD, to the
extent of nearly 64.50 lakhs and odd, could also have been avoided
as there appears no apparent loss of anything to the respondent
authority and therefore, an order of forfeiture of EMD is also bad in
law.
3.4 He has further submitted that even reply submitted by him
offering the explanation is also not considered by the respondent
authority and therefore also, the order passed by it, is bad in law.
3.5 He has further submitted that the order of blacklisting is
passed for a maximum period of 3 years, which is provided in the
Terms of the Tender, and this duration can be branded as
disproportionate to the wrong committed by the petitioner.
3.6 It is vehemently submitted that since the EMD has already
been forfeited, less drastic step already implemented, blacklisting
could have been avoided by the respondent authority.
3.7 He has further submitted that even subsequent events may also
be considered by this Court while hearing the challenge to the order
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of blacklisting/debarring, as for the so-called false disclosure in
Form 'H' and filing a false Undertaking, action is taken against the
petitioner based on an order of debarment dated 20.06.2023 passed
by the BUIDCO, has come to be quashed and exonerated the
petitioner from blacklisting, with a refund of EMD therein, this
Court may interfere with, at least with the period of blacklisting, as
for a period of nearly one and a half years, the petitioner has been
deprived of participating in any Tender process, and it should be
treated as sufficient punishment to the petitioner. Accordingly, the
order of blacklisting should be modified. He has further submitted
that since the respondent authority is gracious enough to consider the
request of constituent partner Maruti Enterprise, Rajkot, and cancel
the order dated 16.09.2023 blacklisting it for a period of 3 years,
similarly, the petitioner was not guilty of submitting any false
documents before BUIDCO, and as on date, BUIDCO has also
revoked that order of blacklisting and refunded the EMD, no such
harsh action of blacklisting could have been passed. It is further
submitted that since the very bid in which the petitioner participated
is already cancelled, the order dated 05.10.2023 passed by the
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respondent herein blacklisting the petitioner for 3 years, requires to
be reconsidered and be quashed and set aside in the interest of
justice.
3.8 Reliance has been placed on a decision in the case of Gorkha
Security Services v. Govt. of NCT Of Delhi & Ors, reported in
(2014) 9 SCC 105, more particularly paragraphs 1 and 16 thereof.
He submitted that a show-cause notice must mention that action for
blacklisting is proposed, or it should be possible to draw a clear
inference to this effect from the notice. Referring to the show-cause
notice dated 23.08.2023, it is submitted that certain Clauses of the
Tender Conditions are mentioned in it, and therefore it is not
discernible that any action for blacklisting is envisaged by the said
Notice as operative portion of the show-cause notice refers to
resorting to action as per Clause 21.7 of the Tender Notice.
3.9 Relying on a decision in the case of M/s. Techno Prints v.
Chhattisgarh Textbook Corporation & Another, rendered in Civil
Appeal No.2362 of 2025, arising out of SLP (C) No. 10042/2023,
more particularly, paragraphs 25 to 30 and 34, it is submitted that
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even a show-cause notice pertaining to blacklisting came to be
quashed by the Supreme Court as the authority, with pre-judged
mind, issued such show-cause notice, with a view to passing an
order of blacklisting, and therefore, seeking an explanation by
issuance of such a notice is a mere ritual.
3.10 Reliance is also placed on a judgment and order passed by this
Court in the case of M/s. Aquafil Polymers Co. Pvt. Ltd. v. Gujarat
Urban Development Company Limited, rendered in Special Civil
Application No. 11731 of 2018 and connected matters by the
Division Bench of this Court, more particularly, paragraph 5.3
thereof, wherein the word "bidder" is applied in the Tender
Document in question, interpreted to mean the individual petitioner
itself as the tenderer. Strictly speaking, as mentioned in the decision,
the petitioner was not the tenderer in the Rajasthan Project.
Therefore, it was concluded that, it cannot be said that it was not the
petitioner entity who was debarred and blacklisted there. Therefore,
when the information in the instant Tender was to be furnished about
the bidder, the non-mention on the part of the petitioner about the
joint venture bidder in Rajasthan having been treated as debarred,
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could not be said to be fatal for the petitioner to get his bid
reconsidered, nor could it be said to be suppression to prejudicially
affect the petitioner.
3.11 Reliance is placed on a judgment and order passed by this
Court in the case of M/s. M. V. Omni Projects (India) Ltd. v.
Vadodara Municipal Corporation through The Commissioner,
rendered in Special Civil Application No. 8175 of 2021. It is
submitted that for the non-consideration of the reply or
representation answering every query or allegation made in the
show-cause notice, the order of debarment came to be quashed and
the matter was remitted back to the respondent Corporation for
undertaking entire exercise afresh and to pass fresh order if thought
fit.
3.12 He has further relied on a decision in the case of M/s Kulja
Industries Limited v. Chief General Manager, W.T. Project, BSNL
& Others, reported in AIR 2014 SC 9, more particularly, paragraphs
20 and 21 thereof, whereby, the guidelines stipulated therein, the
factors that may influence the debarring official's decision, came to
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be enumerated. It is submitted that there is no actual or potential
harm or impact that results or may result from the failure to disclose
correct facts. Therefore, according to him, if those guidelines are to
be followed, the respondent authority could not have resorted to an
order of blacklisting, as the very bid was cancelled subsequently and
the EMD was already forfeited by encashing the Bank Guarantee. In
view thereof, the action of blacklisting is required to be interfered
with.
