Gujarat High Court
N.P. Patel And Co vs Gujarat Water Supply Sewerage Board on 9 April, 2025
Author: Umesh A. Trivedi
Bench: Umesh A. Trivedi
NEUTRAL CITATION
C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 5725 of 2024
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE UMESH A. TRIVEDI
and
HONOURABLE MR. JUSTICE CHEEKATI
MANAVENDRANATH ROY
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Approved for Reporting Yes No
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N.P. PATEL AND CO.
Versus
GUJARAT WATER SUPPLY SEWERAGE BOARD & ORS.
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Appearance:
MR PARAS K SUKHWANI(8284) with MS HONEY H. THAKKAR for
the Petitioner(s) No. 1
MR KEYUR GANDHI WITH MR ISA HAKIM AND MS NITYA JOSHI
for GANDHI LAW ASSOCIATES(12275) for the Respondent(s)
No. 1
NOTICE SERVED for the Respondent(s) No. 2,3
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CORAM:HONOURABLE MR. JUSTICE UMESH A. TRIVEDI
and
HONOURABLE MR. JUSTICE CHEEKATI
MANAVENDRANATH ROY
Page 1 of 42
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NEUTRAL CITATION
C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025
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Date : 09/04/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE UMESH A. TRIVEDI) [1.0] This petition is filed under Article 226 of Constitution of India challenging the order passed by respondent no.2 herein dated 08.02.2024 whereby the petitioner is debarred from participating for the tenders of GWIL, GWSSB and WASMO as per the provisions of Tender Volume IA (Section II A-1.1 (XI) page 21 for a period of three years.
[2.0] The facts in a nutshell, as revealed from the petition as mentioned, are as under:
[2.1] The petitioner is a partnership firm carrying on business as "AA" Class Government approved Contractor at the address shown in the cause title for years together, having turnover of more than crores of rupees. The petitioner has also taken lead in constructing a significant number of Water Treatment Plant and Sewage Treatment Plant Project and the petitioner has served millions of residents across more than five States throughout the nation. It is claimed that the petitioner has completed number of projects in the State of Gujarat as well as throughout the nation without any litigation.
[2.2] The respondent authority called for online tenders by Tender ID No.601027 dated 04.07.2023 for Working Survey, Soil Investigation, Design, Build & Operate (with trial run of 3 Page 2 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined months) Contract for Providing, Supplying, Lowering, Laying & Jointing Rising Main & Gravity main Pipeline (Type-MS Pipe, DI Pipe-K-7 & PVC-6 Kg/cm2 Pipe) & Supply, Installation, Testing & Commissioning of HSCF and Monoset Sub Pump with Associated Mechanical and Electrical Equipment's, Instruments & Accessories, Clear Water Sump, Pump House, Elevated Storage Reservoir, Staff Quarter, Compound Wall, Approach Road (RCC) at various HW, SHW & village with Operation & Maintenance of (existing & proposed scheme) all type of civil structures, Mechanical Equipment's & Pipeline Network for 10 years under Aug. of Rundh Rajpardi Regional Water Supply Scheme based on Narmada River Taluka - Jagadiya / Rajpardi, District - Bharuch.
[2.3] The petitioner alongwith Krishna Construction Company, as a Joint Venture, participated for the tender in question. Krishna Construction Company is having 85% share whereas the petitioner is having 15% share in the Joint Venture. As mentioned in the petition, respondent no.3 vide letter dated 11.12.2023 alleged that there is a discrepancy in Form - H submitted alongwith the tender document and sought the explanation within 7 days why no action be taken as per the provisions of tender Volume 1A (Section IIA-1.1(XI) page
21. The petitioner claimed that the communication dated 11.12.2023 was not brought to the notice, and therefore, no explanation could be offered to respondent no.3. Hence, vide office order dated 08.02.2024 respondent no.2 has debarred the petitioner from participating for the tenders of respondents on the ground that Gandhinagar Mahanagarpalika has Page 3 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined prohibited the petitioner from participating in the tenders for one year, which has been suppressed, to be mentioned, in Form - H by the petitioner, and thereby mislead the respondents authorities, and therefore, the order of debarment, as aforesaid, came to be passed.
[2.4] The petitioner further claimed that Deputy Municipal Commissioner, Gandhinagar Municipal Corporation by order dated 05.04.2023 prohibited the petitioner from participating in the tenders of Gandhinagar Municipal Corporation on the ground that the petitioner has offered 50% less rates for the tender of Providing and Laying Water Distribution Network in Pethapur TP Scheme and Gamtal Area with Construction of ESR (2 Nos.), and therefore, there appears no intention on the part of the petitioner to carryout the work honestly and with utmost integrity. Therefore, with a view to see that quality is maintained for the work undertaken by the Gandhinagar Municipal Corporation, the petitioner is prohibited from submitting any tender from 23.02.2023 for a period of one year of Gandhinagar Mahanagarpalika. However, the said prohibitory order reflects that if the petitioner wants to make any representation, it be made to the Municipal Commissioner, Gandhinagar Mahanagarpalika. Pursuant thereto, the petitioner made representation against the order dated 05.04.2023 by letters dated 07.06.2023, 27.12.2023 and 23.02.2024, which were considered by Gandhinagar Municipal Corporation and vide communication dated 14.03.2024 the order of prohibition for one year was cancelled from 15.03.2024.
Page 4 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined [2.5] The petitioner further contented that vide communication dated 18.03.2024 the petitioner apprised respondent no.2 that prohibitory order passed by the Gandhinagar Municipal Corporation vide order dated 14.03.2024 has come to be cancelled with effect from 15.03.2024, and therefore, respondent no.2 herein was requested to cancel the order of debarment dated 08.02.2024 passed by respondent no.2 herein.
[2.6] It is further the case of the petitioner that since it was not responded thereto, representation dated 18.03.2024 was made through an advocate and respondent no.2 was again apprised with the fact that due to inadvertence the required information could not be provided at the time of submitting the tender for the work in question and since Gandhinagar Municipal Corporation had cancelled the prohibition of one year by further order dated 14.03.2024 with effect from 15.03.2024, the order dated 08.02.2024 passed by respondent no.2 herein was without hearing the petitioner and the order debarring the petitioner for three years from participating in the tenders be cancelled. The said representation, through an advocate, dated 20.03.2024 is part of the compilation and it is as Annexure G, page 132 of the petition.
