Tripura High Court
M/S Kismat Spices Industry vs The State Of Tripura on 21 August, 2023
Page 1 of 11
HIGHCOURT OF TRIPURA
AGARTALA
WP(C) No.455 of 2023
M/S Kismat Spices Industry, Math Chowmohani, A.A. Road, Agartala, P.O
Agartala, P.S-East Agartala, Tripura West, PIN-799006, Having its Head
ofice at Math Chowmuhani, Factory at Badharghat, Industrial Estate, P.0
AD. Nagar, Agartala, West Tripura, Represented by its partners Shri Gautam
Paul & SmtiSubhra Paul.
Petitioner(s)
VERSUS
1.
The State of Tripura, Represented by the Secretary to the Government of
Tripura, Food, Civil Supplies &Consumer Affairs, Civil Secretariat, P.O
Agartala Secretariat, PIN-799010.
2. The Additional Secretary & Director, Food, Civil Supplies & Consumer
Affairs, Government of Tripura, P.N. Complex, Gurkhabasti, Agartala
799010.
3. The Director Food, Civil Supplies & Consumer Affairs, Government of
Tripura, P.N Complex, Gurkhabasti, Agartala-7990 10.
4 The Union of India, Represented by the Secretary to the Government of
India, Ministry of Commerce & Industry, Udyog Bhawan, New Delhi
110107, India.
5. The Salt Commissioner, the Government of India, 2-A Lavan Marg, Post
Box No.139, Jaipur
Respondent(s)
For Petitioner(s) Mr. S.M. Chakraborty, Sr. Advocate.
Mrs. P. Chakraborty, Advocate.
For Respondent(s) Mr. D. Sarma, Addl. G.A.
Date of hearing & 21" August, 2023.
Judgment
Whether fit for
reporting YES
HON'BLE THE CHIEF JUSTICE MR. APARESH KUMARSINGH
HON'BLE MR. JUSTICE T. AMARNATH GOUD
JUDGMENT &ORDER (ORAL)
Heard Mr. S.M. Chakraborty, learned senior counsel appearing for
the petitioner. Also heard Mr. D. Sarma, learned Additional Government
Advocate appearing for the State respondents.
(21 By the impugned orders dated 25.04.2024 (sic.2023 ; wrongly
written as 2024) (Annexure-18) and (Annexure-19), respondent No.2 has
cancelled the Work Order and Agreement executed between the Department and
the petitioner dated 14.12.2022 invoking Clause 27 & 28 of the General Terms &
Conditions of the NIT. Petitioner has also been blacklisted for a period of 05
(five) years from the date of issuance of the order from participating in any e
Tender/Expression of Interests (EolyRequest for Proposal (RFP) of the
Department. It is also indicated that penalty will be deducted from his bill due
and Performance Guarantee deposit as per NIT against the work order No.F.5
11(1)-PP (PD)-DF/2022-23 (Tender)/16620 dated 16.12.2022.
[3] From the pleadings on record and documents adduced, it is evident
that the agreement was for procurement of 'Super Fine Crashed White Iodised
Salt (as per FSSAI Standard) in one Kg Poly-packet during the period
November, 2022 to October, 2023.
[4) Petitioner has taken a plea that the termination of the contract has
been made without following the prescription of mandatory 7 (seven) days notice
under Clause 27 of the General Terms & Conditions of the NIT. In fact, no notice
was issued on the petitioner before termination of the agreement and cancellation
of the work order. No notice has either been issued before blacklisting the
petitioner.
Learned counsel for the petitioner has relied upon the decisionof the
Apex Court in Gorkha Security Services Vs. Government (NCT of Delhi) and
others reported in (2014) 9 SCC 105 and Kulja Industries Limited Vs. Chief
General Manager, Western Telecom Project Bharat Sanchar Nigam Limited
and others reported in (2014) 14 SCC 731 in support of his submission.
[6| Petitioner has made reply on 27.04.2023 against the impugned
order of cancellation of contract and blacklisting and requested them to review
the matter with a holistic approach.
