Delhi High Court - Orders
M/S Tharu And Sons Pvt. Ltd vs Union Of India And Anr on 28 August, 2024
Author: Sanjeev Narula
Bench: Sanjeev Narula
$~144
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 8745/2024
M/S THARU AND SONS PVT. LTD. .....Petitioner
Through: Mr. Ankit Jain, Mr. Mohit Gupta, Mr.
Vishal Saxena, Ms. Meenakshi Garg,
Advocates.
versus
UNION OF INDIA AND ANR. .....Respondents
Through: Mr. Amit Tiwari, CGSC with Mr.
Chetanya Puri, Mr. Rahul Bhaskar,
Advocates for UOI.
CORAM:
HON'BLE MR. JUSTICE SANJEEV NARULA
ORDER
% 28.08.2024 CM APPL. 49207/2024 (application under Section 151 CPC seeking appropriate directions)
1. Through the present writ petition, the Petitioner has challenged the termination letter dated 21st June, 20241 whereby the contract dated 9th October, 20232 for 'Mechanized Washing of Linen in Departmental Laundry and Comprehensive maintenance of laundry machines at Hazrat Nizamuddin (HNZM) depot', awarded to the Petitioner has been rescinded in terms of clause 7.4 of the General Conditions of Contract3 and the performance guarantee has been also forfeited. This impugned communication also 1 "Impugned letter"
2"subject contract"3
"GCC"W.P.(C) 8745/2024 Page 1 of 5
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 31/08/2024 at 02:13:43 debars the Petitioner from participating in any future tenders for a period of two years. On the first date of hearing on 28th June, 2024,4 noting that the issues raised by the counsel for Petitioner would require deeper examination, this Court, as an interim measure, directed that the operation of the impugned letter, in so far as it debars the Petitioner from participating in any future bids pertaining to the Indian Railways, to be stayed. Subsequently, on 31st July, 2024, the Petitioner was disqualified by the Respondents, in a separate tender- GeM Contract bearing No. GEMC-511687747548817,5 at the technical evaluation stage with a comment "In terms of clause 2.5.2.2
(ii) of GCC for services the offer has been treated as Disqualified." The reason for rejection was given as "the offer of the bidder was disqualified due to exceeding the maximum penalty in previous contract."
2. Through the above-captioned application, the Petitioner now seeks extension of the interim stay order as follows:
"i) pass appropriate directions to the Respondents to waive off/ stay the imposition of penalty upon the Petitioner qua the GeM Contract No. GEMC-
511687747548817 dated 09.10.2023, till the pendency of the present Petition; and/ or
ii) direct the Respondents to consider the financial bid of the Petitioner qua all tenders participated by the Petitioner and imposition of penalty shall not be considered as condition for disqualification of the Petitioner, till the pendency of the present Petition; and/ or
iii) Restrain the Respondents from awarding the work contract qua the tender GeM Contract no. GEMC- 511687747548817, till the pendency of the present Petition; and/or
iv) Pass any other or further order(s) as this Hon'ble Court may deem fit and proper in favour of the Petitioners and against the Respondent."
3. The Petitioner is today prevented from participating in Indian Railways contract on account of a clauses contained in the subject contract 4 "interim stay order"
5"subsequent tender"W.P.(C) 8745/2024 Page 2 of 5
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 31/08/2024 at 02:13:43 which reads as follows:
"4.17.1 In cases, where performance or/and quality of services is/are found to be dissatisfactory, Manager or his representatives shall impose penalty as mentioned in bid document, subject to cumulative penalty for such dissatisfactory performance or/and quality of services does not exceeds 10% of original contract value or as prescribed in the bid document."
"2.5.2.2 The contractor shall be disqualified from participating in the bidding for services in a Railway division,
(i) If any previous contract of the bidder or any of its constituents had been terminated under clause 7.4 in that Railway division, with in the previous 2 years from date of submission of bids.
(ii) In that Railway division, the bidder or any of its constituents has been imposed a penalty equivalent to the maximum penalty that can be imposed under a previous contract, such a figure being specified, with in the previous 2 years from date of submission of bids. (Period of 2 years shall be reckoned from the date on which the total accrued amount of penalties has reached the maximum penalty that can be imposed under the contract, as specified by the Competent Authority) The declaration to this effect shall be furnished by the contractor as a part of his bid document. A format in this regard shall be made a part of the tender document. In case this declaration is found to be false, process for 'banning of business' against the bidder/contractor shall be initiated as per extent rules."
4. Mr. Ankit Jain, counsel for the Petitioner, contends that the Court's order dated 28th June, 2024, was intended to permit the Petitioner to participate in future Indian Railways tenders and to prevent disqualification on technical grounds. He further argues that the Respondents, in an attempt to circumvent the interim stay order, has invoked clause 2.5.2.2 (ii) of the GCC to debar the Petitioner, which is against the spirit of the stay order. He prays for the stay of the penalty imposed by the Respondents as well as a direction to the Respondents to consider the financial bid of the Petitioner qua all tenders participated by the Petitioner. He argues that without this relief, the interim stay order granted by the Court, would offer no practical W.P.(C) 8745/2024 Page 3 of 5 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 31/08/2024 at 02:13:44 benefit to the Petitioner. The Court has considered the aforenoted contentions but remains unpersuaded.
5. It is important to note that the challenge in this writ petition is limited to the Impugned letter. This communication does not impose the penalty. The cause of action does not pertain to precluding the Petitioner from participating in the subsequent tender, which arose from the imposition of penalties. It is also pertinent to note that clause 2.5.2.2 (i) of the GCC and clause 2.5.2.2 (ii) of the GCC are two different grounds for disqualification and the subsequent disqualification is basis clause 2.5.2.2(ii) which relates to penalties. Thus, it cannot be held that the purpose of the interim stay order, on which Mr. Jain relies, was to prevent any and all disqualifications which may be imposed on grounds including grounds other than the one examined by the Court.
6. That apart, the Court has also considered the Petitioner's prayer for stay of penalty imposed upon them qua the subject contract. The imposition of penalty arises from the concept of contractual breaches. The challenge to a contractual penalty, is founded on a different footing altogether, which this Court has not examined while granting the interim relief in a writ petition filed under Article 226 of the Constitution of India. The relief already granted to the Petitioner is regarding the debarment of the Petitioner, on which there is extensive case law guiding the Court as to the parameters to be considered for granting such a relief which includes violation of Principles of Natural Justice. However, the Petitioner's challenge to penalty cannot be adjudicated in the present proceedings. The Petitioner's remedy lies elsewhere, not through this interim application, which pertains to a petition challenging the termination letter dated 21 st June, 2024, where the W.P.(C) 8745/2024 Page 4 of 5 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 31/08/2024 at 02:13:44 Petitioner's contract was terminated, and they were barred from participating in future bids.
7. The present application is disposed of.
W.P.(C) 8745/2024
8. List on the date already fixed, i.e., on 19th September, 2024.
9. Interim order to continue.
SANJEEV NARULA, J AUGUST 28, 2024/ab W.P.(C) 8745/2024 Page 5 of 5 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 31/08/2024 at 02:13:44