Jammu & Kashmir High Court - Srinagar Bench
M/S Green Valley Model vs Ut Of J&K & Others on 1 March, 2024
Author: Rajnesh Oswal
Bench: Rajnesh Oswal
IN THE HIGH COURT OF JAMMU & KASHMIR AND
LADAKHAT SRINAGAR
Reserved on: 21.02.2024
Pronounced on:01.03.2024
WP(C) No.2912/2022
M/S GREEN VALLEY MODEL
STRUCTURE PVT. LTD. & ANR. ...PETITIONER(S)
Through: - Mr. Areeb Kawoosa, Advocate.
Vs.
UT OF J&K & OTHERS ...RESPONDENT(S)
Through: - Mr. Furqan Yaqub Sofi, GA.
CORAM:HON'BLE MR. JUSTICE RAJNESH OSWAL, JUDGE
JUDGMENT
1) The respondents vide E-NIT No.SKIMSMC(Estt)-08 of 2022
dated 26.02.2022 invited e-tenders from the registered agencies for
providing sanitation services at SKIMS Medical College-Hospital,
Bemina, Srinagar, for the period of one year. The petitioner-company
participated in the tendering process and emerged as successful bidder.
The respondents vide order dated 22.08.2022 allotted the contract in
favour of the petitioner-company for a period of one year with effect
from 07.09.2022 to 06.09.2023. After the contract was allotted to the
petitioner but before formal agreement could be executed, the
petitioner-company requested the respondents for cancellation of the
allotment order issued in favour of petitioner-company on the ground
that due to certain domestic problems, the rates were quoted without
examining the tender document and rates quoted by the petitioner-
company included the wages payable to the workers at a less rate than
the minimum wages prescribed by the Government and without
including GST, PF, ESIC, EDLI and other applicable charges/taxes.
2) The respondents issued the order dated 25.10.2022 whereby the
contract issued in favour of petitioner No.1 was cancelled and
simultaneously, besides forfeiting the CDR of Rs. 2 lacs deposited by
the petitioner, the petitioner was barred from tendering in SKIMS,
Bemina for a period of two years.
3) The petitioners have filed the present petition for quashing of
the order dated 22.08.2022 whereby contract for sanitation of various
areas of SKIMS Medical College-Hospital, Bemina, Srinagar, was
allotted in favour of the petitioner No.1 for a period of one year and the
petitioners have also sought the quashing of the order dated 25.10.2022
to the extent of forfeiture of CDR and debarring the petitioner-company
from participating in the tendering process in the SKIMS, Bemina for a
period of two years.
4) The case projected by the petitioners in the present petition is
that in terms of Clause (8) of the e-NIT, the rates to be quoted by the
bidder were required to include GST, wages or workers including all
Labour Law obligations (like EPF, ESIC, EDLI etc as may be
applicable as per Government norms, rules and regulations), cleaning
material, uniform, other protective gears and there was a stipulation in
the e-NIT that in the event of failure on the part of allottee of the
contract to pay wages to his employees, the SKIMS reserved the right
to deduct the amount from the monthly bills of the bidder. The
petitioner-company quoted a rate of Rs.4,43,468.33/ for 75 sanitation
workers but after submitting the bid, the petitioners realised that the
petitioner-company was disqualified from being awarded the contract
as the rates quoted by it were less than the minimum rates of wages of
employees fixed in terms of SRO 460 dated 26.10.2017. Not only this,
after the submission of bids and prior to allotment of contract, the
Government had issued S.O.315 dated 27.06.2022, whereby the
minimum rates of wages were further enhanced. The respondents also
provided justification of rates to the petitioner wherein the minimum
bid amount should have been Rs.6,94,755/ per month, without taking
into consideration the cost of cleaning material to be supplied by the
contractor as well as the profit margin of the company.
5) It is submitted in the petition that in utter disregard to the
justification of rates as provided by the respondents, the respondent
No.3 issued the order dated 22.08.2022, whereby the contract for
sanitation of various areas of SKIMS Medical College-Hospital,
Bemina, Srinagar, was allotted in favour of the petitioner No.1 at a rate
less than the present minimum wages as prescribed by the Government.
The petitioners immediately submitted a representation and requested
the respondents that the allotment order dated 22.08.2022 issued in
favour of petitioner No.1 be cancelled. Precisely, the claim of the
petitioners in the present petition is that the respondents could not have
accepted the bid submitted by the petitioner-company as the rates
quoted by it were less than the minimum wages and without including
GST, PF, ESLI, EDLI and other applicable charges/taxes. According to
the petitioners, the bid submitted by the petitioner-company was not
required to be considered at all by the respondents being contrary to
Clause (8) of the e-NIT. Further the order dated 25.10.2022 has been
passed in violation of the principles of natural justice as no show cause
notice was issued to the petitioners for blacklisting of petitioner-
company for a period of two years. It is also urged by the petitioners
that the penalty clause of terms and conditions of e-NIT dated
26.02.2022 does not provide for imposition of penalty of blacklisting.
6) The respondents have filed their response to the writ petition
stating therein that the petitioner-company had quoted rates and after
having done so could not have resiled from the same. It has been urged
that the e-NIT clearly provides that the rates quoted should include
wages of workers in accordance with all labour law obligations and the
petitioner-company by quoting rates failed to fulfil the said
requirement. The respondents were justified in disqualifying the
petitioner No.1 and awarding the contract to another eligible party who
complied with the labour laws and tender conditions. It is further stated
that the petitioners were afforded an opportunity to submit a
representation which they submitted on 07.09.2022 and the
representation so filed did not contain any justification or valid reason
to overturn the decision made by the respondents. It is also stated that
no show cause notice was required to be issued to the petitioner
company as it had violated the terms and conditions of the e-NIT. The
respondents have also given details of 14 bidders and as the petitioner
No.1 was L1, so the contract in question was allotted to it but the
petitioner-company did not start the work within the stipulated time and
a notice was issued to the petitioner-company on 07.09.2022 asking it
to start the work immediately but the petitioner-company failed to start
the work. In response to the said notice, the petitioner company
intimated the respondents through application dated 07.09.2022 that it
was not in a position to start the work due to certain problems and,
accordingly, requested for cancellation of the allotment of work. The
representation of the petitioners was discussed with the Principal
(Chairman, CSC) who desired that one more notice be served upon the
petitioner/contractor and, accordingly, one more notice dated 22.09.022
was served upon the petitioner-company to start the work immediately.
