Orissa High Court
Telsa Transformers Limited vs Odisha Power Transmission Corporation ... on 3 May, 2016
Author: Vineet Saran
Bench: Vineet Saran
ORISSA HIGH COURT: CUTTACK
W.P.(C) No. 18820 of 2015
In the matter of an application under Articles 226 & 227 of the
Constitution of India.
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AFR
TELSA Transformers Limited ........ Petitioner
- versus -
Odisha Power Transmission ........ Opp. Parties
Corporation Limited and another
For Petitioner : M/s. P.C. Nayak along with
S.K. Mishra.
For Opp.Parties: M/s N.C.Panigrahi, Sr. Counsel along with
S.R.Panigrahi,N.K.Tripathy,D.Dhal.
(For opposite party nos.1 & 2).
PRESENT:
THE HON'BLE THE CHIEF JUSTICE MR. VINEET SARAN
AND
THE HON'BLE DR. JUSTICE B.R.SARANGI
DECIDED ON : 03.05.2016
Vineet Saran, C.J. The petitioner TELSA Transformers Limited, a
Private Limited Company registered under the Companies Act, has
filed this application challenging the order dated 14.09.2015
passed by the Sr. General Manager (CPC), Odisha Power
Transmission Corporation Limited (hereinafter referred to as the
'Corporation') vide Annexure-1, debarring it for a period of three
2
years from participating in future tenders and not to encash the
bank guarantee, and further seeks for a direction to release the
amount of pending bills in respect of transformers already supplied
and received by the Corporation.
2. The factual matrix of the case in hand is that in response
to the tender notice floated by the opposite party- Odisha Power
Transmission Corporation Ltd. on 08.02.2014 inviting e-Tender for
supply of transformers, the petitioner had participated and was found
to be the second lowest tenderer. However, the petitioner was
awarded 30% of the tender work on the rate quoted by the lowest
tenderer. On 18.06.2014 purchase order was issued in favour of the
petitioner for supply of 446 nos. of 63 KVA transformers and 402
numbers of 100 KVA transformers to be delivered in three phases,
the first phase being within three months, the second phase within six
months and the third phase within nine months i.e. by 17.03.2015.
For the said purpose the petitioner furnished bank guarantee to the
tune of 10% of the purchase order value which comes to about Rs. 84
lakhs. Since the petitioner failed to make the supplies in the first two
phases, notice for cancellation of the purchase order and for forfeiture
of performance security for non supply of transformer was issued on
03.02.2015. Pursuant to the said communication, the petitioner offered to supply certain lesser numbers of transformers i.e. only 60 numbers of 63 KVA and 80 nos. of transformers of 100 KVA. Then on 12.02.2015 the petitioner made a representation to reduce the 3 quantity to be supplied by it as it was unable to supply the balance transformers. By 17.03.2015, which was the last date for supply of transformer, the petitioner did not supply any transformers. Pursuant to the aforesaid request made by the petitioner, the opposite party- Corporation amended the purchase order on 20.04.2015 and allowed the petitioner to supply 80 nos. of transformer of 100 KVA and 60 nos. of transformers of 63 KVA. The opposite party-Corporation got the same inspected and consequently, the supply of the aforesaid quantity of transformer was accepted by the Corporation.
Then on 01.06.2015, the opposite party-Corporation wrote to the State Bank of India, which had issued bank guarantee in favour of the Corporation on behalf of the petitioner, requesting that the process of the Bank Guarantee may be remitted in favour of the Corporation. On coming to know of the said communication by the Corporation to the Bank, the petitioner vide his communication dated 04.06.2015, requested the opposite party-Corporation not to encash the Bank Guarantee, and offered to pay the amount towards Bank Guarantee by way of demand draft. The opposite party-Corporation agreed to such offer and did not encash the Bank Guarantee and accepted the demand draft for the amount of Bank Guarantee on 26.09.2015. On 14.09.2015, the opposite party-Corporation had already passed an order directing for encashment of the bank guarantee and also communicated to the petitioner that a resolution has been passed on 21.08.2015 debarring the petitioner from 4 participating in any tender for a period of three years. Hence, this petition.
