Kargo League Logistics Private ... vs Bharat Heavy Electricals Limited on 22 September, 2025

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Delhi High Court - Orders

Kargo League Logistics Private ... vs Bharat Heavy Electricals Limited on 22 September, 2025

1. The present petition assails a communication dated 21.08.2025 issued by the respondent no.1 (Bharat Heavy Electricals Limited-BHEL) whereby the petitioner has been purported to be debarred for a period of one year from the date of interim suspension i.e. 23.06.2025.

2. It is submitted that the said action has been purportedly taken under Clause 1.2 (iii) of the stipulations incorporated in the tender document issued by the respondent. The impugned communication dated 21.08.2025 reads as under:-

"RE/MUM/IMP/SBDG/Debarment/01 Date: 21.08.2025 To, M/s Kargo League Logistrics Pvt Limited 408, NBC Complex, Sector 11, CBD Belapur, Navi Mumbai-400614, Maharashtra, India BUSINESS DEBARMENT ORDER Kind attention: Mr. Arun K Agarwal, Director and Ms. Preeti Agarwal, Director Subject: Debarment of business dealings with M/s Kargo League Logistics Pvt. Ltd within ROD as per BHEL guidelines for suspension of Business Dealings 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 24/09/2025 at 22:04:44 with Suppliers/ Contractors.

References:

1. Work Order No. RE/MUM/IMP/AC/ IA-2427 dated 18.01.2025 (GeM Contract GEMC-51 1687704880502) for air rate contract from various overseas countries lo Mumbai Airport. valued at Rs. 64,72,800/- and corresponding acceptance on GeM portal dated 18.01.2025.

2. Work Order No. RE/MUM/ IMP/JIW/ IS-2444 dated 21.02.2025 (GeM Contract GEMC-511687740626678. Dated: 21.02.2025) for ocean freighting from Hamburg/Wilhelmshavcn Seaport to Nhava Shcva Seaport (FOB basis). valued at Rs. 21.50.000/-. and corresponding acceptance on GeM portal dated 21.02.2025.

3. Several mail correspondences for above mentioned contracts.

4. BHEL Guidelines for Suspension of Business Dealings with Suppliers/Contractors No. AA/MM/SB/01. Rev: 02, amdt.03 dated 15.03.2023 available on www.bhel.com.

5. Show Cause Notice no. RE/MUM/IMP/SBDG/SCN/01 dtd:23.06.25 sent to by email and by post on M/s Kargo League Logislics Pvt Ltd on 24.06.25.

6. Reply to Show Cause Notice by M/s Kargo League Logistics Pvt Ltd dtd:

04.07.25 vide email dtd:07.07.25.

7. Personal Hearing of M/s Kargo League Logistics Pvt Ltd held at ROD Mumbai office on 18.07.25 and record of Personal Hearing dtd: 18.07.25 Sir/ Madam, After due deliberation, it has been decided to debar your firm i.e. M/s Kargo League Logistics Pvt. Ltd from business dealings with ROD, BHEL for a period of 1 year from the date of interim suspension i.e. 23.06.2025 as per Company Policy against Clause 1.2 (iii) "After placement of order, supplier fails to execute the contract" under category "Debarment within the Unit for all iterm

(s) material category (ies)/ type (s) of work for One Year" of BHEL Guidelines for Suspension of Business Dealings with Suppliers/ Contractors.

This has the approval of Competent Authority.

3. Learned senior counsel for the petitoner submits that the impugned order is wholly misconceived inasmuch as the entire action is premised on a misconstruction/ distortion of the stipulations contained in the tender document. It is emphasised that the controversy between the parties is in relation to the prescricption that the offer of the petitioner (which came to be accepted) was exclusive of "destination charges".

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 24/09/2025 at 22:04:44

4. It is submitted that in the first instance, an incident was raised by the BHEL at the 'Gem portal' and upon examination, the incident was closed. It is submitted that despite closure of the incident on the 'Gem portal', a show cause notice dated 23.06.2025 was issued by the respondent to the petitoner. The same reads as under:-

                                "RE/MUM/IMP/SBDG/SCN/01                                                Date: 23.06.2025
                                To,
                                M/s Kargo League Logistrics Pvt Limited
                                408, NBC Complex, Sector 11, CBD Belapur,
                                Navi Mumbai-400614,
                                Maharashtra, India

                                                                    SHOW CAUSE NOTICE

Subject: Proposed Suspension of Business Dealings References:

1. Work Order No. RE/MUM/IMP/AC/ IA-2427 dated 18.01.2025 (GeM Contract GEMC-51 1687704880502) for air rate contract from various overseas countries lo Mumbai Airport. valued at Rs. 64,72,800/- and corresponding acceptance on GeM portal dated 18.01.2025.