[3.0] Mr. Paras K. Sukhwani, learned advocate for the petitioner, contended that respondent no.2 failed to appreciate that the very basis of passing the order dated 08.02.2024 was Page 5 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined cancelled by the Gandhinagar Municipal Corporation. It is further contended that respondent no.2 has no authority to debar the petitioner from tenders of other public sector undertakings. He has further submitted that respondent no.2 failed to appreciate that the petitioner was already punished by disqualifying for the tender in question. On the merit of the case, it is submitted that respondent no.2 failed to appreciate that inadvertently the required information in Form - H could not be provided at the time of submitting the tender in question. He has further submitted that respondent no.2 failed to appreciate that there was no prejudice caused to GWSSB as well as other PSUs as the petitioner was already disqualified from the tender in question.
[3.1] He has vehemently submitted that the very communication dated 11.12.2023 cannot be termed as show- cause notice, that too, for initiating action in debarment /blacklisting the petitioner. He further submitted that it does not fulfill in terms that explanation is sought for from the petitioner that why he should not be blacklisted, that too, for the period mentioned in the order of blacklisting. Therefore, according to the submission, based on such alleged show- cause notice, no order of debarment could have been passed by the authority.
[3.2] Drawing attention of the Court to the alleged show- cause notice dated 11.12.2023 asserting that Form - H is submitted by the petitioner, which is incorrect, he submitted that Form - H, which is letter of undertaking to be submitted in Page 6 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined Form 18 at page 187, is not filled in by the petitioner, as claimed in the alleged show-cause notice as it has been signed by the authorized signatory of Krishna Construction Company - Ahmedabad. He has further submitted that the petitioner is only a 15% constituent Joint Venture of Krishna Construction Company, who is not dealt with similar action, as initiated against the petitioner, while petition was filed, which is in clear breach of Article 14 of the Constitution of India.
[3.3] He has further submitted that since the Joint Venture is disqualified, sufficient punishment is imposed upon a minor Joint Venture partner, and therefore, no action debarring it further, that too, for a period of three years could have been initiated. He has vehemently submitted, drawing attention of the Court to Form - H at page 188 Clause (IX), that the person who has filled in Form - H shoulders the responsibility for all consequences that may arise out of the action of the respondents, if any particulars is found to be incorrect, incomplete or misleading in any matter, and therefore, also, no action could have been taken against the petitioner, who is a very small marginal constituent partner of Joint Venture, more particularly, when lead partner of the Joint Venture was not proceeded against for the action in debarment /blacklisting while the petition was being filed.
[3.4] He has further submitted that the action for debarring /blacklisting the petitioner is the harshest action, which brings about civil death for the petitioner, and therefore, it should not be resorted to when the Joint Venture is already Page 7 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined disqualified for the tender as also Earnest Money Deposit, also came to be forfeited by the respondent authority. He has further submitted that the action in blacklisting, that too, a marginal constituent partner of Joint Venture, should not be initiated when there appears no loss or damage caused to the respondent authority, more particularly, when the lead partner of the Joint Venture, who is responsible for filing incongruous, wrong Form - H disclosing incorrect or misleading details, is not proceeded for blacklisting at the time of filing petition. He has further submitted that the alleged show-cause notice does not specify action to be taken, which may lead to blacklisting and that too for a particular period. Therefore, according to the submission of the learned advocate for the petitioner, no action of blacklisting, that too, for a period of three years could have been passed by the respondent authority.
[3.5] He has further submitted that despite declaration /undertaking in Form - H (Form 18) signed and submitted by the authorized signatory of other constituent Joint Venture partner, when it is alleged in the show-cause notice that it is filed by the petitioner, the said communication is with predetermined mind issued only with a view to blacklist the petitioner. He has further alleged that respondents, being State authorities, cannot be permitted to pick and choose while exercising the power of blacklisting and in arbitrary exercise of the power, the respondent authority has, without any application of mind, passed the impugned order dated 08.02.2024, which is against law and required to be quashed and set aside.
Page 8 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined [3.6] Mr. Paras Sukhwani, learned advocate for the petitioner, relying on the decision in the case of Gorkha Security Services Vs. Government (NCT of Delhi) and Others reported in (2014) 9 SCC 105, more particularly paragraph 16 thereof, it is submitted that blacklisting has to be preceded by show-cause notice.
According to the submission, the communication dated 11.12.2023 does not qualify to be show-cause notice. Therefore, relying on the said decision, it is submitted that the order of blacklisting is passed without show-cause notice, and therefore, it is required to be quashed and set aside since it does not give an opportunity to the petitioner to represent against the proposed action of blacklisting.
[3.7] Relying on a decision in the case of M/s. Techno Prints v. Chhattisgarh Textbook Corporation & Another, rendered in Civil Appeal No.2362 of 2025, arising out of SLP (C) No. 10042/2023, more particularly, paragraphs 25 to 30 and 34, it is submitted that even a show-cause notice pertaining to blacklisting came to be quashed by the Supreme Court as the authority, with pre-judged mind, issued such show-cause notice, with a view to passing an order of blacklisting, and therefore, seeking an explanation by issuance of such a notice is a mere ritual.
[3.8] Reliance is also placed on a judgment and order passed by this Court in the case of M/s. Aquafil Polymers Co. Pvt. Ltc. v. Gujarat Urban Development Company Page 9 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined Limited, rendered in Special Civil Application No. 11731 of 2018 and connected matters, more particularly, paragraph 5.3 thereof, wherein the word "bidder" is applied in the tender document in question, interpreted to mean the individual petitioner itself as the tenderer. Strictly speaking, as mentioned in the decision, the petitioner was not the tenderer in the Rajasthan Project. Therefore, it was concluded that, it cannot be said that it was not the petitioner entity who was debarred and blacklisted there. Therefore, when the information in the instant tender was to be furnished about the bidder, the non-mention on the part of the petitioner about the Joint Venture bidder in Rajasthan having been treated as debarred, could not be said to be fatal for the petitioner to get his bid reconsidered, nor could it be said to be suppression to prejudicially affect the petitioner.
[3.9] Reliance is placed on a judgment and order passed by this Court in the case of M/s. M. V. Omni Projects (India) Ltd. v. Vadodara Municipal Corporation through The Commissioner, rendered in Special Civil Application No. 8175 of 2021. It is submitted that in the said case the non- consideration of the reply or representation answering every query or allegation made in the show-cause notice, the order of debarment came to be quashed and the matter was remitted back to the respondent Corporation for undertaking entire exercise afresh and to pass fresh order, if thought fit.