3.13 He has further relied on a decision of the Supreme Court in the
case of The Blue Dreamz Advertising Pvt. Ltd. & Another v.
Kolkata Municipal Corporation and Ors., reported in 2024 SCC
OnLine SC 1896, more particularly, paragraphs 24, 25, and 35
thereof, wherein the Supreme Court has also considered its earlier
judgments, including that of Kulja Industries Limited (supra), and
others on the issue of blacklisting, and quoted the paragraphs
wherein, the Supreme Court has held that, where the case is of an
ordinary breach of contract and the explanation offered by the
person concerned raises a bona fide dispute, blacklisting/debarment
as a penalty ought not to be resorted to. It is further held that, too
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readily invoking debarment for ordinary cases of breach of contract,
where there is a bona fide dispute, is not permissible. It is further
held in paragraph 35 of the said decision that, the invocation of the
penalty of blacklisting should be justified with reasons, considering
whether the penalty is proportionate, which should be the real
question.
3.14 Decision in the case of Royal Infra Engineering Pvt. Ltd. v.
Surat Municipal Corporation and 1 Other, rendered in Special
Civil Application No. 10412 of 2018, more particularly, paragraphs
20 to 38 on the doctrine of proportionality for taking action in
blacklisting, is relied on by the learned advocate for the petitioner.
3.15 Relying on aforesaid decisions and arguments as aforesaid,
Mr. Paras Sukhwani, learned advocate for the petitioner, contended
that the petitioner has learnt a lesson and, since no stay was granted,
and nearly one and a half years have already passed, in view of
subsequent developments, revoking the order of blacklisting by
BUIDCO dated 20.06.2023 in respect of the present petitioner, if at
all the Court comes to the conclusion that no case is made out to
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challenge the order of blacklisting, at least the period for which it is
ordered should be limited, applying the doctrine of proportionality.
Therefore, he submitted that this petition deserves consideration and
therefore, it is required to be admitted and allowed.
4. As against that, initially Mr. Krunal Vyas and thereafter,
Mr. Keyur Gandhi for M/s. Gandhi Law Associates for the
respondent vehemently submitted that as per the Terms of the
Tender Notice, it is expected from every bidder that they should
disclose true and correct facts in their bid. Therefore, certain Terms
and Conditions mention consequences of submitting false/incorrect
or misleading facts so as to disqualify, forfeit the EMD and blacklist
the bidder.
4.1 He has further submitted that petitioner, through, it's
authorised person on behalf of Joint Venture who signed this
petition, has also signed the bid and each and every document
required under the bid, submitted its bid dated 26.06.2023, maybe, it
should be 27.06.2023 as Undertaking in Form 'H' is filed which
discloses that, their firm are not listed under a declaration of
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ineligibility for corrupt or fraudulent practices presently not
blacklisted and terminated in any of the Central or State
Government Bodies, State or Central Government Undertakings and
State or Central Semi Government Bodies or Organizations. Not
only that, an Undertaking at page 75 is also filed recognizing right of
the respondent authority to forfeit the EMD and blacklist the firm in
case of any information submitted in the bid is found to be incorrect
or misleading.
4.2 He has further submitted that not only the relevant Clauses of
the Tender Notice based on which the petitioner participated in the
Tender mention clearly in the show-cause notice for action
mentioned therein, the action of forfeiting the EMD as also
blacklisting, is also clear and apparent in the said Terms and
Conditions, referred to in the show-cause notice. He has further
submitted that even relevant portion thereof, which provides for, also
mentions that it would be for a period of 3 years. Thus, according to
his submission, the show-cause notice is very specific in respect of
breach committed by the petitioner and the proposed action as per
the Tender Conditions/Terms, resultant action in respect thereof.
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Therefore, show-cause notice cannot be termed as vague, not
containing the required details so as to render it invalid as contended
by the learned advocate for the petitioner.
4.3 Drawing attention of the Court to the Representation dated
29.08.2023 submitted by the petitioner, which is at page 39,
Annexure 'I' to the petition, wherein in second unnumbered
paragraph, it is stated by the petitioner that, debarment by the
BUIDCO was executed on 20.06.2023 and subsequently, posted on
its website without a direct prior intimation to the petitioner.
However, it is specifically stated that, "we were informed of our
debarment through an email on 24th of June 2023, while the
deadline for document submission for present tender was the 26th of
June 2023. This time frame left petitioner with only a brief two day
window to respond and therefore, unintentional oversight in not
being promptly informed about the debarment led to the inadvertent
submission of the affidavit". Thus, according to submission of the
learned advocate for the respondent authority, the day on which
bidder filled in Form 'H' as also the Undertaking, that too, before a
Notary Public, when it is affirmed, the order of debarment by the
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BUIDCO is already known to it and, that too, to the authorised
person who has signed the bid on behalf of the petitioner as also who
has signed this petition as well, a bold statement in Form 'H' that,
presently not blacklisted and terminated in any of the central or State
Government Bodies as also acknowledging the Terms of the Tender
Notice claiming that all the details are true and the respondent
authority have right to forfeit the EMD and blacklist the firm if any
information is incorrect or misleading. Therefore, according to the
submission of learned advocate for the respondent, not only there is
a suppression in Form 'H', when it is not disclosed that the
petitioner was blacklisted by BUIDCO, as also conscious knowledge
of consequences of submitting incorrect or misleading facts in the
bid, a petition challenging the said consequence should not be
entertainment.