2. Work Order No. RE/MUM/ IMP/JIW/ IS-2444 dated 21.02.2025 (GeM Contract GEMC-511687740626678. Dated: 21.02.2025) for ocean freighting from Hamburg/Wilhelmshavcn Seaport to Nhava Shcva Seaport (FOB basis). valued at Rs. 21.50.000/-. and corresponding acceptance on GeM portal dated 21.02.2025.

3. BHEL Guidelines for Suspension of Business Dealings with Suppliers/Contractors No. AA/MM/SB/01. Rev: 02, amdt.03 dated 15.03.2023 available on www.bhel.com.

Sir/Madam The aforementioned contracts were awarded to Mis Kargo League Logistics Pvt. Ltd.

through the Government e-Marketplace (GeM) portal. Despite due acceptance of the contracts on the portal, it has been observed that your firm has not initiated any action towards execution of the awarded contracts.

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 24/09/2025 at 22:04:44 In this regard, BHEL proposes to initiate action against your firm under Clause 1.2 of the BHEL Guidelines for Suspension of Business Dealings, which provides for Debarment within the Unit for all item(s)/material category (ies)/type (s) of work for One Year", based on the following grounds:

Case 1:

Your firm altered its offer after opening of the price bid and failed to execute the contract in the absence of unconditional acceptance of tender terms. This is a violation under:

Clause l.2(iii): "After placement of order, supplier fails to execute the contract. "

Clause 1.2 (vi): "After price bid opening but before placement of order, supplier withdraws or varies the offer within the validity period. "

Case 2 :

Failure to execute the contract even after placement of order constitutes another instance falling under:

Clause l.2 (iii): "After placement of order, supplier fails to execute the contract."

Accordingly, you are hereby called upon to SHOW CAUSE, within 15 (fifteen) days from the date of receipt of this notice, as to why action should not be initiated against your firm for the aforementioned violations, under the applicable provisions of the BHEL Guidelines.

Please note that in the interim, your firm is being placed under suspens ion of business dealings with BHEL from the date of issuance of this Show Cause Notice, in accordance with Clause 3.4 of the above Guidelines.

In the event no response is received within the stipulated time, it shall be construed that your firm has no representation to offer, and BHEL will proceed to take appropriate action as deemed fit, without any further reference."

5. An elaborate response thereto to the said show cause notice was given by the petitioner on 04.07.2025, the same is reproduced is as under:-

Date: 04/07/2025 Mr. Sanjeev Shikhare, Additional General Manager, BHEL, ROD Mumbai.

In the matter: Reply to show cause notice No. RE/ MUM/ IMP/ SBDG/ 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 24/09/2025 at 22:04:44 SCN/ 01 dated 23.06.2025 Subject: Proposed Suspension of Business Dealings.

Dear Sir, We are in receipt of the above-mentioned show cause notice vide which, taking recourse to cross 1.2 of SHEL guidelines for suspension of business dealings, SHEL proposes to suspend business dealings with SHEL for alleged to violations, mentioned in the said show cause notice.

The violations have been pointed out with regard to:

(i) work order No. RE/ MUM/ IMP/ AC/IA-2427 dated 18.01.2025 (GEM contract GEMC-511687704880502) for air rate contract cfrom various overseas countries to Mumbai airport and

(ii) work order No. RE/MUM/IMP/HW/IS-2444 dated 21/02/2025 (GeM Contract GEMC - 511687740626678) for ocean freight from Hamburg/Wilhelmshaven Seaport to Nava Shiva Seaport (FOB basis).

It has been alleged in the said show cause notice that despite accepting the said contracts on GeM portal, Kargo League has not initiated any action towards execution of the awarded contracts.

Case 1 It has been alleged that we have violated clause 1.2(iii) and clause 1.2 (iv) in as much as we altered the offer after opening of price bid and failed to execute the contract in the absence of unconditional acceptance of the terms.

Our Response to Case 1 {work order No. RE/ MUM/ IMP/ AC/ IA-2427 dated 18.01.2025 (GEM contract GEMC-511687704880502) for air rate contract from various overseas countries to Mumai airport}.

a. The allegation raised in the show cause notice is absolutely misconceived, wrong and are denied by us. It is strongly denied that we have altered our offer after opening of the price bid as is alleged. We further strongly deny that we have failed to execute the contract. Multiple documented mails have been exchanged in this regard.

b. The show cause notice very conveniently ignores all the emails, representations, and discussions that has happened between us. It also ignores the fact that an incident was raised on GeM portal both by BHEL as well as by Kargo League and after submissions by both the parties, GeM concluded that the submission of Kargo league was correct and consequently closed the incident raised by SHEL and approved the incident raised by Kargo League.

