Shri Rajendrabhai Virjalalbhai ... vs Vadodara Municipal Corporation on 11 July, 2019

[Cites 4, Cited by 2]

Gujarat High Court

Shri Rajendrabhai Virjalalbhai ... vs Vadodara Municipal Corporation on 11 July, 2019

1. Heard learned Senior Advocate Mr. Mihir Joshi with learned Advocate Mr. Sheth for the Petitioner and learned Senior Advocate Mr. S.N.Shelat with learned Advocate Mr. Nilesh A. Pandya for the Respondent - VMC. Notice is issued to Respondent No.2 which is (as per record) refused. Though the Respondent No.3 is served, he has not remained present before the court.

2. M/s. Pooja Construction Co. Engineering Consultants & Contractors (hereinafter referred to as "the Petitioner") has filed present Petition upon being aggrieved and dissatisfied with the Resolution No. 06/2019-20 dated 27.5.2019 whereby the Petitioner Page 1 of 19 Downloaded on : Thu Aug 01 00:05:08 IST 2019 C/SCA/9885/2019 ORDER

- Pooja Construction is debarred for 10 years from capital work, operation and maintenance work, of Respondent No.1 - Vadodara Municipal Corporation (hereinafter referred to as "Respondent - VMC").

3. Order under Challenge:

3.1 The Petitioner has challenged the order No. 06/2019-20 dated 27.5.2019 passed by the Respondent - VMC to the extent the Petitioner is debarred for 10 years.

3.2 The Petitioner was given notice dated 3.5.2019 by the Respondent - VMC to give written explanation about negligence in operation and maintaining the water treatment plant situated at Nimeta.

3.3 The Respondent - VMC granted opportunity of hearing.

One Mr. Bhavesh and Mr. Nitishbhai Govani attended the hearing on behalf of the Petitioner. Oral as well as written representation was made on behalf of the Petitioner.

4. Relief claimed by Petitioner:

4.1 That the operative portion or the order dated 27.5.2019 of the Respondent - VMC is in three parts. The Petitioner has restricted his relief only for debarring the Petitioner for 10 years from any work of Respondent No.1 - VMC. The relief prayed by the Petitioner is as under:

"21. a. Your Lordships may be pleased to issue appropriate writ of mandamus or any other appropriate writ, order or direction by quashing & setting aside the Resolution No. 06/2019- 20 dated 27/05/2019 qua debarring the Petitioner for 10 yrs.

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From work of VMC.

b. Pending the admission and final hearing of the present Petition, your Lordships may be pleased to by way of interim relief restrain the respondents and their men, agents, servants and subordinates from implementing the Resolution No.06/2019-20 dated 27/5/2019 qua debarring the petitioner for 10 yrs. From work of VMC.

4.2 VMC has claimed that after issuing Notice and after considering the reply to Notice, it appeared that the Petitioner failed to satisfactorily perform work of operation and maintenance of Nimeta Plant as per SOP and that the Petitioner has not taken care and remained negligent in maintaining and operating the plant. The Respondent - VMC also claimes that it had received complaints from the public about supply of dirty water from the Nimeta Filtration Plant. The Petitioner was informed but the Petitioner has not taken serious note of that and not made serious attempts for improving the same. As a result the problem about dirty water arose in Eastern and Southern area of the city of Vadodara. The Petitioner has failed to control the situation and remained negligent and irresponsible. Therefore the image of the Respondent - VMC is tarnished. It is concluded after inquiry that the Petitioner has shown carelessness and remained negligent in maintenance of Nimeta Water Treatment Plant. The Respondent - VMC therefore ordered that;

(a) The work order for maintenance and operation of Nimeta Plant is terminated with immediate effect.

(b) The Petitioner is debarred for 10 years from capital work or operation and maintenance work of the Respondent -

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             VMC and deposits are         forfeited.
   (c)       To carry out the operation and maintenance work from other
             contractor    at the cost and risk of the Petitioner.

In the present Petition only 2nd part of the order [i.e. the decision at

(b) above is challenged].

5. Facts of the case:

5.1 The Respondent - VMC invited the tender for operation and maintenance of 45 MLD, 50 MLD (OLD) and 50 MLD (NEW) Water Treatment Plant at Nimeta on Annual Rate Contract base. The agreement was executed between the parties and Corporation issued work order on 16.3.2016 for 5 years.