4.4 He has further submitted that though initially on a
Representation made by the constituent partner Maruti Enterprise,
Rajkot, the order of debarment, so far as it, is concerned, came to be
revoked, when respondent authority realized that each constituent
partner of Joint Venture are equally responsible for all their deeds,
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fresh show-cause notice for initiating action in blacklisting against it,
is already issued and a copy thereof, is also produced along with the
affidavit-in-reply. Therefore, according to his submission, there is
no merit in the contention that constituent partner is exonerated from
blacklisting and therefore, no action could have been taken against
the petitioner either forfeiting the EMD or blacklisting it alone, has
no legs to stand.
4.5 Relying on a decision in the case of Gujarat Construction
Company v. Gujarat Water Supply and Sewerage Board, rendered
in Special Civil Application No. 19025 of 2023, it is submitted that
after taking into consideration the Supreme Court's decision as also
interpreting similar such Terms and Conditions of Tender therein by
the very present respondent authority, similar challenge came to be
rejected by this Court.
4.6 On the aforesaid submissions and precedent relied on by the
learned advocate for the respondent, it is submitted that this petition
is without any merit and therefore, it is required to be rejected.
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5. Having heard the learned advocates for the appearing parties
and going through the documents annexed along with the petition
and the precedents cited by the parties for the determination of this
petition, Terms of the Tender Notice would be profitable to be
referred to as coming out from the show-cause Notice itself:
"GUJARAT WATER SUPPLY & SEWERAGE BOARD
AHMEDABAD
(A WHOLLY OWNED GOVERNMENT OF GUJARAT
UNDERTAKING)
VOLUME - IA
SECTION-II
INSTRUCTIONS TO BIDDERS
A. GENERAL
1.0 xxx
1.1 Special Attention:
(i) This tender consists for the work "Design &
Construction of Various Sizes RCC Sumps & RCC ESR,
providing, supplying, lowering laying and jointing of DI &
PVC pipeline for Rising main/ Gravity distribution pipeline
network including providing, supplying, erecting and testing
Pumping Machineries at Main HW & Sub HW & Village
Level Pumping Stations, RCC Road, Staff quarter, Compound
Wall, Electrification work and other headwork development
works at Main HW & Sub HW and Operation & Maintenance
of All type Civil & Mechanical Structures, Machineries &
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Pipeline Network for 10 Yrs. for A2 Augmentation Regional
Water Supply Scheme based on Dholka branch canal : Part-I
(Telav group) : Package 1, Taluka : Bavla & Sanand District:
Ahmedabad"
(ii) A pre-bid conference for the works, open to all intending
bidders, shall be held on the date & venue as mentioned in the
Tender Notice.
(iii) All Bidders are urged to submit a written request
immediately upon receipt of the tender documents for the
matter where clarification and/or additional information are
desired, along with the details of work. The request shall be
submitted not less than four days in advance of the pre-bid
conference.
(iv) The tender document shall be submitted as per
procedure laid down in Section-II, Para No. 26, for
submission of tender.
(v) Earnest money deposit details & scanned copy shall be
submitted as prescribed on line and after submission online,
in form specified shall be submitted in office of "Executive
Engineer. P.H. Works Division, GWSSB, Ahmedabad" as per
details given online in sealed envelope. If earnest money
deposit is not received within prescribed time limit the bid
shall be rejected.
(vi) Tender shall be opened as per procedure laid down in
this Section-II, clause 28 and as per detailed tender notice.
(vii) All Bidders are cautioned that e-tender containing any
deviation from the contractual terms and conditions,
specifications or requirements shall be rejected as non-
responsive.
(viii) Conditional offer will be out right rejected. No
condition shall be included in tender.
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(ix) Alternative tenders are not acceptable.
(x) Qualification of bidder will be done whose tender is
considered responsive and meets the specified evaluation and
qualification criteria as per tender conditions.
(xi) Bidders shall have to declare regarding the tender
submitted in the prescribed format.
(xii) The department reserves the right to qualify/disqualify
any applicant without assigning any reason thereof.
(xiii) The bidder shall be disqualified if;
a. The bidder had made misleading or false representation
in the forms, statements and attachment submitted in proof of
qualification requirements and/or
b. A record of poor performance such as abandoning the
work, not properly completing the contract, inordinate delays
in completion, litigation history or financial failures etc.
c. The Bidder has been blacklisted by any Government /
Non-Government / Private agencies / Organizations/
Institutions/ Government Undertakings and funding Agencies
in the last 03 years.
The bidder should provide accurate information on litigation
and / or arbitration resulting from contract completed or
under execution by him over the last five years. A consistent
history of arbitration awards / judgments against the
applicant or any partner of a joint venture may result in
disqualification for proposed work. If the details of litigation
history is hidden by the applicant and later on it comes to
knowledge of the employer the bidder shall be disqualified for
the proposed work and other appropriate actions shall be
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taken against the bidder.
The bidder should submit undertaking on non-judicial e-stamp
paper of Rs.300/- duly attested by notary public regarding
documents submitted, are true. Board would have the right to
forfeit the EMD and blacklist to the bidder if any of the
information given by the bidder is found faulty or incorrect or
misleading.
(xiv) to (xix) xxx
(xx) Bidder shall not be listed under a declaration of
ineligibility for corrupt or fraudulent practices issued by the
central / state govt. in accordance with sub clause 45.1 (c) or
not in the list of black listed contractors announced by
Government (State / Central), Board, Corporation, and
Government Undertaking / Organizations of state & central
government including all Public Sector Units.