[7] Learned counsel for the petitioner submits that since the impugned
orders suffers from violation of principles of natural justice and the
terms and
conditions of the agreement and entails adverse consequences as he has been
debarred from participating in any tender for the next 5 (five) years affecting
the prospects of the petitioner company in participating in tenders with
any
other State or its instrumentalities, the impugned orders may be
set aside and
the matter may be remanded to the respondent
authorities to take a fresh
decision in accordance with law.
[8] Mr. D. Sarma, learned Additional
Government Advocate submits
that the matter has been taken up for the first time,
therefore, instructions are
awaited. However, since a perusal of the impugned letter indicates that
the
order of cancellation of contract and
blacklisting has not been preceded with
any show-cause notice, this Court if it may deem
so fit, remand the matter to
the respondent authorities to take a decision in accordance with law on the
subject after giving due show-cause notice and opportunity to the petitioner.
191 We have considered the submissions of learned counsel for the
parties. The impugned letters bearing No.F.5-11(1)-PP (PD)-DF/2022-23
(Tender)5766-70 (Annexure-18) and No.F.5-1 1(1)-PP (PD)-DF/2022-23
(Tender)/5771-75 (Annexure-19) both dated 25.04.2024 (should be read as
25.04.2023) are extracted hereunder:
"No.F.S-11(1)-PP (PD)-DF/2022-23 (Tender)/5766-70
Government of Tripura,
Directorate of Food, Civil Supplies & CA
P.N. Complex,Gurkhabasti, Agartala
Agartala, the 25th April, 2024.
To
M/S. Kismat Spices Industry,
Math Chowmuhani,
A.A. Road, Agartala, Tripura (West).
Subject: Cancellation of Work Orders for supply of lodised Salt.
Sir,
As per provisions of the 'Clause 27° and 'Clause 28' of
the General Terms & Condition' Section of the NIT No.F.5
11(1)-PP (PD)-DF/2022-23 (Tender/12446 dated 12.09.2022,
penal provisions have been invoked by the Department against
your Company and the following Work Orders for supply of
lodised Salt are hereby cancelled.
SI W.0. No. & Date Quantity Last date of supply
i) F.5-11(1)-PP(PD)-DF/2022-23 2520.00 15.03.2023
(Tender)/1325 dated 20.01.2023. MT
F.5-11(1)-PP(PD)-DF/2022-23 2520.00 28.04.2023
ii)
(Tender)/3012 dated 04.03.2023. MT
Sd/
(Nirmal Adhikari)
Addl. Secretary & Director
Food CS&CA, Tripura
Copy to:
1. PS to the Hon'ble Minister, Food CS&CA for kind
information of the Hon'ble Minister.
2. PS to the Special Secretary, Food CS&CA for kind
information of the Special Secretary.
3. All Sub-Divisional Magistrates of the State for information.
4. The DDE, Dharmanagar/Udaipur, O/C, Central Stores,
A.D. Nagar for information.
Sd/
Addl. Secretary & Director
Food CS&CA,Tripura"
"No.F.5-11(1)-PP (PD-DF/2022-23 (Tender)/5771-75
Government of Tripura,
Directorate of Food, Civil Supplies & CA
P.N.Complex, Gurkhabasti, Agartala
Agartala, the 25h April, 2024.
Subject: Procurement of Super Fine Crashed White lodised Salt
(as per FSSAIStandard) in one Kg Poly-packet during the period
from November, 2022 to October, 2023-Cancellation of Deed of
Agreement' and Blacklisting of MIS. Kismat Spices Industry,
Agartala, Tripura from participating in any e-Tender, Eol and
RFP of the Food CS&CADepartment for 05 years.
References:
a) NIT No.F.5-11(1)-PP (PD)-DF/2022-23 (Tender)/12446
dated 12.09.2022.
b) Deed of Agreement F.5-11(1)-PP (PD)-DFI2022-23
(Tender)/12446 dated 14.12.2022.