[3.10] He has further relied on a decision in the case of M/s Kulja Industries Limited v. Chief General Manager, Page 10 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined W.T. Project, BSNL & Others, reported in AIR 2014 SC 9, more particularly, paragraphs 20 and 21 thereof, whereby, the guidelines stipulated therein, the factors that may influence the debarring official's decision, came to be enumerated. It is submitted that there is no actual or potential harm or impact that results or may result from the failure to disclose correct facts. Therefore, according to him, if those guidelines are to be followed, the respondent authority could not have resorted to an order of blacklisting, as the very bid was cancelled subsequently and the EMD was already forfeited by encashing the Bank Guarantee. In view thereof, the action of blacklisting is required to be interfered with.
[3.11] He has further relied on a decision of the Supreme Court in the case of The Blue Dreamz Advertising Pvt. Ltd. & Another v. Kolkata Municipal Corporation and Ors., reported in 2024 SCC OnLine SC 1896, more particularly, paragraphs 24, 25, and 35 thereof, wherein the Supreme Court has also considered its earlier judgments, including that of M/s Kulja Industries Limited (supra), and others on the issue of blacklisting, and quoted the paragraphs wherein, the Supreme Court has held that, where the case is of an ordinary breach of contract and the explanation offered by the person concerned raises a bona fide dispute, blacklisting/debarment as a penalty ought not to be resorted to. It is further held that, too readily invoking debarment for ordinary cases of breach of contract, where there is a bona fide dispute, is not permissible. It is further held in paragraph 35 of the said decision that, the invocation of the penalty of blacklisting should be justified with Page 11 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined reasons, considering whether the penalty is proportionate, which should be the real question.
[3.12] Decision in the case of Royal Infra Engineering Pvt. Ltd. v. Surat Municipal Corporation and 1 Other, rendered in Special Civil Application No. 10412 of 2018, more particularly, paragraphs 20 to 38 on the doctrine of proportionality for taking action in blacklisting, is relied on by the learned advocate for the petitioner.
[3.13] On the aforesaid submission and precedents relied upon by the learned advocate for the petitioner, he submitted that this petition be admitted and allowed.
[4.0] As against that, Mr. Keyur Gandhi, learned advocate for the respondent - authority, submitted that the action of blacklisting the petitioner is initiated based on a legal and valid show-cause notice dated 11.12.2023. According to his submission, no word like "blacklisting" is used therein, and therefore, it cannot be successfully contended that it does not qualify for taking action in blacklisting. He has further submitted that when it refers about the terms of tender in Volume 1A (Section II A-1.1(XI) at Page 21, the said clause, as coming out from the tender notice produced by the petitioner at page 28 of compilation, it speaks about as a heading, the bidder shall be disqualified containing not only clauses for disqualification, other appropriate action is also provided for therein. Not only that, an action reserving the right of the authority to forfeit the Earnest Money Deposit and blacklist the Page 12 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined bidder is there in case in an undertaking on a non judicial stamp paper duly attested by notary is found to be faulty, incorrect or misleading.
[4.1] According to his submission, as mentioned in the petition itself, he is not a fresh or a first time tenderer, who would not be familiar with the terms of tender. Not only that, any bidder, who participates in any tender, is expected to file even the undertaking that the bidder has read and understood the terms of tender and thereafter only he submits his bid for the consideration. According to his further submission, the present tender in question is submitted by Joint Venture, lead partner being Krishna Construction Company - Ahmedabad and the petitioner herein, may be a marginal sharer, who is certainly a constituent partner of the Joint Venture, who has filled the bid. Therefore, when the show-cause notice dated 11.12.2023 refers that, you Krishna Construction Company as Joint Venture participated in the bid and you submitted Form - H, it means that Form - H is filled, may be by the authorized signatory of the Joint Venture but for and on behalf of both the constituent partner of the Joint Venture and not in an individual capacity. Therefore, it is submitted that the contention raised by the petitioner that it has not submitted any Form - H, and therefore, no action in blacklisting the petitioner, if at all any information therein is found to be incorrect, be taken against the petitioner, is fallacious.
[4.2] He has further submitted that since action in blacklisting can be taken against the bidder for submitting Page 13 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined undertaking, which is found to be faulty, incorrect or misleading is provided as a consequence when other clauses for the tender terms restricts order of blacklisting for a period of three years, when it is exercised for that period, no complaint can be made by any bidder if that part of the terms of tender restricting period of blacklisting is not mentioned in the show-cause notice. However, the copy of entire tender conditions placed on record by the petitioner clearly suggests in Clause 21.7 at page 49 that in case of forfeiture of Earnest Money, bidder shall be disqualified and shall not be allowed to bid for further works under GWSSB for three years. In Clause 21.6 also at page 48, there is a clause for forfeiture of bid security empowering authority to forfeit the same if the documents submitted by the bidder is false or fraudulent.
[4.3] He has further submitted that GWIL as also WASMO are the projects under GWSSB, and therefore, when Clause 21.7 does not provide for debarring the petitioner from GWIL or WASMO for participation in the tender for a period of three years, it makes no difference as both that works are under respondent authority.
[4.4] Drawing attention of the Court to Clause 43 of the tender notice at page 61, it is submitted that reading Clause 43.1 with Sub Clause 'c' of 29 of the tender terms, it refers about evaluation of technical bid. The undertaking as per Form - H duly attested by notary public regarding document submitted are true, if any information therein given by bidder is found faulty, incorrect or misleading, not only the Page 14 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined respondent authority has right to forfeit the Earnest Money Deposit but also has a right to blacklist the bidder, and therefore, according to his submission, not only the period for which the action in blacklisting would be taken is mentioned under the terms of tender even for the submission of false information, that too, in Form- H if found to be faulty or incorrect or misleading, action in blacklisting can also be taken. Even assuming that the Earnest Money Deposit is not forfeited by the authority still the authority is empowered to initiate action for blacklisting the bidder.
[4.5] He has further submitted that the respondent - Board when found that in the bid by Joint Venture all the constituents of Joint Venture are equally responsible for the acts of one of them and Joint Venture is a legal entity, which cannot be bifurcated, the respondent has already issued show- cause notice for blacklisting even the lead partner Krishna Construction Company - Ahmedabad as well vide notice dated 17.03.2025, and therefore, though at the time of filing the writ petition, no action in blacklisting was initiated against the lead partner of the Joint Venture, since notice is issued, Article 14 of the Constitution of India cannot be pressed into service. According to his submission even otherwise Article 14 of the Constitution of India cannot be pressed into service for the reason that no similar action in blacklisting lead partner of Joint Venture is taken.