(xxi) to (xxxii) xxx
GENERAL DESCRIPTION OF THE WORK
xxx
21. BID SECURITY:
21.1 to 21.5 xxx
21.6 The bid security may be forfeited;
(a) If the bidder withdraws its bid, during bid validity
period specified.
(b) If any document submitted by the bidder are false and
fraudulent
(c) if the successful bidder fails
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i. To furnish security deposit in accordance with the
relevant clause in the bid.
ii. To sign the contract within time limit specified in the
bid.
21.7 In case of forfeiture of EMD, Bidder shall be
disqualified and shall not be allowed to bid for further works
under GWSSB/GWIL for three years.
22 to 24 xxx
25. ACCOMPANIMENTS TO TENDER
25.1 to 25.8 xxx
25.9 Scanned copy of all the prescribed Forms & Annexure
mentioned in Section-III, also in physical form in separate
sealed cover by RPAD/Speed Post/ Hand Delivery in the office
of The Executive Engineer as mentioned in the Tender Notice.
25.10xxx
25.11The bidder should submit undertaking on non-judicial e-
stamp paper of Rs.300/- duly notarized regarding document
submitted, are true. Board would have the right to forfeit the
EMD and black list to the bidder if any of the information
given by the bidder is found faulty or incorrect or misleading.
25.12to 25.13 xxx
26 to 28 xxx
29. EVALUATION OF TECHNICAL BIDS
29.1 xxx
29.2 Even though the bidder meets the above qualification
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criteria, he shall be disqualified if:
a. The bidder had made misleading or false representation
in the forms, statements and attachment submitted in proof of
qualification requirements and/or
b. A record of poor performance such as abandoning the
work, not properly completing the contract, inordinate delays
in completion, litigation history or financial failures etc.
c. Bidder has been blacklisted by any Government / Non-
government / Private agencies / Organizations / Institutions /
Government Undertakings and funding Agencies in the last 05
years.
The bidder should provide accurate information on litigation
and / or arbitration resulting from contract completed or
under execution by him over the last five years. A consistent
history of arbitration awards / judgments against the
applicant or any partner of a joint venture may result in
disqualification for proposed work. If the details of litigation
history is hidden by the applicant and later on it comes to
knowledge of the employer the bidder shall be disqualified for
the proposed work and other appropriate actions shall be
taken against the bidder.
The bidder should submit undertaking on non-judicial stamp
paper of Rs.300/- dully attested by notary public regarding
document submitted, are true. Board would have the right to
forfeit the EMD and black list to the bidder if any of the
information given by the bidder is found faulty or incorrect or
misleading.
29.3 to 29.4 xxx
30. to 40. xxx
41. CORRUPT OR FRAUDULENT PRACTICES:
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41.1 The GWSSB requires that bidders/ suppliers/
contractors have followed the highest standard of ethics
during the procurement and execution of such contracts. In
pursuance of this policy:
(a) Defines for the purposes of this provision, the terms set
forth below as follows:
(i) xxx
(ii) "Fraudulent practice" means a misrepresentation of
facts in order to influence a procurement process or the
execution of a contract to the determination of the Borrower,
and includes collusive practice among bidders (prior to or
after bid submission) designed to establish bid prices at
artificial non-competitive levels and to deprive the borrower
of the benefits of free and open competition;
(b) xxx
(c) Will declare a firm ineligible, either indefinitely or for a
stated period of time, to be awarded a contract if it at any time
determines that the firm has engaged in corrupt and
fraudulent practices in competing for, or in executing, a
contract.
If at any stage it is found that bidder had hidden material
information or had submitted information which is false and
fraudulent shall be debarred from bidding in GWSSB/GWIL
tender for three years and EMD shall be forfeited. The matter
shall also be brought to notice to the registration authority of
the contractor.
42. xxx
43.0 DECLARATION FORM: (FORM-H)
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43.1 In conjunction to Sub Clause 'C' under "29. Evaluation
to Technical bids" the bidder should submit undertaking as
per Form-H on non-judicial stamp paper of Rs.300/- dully
attested by notary public regarding document submitted, are
true. GWSSB would have the right to forfeit the EMD and
blacklist the bidder if any of the information given by the
bidder is found faulty or incorrect or misleading.
xxx"
5.1 Pursuant to the aforesaid Tender Notice, the petitioner as Joint
Venture with Maruti Enterprise, Rajkot participated in the bid. The
authorised signatory who is the partner of the petitioner firm was
also authorised to submit all the required documents signed and
attested by him, for participation in the bid. He submitted at page 73
and 75 required Undertakings to the effect that their firm are not
listed under a declaration of ineligibility for corrupt or fraudulent
practices presently not blacklisted and terminated in any of the
Central or State Government Bodies, State or Central Government
Undertakings and State or Central Semi Government Bodies or
Organizations. At the same time, Undertaking at page 75, duly
signed and attested before the Notary Public by the authorised
signatory of the Joint Venture, who was also authorised to sign the
bid documents, stated that, bidder has submitted all details, which
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are true and GWSSB/GWIL have right to forfeit the EMD and
blacklist the firm in case of any information is incorrect or
misleading. Both Undertakings, at page 73 and 75, bear date
26.06.2023, attested and signed before the Notary Public on
27.06.2023.