C) Work Order No. F.5-11(1)-PP (PD)-DF/2022-23
(Tender)/16620 dated 16.12.2022, Work Order No.F.5
11(1)-PP (PD)-DF/2022-23 (Tender)/1325 dated 20.01.2023
and Work Order No. F.5-11(1)-PP (PD)-DF/2022-23
(Tender)/3012 dated 04.03.2023.
d) e-Mail communications of the Food CS&CA Department
dated 05.03.2023, 06.03.2023, 05.04.2023, 09.04.2023 &
10.04.2023.
M/S. Kismat Spices Industry, Math Chowmuhani, A.A.
Road, Agartala (herein under referred as the Supplier)
participated in the e-Tender invited by the Food CS&CA
Department, Govt. of Tripura (herein under referred as the
Department) vide NIT
No.F.5-11(1)-PP(PD)-DF/2022-23
(Tender)y12446 dated 12.09.2022 and offered lowest rate for
supply of 'Super Fine Crashed White lodised Salt (as per FSSAI
Standard) in one Kg Poly-packet' during the period from
November, 2022 to October, 2023. The Supplier quoted the
lowest rate (L) for the supply and recognized by the Department
as successful Bidder against the referred e-Tender.
2 Thereafter, in response to Letter of Intent (Lol) dated
|1.11.2022 of the Department, the Supplier executed Deed of
Agreement' on 14.12.2022 for supply of 22384.00 MT
(tentative) of lodised Salt with the Food CS&CA Department,
Govt,of Tripura as per terms &conditions stipulated in the NIT
Document, Deed of Agreenment & Work Orders etc. of the Food
CS&CA Department.
3 Subsequently, the Department issued 03(three) Work
Orders vide No. F.5-11()-PP (PD)-DF/2022-23 (Tender)/16620
dated 16.12.2022: Work Order No.F.5-1I()-PP (PD)-DF/2022
23 (Tendery/1325 dated 20.01.2023 and Work Order No. F.5
11()-PP (PD)-DF/2022-23 (Tender)/3012 dated 04.03.2023 for
supply of total 7560 MT (@2520 MT per Work Order) within
the last date of supply stipulated in the respective Work Orders.
4 However, it has been observed that due to delay in supply
and total non-responsive approach of the Supplier, regular
monthly distribution of lodised Salt through PDS has been
hampered badly during last few months and thus, the 9.60 lakh
ration cardholders of the State deprived of getting their monthly
entitlement of lodised Salt in time.
5 Upon review of the supply position, it is observed that the
following defaults have been committed by the Supplier which
are breach of the contractual obligations and contrary to the
interest of the Department and ration cardholders of the State.
a) Last date for supply of lodised Salt at 55 (fifty five) nos.
State Food Godowns against the Word Order No. F.5
11(1)-PP (PD)-DF/2022-23 (Tender)/16620 dated
16.12.2022 was 30.01.2023. However, the Supplier
initiated supply at State Food Godown level on
13.02.2023 i.e. after 02(two) weeks from the date of
supply.
b) Last date for supply of lodised Salt at 55 (fifty five) nos.
State Food Godowns against the Work Order No.F.5
11(1)-PP (PD)-DFI2022-23 (Tender)/1325 dated
20.01.2023 was 15.03.2023. However, the Supplier has
not yet supplied any quantity of lodised Salt at State Food
Godowns till date.
c) In the meantime, the Department sent
several e-mail
communications to the Supplier periodically, requesting
to inform regarding the status of supply.
Unfortunately
the Department hardly received any reasonable reply
from the Supplier.
6 In view of the delaults detailed at para-5
above, the
Competent Authority in the Department is of the view that the
Supplier has failed to comply the contractualobligations, execute
the Work Orders of supply and hampered the interests of
the
Department and 9.60lakh ration cardholders of the State as well.
7. Now therefore, with approval of the
Competent
Authority, Ihereby invoking penal provisions under Clause 27 &
28 of the 'General Terms & Conditions' Section NIT
document
under reference and passing the following orders.
executed between the
The Dced of Agreement
M/S. Kismat Spices Industry, Math
Department and
is
Chowmuhani, A.A. Road, Agartala dated 14.12.2022
hereby cancelled.