[4.6] He has further submitted that this action of blacklisting the petitioner is based on suppression of material Page 15 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined fact in Form - H, which is required to be disclosed by the bidder, which includes the petitioner as a constituent partner of the Joint Venture, may be that bid is signed by any authorised signatory, the day on which i.e. 29.07.2023 Form - H was signed and submitted by duly attesting before the notary public and order of blacklisting passed by Gandhinagar Municipal Corporation dated 05.04.2023 was already in existence. Therefore, it was incumbent upon the bidder to disclose the same in Form - H and suppression thereof to entail the action in blacklisting of the bidder, which includes all constituent partners of Joint Venture as Joint Venture constituent partner are jointly and severally responsible for any action of anyone of them.
[4.7] He has further submitted that even if subsequently with effect from 15.03.2024, if order of prohibition from participating in tender of Gandhinagar Municipal Corporation by the petitioner is revoked, it has nothing to do with the declaration filled in Form - H as the day on which it is submitted by the bidder, the said order of prohibition debarring the petitioner from participation in the tenders of Gandhinagar Municipal Corporation was existing and subsequent event need not require to be taken into consideration as action of debarment /blacklisting is taken against the petitioner as a consequence of known terms and conditions based on which terms, petitioner as a bidder, through Joint Venture, submitted its bids for the consideration.
[4.8] He has further submitted that not only the relevant Page 16 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined Clauses of the tender notice based on which the petitioner participated in the tender mentions clearly in the show-cause notice for action mentioned therein, the action of forfeiting the EMD as also blacklisting, is also clear and apparent in the said terms and conditions, referred to in the show-cause notice. He has submitted that even relevant portion thereof, which provides for, also mentions that it would be for a period of 3 years. Thus, according to his submission, the show-cause notice is very specific in respect of breach committed by the petitioner and the proposed action as per the tender conditions/terms, resultant action in respect thereof. Therefore, show-cause notice cannot be termed as vague, not containing the required details so as to render it invalid as contended by the learned advocate for the petitioner.
[4.9] Therefore, he has submitted that this petition is without any merit, and therefore, it is required to be rejected at the threshold.
[5.0] Having heard the learned advocates for the appearing parties and going through the affidavits-in-reply, rejoinder and additional affidavit, whether the action of blacklisting based on alleged notice dated 11.12.2023 as claimed by the petitioner qualifies for the purpose of taking action of blacklisting or not?
[5.1] For the same, Clause mentioned in the communication dated 11.12.2023 is also relevant, which is reproduced herein as under:
Page 17 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined VOL-1A (Section IIA-1.1(xi) 1.1. Special Attention This tender consists for the work "Bid documents for "Working Survey, Soil Investigation, Design, Build & Operate (with Trial Run of 3 Months) Contract for Providing, Supplying, Lowering, Laying & Jointing Rising Main & Gravity main Pipeline (Type-MS Pipeline (Type-MS Pipe, DI Pipe-k-7 & PVC
-6 kg/cm2 Pipe) & Supply, Installation, Testing & Commissioning of HSCF and Monoset Sub Pump With Associated Mechanical and Electrical Equipment's, Instruments & Accessories, Clear water sump, Pump House, Staff Quarter, Compound Wall, Approach Road (R.C.C.) at various HW, SHW & Village with Operation & Maintenance of (Existing & Proposed Scheme) All type of Civil Structures, Mechanical Equipments & Pipeline Network for 10 years under Aug. of Rundh Rajpardi Regional Water Supply Scheme based on Narmada river Taluka -
Jagadiya /Rajpardi, District - Bharuch (69 Village, 01 Town, 28 Habitation)" A pre-bid conference for the works, open to all intending bidders, shall be held on the date & venue as mentioned in the Tender Notice.
xxx
(xi) The bidder shall be disqualified if:
Page 18 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined a. The bidder had made misleading or false representation in the forms, statements and attachment submitted in proof of qualification or requirements and /or b. The bidder is not meeting prequalification criteria of financial and /or physical performance. c. If the bidder is blacklisted by necessary order of the central or state.
The bidder should provide accurate information on litigation and /or arbitration resulting from contract completed or under execution by him over the last five years. A consistent history of arbitration awards /judgments against the applicant or any partner of a joint venture may result in disqualification for proposed work. If the details of litigation history is hidden by the applicant and later on it comes to knowledge of the employer the bidder shall be disqualified for the proposed work and other appropriate actions shall be taken against the bidder.
The bidder should submit undertaking on non- judicial-stamp paper of Rs.300/- duly attested by notary public regarding document submitted, are true, Board would have the right to forfeit the EMD and black list to the bidder if any of the information given by the bidder is found faulty or incorrect or misleading.
[5.2] Alongwith those Clauses other relevant Clauses of Page 19 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined tender notice are also quoted herein for considering and understanding the requirement of contents of show-cause notice for blacklisting.
21. BID SECURITY:
21.1 to 21.5 xxx 21.6 The bid security may be forfeited;
(a) If the bidder withdraws its bid, during bid validity period specified.
(b) If any document submitted by the bidder are false and fraudulent
(c) if the successful bidder fails i. To furnish security deposit in accordance with the relevant clause in the bid.
ii. To sign the contract within time limit specified in the bid.
21.7 In case of forfeiture of EMD, Bidder shall be disqualified and shall not be allowed to bid for further works under GWSSB/GWIL for three years.
22 to 24 xxx
25. ACCOMPANIMENTS TO TENDER 25.1 to 25.8 xxx 25.9 Scanned copy of all the prescribed Forms & Annexure mentioned in Section-III, also in physical form in separate sealed cover by RPAD/Speed Post/ Hand Delivery in the office of The Executive Engineer as mentioned in the Tender Notice.
25.10 xxx Page 20 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined 25.11 The bidder should submit undertaking on non- judicial e-stamp paper of Rs.300/- duly notarized regarding document submitted, are true. Board would have the right to forfeit the EMD and black list to the bidder if any of the information given by the bidder is found faulty or incorrect or misleading.
25.12 to 25.13 xxx 26 to 28 xxx
29. EVALUATION OF TECHNICAL BIDS 29.1 xxx 29.2 Even though the bidder meets the above qualification criteria, he shall be disqualified if:
a. The bidder had made misleading or false representation in the forms, statements and attachment submitted in proof of qualification requirements and/or b. The bidder is not meeting prequalification criteria of financial and /or physical performance.
c. If the bidder is blacklisted by necessary order of the central or state......