3. The facts as stated above are not disputed by the parties. Mr. P.C. Nayak, learned counsel appearing for the petitioner has raised two fold contentions. Firstly, it is submitted that no show cause notice was issued to the petitioner before passing the impugned order dated 14.09.2015; and secondly, it is contended that by the amended purchase order issued on 20.04.2015, the opposite party-Corporation had itself amended the terms of the contract, and as such debarring the petitioner from participating in any tender, imposing any penalty or invoking the bank guarantee cannot be justified in law. Debarring the petitioner from participating in any tender for a period of three years without affording any opportunity amounts to blacklisting of contract, which is not permissible under law. To substantiate his contention, reliance has been placed on the judgments of the Apex Court in Gorkha Security Services v. Govt. of NCT of Delhi & Ors., AIR 2014 SC 3371 and M/s Erusian Equipment & Chemicals Ltd. v. State of West Bengal and another, (1975) 1 SCC 70.
4. Per contra, Sri N.C. Panigrahi, learned Senior counsel appearing for the opposite party-Corporation has submitted that vide its communication dated 4.6.2015, the petitioner had itself offered to pay the amount in lieu of the bank guarantee furnished by it, because encashment of the bank guarantee would adversely affect the 5 reputation of the petitioner. It is thus submitted that the letter of encashment of bank guarantee has been sent after the admission of the petitioner with regard to the same. It is further submitted that time is the essence of the contract, and since the petitioner did not supply the transformers within time i.e. by 17.03.2015, encashment of the bank guarantee, as well as debarring the petitioner from participating in any tender for a period of three years, is fully justified and that the order dated 20.04.2015 was not in the form of extension of contract/ purchase order but only to be treated as a fresh purchase order, independent of the earlier contract/purchase order. To substantiate his contention, reliance has been placed on the judgment of the Apex Court in Kulja Industries Limited v. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Limited and others, (2014) 14 SCC 731.
5. Having heard learned counsel for the parties and after going through the records, it appears that the opposite party, pursuant to the e-Tender Notice No. CPC-28-2013-14.docx. and Tender Specification No. Tender-DTR-CPC-28-2013-14.docx., issued a purchase order dated 18.6.2014 for procurement of transformers. Clause-16 of the condition of contract of purchase order states as follows:-
Clause-16:- Extension of Delivery Time:-
"If the delivery of the transformers is delayed due to reasons beyond your control, then you will without delay give notice to this office in writing of your 6 claim for an extension of delivery time. On receipt of such notice, OPTCL may or may not agree to extend the contractual delivery date as may be reasonable but without prejudice to other terms and conditions of the contract."
6. The purchase order was issued for supply of certain quantities of transformers. Subsequently, pursuant to the amended purchase order dated 20.04.2015 (vide Annexure-14) referring to the very same e-tender notice and tender specification, the opposite parties had agreed to the supply of reduced number of transformers. There is no doubt that time is the essence of the contract, but when provision for extension is provided under clause-16 of the contract itself, and amended purchase order in terms of the said contract has been issued, the terms of which have been complied with by the petitioner, the original contract/agreement/purchase order would automatically stand amended to the extent of the subsequent order.
7. In Basheshar Nath v. Commissioner of Income Tax, Delhi and Rajasthan, AIR 1959 SC 149, Mademsetty Satyanarayana v. G. Yelloji Rao, AIR 1965 SC 1405, Associated Hotels of India Ltd. v. S.B. Sardar Ranjit Singh, AIR 1968 SC 933 and Sikkim Subba Associates v. State of Sikkim, AIR 2001 SC 2062, the Apex Court held that even in case of mandatory provision, under specific circumstances, a party can waive its right. Waiver means relinquishment of one's own right. It is referable to a conduct signifying intentional abandonment of right. It may be express or may even be implied but should be 7 manifest from some overt act. Waiver involves a conscious, voluntary and intentional relinquishment or abandonment of a known existing legal right. Thus, benefit, claim or privilege, which, except for such a waiver, the party would enjoy. Even in a case if a plea is taken and evidence is not led, it would amount to be a waiver.