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 24/09/2025 at 22:04:44 c. As per the tender terms t he Tender was to be finalized through reverse auction and GeM reverse auction guidelines were to be followed {Section II Clause 14(D)}. The offers were to be evaluated based on lump sum prices quoted by bidders {Section II Clause 14(8)} . Government guideline/ circulars on provision for ordering on MSE vendors was made applicable to the said Tender {Section II Clause 14(F)}.

d. As per Clause 14(C) - Instructions to Bidders "Offered lump sum price (excluding destination charges) will be compared with BHEL total estimate (excluding destination charges) in terms of percentage. This percentage shall be uniformly applied to Company published Scheduled rate (Schedule A and B) to arrive at individual slab rate (except Destination Charges). Destination cha rges has been kept fixed ." e. In Section IV {General Terms and Conditions it was reiterated that Reverse Auction to be done on GeM portal as per GeM guidelines (Clause 30). f. The condition and process of reverse auction was also reiterated in Section VI of the Tender.

As per Section VI as well:-

1. The bidder has to quote Lump Sum offer for entire scope inclusive of GST in INR.

2. There is only one Place in GEM where Offered Price needed to be submitted inclusive of GST.

3. Para 1 itself gives clarity about Lumpsum Offered Price.(it should exclude Destination Charges)

4. RA to be applied on Schedule A and Schedule B only (Destination Charges already excluded)

5. Reverse Auction will be conducted on Lump Sum offer in price bid (incl GST),% coming will be applied on Schedule A & B only, as per Para 1.

6. Reverse Auction was to be conducted on Lump Sum offer in price bid (incl GST) and Lump Sum amount was cumulation of Projected cash flow for contract duration for Schedule A, Projected cash flow for contract duration for Schedule B excluding Destination Charges(D) consolidated per AWB fixed at Rs.2/KG subject to a minimum of INR, 4500/-. It is thus clear that the prices to be quoted for Schedule A & Schedule B were flexible and the price for Destination charges was FIXED. The fact that the price for Destination Charges was fixed and not to apply in the reverse Auction was further clarified in the clarification given in the Section VI itself.

g. The tender was awarded to us after the process of RA was completed and even during the RA it was clarified to all tenderers that Destination Charges were fixed and the RA was to be only on the prices quoted for Schedule A & Schedule B as per Section VI of the Tender Document.

h. After the RA process was completed and were declared successful, BHEL called upon us to give fresh breakup of quoted prices on the sheet mentioned in Section VI of the Tender Document. When we filled the said sheet it was 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 24/09/2025 at 22:04:44 observed by us that the RA portion was applied on Destination Charges also and thus we immediately called upon BHEL to look into the issue and clarify in term of Tender conditions.

i. However, instead of the understanding the situation and considering the issue from the point of view of tender terms SHEL refused to look into the issue insisting that RA portion will apply on the Destination Charges also against the Tender Terms and we will have to accept their dictates. As a matter of fact it was SHEL that altered the Tender terms after the same was accepted by us and insisted that we accept the NEW terms contrary to the Tender Terms.

j. In any case as per Clause 17.8 of GeM GTC, "non-performance due to factors beyond supplier's control does not attract penalty". In the present matter the non-performance, if any, is k. due to the acts by SHEL which is giving a completely new meaning tp the tender terms and is also forcing us to accept the same. I. Constrained by the acts of SHEL, Kargo League raised an incident on GeM portal bearing incident number 2072373. In response to the incident raised by Kargo League, SHEL also raised its incident on the GeM portal. GeM sought written submissions from both sides and after considering the submissions of Karg League as well as SHEL, it closed the incident with the following conclusion "The Case appears to be a dispute between the Buyer and the Seller/ it is recommended that further action be taken by both parties as per Clause 16 of GTC, hence this incident is closed". Complete incident is attached for your ready reference.

m. At this stage, it is pertinent to mention that if after considering the submissions made by Kargo League as well as SHEL GeM would have concluded that the stand taken by Kargo League was wrong and against the tender terms, it would have immediately taken action against Kargo League. The fact that the multiple incidents raised by SHEL in this regard, were closed by GeM after considering the submissions made by Kargo League clearly demonstrates that the submission of Kargo League is correct and the assertion being made by SHEL with regard to the interpretation being given by it to the tender terms is wrong.

n. By this response, we once again call upon SHEL to honour the tender terms and remove application RA on Destination Charges and treat them as fixed cost, as they are excluded from RA process in the tender. o. We (Kargo League) is not at fault in this case, Hence revocation should be done of Interim Suspension.