The bidder should provide accurate information on litigation and /or arbitration resulting from contract completed or under execution by him over the last five years. A consistent history of arbitration awards /judgments against the applicant or any partner of a joint venture may result in disqualification for proposed work. If the details of litigation history is hidden by the applicant and later on it comes to knowledge of the employer the bidder shall be disqualified for the proposed work and other appropriate actions shall eb taken against the bidder.
The bidder should submit undertaking on non-judicial stamp paper of Rs.100/- dully attested by notary pubilc Page 21 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined regarding document submitted, are true. Board would have the right to forfeit the EMD and blacklist to the bidder if any of the information given by the bidder is found faulty or incorrect or misleading.
29.3 to 29.4 xxx
30. to 40.xxx
41. CORRUPT OR FRAUDULENT PRACTICES:
41.1 The GWSSB requires that bidders/ suppliers/ contractors have followed the highest standard of ethics during the procurement and execution of such contracts.
In pursuance of this policy:
(a) Defines for the purposes of this provision, the terms set forth below as follows:
(i) xxx
(ii) "Fraudulent practice" means a misrepresentation of facts in order to influence a procurement process or the execution of a contract to the determination of the Borrower, and includes collusive practice among bidders (prior to or after bid submission) designed to establish bid prices at artificial non-competitive levels and to deprive the borrower of the benefits of free and open competition;
(b) xxx
(c) Will declare a firm ineligible, either indefinitely or for a stated period of time, to be awarded a contract if it at any time determines that the firm has engaged in corrupt and fraudulent practices in competing for, or in executing, a contract.
If at any stage it is found that bidder had hidden material information or had submitted information which is false and fraudulent shall be debarred from bidding in GWSSB/ Page 22 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined GWIL tender for three years and EMD shall be forfeited. The matter shall also be brought to notice to the registration authority of the contractor.
42. xxx 43.0 DECLARATION FORM: (FORM-H) 43.1 In conjunction to Sub Clause 'C' under "29. Evaluation to Technical bids" the bidder should submit undertaking as per Form-H on non-judicial stamp paper of Rs.300/- dully attested by notary public regarding document submitted, are true. GWSSB would have the right to forfeit the EMD and blacklist the bidder if any of the information given by the bidder is found faulty or incorrect or misleading.
xxx"
[5.3] Considering Clause 1.1 (xi)(a) of Volume IA of Section IIA, it is clear that bidder shall be disqualified if the bidder had made misleading or false representation in the forms, statements and attachment submitted in proof of qualification requirements and /or bidder is not meeting prequalification criteria of financial and /or physical performance. If the bidder is blacklisted by necessary order of the Central or State, the bidder should provide accurate information on litigation and /or arbitration resulting from contract completed or under execution by him over the last five years. A consistent history of arbitration awards judgments against the applicant or any partner of a Joint Venture may result in disqualification for proposed work. If the details of litigation history is hidden by the applicant and later on it comes to knowledge of the employer the bidder shall be disqualified for the proposed work and other appropriate Page 23 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined actions shall be taken against the bidder. In Sub Clause (c) of Clause 1.1(xi) the bidder should submit undertaking on non judicial stamp paper of Rs.300/- duly attested by notary public regarding document submitted, are true. The board would have the right to forfeit the EMD and blacklist the bidder, if any of the information given by the bidder is found faulty or incorrect or misleading.
[5.4] In respect of bid filed by Joint Venture, it is for and on behalf of each constituent partner of Joint Venture for which they are jointly and severally liable. Any bid filed by the Joint Venture becomes the bid filed by each constituent partner of the Joint Venture, who is responsible and all are equally responsible /liable for action in case any one of them fail to submit details or submit incorrect details by any one of them. As such, Joint Venture is the association of its constituent partner for the purpose of a particular project itself. For carrying out the project, they come together utilizing someones financial support and /or others experience for carrying out the project. However, as per their inter se contract as Joint Venture they may agree for any share out of the profit earned on the project when they come together to submit bid in the name of the Joint Venture, each constituent partner and partners /Directors all are also equally responsible for wrong doing by anyone of them. They cannot throw any burden on others and save themselves from the proposed action.
[5.5] Not only that, Clause 34 of the tender notice clearly Page 24 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined mentions status of Joint Venture Consortium, which is quoted herein as under :
"34. JOINT VENTURE CONSORTIUM (JV) Joint Venture Consortium of Maximum Three firms /members /companies, as partners shall be allowed for the works.
All the Members of the JV shall be jointly and severally responsible for this Contract. The Member of the JV holding highest stake shall be the Lead Partner. The JV shall comply with the following requirements:
(a) A Joint Venture agreement must be submitted alongwith the documents in which minimum share of lead member shall have to be 60% and share of other members, individually shall not be less than 15%.
(b) All the members of the Joint Venture firms shall have to collectively satisfy all the criteria mentioned.
Note:
In case, the applicant /JV partner has achieved physical & financial performance for the criteria above in past, in joint venture other Contractor Page 25 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined (other than present JV partner), the portion of the work (physically and financially of the contractor included in their Joint Venture Agreement in original contract work shall only be considered for evaluation purpose.
In Joint Venture Consortium the lead partner shall only be an Indian citizen, Indian partnership firm or Indian private /public limited company.
The lead member shall have "AA" class registration with Government of Gujarat /CPWD /Railway, Government (State /Central), Board, Corporation, and Government Undertaking /Organisations of State & Central Government and Public Sector Units equivalent to class "AA" of Gujarat State. Having the above stated criteria, such bidder shall have to apply on or before the last date of submission of registration documents to get himself registered in "AA" class in Government of Gujarat (R&B/WRD/GWSSB) and obtain registration in "AA" class before the date of finalization of regular tender procedure of particular work. The proof of application for Registration in "AA" class shall have to be attached with the registration documents.
(c) The individual members who join in JV shall have to give an undertaking that they will maintain status-quo till the completion of the work, if the Page 26 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined work is awarded to the JV Consortium, the same JV Consortium shall be maintained till the satisfactory completion of the work. This undertaking shall be submitted on e-Stamp paper Rs.300. Duly signed by the authorized signatory, which shall be notarized.
(d) In case of bidder participating as a Joint Venture on his selection for award of contract, all the partners /members of the Joint Venture will have to sign the Contract with the employer and will be jointly and severally liable for performance of the contract. Award of Contract will be in the name of Joint Venture consortium which will be considered as "Legal Entity" as far as this Bid /Contract is concerned.
....................."
