Madras High Court
Muthoot Exim Private Limited vs State Of Tamil Nadu on 22 September, 2021
W.A.No.2099 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 22.09.2021
CORAM
THE HONOURABLE MRS. JUSTICE PUSHPA SATHYANARAYANA
AND
THE HONOURABLE MR.JUSTICE KRISHNAN RAMASAMY
W.A.No.2099 of 2021 and C.M.P. No.13304 of 2021
Muthoot Exim Private Limited
Represented by its Senior Manager-
Business Development
No.18, 18th Floor
Sunshine Towers
Senapathi Bapath Marg
Mumbai - 400 013 .. Appellant
Vs.
1.State of Tamil Nadu
Represented by its Secretary to Government
Social Welfare Department
Fort St. George, Chennai - 600 009
2.The Commissioner
Panagal Maligai, 2nd Floor
Saidapet, Chennai - 600 015 .. Respondents
***
Prayer : Writ Appeals filed under Clause 15 of Letters Patent against the
order dated 10.02.2020 made in W.P.No.6064 of 2019.
***
For Appellant : Mr.V.Anand
For Respondents : Mr.J.Ravindran, Addl. Advocate Genl.
assisted by
Mr.D.Ravichander,
State Govt. Counsel
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W.A.No.2099 of 2021
JUDGMENT
(delivered by PUSHPA SATHYANARAYANA, J.)
This intra-court writ appeal is directed against the order of the
learned single Judge dated 10.02.2020 made in W.P. No.6064 of 2019,
by which the learned single Judge, declined to interfere with the
impugned order. Aggrieved by the same, the writ petitioner is on appeal.
2. The dispute arose out of the tender dated 31.07.2018 advertised
in ROC. No.11549/WW-1(1)/2018 dated 27.07.2018, for supply of
1,11,000 numbers of eight gram gold coins of 22 carat each. The said
tender was floated to distribute the gold coins to the beneficiaries under
five major assistance schemes of the Government of Tamil Nadu.
3. The writ petitioner, who is the appellant herein, had participated
in the tender and offered to supply 20,000 numbers of gold coins, which
was permissible as per the tender conditions. The selection letter of the
appellant was handed over to him only on 20.09.2018, with a delay of 20
days from the date of opening of the tender, within which time, there
was a steep rise in the price of gold, due to extremely volatile market
conditions. As the appellant herein/writ petitioner was not in a position to
absorb the steep rise in the price of the gold, it requested to consider the
current rate per gram gold price as on 24.09.2018 or permit the writ
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W.A.No.2099 of 2021
petitioner/appellant herein to withdraw from the tender and return the
EMD. However, as the appellant herein/writ petitioner did not adhere to
the firm order issued by the respondents, proceedings was issued for
confiscating the EMD amount of Rs.53.00 Lakhs paid by the appellant
along with the tender document, as per Rule 30(5) of Tamil Nadu
Transparency in Tenders Rules, 2000 and clause 7(e) of the tender
document. In spite of giving sufficient chance, as the appellant did not
adhere to the terms and conditions, the firm order was cancelled and the
EMD amount was forfeited vide proceedings dated 24.12.2018 and they
were blacklisted on 05.02.2019 from entering into any Government
tenders. Aggrieved by the said orders, the writ petition was filed.
4. The learned single Judge, had elaborately gone into the merits of
the case and found that the petitioner has not made out a case for
interference with the impugned orders and hence dismissed the writ
petition. Aggrieved by the same, the writ petitioner has preferred the
above appeal.
5. The dispute brought-forth by the appellant is based on a
contract. The scope of judicial review in such contractual matters is very
limited. Power of judicial review will not be invoked to protect privte
interest at the cost public interest or to decide contractual disputes.
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W.A.No.2099 of 2021
When the appellant is clear on the facts and dispute and the respondents
had acted only as per the tender conditions, by filing a writ petition under
Article 226, the appellant herein/writ petitioner, cannot persuade this
court to interfere in the matter.
6. Clause 21 of the tender documents itself contains an arbitration
clause and that any dispute between the Commissioner of Social Welfare
and the supplier, may be referred to arbitration. The same reads thus:
" 21. Arbitration
The Commissioner of Social Welfare and the supplier
shall make every effort to resolve amicably by direct
negotiation any disagreement or dispute or misunderstanding
arising between them in connection with the contract. If any
dispute shall arise between Commissioner of Social Welfare
and the supplier on aspects not covered by this tender
document or supply order, or operation thereof, or the rights,
duties or liabilities under these except as to any matters, the
decision of which is specially provided for by the general or
the special conditions, such dispute shall be referred to two
arbitrators, one to be appointed by each party and the said
arbitrators shall appoint an umpire, as the case may be, shall
be final and binding on both the parties. The arbitrators or
the umpire as the case may be, with the consent of parties,
may modify the time frame for making and publishing the
award. Such arbitration shall be governed in all respects by
the provision of the Indian Arbitration Act or its later
modifications and the rules there under and any statutory
modification or re-enactment, thereof. The arbitration
proceedings shall be held in Chennai, India.