5.2 Despite the petitioner as constituent partner, perhaps the lead
partner, of M/s. J.M. Vaghasiya, (Joint Venture) + M/s. Jainam
Engicon Private Limited vide order dated 20.06.2023 declared to be
blacklisted for a period of 10 years and the said order, is received by
the petitioner through e-mail as admitted in the reply / representation
dated 29.08.2023, which is at page 39, Annexure 'I' to the petition,
on 24.06.2023, whereas the Undertakings at page 73 and 75 signed
before the Notary Public on 27.06.2023, very order of blacklisting
known, it came to be boldly suppressed claiming to be an
inadvertent mistake as the deadline for document submission of the
present Tender was 26.06.2023 getting over, this time-frame left
them with only 2 days' window to respond. The said bold
suppression is stated to be an unintentional oversight in not being
promptly informed about the debarment led to the inadvertent
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submission of the affidavit. It is claimed to be purely a mistake of
fact rather than a deliberate attempt to mislead.
5.3 If the order of blacklisting passed by BUIDCO is seen, Joint
Venture partner of the present petitioner firm M/s. Jainam Engicon
Private Limited deliberately produced forged and fabricated
Experience Certificates, as per the requirement of the bid, before that
authority. Not only it had provided an e-mail address for the
purpose of verification of the same and an e-mail sent to the address
revealed that it is issued by that authority. However, it is only on
physical verification, the authority at Beawar, Rajasthan informed
that no such work, Certificates of Experience which are produced,
was ever allotted to M/s. Jainam Engicon Private Limited. There
again, once the petitioner as also the constituent Joint Venture
partner held to be blacklisted for a period of 10 years by the
BUIDCO, subsequently, the petitioner represented to it that the
petitioner is not responsible for production of forged documents and
therefore, no order of blacklisting could be passed by the authority.
As stated and produced by the petitioner, BUIDCO has relieved the
petitioner from blacklisting order and has also ordered to refund the
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EMD. Though, that order is also required to be ascertained by the
respondent authority, whether it is done or not, when bid is filed on
behalf of the Joint Venture, each constituent partner of it, is
responsible for all the acts done by any one of them. They are
equally responsible for incurring any liability thereof for a deed or
misdeed by any one of them. Be that as it may, that order relieving
the petitioner from blacklisting order, is not challenged here before
this Court, we put at rest that scrutiny of it here. But the fact remains
that when Form 'H' and undertakings signed, affirmed and
submitted with bid order of debarment was in existence and it is
suppressed.
5.4 Be that as it may, so far as present case is concerned, partner
of the petitioner firm, who is also authorised to sign and submit the
bid, himself has filed Undertakings which are found to be false and
misleading. The day on which, the Undertakings at page 73 and 75
were filed, fact remains that the petitioner was blacklisted by
BUIDCO, that too, for a period of 10 years. Therefore, it was
expected from the bidder Joint Venture, that too, authorised
signatory of the petitioner, who, as an authorised signatory of bidder,
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signed those Undertakings, to correctly disclose any order of
blacklisting passed by the Central or State Government or its Bodies,
Undertakings or Organizations. Instead of regretting for suppressing
this most material and important fact, it has been assertively argued
that subsequently, that order is recalled so far as it relates to the
petitioner firm as also the bid itself is cancelled; authority could not
have passed an order of blacklisting, that too, for a period of 3 years.
The said assertion is misconceived in facts as also in law. The
Undertakings required to state true and correct facts obtaining on
that day. It never envisaged any subsequent event to be stated in it.
It was expected from the authorised signatory of the petitioner to
disclose true and correct fact.
5.5 The bidders had to file their bids keeping in mind the
conditions mentioned in the NIT subject to which, they have to place
their offer for consideration. With an open eye, the bidder i.e. the
petitioner had accepted the Terms that any information submitted in
any Declaration or Undertaking is found to be incorrect or false, it
shall be debarred from bidding in GWSSB/GWIL Tender for three
years and EMD shall be forfeited. Not only that, they have
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acknowledged the right of the respondent authority by submitting the
Undertaking on Non-Judicial Stamp Paper of Rs.300/-, duly attested
by a Notary Public, regarding document submitted are true as also,
the Board would have a right to forfeit the EMD and blacklist the
bidder if any of the information given by the bidder, is found faulty
or incorrect or misleading. It was expected from a bidder to provide
accurate information on litigation and/or arbitration resulting from
contract completed or under execution by him over the last five
years. Though, there is no accurate information on the litigation
while Undertakings are filed by the bidder, it was aware and
acknowledged that in case of forfeiture of EMD, bidder shall be
disqualified and shall not be allowed to bid for further works under
GWSSB/GWIL for three years as per Clause 21.7 of the Tender
Conditions. So, not only there is a condition for participation in the
bid, expected to be true and correct in each and every respect,
submitting inaccurate or false particulars or details may lead to not
only disqualification of the bidder but forfeiture of EMD as also
blacklisting for a period of three years. With an open eye, accepting
such conditions, Undertakings on oath before Notary Public filed by
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the petitioner, which is found to be false and as a consequence for it,
action in disqualification, forfeiture of EMD as also blacklisting for
a period of three years is to be passed by the authority.
5.6 Neither disqualification nor forfeiture of EMD or taking action
for blacklisting is alternative to each other. It is the consequence of
wrong doing by the bidder and such conditions are accepted by the
bidder while submitting their bid with an open eye for consideration
of their offer, whether any loss is suffered by the authority, whether
any damage is caused to the authority, pales into insignificance.