[5.6] The bidder while participating in the tender has read and understood correctly and accepted the liability to be proceeded against and if declaration is found to be incorrect, then without prejudice to any other action that may be taken they shall be debarred from bidding in GWSSD /GWIL tender for three years, which is the undertaking given by the authorised signatory of Joint Venture consortium in letter of undertaking Form - H, which is at page 187 being Form No.18. Not only that, Sub Clause (d) of Clause 34 is clear that bidder participating as a Joint Venture, on his selection for award of contract, all the partners /members of the Joint Venture will Page 27 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined have to sign the Contract with the employer and will be jointly and severally liable for performance of the contract. At the same time, award of contract will be in the name of Joint Venture consortium, which will be considered as "Legal Entity"
as far as this bid /contract is concerned.
[5.7] Other Sub Clauses in Clause 34 of the tender notice is in respect of prime bidder member in charge of a contract, who shall be authorized to incur liabilities, receive payments and receive instructions for and on behalf of any or all partners of Joint Venture post execution of contract. However, the said status of Joint Venture when it files bid on behalf of Joint Venture consortium, it equally applies to all constituent partners of the consortium.
[5.8] Sub Clause (b) of Clause 34 clearly reveals that all the members of the Joint Venture firms shall have to collectively satisfy all the criteria mentioned. Therefore, the petitioner cannot successfully argue that the bid and undertaking in Form 18, Form - H is signed by the authorized signatory Krishna Construction Company, Ahmedabad and not by the petitioner, and therefore, no action in blacklisting can be initiated against it is without any basis. Considering all the Clauses under Clause 34 of the tender condition, Joint Venture Consortium has to authorize anyone out of them or any other person as authorised signatory to submit its bid. That bid is for and on behalf of all the constituent partner of Joint Venture Consortium. Any constituent partner, may be marginal partner, can never escape any liability for a wrong committed Page 28 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined by it, other constituent partner may be lead partner. Even lead partner also cannot escape any liability incurred for making false declaration or giving false information in case it is not pertaining to lead partner directly but all the other constituent partner, both incur the same liability for filing false declaration showing incorrect details in it.
[5.9] If declaration submitted by the authorized signatory of the bidder, which is at page 187 is seen, it is not as per the proforma prescribed under the tender document, which is at page 107 of the compilation.
[5.10] Not only that, Clause 42.8, which is at page 61, prohibits any erasures or alteration by persons tendering in the texts of the document downloaded from website. Such erasure and alterations if made will be disregarded. As such, making alterations or erasures in the document downloaded should incur disqualification as a term of tender notice but at the same time, once it is to be disregarded, any liability expressed to be shouldered by the authorized signatory if it is of a bidder that is Joint Venture Consortium, such alterations to the format is to be disregarded, and therefore, the submission made by the learned advocate for the petitioner that in Clause (IX) of Form - H at page 188 lead partners of the Joint Venture Consortium has accepted the liability for submitting incorrect or incomplete or misleading particulars in the bid and for all the consequence that may arise out of such conduct to be faced by Krishna Construction Company, Ahmedabad can never be taken note of as there appears no such Clauses in the Page 29 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined format, which is at page 107, which is nothing but an alteration of the format, which is prohibited under the terms of tender, and therefore, it cannot be successfully argued that for any incorrect statement, may be because of petitioner, made in the bid or any form, only the lead partner who has undertaken that liability in Form - H would be responsible, cannot be accepted.
[5.11] Not only that the qualification criteria and evaluation procedure in Volume IA technical bid under the head of general instructions at Clause 1 page 65, it is clearly mentioned that tender's /bidder's are cautioned that not giving complete information called for in the tender documents in the form required or not giving it in clear terms or making any change in the prescribed forms may result in the bidder being summarily disqualified. This being very vital condition even bidder could have been disqualified for altering this Form
- H to suit its convenience and thereafter any other action if needed could have been against the Joint Venture and all constituent partners. Be that as it may, it is stated for the purpose of repelling the contention of the petitioner that when lead partner has shown his willingness to shoulder all his responsibility, the petitioner, marginal constituent partner, should not incur liability of blacklisting, and therefore, it is required to be rejected outright.
[5.12] Neither the disqualification nor forfeiture of EMD or taking action for blacklisting is alternative to each other. It is the consequence of wrong doing by the bidder and such conditions are accepted by the bidder while submitting their Page 30 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined bid with an open eye for consideration of their offer, whether any loss is suffered by the authority, whether any damage is caused to the authority, pales into insignificance. Forfeiture of EMD and order of blacklisting when it is made for breach of tender conditions at a per-contractual stage when no contract has yet come into existence, it does not infringe any statutory right under the Indian Contract Act, 1872 since EMD is taken in such cases to ensure that a contract comes into existence. At the same time, such condition of order of blacklisting is passed for submitting inaccurate or false details, is with a view to see that only genuine bidders participate in the bid process. Absence of any terms forfeiting of EMD may lead to a situation where even bidders who do not have capacity or intention of entering into the contract, venture into the bidding process for, at times, extraneous reasons. The purpose of such a Clause providing for forfeiture of EMD is only with a view to see that only genuine bids are received. Equally, the condition of blacklisting, if any information, undertaking or affidavit found to be incorrect or false, is to dissuade ingenuine bidders since State authorities want to enter into commercial transactions with responsible and honest bidders. If a bidder is not hesitating in supplying false or incorrect facts before the authority, he cannot be relied on for a work to be carried out under a tender, that he will act very honestly and he will not suppress true and correct facts.
[5.13] Action of forfeiture of EMD and blacklisting are taken for making false claim/declaration while submitting bid as a consequence of express breach of terms of tender based Page 31 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined on which, bidder made his offer, which employer took into consideration, then, it is a contract in itself. Even if it is not a contract, it is consequence of false declaration/undertaking, different from taking any action for breach of contract executed while work being carried out.
[5.14] With a view to see that honest bidders come for contract with the employer and to weed out all dishonest attempts of the bidders at the threshold, such is the consequence for the apparent/bold false statement/undertaking being made by them.
[5.15] Submission based on Article 14 of the Constitution of India i.e. discrimination, pressed into service by the learned advocate for the petitioner on the ground that constituent partner of Joint Venture is relieved of blacklisting order on its representation, even if it is true, cannot be pressed into service for the reason that on that ground, the petitioner cannot be relieved of the action, which is taken for breach of the terms of the tender, which he agreed while submitting his offer for consideration. At the same time, as brought on record by an additional affidavit by the respondent authority, it has already issued a notice against even the constituent partner of the Joint Venture for taking action of blacklisting it for submission of false/inaccurate/incorrect details in Undertaking filed on behalf of the Joint Venture. The said submission, based on breach of Article 14 of the Constitution of India, falls to the ground.