Case 2 It has been al leged that we have violated clause 1.2(iii) in as much as failed to execute the contract in the absence of unconditional acceptance of the terms.

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 24/09/2025 at 22:04:44 Our Response to Case 2 work order No. RE/MUM/IMP/HW/IS-2444 dated 21/02/2025 (GeM Contract GEMC - 511687740626678) for ocean freight from Hamburg/Wilhelmshaven Seaport to Nava Shiva Seaport (FOB basis). a. Section IV (General Terms and Conditions) casted a duty upon the bidders to ensure that the goods to be moved where seaworthy. The duty also extended to bringing to the notice of BHEL, any deficiency in the sea worthiness of the Cargo and required that the builder gave suggestion to take remedial measures to enable SHEL to make the cargo seaworthy. The obligation to bear the cost of keeping the cargo seaworthy was upon SHEL. Reference and Reliance in this regard is made to clause number 5.2, which is reproduced here under for ready reference.

"Clause 5 .2: Before arrival of the vessel, the Bidder will inspect the cargo available in Port whether under the custody of the Bidder or Company or its supplier or any other authorized representative and ensure its sea worthiness. Any deficiency in this regard shall be brought to the notice of Company in writing suggesting remedial measures to enable Company to make it sea worthy. Alternatively, such action can be taken by the Bidder after obtaining written approval of Company to the action as well as to the cost. Such cost incurred by the Bidder shall be reimbursed by Company to the Bidder, if agreed. After such remedial measures, the Bidder shall be responsible for loading of the cargo on the Ship arranged by the Bidder."

b. When Kargo League contacted the shipper to confirm the seaworthiness of the Cargo, it was informed by the shipper that the cargo is not packed and as the cargo was not packed, it was not in a seaworthy condition. Acting on its obligation as per clause 5.2, Kargo League immediately contacted BHEL and called upon them to ca ll upon the shipper to ensure that the cargo was seaworthy. However, instead of considering the request and suggestion of Kargo League, BHEL once again for reasons, best known to it, instead of acting on the suggestion of Kargo League and calling upon the shipper to provide the cargo in a sea, the condition insisted that Kargo League shipped the goods in as various condition as provided by the shipper. Reference in this regard is made to email dated 6th March 2025 issued by BHEL.

c. It is pertinent to mention that the stand taken by BHEL was technically unviable to load on 40FR container with 38.5 MT of cargo weight and 42 MT of cargo weight. It violated all norms of transportation of heavy cargo. Kargo League tried to explain the situation to BHEL, however, BHEL insisted that Kargo League shipped the good in the condition the shipper was handing it over. However, Kargo League could not ignore its obligation as per the tender terms and duly informed the same to BHEL.

d. Kargo league has never refuse to fulfil its obligation with regard to this work order. Cargo has only acted in terms of the tender terms and it is DHEL 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 24/09/2025 at 22:04:44 which wants Kargo League to ignore the tender terms and transport the cargo as per the dictates of the shipper. Needless to say both, Kargo League and BHEL are bound by the terms of tender and the present show cause notice having been issued for insistence of tender terms by Kargo League has come as a surprise to us.

e. In this regard also an incident was raised by BHEL bearing incident number 2117535. GeM sought written submissions from both sides and after considering the submissions of Kargo League as well as BH EL, it closed the incident. At this stage, it is pertinent to mention that if after considering the submissions made by Kargo League as well as BHEL GeM would have concluded that the stand taken by Kargo League was wrong and against the tender terms, it would have immediately taken action against Kargo League. The fact that the incident raised by BHEL was closed by GeM after considering the submissions made by Kargo League clearly demonstrates that the submission of Kargo League is correct and the assertion being made by BHEL with regard to the interpretation being given by it to the tender terms is wrong.

f. Another important relevant fact in this Case No. 2 is that Kargo League had in fact made bookings and already incurred expenses towards shipping of the goods, however, when Kargo League contacted the shipper, it was informed by the shipper that BHEL has in fact, ask the shipper to handover the cargo to Kargo League. From this fact is apparent that it is not. Kargo League, which has failed to fulfil the contract, but it was BHEL, which has ensured that we could not fulfil our obligations under the contract.

g. Booking of Super ODC and fina lization of warehouse has costed us Huge Money, Which has become a loss for us, after denial of Work by BHEL.