Forfeiture of EMD and order of blacklisting when it is made for
breach of Tender Conditions at a pre-contractual stage, when no
contract has yet come into existence, it does not infringe any
statutory right under the Indian Contract Act, 1872 since EMD is
taken in such cases to ensure that a contract comes into existence.
At the same time, such condition of order of blacklisting is provided
for submitting inaccurate or false details, is with a view to see that
only genuine bidders participate in the bid process. Absence of any
Terms forfeiting of EMD may lead to a situation where even bidders
who do not have capacity or intention of entering into the contract,
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venture into the bidding process for, at times, extraneous reasons.
The purpose of such a Clause providing for forfeiture of EMD is
only with a view to see that only genuine bids are received. Equally,
the condition of blacklisting, if any information, undertaking or
affidavit found to be incorrect or false, is to dissuade ingenuine
bidders since State authorities want to enter into commercial
transactions with responsible and honest bidders. If a bidder is not
hesitating in supplying false or incorrect facts before the authority,
he cannot be relied on for a work to be carried out under a Tender,
that he will act very honestly and will not suppress true and correct
facts.
5.7 Action of forfeiture of EMD and blacklisting are taken for
making false claim/declaration while submitting bid as a
consequence of express breach of Terms of Tender based on which,
bidder made his offer, which employer took into consideration.
Knowing fully well such conditions that EMD would be forfeited
and order of blacklisting would be passed, if information supplied in
bid documents / undertakings found to be false or inaccurate, bidder
participated in the Tender, then he cannot complain about sufferance
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of such consequences provided. Then, it is a contract in itself. Even
if it is not a contract, it is consequence of false
declaration/undertaking, different from taking any action for breach
of contract executed while work being carried out.
5.8 With a view to see that honest bidders come for contract with
the employer and to weed out all dishonest attempts of the bidders at
the threshold, such is the consequence for the apparent/bold false
statement/undertaking being made by them.
5.9 Submission based on Article 14 of the Constitution of India
i.e. discrimination, pressed into service by the learned advocate for
the petitioner on the ground that constituent partner of Joint Venture
is relieved of blacklisting order on its representation, even if it is
true, cannot be pressed into service for the reason that on that
ground, the petitioner cannot be relieved of the action which is taken
for breach of the Terms of the Tender which he agreed while
submitting his offer for consideration. At the same time, as brought
on record by an additional affidavit by the respondent authority, it
has already issued a notice against even the constituent partner of the
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Joint Venture for taking action of blacklisting it for submission of
false/inaccurate/incorrect details in Undertaking filed on behalf of
the Joint Venture, the said submission, based on breach of Article
14, falls to the ground.
5.10 The submission made by the learned advocate for the
petitioner that since there is no actual loss to the respondent
authority or a damage caused to it, EMD, which runs into lakhs of
rupees, could not have been forfeited, is again required to be rejected
for the reason that it is not forfeited for any loss or damage caused to
it, but it is forfeited as a consequence of filing false details with
regard to blacklisting, that too, on oath before a Notary Public and
only on that condition, bidders had to submit their bids. When
breach thereof is committed, it is the consequence of the same and
not as either penalty or loss caused to the authority.
5.11 The decision in the case of Gorkha Security Services (supra),
relied on by the learned advocate for the petitioner is of no help to
the petitioner as from the show-cause notice, it is possible to draw
clear inference about taking action in breach of Clause mentioned
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therein, which states about taking action of forfeiting EMD as also
order of blacklisting for a period of three years. It is in case of non-
mentioning of blacklisting or forfeiture, it cannot be possible to draw
clear inference from it, in that case, the ratio laid down therein,
would be pressed into service. Mentioning the clauses in the show-
cause notice for the proposed action for the breach thereof, when
petitioner with an open eye, knowing each and every Clause of the
Tender Notice, submitted a bid, he would very well understand that
these Clauses are for the purpose of forfeiture of EMD and passing
an order of blacklisting for submitting false/incorrect Undertakings
while submitting bid. It is sufficient and adequate and meaningful
opportunity to the petitioner who could even file reply claiming that
it is inadvertent mistake because of short time, which could never be
countenanced.
5.12 As coming out from the order of blacklisting passed by the
BUIDCO, prior to the order dated 20.06.2023, show-cause notice
came to be issued not only to the petitioner but also M/s. Jainam
Engicon Private Limited, Joint Venture partner, to which, the
petitioner had not even responded at all. Therefore, it is clear that he
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was aware of action in blacklisting being taken by that authority.
Not only that, as admitted by him in his written Representation, the
order of blacklisting dated 20.06.2023 came to be intimated to the
petitioner through e-mail on 24.06.2023 i.e. even prior to
Undertakings filed and affirmed before the Notary Public.
Therefore, it can be easily inferred that it is nothing but a deliberate
and bold decision of the petitioner to suppress material fact of
blacklisting order passed by the BUIDCO while submitting the bid.
5.13 The decision in the case of M/s. Techno Print (supra), where,
show-cause notice issued for blacklisting came to be quashed on the
facts stated therein. No such facts obtained in the present case and it
is not even at the stage of show-cause notice. For anything to be
explained, an opportunity was available to the petitioner, which he
explained and admitted to knowledge of it prior to submitting bid, in
view of his own admission, it incurred an order of blacklisting.
Therefore, the decision in the case of M/s. Techno Print (supra),
cannot be pressed into service by the petitioner.