The petitioner-company again vide application dated 22.09.2022
represented before the respondents that the allotment of work may be
cancelled. Finally, the matter was placed before 5th Contract Sub
Committee meeting wherein it was unanimously decided that the
sanitation contract for the year 2022-23 allotted in favour of the
petitioner-company be cancelled and a fresh tender on short term basis
be floated and further it was resolved that the petitioner-company be
debarred from participating in the tendering process in the Institution
for a period of two years and the CDR be forfeited.
7) Learned counsel for the petitioners has submitted that the there
was no stipulation in the e-NIT for blacklisting the bidder but the
petitioner-company has been blacklisted without affording due
opportunity of hearing to it. He further submitted that the earnest
money deposited could not have been forfeited as the petitioner
company was, in fact, required to be disqualified for not complying
with the stipulations contained in Clause (8) of the e-NIT and it was
obligatory on the part of the respondents to examine the bid submitted
by the petitioner company in accordance with the terms and conditions
of e-NIT and had they done so, the respondents would have declared
the petitioner-company an unsuccessful bidder and the earnest money
deposited by the petitioner-company would have been released in its
favour.
8) On the contrary, Mr. Furqan Yaqub, learned counsel appearing
for the respondents, submitted that the blacklisting has been done in
accordance with the terms and conditions of the e-NIT after the
petitioner-company failed to execute the work allotted in its favour. He
further submitted he is under instruction from the respondents that the
amount of CDR can be released in favour of the petitioners.
9) Heard and perused the record.
10) So far as the grievance of the petitioners in respect of forfeiture
of CDR is concerned, that prayer of the petitioner-company has been
agreed to by the respondents in view of the submission made by
learned counsel appearing for the respondents, notwithstanding the
fact that in their reply, the respondents have denied the entitlement of
the petitioners to the said relief.
11) Now the only contention which remains to be adjudicated upon
by this Court is as to whether the petitioner-company could have been
blacklisted for two years or not. The petitioner-company requested for
cancellation of the contract on account of its inability to perform the
same for having quoted less rates. The petitioner is a company and not
an individual but it appears that it was the Managing Director of the
petitioner-company who made representations before the respondents.
The petitioners should have been vigilant while submitting the bid as
the submission of bids in such a manner not only results into delayed
execution of works but also leads to issuance of fresh tenders, as has
happened in the instant case, thereby putting extra fiscal burden on the
Tender Inviting Authority. The stand of the respondents is that prior
notice was issued to the petitioner-company before taking any action
against it. The respondents have placed reliance upon communications
dated 07.09.2022 and 19.09.2022 to demonstrate that opportunity of
hearing was afforded to the petitioner company. The perusal of notice
dated 07.09.2022 reveals that in the said notice, the petitioner-
company was directed to start the work immediately failing which
necessary action was to be taken and vide communication dated
19.09.2022, the petitioner-company was again directed to start the
work within three days positively failing which disciplinary action in
terms of Clause (7) of the allotment order was to be taken.
12) The perusal of Clause (7) provides for forfeiture of the earnest
money in the event the successful tenderer fails to abide by the terms
and conditions of the contract. The respondents have not been able to
demonstrate before this Court that the petitioner-company was put to
notice that in the event of non-compliance of the terms and conditions
of the allotment of contract, it would be blacklisted for two years. In
fact, the petitioner-company has been condemned unheard as no show
cause notice for blacklisting the petitioner-company was issued to the
petitioner-company.
13) The Hon'ble Supreme Court of India in UMC Technologies
Private Limited vs. Food Corporation of India and another,
(2021) 2 SCC 551, has held as under:
"14. Specifically, in the context of blacklisting of a person or
an entity by the state or a state corporation, the requirement of
a valid, particularized and unambiguous show cause notice is
particularly crucial due to the severe consequences of
blacklisting and the stigmatization that accrues to the
person/entity being blacklisted. Here, it may be gainful to
describe the concept of blacklisting and the graveness of the
consequences occasioned by it. Blacklisting has the effect of
denying a person or an entity the privileged opportunity of
entering into government contracts. This privilege arises
because it is the State who is the counterparty in
government contracts and as such, every eligible person is
to be afforded an equal opportunity to participate in such
contracts, without arbitrariness and discrimination. Not
only does blacklisting takes away this privilege, it also
tarnishes the blacklisted person's reputation and brings
the person's character into question. Blacklisting also has
long-lasting civil consequences for the future business
prospects of the blacklisted person."
(emphasis added)
14) In view of above, the present petition is allowed and the
impugned order dated 25.10.2022, to the extent of forfeiture of CDR
deposited by the petitioner-company and debarring the petitioner
company from participating in the tendering process for a period of
two years, is quashed and the respondents are directed to release the
amount of CDR in favour of the petitioner-company but without
interest.
15) No order as to costs.
(Rajnesh Oswal)
Judge
SRINAGAR
01.03.2024
"Bhat Altaf-Secy"
Whether the order is speaking: Yes/No
Whether the order is reportable: Yes/No