h. We Offered Solut ion after Supplier's confirmation, and then BHEL denied, so how t his can become our fault, But Still being facing interim suspension, which should be immediately revoked under such circumstances.

i. We have been playing a key role in reducing your logistics cost in last 5 years on continuous basis, resolved all concerns, taught people with books and law, Still such allegations have been enforced on us through th is Interim Suspension, We request humble and immediate revocation of the same, In view of the above-mentioned facts and circumstances, we respectfully request and making Humble Prayer for :

1. Removal/revocation of interim suspension .

2. Opportunity for in-person hearing may be afforded to Kargo League before taking any final decision .

3. Reinstatement and continuation of both contracts with original Terms.

This is a digitally signed order.

6. It is submitted that, without taking note of the various contentions of the petitioner as highlighted in its reply, the impugned debarring order has been issued by the respondent. It is emphasised that besides being factually unfounded, the said order is wholly unreasoned inasmuch as none of the contentions of the petitioner in its elaborate reply to the show cause notice have been noticed, much less dealt with.

7. It is emphasised that the same is also in contravention of the dicta laid down by the Supreme Court in M/s Techno Prints v. Chhattisgarh Textbook Corporation & Anr., 2025 INSC 236. In terms thereof, mere violation of terms of a contract or difference/s between the parties as regards interpretation of contractual terms, cannot be a ground for debarring / blacklisting. The relevant portions of the judgment reads as under:

"30. Therefore, the Authority is expected to be very careful before issuing a show cause notice. It is expected to understand the facts well and try to ascertain what sort of violation is said to have been committed by the contractor. As noted above, there is always an inherent power in the Authority to blacklist a contractor. But possessing such inherent power and exercising such power are two different situations and connotations. There may be a power but there should be reasonable ground to exercise such power.

31. To put it by way of an illustration, the Police has the power to arrest but it is not necessary that in all cases arrest must be effected. The Police should know whether at all arrest is necessary.

32. We may put it in a slightly different way. Take for instance, the show cause notice in the present case is the final order of blacklisting. The final order in any case cannot travel beyond the show cause notice. Therefore, we take the show cause notice as the final order. Whether it makes out a case for blacklisting? This should be the test to determine whether it is a genuine case to blacklist a contractor or visit him with any other penalty like forfeiture of EMD, recovery of damages etc. We say so because once an order of blacklisting is passed the same would put an end to the business of the person concerned. It is a drastic step. Once the final order blacklisting the Contractor is passed then the Contractor is left with no other option but to go 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 24/09/2025 at 22:04:44 to the High Court invoking writ jurisdiction under Article 226 of the Constitution and challenge the same. If he succeeds before the Single Judge then it is well and good otherwise he may have to prefer a writ appeal or LPA as the case may be. This again would lead to unnecessary litigation in the High Courts. The endeavour should be to curtail the litigation and not to overburden the High Courts with litigations of the present type more particularly when the law by and large is very well settled and there is no further scope of any debate.

33. As observed by this Court in Erusian Equipment & Chemicals Ltd. Vs. State of W.B. reported in (1975) 1 SCC 70, an order of blacklisting casts a slur on the party being blacklisted and is stigmatic. Given the nature of such an order and the import thereof, it would be unreasonable and arbitrary to visit every contractor who is in breach of his contractual obligations with such consequences. There have to be strong, independent and overwhelming materials to resort to this power given the drastic consequences that an order of blacklisting has on a contractor. The power to blacklist cannot be resorted to when the grounds for the same are only breach or violation of a term or condition of a particular contract and when legal redress is available to both parties. Else, for every breach or violation, though there are legal modes of redress and which compensate the party like the Corporation before us, it would resort to blacklisting and at times by abandoning or scuttling the pending legal proceedings.

34. Plainly, if a contractor is to be visited with the punitive measure of blacklisting on account of an allegation that he has committed a breach of a contract, the nature of his conduct must be so deviant or aberrant so as to warrant such a punitive measure. A mere allegation of breach of contractual obligations without anything more, per se, does not invite any such punitive action."

8. Issue notice to the respondent through all permissible modes, including electronically.

9. Let reply be filed within a period of four weeks from today. Rejoinder thereto, if any, be filed within a period of two weeks, thereafter.

10. Considering the aforesaid aspects as highlighted by learned senior counsel for the petitioner, there shall be a stay of the impugned communication dated 21.08.2025, till the next date of hearing.

11. List on 05.02.2026.

SACHIN DATTA, J SEPTEMBER 22, 2025/uk 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 24/09/2025 at 22:04:44

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