5.2 However the work contract is terminated by Respondent - VMC vide Resolution No. 06/2019-20 dated 27.5.2019.

6. Arguments of the Parties:

6.1 Learned Senior Counsel for Petitioner has submitted that the Petitioner has been awarded work earlier for 3 years and that the work was carried out satisfactorily and successfully. No complaint was received during that period. The action of debarring and passing the Resolution dated 27.5.2019 is wrongful, illegal and not tenable in the eye of law.

6.2 That the instruction was given by the Respondent - VMC are followed by the Petitioner. That the chemist had been informed to maintain the quality of water and Alum Dosing. That the Petitioner had informed the Deputy Executive Engineer to take steps for removing the yellowish colour of water as per the advise Page 4 of 19 Downloaded on : Thu Aug 01 00:05:08 IST 2019 C/SCA/9885/2019 ORDER of the consultant.

6.3 It is also submitted that WTP-3 (50 MLD NEW) is required to be run over load of capacity, resulting into not maintaining the quality of water. That earlier officers of VMC directed to stop chlorination and used overdose of PAC liquid due to which Flock Formation and Sludge had increased and it was not possible to remove the sludge from WTP-3 (50 MLD NEW) Lamela Filter at Bottom and water was seen with Turbidity. The Petitioner was informed on 8.4.2019 by the Respondent no.3, City Engineer and consultant of VMC to start Chlorination and reduce the dose of PAC (Poly Alumina Chloride) liquid and accordingly the Petitioner followed the instruction which resulted into improvement in the quality of filtration water.

6.4 That the Petitioner is not guilty of breach of operation and maintenance of contract. That the Petitioner is not found guilty of breach of contract by any competent court. That the Respondent -

VMC being a party to the contract, therefore, they cannot prosecute and judge there own. That the quality of water was so affected due to over dose i.e. 40-50 times more use of liquid PAC as directed by the officers of the Respondent - VMC.

6.5 It is further submitted that the agreement of operation and maintenance of contract does not provide for any technology for removal of colour from water. That the direction to stop the chlorination was issued by the officers of the Respondent - VMC. That the Petitioner has acted in good faith and upon the directions of the officers of the Respondent - VMC.

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6.6 Learned Advocate for Petitioner claims that on account of the order to debar the Petitioner, it will be deprived of the work of Respondent - VMC and other tenders invited by other public undertakings. It is further submitted that the order is arbitrary and unjustified and that if order is not set aside or stayed, it will cause loss to the Petitioner. Learned Advocate for the Petitioner therefore prayed to quash and set aside the impugned order.

7. Submission of Respondent No.1 - VMC:

7.1 Learned Senior Counsel Shri S.N.Shelat submitted that the Petitioner is responsible for smooth, effective and satisfactory operation and maintenance of the water treatment plant of Nimeta Water Works on round the clock basis.

7.2 That the Petitioner is required to operate and maintain the raw water treatment plant with the aim and purpose of treatment of raw water so that the turbidity of filtered water does not exceed the desired limit.

7.3 That the filtered water from the plant should be clear, sparking, devoid of all suspended material and other foreign material without any Alge and colour, having objectionable and acceptable pattern may not for potable drinking water and to bringing the standard IS 10500 : 1951.

7.4 That the Petitioner was warned by the repeated communications about raw water being coloured and turbid.

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7.5 That the Petitioner has admitted in writing in his letter dated 11.1.2019 about the raw water having turbidity and colour. It is further submitted that in spite of taking necessary action and improving the quality of water, he started finding fault with the officers.

7.6 It is further submitted that the complaints from the people of Vadodara city were received about yellowish colour and turbidity in the water. The same situation was drawn to the attention of the Petitioner vide notice and communication dated 2.4.2019, 10.4.2019 and 20.4.2019 and Petitioner was repeatedly asked to take proper steps.

7.7 That the Petitioner however blamed the department and contended that he is not responsible for impurity. It is contended that finally on 27.4.2019 the Petitioner was informed of several deficiencies in operation of the treatment plant and maintenance.

The Petitioner was given further notice dated 3.5.2019 for termination of contract and also for blacklisting him. The defects were admitted but the reasons given were not proper. The Municipal Commissioner has given an opportunity to explain the stand and personal hearing on 8.5.2019.