Page 32 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined [5.16] The submission made by the learned advocate for the petitioner that since there is no actual loss to the respondent authority or a damage caused to it, EMD, which runs into lakhs of rupees, could not have been forfeited, is again required to be rejected for the reason that it is not forfeited for any loss or damage caused to it, but it is forfeited as a consequence of filing false details with regard to blacklisting, that too, on oath before a Notary Public and only on that condition, bidders had to submit their bids. When breach thereof is committed, it is the consequence of the same and not as either penalty or loss caused to the authority.
[6.0] The decision in the case of Gorkha Security Services (supra), relied on by the learned advocate for the petitioner is of no help to the petitioner as from the show- cause notice, it is possible to draw clear inference about taking action about breach of Clause mentioned therein, which states about taking action of forfeiting EMD as also order of blacklisting for a period of three years. It is in case of non- mentioning of blacklisting or forfeiture, it cannot be possible to draw clear inference from it, in that case, the ratio laid down therein, would be pressed into service. Mentioning the Clauses in the show-cause notice for the proposed action for the breach thereof, when petitioner with an open eye, knowing each and every Clause of the tender notice, submitted a bid, he would very well understand that these Clauses are for the purpose of forfeiture of EMD and passing an order of blacklisting for submitting false/incorrect Undertakings while submitting bid.
Page 33 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined [6.0] The decision in the case of M/s. Techno Print (supra), where, show-cause notice issued for blacklisting came to be quashed on the facts stated therein, no such facts are obtained in the present case and it is not even at the stage of show-cause notice, for anything to be explained, an opportunity was available to the petitioner, which he admitted to explain but in view of his own admission, it incurred an order of blacklisting. Therefore, the decision in the case of M/s. Techno Print (supra), cannot be pressed into service by the petitioner.
[6.1] The decision in the case of Blue Dreamz Advertising Pvt. Ltd. (supra), if considered, action of blacklisting initiated for breach of terms of contract where, even penalty is also provided for, there appears to be a dispute/issue between the parties to be resolved by the arbitrator and that Clause was invoked by the appellant therein; authority could not have initiated order of blacklisting based on that issue when it was pending adjudication before the arbitrator.
[6.2] Not only that the day on which the appeal was determined by the Supreme Court, the arbitrator had already declared its award which went in favour of the appellant. Though, it may be a subsequent event, the principles laid down by the Supreme Court in that case is suggestive of the fact that where the case is of an ordinary breach of contract and the explanation offered by the person concerned raises a bona fide dispute, blacklisting/debarment as a penalty ought Page 34 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined not be resorted to. Similarly, too readily invoke the debarment for ordinary cases of breach of contract where there is a bona fide dispute, is not permissible.
[6.3] Here, it is not a case that blacklisting is resorted to for a bona fide dispute for ordinary breach of contract. Forfeiture of EMD and action in blacklisting is resorted to for a breach of terms of tender, which is a consequence of breach thereof, requiring no adjudication or even a bona fide dispute to be explained. In that view of the matter, the aforesaid decision of the Supreme Court in the case of Blue Dreamz Advertising Pvt. Ltd. and Another (supra), is also not applicable to the facts of the present case.
[6.4] The decision in the case of Kulja Industries Ltd. (supra), is also on the same line and which is considered by the Supreme Court in the case of Blue Dreamz Advertising Pvt. Ltd. and Another (supra). Therefore, no separate reference thereof is required.
[6.5] In the judgment and order of Co-ordinate Bench of this Court in the case of M/s. M. V. Omni Projects (India) Ltd. (supra), since detailed reply submitted to the show- cause notice answering every query or allegations made in the show-cause notice, did not notice by the authority, in the peculiar facts and circumstances of that case, order of blacklisting came to be set aside remitting the case back to the respondent Corporation for undertaking exercise afresh. However, from the impugned order, it is very clear that his Page 35 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined written representation/reply is not only quoted in it, but consideration thereof is also very specific in the order itself.
[6.6] The decision in the case of M/s. Aquafil Polymers Co. Pvt. Ltd. (supra), relied upon by the petitioner is of no avail to it, as noted in paragraph 5.3 of the said decision, the term "bidder" in relation to and as applied to in the instant tender document, would mean the individual petitioner itself as tenderer. The petitioner was not the tenderer, where, Joint Venture came to be blacklisted. Therefore, it is stated that it cannot be said that it was not the petitioner entity who was debarred and blacklisted there. Therefore, information in the said tender was to be furnished about the bidder, the non- mention on part of the petitioner about debarment could not be said to be fatal for the petitioner to get its bid considered, nor it could be said to be a suppression to prejudicially affect the petitioner.
[6.7] Decision in the case of Royal Infra Engineering Pvt. Ltd. (supra), relied on by the learned advocate for the petitioner is a case where all the decisions in respect of blacklisting from the case of Erusian Equipment & Chemicals Ltd. and Kulja Industries Ltd. etc. were considered by the Division Bench of this Court in detail and the principle for the same culled out and enunciated by the Division Bench, there is no dispute. The doctrine of proportionality in punishment cannot be invoked in the present case as it is not for any loss or damage caused to the respondent authority which could be assessed in terms of Page 36 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined money. Here, if at all it is to be considered as a punishment and order of blacklisting came to be passed for breach of terms of the Tender Notice, which expected the petitioner to place true and correct facts by way of undertakings at the time of submitting its bid. Not only that, pursuant to the said tender notice, when petitioner has submitted its offer for consideration, he was aware about the consequence of submitting false information or incorrect information, and therefore, forfeiture of EMD and action of blacklisting is the consequence of that act of suppression, which is the only option available and it has been resorted to. All the decisions, so far as doctrine of proportionality is concerned, speak about punishment should be proportionate to the wrong committed. Here, there is no question of finding out any proportion as for disclosure of incorrect and false information, forfeiture of EMD is the consequence. No other option is left with the authority because before submitting its offer, the petitioner was aware of the said condition and despite that, he ventured into submission of false details in its bid.
[6.8] Reliance placed on the decision in the case of Gujarat Construction Co. Ltd. (supra) by the learned advocate for the respondent authority, where similar tender conditions of the very respondent authority when resorted to, passing of order of blacklisting and forfeiture of EMD came to be considered and the challenge made therein fails holding that respondent Board has acted in accordance with the tender Clauses and has complied with the requirements of principles of natural justice and after considering even the explanation Page 37 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined offered by the petitioner therein, by assigning reasons for passing the impugned order therein. The aforesaid decision of the Co-ordinate Bench of this Court is also confirmed as SLP preferred there against came to be dismissed vide order dated 12.08.2024 passed by the Supreme Court in Special Leave to Appeal (C) No. 17105 of 2024.