Chowmuhani, A.A.
b) MIS. Kismat Spices Industry, Math
period of 05
Road, Agartala is hereby blacklisted for a
this Order for
(five) yecars from the date of issuance of
participating any e-Tender/Expression of Interests
(Eol)/Request for Proposal (RFP) of the Department.
the Bill
c) Appropriate penal amount will be deducted from
due/Performance Guarantee deposit of the Supplier as per
provisions of the NIT document under reference for
delayed supply against Work Order No. F.5-11(|-PP
(PD)-DFI2022-23 (Tender)/16620 dated 16.12.2022.
Sd/
(Nirmal Adhikari)
Addl. Secretary & Director
Food CS&CA, Tripura
To
MIS. Kismat Spices Industry, Math Chowmuhani,
A.A. Road, Agartala
Copy to:
1. PS to the Hon'ble Minister, Food CS&CA for kind
information of the Hon'ble Minister.
2. PS to the Special Secretary, Food CS&CA for kind
information of the Special Secretary.
3. All Sub-Divisional Magistrates of the State for information.
4. The DDF, Dharmanagar/Udaipur, O/C, Central Stores, A.D.
Nagar for information.
Sd/
Addl. Secretary & Director
Food CS&CA, Tripura"
[10] Clause 27 of the terms and conditions of the NIT are also extracted
hereunder which stipulates furnishing of mandatory 7 (seven) days notice
before the agreement is terminated at the behest of the employer.
"27. Penalty on default /Extension of time:
The successful Bidder shall have to supply the monthly
ordered quantity of lodised Salt as per specitications
prescribed in the NIT and supply shall have to be
completed in a span of 30 (hirty) days from the date of
issuance of the supply order. However, the successful
Bidder shall be given a one-time preparatory period of 30
(thirty) days from the date of issuance of the Letter of
Appointment (LoA) for the Work.
i. In case of non-supply/delayed supply as per the above
schedule, liquidated damage for delay in supply shall be
recovered to be computing @2% of the work order value
for 1 week, @3% of the work order value for 2nd week,
of the quantity of delayed supply from the approved
supplier. In case the supplier still fails to supply even
after 2nd week, the Department shall have the right to
cancel the supply order and make arrangements for the
supply of lodised Salt from other sources at the risk &
cost of the defaulted supplier/Bidder and the incidental
charges incurred thereon on this account shall be
deducted from the due payments of the supplier as well as
from the performance guarantee amount deposits. In
addition to this, the Department shall also have the right
to forfeit the Performance Guarantee Deposit of the
supplier/Bidder besides black-listing the firm.
iv. The Department reserves the right to terminate awarded
contract at any time by giving 07 days prior notice, if the
service of the Bidder is found un-satisfactory.
V. Penalty provision as mentioned above for delayed supply
will be applicable, but in exceptional circumstances and if
it is sufficiently proved that the delay in supply is due to
the circumstances beyond the control of the suppliers,
extension of timne will be granted at the discretion of
Director, Food, CS&CA.
vi. In the event of failure by the successful Bidder (L) the
Food, CS&CA Department is at liberty and also reserves
the right to purchase the ordered quantity to ensure
uninterrupted supplies. In such circumstances the
differential cost, transport charges, incidental charges and
other excess expenditure, if any, will be recovered from
the successful Bidder (L1). If the new rate is cheaper the
benefit willnot accrue to the unsuccessful supplier.
vii. Food, CS&&CA Department reserves the right to charge
penalty provision as mentioned above or withhold
payment against any unsatisfactory stocks supplied by the
supplier without prejudices to other rights. The decision
of the Director, Food, CS&CA Department is final and
cannot be called into question. The supplier is liable to
reimburselcompensate the Food, CS&CA Department or
to third party for any loss, damage, injury, etc. caused or
arising out of the negligence in supply of low or inferior
quality of stocks or any breach of contract.
viii. Notwithstanding anything contained in the terms and
conditions of this tender, The Director, Food, CS&CA
Department is the authority in deciding the recovery of
penalty from the supplier taking into account the stock
position and future requirement of supply in the larger
interest of the uninterrupted PDS supply."