7.8 Learned Senior Counsel has drawn attention on the reports on short physical and chemical examination of water (at page 157 to 160) and submitted that the result of test explicitly shows that the water is chemically unfit for drinking purpose. Learned Senior Counsel has referred to some of the correspondences taken place between the parties and requested to dismiss the petition. In the Page 7 of 19 Downloaded on : Thu Aug 01 00:05:08 IST 2019 C/SCA/9885/2019 ORDER 7.9 Learned Senior Counsel has relied upon the judgment in case of M/s Kulja Industries Limited v. Chief Gen. Manager, W.T. Proj., BSNS and Ors. reported in AIR 2014 SC 9 and submitted that the authority concerned is empowered to determine the time period of blacklisting or debarring the Petitioner. In the said decision, Apex Court has observed that:

"17. That apart the power to blacklist a contractor whether the contract be for supply of material or equipment or for the execution of any other work whatsoever is in our opinion inherent in the party allotting the contract. There is no need for any such power being specifically conferred by statute or reserved by contractor. That is because 'blacklisting' simply signifies a business decision by which the party affected by the breach decides not to enter into any contractual relationship with the party committing the breach. Between two private parties the right to take any such decision is absolute and untrammelled by any constraints whatsoever. The freedom to contract or not to contract is unqualified in the case of private parties. But any such decision is subject to judicial review when the same is taken by the State or any of its instrumentalities. This implies that any such decision will be open to scrutiny not only on the touchstone of the principles of natural justice but also on the doctrine of proportionality. A fair hearing to the party being blacklisted thus becomes an essential pre-condition for a proper exercise of the power and a valid order of blacklisting made pursuant thereto. The order itself being reasonable, fair and proportionate to the gravity of the offence is similarly examinable by a writ Court.

18. Subsequent decisions of this Court in M/s Southern Painters v. Fertilizers & Chemicals Travancore Ltd. and Anr. AIR 1994 SC 1277; Patel Engineering Ltd. Union of India (2012) 11 SCC 257; B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd. & Ors. (2006) 11 SCC 548; Joseph Vilangandan v. The Executive Engineer, (PWD) Ernakulam & Ors. (1978) 3 SCC 36 among others have followed the ratio of that decision and applied the principle of audi alteram partem to the process that may eventually culminate in the blacklisting of a contractor.

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25. In the case at hand according to the respondent-BSNL, the appellant had fraudulently withdrawn a huge amount of money which was not due to it in collusion and conspiracy with the officials of the respondent- corporation. Even so permanent debarment from future contracts for all times to come may sound too harsh and heavy a punishment to be considered reasonable especially when (a) the appellant is supplying bulk of its manufactured products to the respondent-BSNL and (b) The excess amount received by it has already been paid back.

26. The next question then is whether this Court ought to itself determine the time period for which the appellant should be blacklisted or remit the matter back to the authority to do so having regard to the attendant facts and circumstances. A remand back to the competent authority has appealed to us to be a more appropriate option than an order by which we may ourselves determine the period for which the appellant would remain blacklisted. We say so for two precise reasons. Firstly, because blacklisting is in the nature of penalty the quantum whereof is a matter that rests primarily with the authority competent to impose the same. In the realm of service jurisprudence this Court has no doubt cut short the agony of a delinquent employee in exceptional circumstances to prevent delay and further litigation by modifying the quantum of punishment but such considerations do not apply to a company engaged in a lucrative business like supply of optical fibre/HDPE pipes to BSNL. Secondly, because while determining the period for which the blacklisting should be effective the respondent-Corporation may for the sake of objectivity and transparency formulate broad guidelines to be followed in such cases. Different periods of debarment depending upon the gravity of the offences, violations and breaches may be prescribed by such guidelines. While, it may not be possible to exhaustively enumerate all types of offences and acts of misdemeanour, or violations of contractual obligations by a contractor, the respondent- Corporation may do so as far as possible to reduce if not totally eliminate arbitrariness in the exercise of the power vested in it and inspire confidence in the fairness of the order which the competent authority may pass against a defaulting contractor."