[6.9] While dictating the judgment, we came across two of the decisions of the Supreme Court on the issue closely connected with the present petition and the contentions raised on behalf of the petitioner.
[6.10] The first decision in line is the case of National Highways Authority of India Vs. Ganga Enterprises and Another reported in (2003) 7 SCC 410 recognizing every right of revoking a proposal /offer at any time before the communication of its acceptance as provided under Section 5 of the Indian Contract Act, 1872 but where a person made an offer to undertake a certain work on a condition that the earnest furnished by him would be forfeited for not entering into a contract or for non performance of the some act, Section 5 of the Indian Contract Act, 1872 would entitle a person to withdraw the offer but not entitle him to claim refund of earnest in case of withdrawal of his offer before its acceptance.
[6.11] Similar analogy can be applied in the present case when terms of tender notice stipulates that bidder may be disqualified, Earnest Money Deposit may be forfeited and /or blacklisting would be ordered, on certain exigencies when Page 38 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined bidder submits its bid for consideration of such terms, which is nowhere prohibited under the Indian Contract Act, 1872, it can never be heard to say that any action, which is taken as a consequence of that breach of the tender terms, any actual loss or damage should be shown for the purpose of forfeiture of a bank guarantee or incurring any disqualification or blacklisting though blacklisting may be a harshest action with a view to see that only genuine bidders participate. With a view to dissuade bidders from submitting false, incorrect, incomplete details when such condition is stipulated in the tender notice itself, which is not even contrary to any law, with an open eye on that terms if bid is submitted for consideration, authority is right and justified in taking action for breach of the same. All the precedents cited on behalf of the petitioner on the issue of blacklisting pertains to blacklisting, where blacklisting is being ordered for breach of terms of contract, which is already executed where even penalty may be provided for or a compensation is also provided for, if that alternative is available after execution of a contract. If such precedents incorporating those terms of contract are already executed, it cannot be applied with same force where conditions are imposed to incur such liability as a consequence for the breach thereof, and therefore, no such actual loss or damage caused to the authority is to be shown for forfeiting the Earnest Money Deposit. The condition in the tender notice that any bidder or its partner, Director etc. to mention in the bid whether they are blacklisted by any State Government or Central Government or Public Sector undertaking etc. is for the purpose that only genuine, efficient and honest bidders Page 39 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined participate in the bid. Not only that, participation by a bidder boldly stating that no such order is passed by any State Government, Central Government or Public undertaking and when it is found that it was passed by the authority mentioned therein, there is no option for the authority but to initiate action for the breach of the terms of the tender notice inviting their offer on reading and understanding the very same terms that in breach thereof an action would be taken against the bidder.
[6.12] Yet there is another decision of the three Judge of the Supreme court in the case of National Thermal Power Corporation Limited Vs. Ashok Kumar Singh and Others reported in (2015) 4 SCC 252 wherein decision in the aforesaid case has not only considered earlier decision of the Supreme Court in Ganga Enterprise (Supra) but other three decisions of Supreme Court wherein it held that forfeiture of Earnest Money when it is made for breach of action /tender conditions at pre contractual stage, when no contract has yet come into existence, it does not infringe any statutory right under the Indian Contract Act, 1872 since the Earnest Money /security is given and taken in such cases only to ensure that a contract comes into existence. The tenderer has a right to withdraw his offer, but he will have no right to claim refund of Earnest Money, if said offer is subject to condition that Earnest money will be forfeited if offer is withdrawn. Therefore, though right of the bidder to withdraw its offer is recognized under the Indian Contract Act but when that offer is made subject to incurring liability of forfeiture of Earnest Money, withdrawal of Page 40 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025 NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined offer is permitted but subject to incurring liability of forfeiture of the earnest money deposited by the bidder.
[6.13] Since when the petition was filed, no action for breach of terms of tender notice as initiated against the petitioner was initiated against the constituent partner who according to the petitioner is the lead partner and authorised signatory to the bid but during the pendency of the petition even a show-cause notice is also issued to the lead partner and the authorised signatory of Joint Venture consortium, the submission made by the petitioner complaining breach of Article 14 of the Constitution of India, which otherwise could not have been invoked, is of no consequence. The excuse of the petitioner that because of inadvertent mistake inadvertently required information in Form - H could not be provided is merely an eye wash. Since the petitioner was prohibited from participating in the tender process by Gandhinagar Municipal Corporation was much prior to the form submitted, it was incumbent upon the petitioner, as a constituent partner of the Joint Venture to make it known to the authorized signatory to disclose the same in Form - H. It is even otherwise the duty of the authorized signatory of the Joint Venture consortium to ascertain it from each constituent partner of the Joint Venture before submitting information as required in Form - H. The disqualification of the bidder is again a consequence of breach of terms of the tender notice and it is not alternate to the proceedings for blacklisting, and therefore, no question of any prejudice caused to the petitioner.
Page 41 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025NEUTRAL CITATION C/SCA/5725/2024 JUDGMENT DATED: 09/04/2025 undefined [7.0] In view thereof, we see no reason to entertain this petition, and therefore, it is hereby rejected. Notice is discharged. Ad-interim relief granted earlier vide order dated 09.04.2024, which is extended till today stands vacated.
[8.0] Ms. Honey Thakkar, learned advocate for Mr. Paras Sukhwani, learned advocate for the petitioner, at this stage, requests for extension of stay, which was already granted by this court for a period of four weeks whereas Mr. Isa Hakim, learned advocate for Mr. Keyur Gandhi, learned advocate for Gandhi Law Associates objects to the extension of the interim relief since the petition came to be dismissed and its consequence of incorrect /incomplete disclosure of required information in the tender form by the bidder when blacklisting is ordered as a consequence of the breach of the said terms, when it is concluded, interim relief may not be extended.
[8.1] Considering the submissions made by the parties when the order impugned dated 08.02.2024 though stayed by interim order dated 09.04.2024 i.e. after two months of passing thereof, we deem it fit to extend the same for a further period of four weeks from today.
(UMESH A. TRIVEDI, J.) (CHEEKATI MANAVENDRANATH ROY, J.) siji Page 42 of 42 Uploaded by SIJI THOMAS(HC00174) on Mon Apr 21 2025 Downloaded on : Sat May 03 02:06:34 IST 2025