5.14 The decision in the case of Blue Dreams Advertising Pvt.
Ltd. (supra), if considered, action of blacklisting initiated for breach
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of Terms of contract where, even penalty is also provided for. There
appears to be a dispute/issue between the parties to be resolved by
the arbitrator and that Clause was invoked by the appellant therein;
authority could not have initiated order of blacklisting passed on that
issue when it was pending adjudication before the arbitrator.
5.14.1 Not only that, the day on which appeal was determined
by the Supreme Court, the arbitrator had already declared its award
which went in favour of the appellant. Though, it may be a
subsequent event, the principles laid down by the Supreme Court in
that case is suggestive of the fact that where the case is of an
ordinary breach of contract and the explanation offered by the
person concerned raises a bona fide dispute, blacklisting/debarment
as a penalty ought not be resorted to. Similarly, too readily invoking
the debarment for ordinary cases of breach of contract where there is
a bona fide dispute, is not permissible.
5.14.2 Here, it is not a case that blacklisting is resorted to for a
bona fide dispute for ordinary breach of contract. Forfeiture of
EMD and action in blacklisting are resorted to for breach of Terms
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of Tender, which is a consequence of breach thereof, requiring no
adjudication or even a bona fide dispute to be explained. In any
case, false disclosure in the Undertakings is evident from the
Representation of the petitioner itself, where it is admitted that the
day on which, such Undertakings were filed, order of blacklisting
passed by BUIDCO was known to it and despite that, it has not been
mentioned in any of the Undertakings though it was a condition
precedent to be mentioned. In that view of the matter, the aforesaid
decision of the Supreme Court in the case of Blue Dreamz
Advertising Pvt. Ltd. and Another (supra), is also not applicable to
the facts of the present case.
5.15 The decision in the case of Kulja Industries Ltd. (supra), is
also on the same line and which is considered by the Supreme Court
in the case of Blue Dreamz Advertising Pvt. Ltd. and Another
(supra). Therefore, no separate reference thereof is required.
5.16 In the judgment and order of Co-ordinate Bench of this Court
in the case of M/s. M. V. Omni Projects (India) Ltd. (supra), since
detailed reply submitted to the show-cause notice answering every
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query or allegations made in the show-cause notice, did not notice
by the authority, in the peculiar facts and circumstances of that case,
order of blacklisting came to be set aside remitting the case back to
the respondent Corporation for undertaking exercise afresh.
However, from the impugned order, it is very clear that its written
representation/reply not only quoted in it, but consideration thereof
is also very specific in the order itself.
5.17 The decision in the case of M/s. Aquafil Polymers Co. Pvt.
Ltd. (supra), relied upon by the petitioner is of no avail to it, as
noted in paragraph 5.3 of the said decision, the term "bidder" in
relation to and as applied to in the instant Tender document, would
mean the individual petitioner itself as tenderer. The petitioner was
not the tenderer in the Rajasthan Project, where, Joint Venture came
to be blacklisted. Therefore, it is stated that it cannot be said that it
was not the petitioner entity who was debarred and blacklisted there.
Therefore, information in the said Tender was to be furnished about
the bidder, the non-mention on part of the petitioner about the joint
venture bidder in Rajasthan having been treated as debarred could
not be said to be fatal for the petitioner to get its bid considered, nor
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it could be said to be a suppression to prejudicially affect the
petitioner. Not only that, the order of blacklisting dated 06.11.2015
therein, came to be set aside by the Rajasthan High Court allowing
Civil Writ Petition No. 6375 of 2017.
5.18 Decision in the case of Royal Infra Engineering Pvt. Ltd.
(supra), relied on by the learned advocate for the petitioner is a case
where all the decisions in respect of blacklisting from the case of
Erusian Equipment & Chemicals Ltd. and Kulja Industries Ltd. etc.
were considered by the Division Bench of this Court in detail and
the principle for the same culled out and enunciated by the Division
Bench, there is no dispute. The doctrine of proportionality in
punishment cannot be invoked in the present case as it is not for any
loss or damage caused to the respondent authority which could be
assessed in terms of money. Here, if at all it is to be considered as a
punishment, an order of blacklisting came to be passed for breach of
Terms of the Tender Notice which expected the petitioner to place
true and correct facts by way of Undertakings at the time of
submitting its bid. Not only that, pursuant to the said Tender Notice,
when petitioner has submitted its offer for consideration, he was
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aware about the consequence of submitting false information or
incorrect information and therefore, forfeiture of EMD and action of
blacklisting is the consequence of that act of suppression which is
the only option available and it has been resorted to. All the
decisions, so far as doctrine of proportionality is concerned, speak
about punishment should be proportionate to the wrong committed.
Here, there is no question of finding out any proportion as for
disclosure of incorrect and false information, forfeiture of EMD is
the consequence. No other option is left with the authority because
before submitting its offer, the petitioner was aware of the said
condition and despite that, petitioner ventured into submission of
false details in its bid.
5.19 Reliance placed on the decision in the case of Gujarat
Construction Co. Ltd. (supra) by the learned advocate for the
respondent authority. Similar Tender Conditions of the very
respondent authority when resorted to, passing of order of
blacklisting and forfeiture of EMD came to be considered and the
challenge made therein fail holding that respondent Board has acted
in accordance with the Tender Clauses and has complied with the
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requirements of principles of natural justice and after considering
even the explanation offered by the petitioner therein, by assigning
reasons for passing the impugned order therein. The aforesaid
decision of the Co-ordinate Bench of this Court is also confirmed as
SLP preferred thereagainst came to be dismissed vide order dated
12.08.2024 passed by the Supreme Court in Special Leave to Appeal
(C) No. 17105 of 2024.