8. Applying the said principle to the present context, it appears that by amended purchase order dated 20.04.2015 by reducing the quantity of transformer to be supplied by the petitioner, the opposite parties had waived the condition of initial purchase order dated 18.06.2014 with regard to the quantity to be supplied pursuant to the initial contract, and as such the opposite parties had acted upon with the amended purchase order by accepting the supply of reduced quantity of transformers. Therefore, the opposite parties are estopped from taking any further coercive action against the petitioner.
9. As such, in our view, debarring the petitioner for a further period of three years, despite the terms of the initial purchase order dated 18.06.2014 having been amended by the subsequent purchase order dated 20.04.2015, cannot be justified in law. Debarment of the petitioner, without following due procedure of law, and without complying with the principles of natural justice, amounts to blacklisting him, which is also not permissible under law. 8
10. In M/s Erusian Equipment & Chemicals Ltd. (supra), the Apex Court held that fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the black list.
11. In Gorkha Security Services (supra), the Apex Court held that merely because clause in Notice Inviting Tender empowers department to impose such penalty that does not mean that such penalty can be imposed without putting defaulting contractor to notice to this effect.
12. The reference made to Kulja Industries Limited (supra) by the learned Sr. Counsel for the opposite party also supports the stand of the petitioner. In the said judgment, the Apex Court held that if State or its instrumentality takes decision on blacklisting then such decision is subject to judicial review on grounds of principles of natural justice, doctrine of proportionality, arbitrariness and discrimination under Article 14 of the Constitution of India.
13. On perusal of the impugned order, it appears that before debarring the petitioner to participate in future tender for a period of three years, no notice of opportunity was given to him before passing such order. Even otherwise, no notice or opportunity was ever given to the petitioner before passing any such order, and merely reference of the same has been made in the impugned order dated 14.09.2015, wherein it is stated that by resolution dated 21.08.2015, the petitioner has been debarred from participating in any Tender for a 9 period of three years. In the facts of the present case, such resolution could not have been passed without giving opportunity to the petitioner. Such portion of the order dated 14.09.2015, by which the petitioner has been debarred, is liable to be quashed, and is accordingly quashed.
14. So far as the question of encashment of bank guarantee is concerned, we are of the view that, just as the opposite party- Corporation is estopped from raising any dispute with regard to the extension or amendment of the purchase order, after having amended the same by its communication dated 20.04.2015, the petitioner also cannot raise any dispute with regard to the encashment of the bank guarantee, as its communication dated 04.06.2015 itself is an offer to pay the bank guarantee amount in lieu of the bank guarantee which was returned to the petitioner on furnishing bank draft, and the same was only acted upon by the petitioner after passing the impugned order on 14.09.2015, on 26.09.2015 when the petitioner submitted the bank draft of equivalent amount for taking back the bank guarantee. In such view of the matter, we would not be inclined to interfere with the direction in the impugned order dated 14.09.2015, with regard to the encashment of the bank guarantee.
15. At this stage learned counsel for the petitioner has submitted, that the pending bills of the petitioner may be cleared as 10 admittedly the petitioner has made certain supplies, which bills are not being paid.
Sri N.C. Panigrahi, learned Senior Counsel appearing for the opposite party-Corporation has fairly submitted, that the account of the petitioner will be cleared by the opposite party-Corporation within two months from the date of filing of the certified copy before opposite party-Corporation.
16. For the reasons given hereinabove and balancing equity between the parties, it is directed that the amount equivalent to the bank guarantee already paid by the petitioner in lieu of return of the original bank guarantee is sustained, and the direction given in the order dated 14.09.2015 with regard to debarring the petitioner from participating in any future contract of the opposite party-Corporation, is quashed.
17. Accordingly, the writ petition stands allowed in part. No order to costs.
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(Vineet Saran, C.J.) ........................................
(Dr. B.R. Sarangi, J.) Orissa High Court, Cuttack The 4th May, 2016/Ashok