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W.A.No.2099 of 2021
7. The writ court had held that the appellant cannot invoke the
arbitration clause as the same can be invoked qua the disputes regarding
aspects not covered under the tender documents. However, the appellant
has not challenged the same in the appeal or raised as a ground. Hence
we are not discussing the said aspect.
8. So far as blacklisting of the appellant is concerned, the finding of
the learned single Judge is that there was no reply/response from the
appellant when the second respondent originally recommended the
appellant to be blacklisted. Therefore, the appellant was blacklisted for its
delinquent act, which is well within the power of the State to take any
action. In this regard, it would be worthwhile to advert to the decision of
the Hon'ble Apex Court in Patel Engineering Limited vs. Union of
India and Another reported in (2012) 11 SCC 257, wherein, the
Hon'ble Apex Court, in paragraph Nos.15, 22 and 25, held as follows:
"15. It follows from the above judgment in Erusian
Equipment case [(1975) 1 SCC 70] that the decision of the
State or its instrumentalities not to deal with certain persons
or class of persons on account of the undesirability of
entering into the contractual relationship with such persons is
called blacklisting. The State can decline to enter into a
contractual relationship with a person or a class of persons
for a legitimate purpose. The authority of the State to
blacklist a person is a necessary concomitant to the
executive power of the State to carry on the trade or the
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W.A.No.2099 of 2021
business and making of contracts for any purpose, etc. There
need not be any statutory grant of such power. The only
legal limitation upon the exercise of such an authority is that
the State is to act fairly and rationally without in any way
being arbitrary—thereby such a decision can be taken for
some legitimate purpose. What is the legitimate purpose that
is sought to be achieved by the State in a given case can
vary depending upon various factors.
22. These two clauses become relevant in the context
of the second submission made by the learned counsel for
the petitioner that as per the bid document, the power to
blacklist is available only in the cases of the commission of
any or some of unacceptable practices by the bidder or his
agents, etc. but not in the case, where the successful bidder
declines to enter into a contract on being declared as a
successful bidder. No doubt, the bid document expressly
declares that in the case of the commission of a corrupt
practice, etc. the bidder shall not be eligible to participate in
any tender issued by the second respondent for a period of
two years from the date on which it is found that a corrupt
practice has been committed. Such an express stipulation is
not to be found in the bid document, in the context of the
failure of the successful bidder to execute the necessary
documents to conclude the contract. In our opinion, that is
not determinative of the authority of the second respondent
to blacklist a bidder, such as, the petitioner herein, who
declines to execute the necessary documents for creating a
concluded contract after the offer made by the bidder, is
accepted by the second respondent.
25. The bid document is not a statutory instrument.
Therefore, the rules of interpretation, which are applicable to
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the interpretation of statutes and statutory instruments, are
not applicable to the bid document. Therefore, in our opinion,
the failure to mention blacklisting to be one of the probable
actions that could be taken against the delinquent bidder
does not, by itself, disable the second respondent from
blacklisting a delinquent bidder, if it is otherwise justified.
Such power is inherent in every person legally capable of
entering into contracts."
9. In view of the settled position, the petitioner cannot invoke
Article 226 of the Constitution of India, when they have got the common
law remedy, as the dispute has arisen out of breach of contract. When an
alternate remedy is available, unless the appellant establishes that there
is a breach of their fundamental rights or violation of principles of natural
justice or an excess of jurisdiction which are exceptional cases, the
appellant herein/writ petitioner cannot invoke Article 226 of the
Constitution of India and we hold that the order of the learned single
Judge does not suffer from any infirmity for interference in this appeal.
10. Accordingly, the writ appeal is dismissed. However, there is no
order as to costs. Consequently, connected CMP is closed.
(P.S.N., J.) (K.R., J.)
22.09.2021
Index : Yes / No
Asr
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W.A.No.2099 of 2021
PUSHPA SATHYANARAYANA, J.
AND
KRISHNAN RAMASAMY, J.
Asr
To
1.State of Tamil Nadu
Represented by its Secretary to Government
Social Welfare Department
Fort St. George, Chennai - 600 009
2.The Commissioner
Panagal Maligai, 2nd Floor
Saidapet, Chennai - 600 015
W.A.No.2099 of 2021 and
C.M.P. No.13304 of 2021
22.09.2021
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