5.20 While dictating the judgment, we came across two of the
decisions of the Supreme Court on the issue closely connected with
the present petition and the contentions raised on behalf of the
petitioner.
5.20.1 The first decision in line in the case of National
Highways Authority of India v. Ganga Enterprises and Another,
reported in (2003) 7 SCC 410 recognizing every right of revoking a
proposal /offer at any time before the communication of its
acceptance as provided under Section 5 of the Indian Contract Act,
1872, but where a person made an offer to undertake a certain work
on a condition that the earnest furnished by him would be forfeited
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for not entering into a contract or for non-performance of the some
act, Section 5 of the Indian Contract Act, 1872 would entitle a
person to withdraw the offer but not entitle him to claim refund of
earnest in case of withdrawal of his offer before its acceptance.
5.20.2 Similar analogy can be applied in the present case when
Terms of Tender Notice stipulates that bidder may be disqualified,
Earnest Money Deposit may be forfeited and /or blacklisting would
be ordered, on certain exigencies when bidder submits its bid for
consideration on such terms, which is nowhere prohibited under the
Indian Contract Act, 1872, it can never be heard to say that any
action, which is taken as a consequence of that breach of the Tender
Terms, any actual loss or damage should be shown for the purpose
of forfeiture of a bank guarantee or incurring any disqualification or
blacklisting though blacklisting may be a harshest action with a view
to see that only genuine bidders participate. With a view to dissuade
bidders from submitting false, incorrect, incomplete details when
such condition is stipulated in the Tender Notice itself, which is not
even contrary to any law, with an open eye on that terms if bid is
submitted for consideration, authority is right and justified in taking
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action for breach of the same. All the precedents cited on behalf of
the petitioner on the issue of blacklisting pertains to blacklisting,
where Blacklisting is being ordered for breach of Terms of contract,
which is already executed where even penalty may be provided for
or a compensation is also provided for, if that alternative is available
after execution of a contract. If such precedents incorporating those
Terms of contract are already executed, it cannot be applied with
same force where conditions are imposed to incur such liability as a
consequence for the breach thereof, and therefore, no such actual
loss or damage caused to the authority is to be shown for forfeiting
the Earnest Money Deposit. The condition in the Tender Notice that
any bidder or its partner, Director etc. to mention in the bid whether
they are blacklisted by any State Government or Central
Government or Public Sector undertaking etc. is for the purpose that
only genuine, efficient and honest bidders participate in the bid. Not
only that, participation by a bidder boldly stating that no such order
is passed by any State Government, Central Government or Public
undertaking and when it is found that it was passed by the authority
mentioned therein, there is no option for the authority but to initiate
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action for the breach of the Terms of the Tender Notice inviting their
offer on reading and understanding the very same Terms that in
breach thereof an action would be taken against the bidder.
5.20.3 Yet there is another decision of the three Judge of the
Supreme Court in the case of National Thermal Power Corporation
Limited v. Ashok Kumar Singh and Others, reported in (2015) 4
SCC 252, wherein decision in the aforesaid case has not only
considered earlier decision of the Supreme Court in Ganga
Enterprises (supra) but other three decisions of Supreme Court,
wherein, it held that forfeiture of Earnest Money when it is made for
breach of auction/tender conditions at pre-contractual stage, when no
contract has yet come into existence, it does not infringe any
statutory right under the Indian Contract Act, 1872 since the Earnest
Money/security is given and taken in such cases only to ensure that a
contract comes into existence. The tenderer has a right to withdraw
his offer, but he will have no right to claim refund of Earnest Money,
if said offer is subject to condition that Earnest money will be
forfeited if offer is withdrawn. Therefore, though right of the bidder
to withdraw its offer is recognized under the Indian Contract Act,
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but when that offer is made subject to incurring liability of forfeiture
of Earnest Money, withdrawal of offer is permitted but subject to
incurring liability of forfeiture of the earnest money deposited by the
bidder.
5.21 The contention that since one and half years are passed from
the date of blacklisting the petitioner from participating in bid
floated by the respondent authority, the Court may substitute the
period of blacklisting as ordered by the respondent authority with the
period already undergone as on date. We are afraid that this Court
would have any such discretion, that too, while exercising powers of
judicial review, to substitute by its own discretion to the period of
blacklisting as already ordered by the authority. The said period and
resorting to the blacklisting is provided as a Terms, as aforesaid, to
dissuade any ingenuine bidder, who tries his luck by submitting false
details before the authority.
6. For the forgoing reasons, we see no reason to entertain this
petition and it is hereby rejected, with no order as to costs. Notice is
discharged.
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6.1 At this stage, Ms. Honey Thakkar, learned advocate for Mr.
Paras Sukhwani, learned advocate for the petitioner prays for stay of
this order for a period of four weeks, to which Mr. Hakim, learned
advocate appearing on behalf M/s. Gandhi Law Associates for the
respondent objected to the same.
6.2 Since, from the date of filing of the petition in the year 2023
itself, there is no stay granted by this Court, we do not deem it fit to
grant the same at this stage.
[ Umesh A. Trivedi, J. ]
[ Cheekati Manavendranath Roy, J. ]
hiren/SB-I-1tss9&15425