|11] A perusal of the impugned letters itself show that there is no
reference to any show-cause notice issued upon the petitioner before the
precipitate action of termination of the agreement and blacklisting has been
taken against him. The law in this regard in quite well settled. Reference is
made to the decision of the Apex Court in the case of Gorkha Security Services
(Supra) (paragraphs 21and 22) which are quoted hereunder:
*21. The central issue, however, pertains to the requirement of
stating the action which is proposed to be taken. The
fundamental purpose behind the serving of show-cause notice is
to make the noticee understand the precise case set up against
him which he has to meet. This would require the statement of
imputations detailing out the alleged breaches and defaults he has
committed, so that he gets an opportunity to rebut the same.
Another requirement, according to us, is the nature of action
which is proposed to be taken for such a breach. That should also
be stated so that the noticee is able to point out that proposed
action is not warranted in the given case, even if the defaults/
breaches complained of are not satisfactorily explained. When it
comes to blacklisting, this requirement becomes all the more
imperative, having regard to the fact that it is harshest possible
action.
22. The High Court has simply stated that the purpose of show
cause notice is primarily to enable the noticee to meet the
grounds on which the action is proposed against him. No doubt,
the High Court is justified to this extent. However, is equally
important to mention as to what would be the consequence if the
noticee does not satisfactorily meet the grounds on which an
action is proposed. To put it otherwise, we are of the opinion that
in order to fulfil the requirements of principles of natural justice,
a show-cause notice should meet the following two requirements
viz:
(i) The material/grounds to be stated which according to
the Department necessitates an action;
(ii) Particular penaltylaction which is proposed to be
taken. It is this second requirement which the High
Court has failed to omit.
We may hasten to add that even if it is not specifically mentioned
in the show-cause notice but it can clearly and safely be
discerned from the reading thereof, that would be sufficient to
meet this requirement."
|12) Reliance is also placed on the decision of the Apex Court in the
case of Kulja Indstries Limited (Supra) (paragraphs 17,18,20,27,28,28.1 &
Z8.2)_ The Apex Court has laid down that not only the order of blacklisting
should precede a show-cause containing the charges but it should also indicate
the propOsed quantum of penalty in vjew of the doctrine of proportionality so
that the noticee is in a position to offer his reply to the charges and also the
proposed penalty since the order of blacklisting has serious adverse
consequences as it affects the right to carry on business guaranteed under
Article 19(1X(g) of the Constitution of India.
[13] It further appears that the impugned orders suffers from non
application of mind as even the date mentioned in the orders are of 25.04.2024
which the concerned respondent has not even cared to correct before signing it.
[14] Having regard to the position in law referred to above and the facts
and circumstances of this case, since the impugned orders of cancellation of
work order, termination of agreement/contract and blacklisting are apparently
in violation of principles of natural justice and not preceded by any show-cause
notice, in order to give an opportunity to the petitioner to submit his defence, at
this stage without observing anything on the merits of the charges referred to in
the impugned orders, the impugned letters bearing No.F.5-11(1)-PP (PD)
DF/2022-23(Tender)/5766-70 and No.F.5-1 1(1)-PP(PD)-DF/2022-23
(Tender)/S771-75 both dated 25.04.2024 are quashed.
|15] The matter is remitted to the competent authorities/respondent
No.2 1o take a fresh decision in accordance with law on the issue of
cancellation of work order., termination of contract and the blacklisting by
giving adequate opportunity to the petitioner to show-cause and upon
consideration of his reply, if any. Needless to say, such decision be taken
preferably within 4 (four) weeks as the issue not only affects the petitioner but
the interest of the employer also whose work may continue to suffer. The writ
petition is accordingly disposed of.
Pending application(s), if any, also stands disposed of.
Apasesh keman Son
(T. AMARNATH GOUD), J (APARESH KUMAR SINGH), CJ
RUDRADEEP Digitally signed by RUDRADEEP
Rudradeep BANERJEE
BANERJEE
Date: 2023.08.23 16:22:43 +05'30'