8. Having regard to the submission that Petitioner is debarred for 10 years, we, in light of submissions by learned Senior Advocates for Page 9 of 19 Downloaded on : Thu Aug 01 00:05:08 IST 2019 C/SCA/9885/2019 ORDER both sides, considered it appropriate to grant opportunity to the Petitioner to submit representation and that therefore we passed the below quoted order on 20.6.2019:

"In view of submission by Mr. Sukhwani, learned advocate for the petitioner to the effect with regard to the Order debarring the Petitioner/ period for which the Petitioner is debarred by the Respondent Corporation, the Petitioner, while keeping the petition pending, would approach the Respondent No.1 with a representation and the said representation may be expeditiously decided, Mr. Pandya, learned advocate for respondent submitted that such representation, when made, will be considered by the Competent Authority.

In light of the said submission by learned advocates for petitioner and respondent, we adjourn the proceedings to 1.7.2019.

Mr.Sukhwani, learned advocate submitted that the Petitioner would submit representation on or before 24.6.2019."

9. Thereafter the Petitioner filed further affidavit and the Respondent

- VMC has produced order dated 29.6.2019. The said order is passed after considering the representation made by the Petitioner.

9.1 Petitioner's affidavit and the order dated 29.6.2019 gives out that same decision is maintained and continued without any change.

9.2 According to the Petitioner the period is not even reduced.

9.3 The Respondent claims that it is so because the Petitioner, in its representation, demanded complete cancellation.

10.When the submissions by learned Senior Counsels appearing for Page 10 of 19 Downloaded on : Thu Aug 01 00:05:08 IST 2019 C/SCA/9885/2019 ORDER the parties and the dispute about the order - whether in light of facts and circumstances of present case, the order viz. the decision to debar the Petitioner is arbitrary and unjustified, are considered in light of above quoted observation by Hon'ble Apex Court, it comes out that the petition, which challenges the decision to debar the Petitioner for 10 years, requires consideration.

11.In this context the observation by Apex Court in para 17 whereby Hon'ble Apex Court clarified and explained that;

"This implies that any such decision will be open to scrutiny not only on the touchstone of the principles of natural justice but also on the doctrine of proportionality. A fair hearing to the party being blacklisted thus becomes an essential pre-condition for a proper exercise of the power and a valid order of blacklisting made pursuant thereto. The order itself being reasonable, fair and proportionate to the gravity of the offence is similarly examinable by a writ Court."

Hence RULE.

12.The Petitioner, by way of interim relief, claims that operation of impugned order may be stayed.

13.With reference to the request for interim relief, it is necessary to consider the provision in the tender document containing the scope of work, wherein, it is specifically mentioned that;

"In given condition of raw water quality, it is desired that filter water from plant should be clear, sparking, devoid all suspended matter and other foreigh material, without any algae and colour, having un-objectionable odor and acceptable appearance meant for potable / drinking water purposes and in accordance to drinking water standards - IS - 10500:1991 (latest Edition)."

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The said clause provides the condition that the agency would be responsible for maintaining the water clear and devoid of all matter including algae and colour.

12.1 It is also necessary to consider that the Respondent - VMC had received several complaints from public of the city that the water supplied is yellowish and turbid.

12.2 The Respondent - VMC has produced the report of physical and chemical examination of water [at page No. 157 of the petition]. On perusing the said report it indicates following abnormalities:

[A] Source and Details of Sample: From Ajwa (Raw Water) SR. Characteristic Analytical Value

1. Colour, Hazen Unit, Max Light Yellow

3. Turbidity NTU, max 21.4

4. PH Value 8.98 Opinion : The Water is Chemically Unfit for Drinking Purpose.

Bacteriological Quality SR. Organisms Result

1. E, Coll Present

3. Turbidity NTU, max 21.4 Opinion : The Water is Bacteriologically Unfit for Drinking Purpose.

[B]Source and Details of Sample: Nimeta Sump-Plant-1(Treated Water) SR. Characteristic Analytical Value

3. Turbidity NTU, max 12.9 Opinion : The Water is Chemically Unfit for Drinking Purpose.


                          Bacteriological Quality

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      SR.      Organisms                                          Result
       1.      E, Coll                                           Absent
  Opinion :       The Water is Bacteriologically Fit for Drinking
                  Purpose.

[C]Source and Details of Sample:Nimeta Sump - Plant -2 (Treated Water) SR. Characteristic Analytical Value

3. Turbidity NTU, max 13.2 Opinion : The Water is Chemically Unfit for Drinking Purpose.


                           Bacteriological Quality

     SR.       Organisms                                          Result
       1.      E, Coll                                           Absent
  Opinion :       The Water is Bacteriologically Fit for Drinking
                  Purpose.

[D]Source and Details of Sample : From Nimeta Sump - Plant-3 (Treated Water) SR. . Characteristic Analytical Value

3. Turbidity NTU, max 12.6 Opinion : The Water is Chemically Unfit for Drinking Purpose.


                           Bacteriological Quality

     SR.       Organisms                                          Result
       1.      E, Coll                                           Absent
            Opinion :    The Water is Bacteriologically Fit for Drinking
  Purpose.

14.From the record it prima facie appears that in light of the complaints and in view of the quality of water from the plant, Respondent - VMC had, from January 2019 onwards, issued notices and letters and drawn attention of the Petitioner about the dirty water. Such fact was not only within the knowledge of the Page 13 of 19 Downloaded on : Thu Aug 01 00:05:08 IST 2019 C/SCA/9885/2019 ORDER Respondent - VMC but also admitted by the Petitioner in some of its correspondence. Reasonable opportunity to cure the defect was granted by the Respondent - VMC to the Petitioner, but the Petitioner failed to control the situation.

15. According to the Respondent - VMC, the defect on part of the Petitioner has directly affected the health of the public of Vadodara city. It is also claimed that on on 3.5.2019 the Additional City Civil Engineer of Respondent - VMC gave show cause notice to the Petitioner stating that you have not complied with the conditions mentioned in the Scope of Work of the Agreement in the operation and maintenance work. Therefore the water received after the treatment is yellowish in colour and turbid since many times. That you have not taken care as per the scope of work mentioned in the agreement. That the show cause notice is given to the Petitioner as to why the penalty be not recovered ? Why you should not be black listed and why are you not be debarred from other Corporation's work. The Petitioner was directed to give written reply on 8.5.2019 to the Municipal Commissioner of the Respondent - VMC. It is also stated that if you fail to remain present, appropriate action for punishment will be taken.

16.In addition to foregoing discussion as well as in light of the facts of present case and the details and other aspects mentioned above, we may also mention that we have also considered;

(1) The letters and Notice dated 5.1.2019 (page 80), 27.3.2019 (page 83), 2.4.2019 (page 85), 20.4.2019 (page 89), 26.4.2019 (page 94), 27.4.2019 (page 96), 3.5.2019 (page 99), by the Page 14 of 19 Downloaded on : Thu Aug 01 00:05:08 IST 2019 C/SCA/9885/2019 ORDER Respondent - VMC;

(2) From the said notice(s), it emerges that the Respondent - VMC had informed the Petitioner about defect and shortfall in performance and had also asked the Petitioner to take corrective measures.

(3) We have also considered that the said water treatment plant caters service/supplies water to population of almost seven (7) lakh residents of Vadodara city.

(4) We have also considered some other undisputed pertinent aspects viz. that there is no dispute about the fact that:

(a) The water supplied to the residents of Vadodara city during above mentioned period was (i) unfit for drinking purpose and;

(b) The obligation to operate and maintain the water treatment plant - during the period in question - was of the Petitioner and it was in charge of operation and maintenance of the plant.

(c) According to the Respondent - VMC, Petitioner did not perform its work satisfactorily and although Notices and instructions and reminders were issued, Petitioner did not solve the problem, did not improve performance and did not cure the defect;

(d) The Petitioner shifts the blame to the Respondent - VMC, the chemical and alleged overload;

(e) Before passing the order, the Respondent - VMC;

(i) issued show cause notice;

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(ii) called for reply / explanation from the Petitioner;

(iii) granted opportunity of hearing to the Petitioner;

and

(iv) considered the reply submitted by the Petitioner.

(5) We have also taken into account the fact that the decision and order whereby the contract - work order came to be terminated is not challenged in present petition and the petitioner has declared that it proposes to file "appropriate proceedings" against (1) termination of contract; and (2) forfeiture of deposit.

(6) The proposed suit or other appropriate proceedings are yet not filed.

17.Thus, we are called upon to examine the legality and propriety of order debarring the petitioner in absence of challenge against order terminating contract.

18.The petitioner has challenged order dated 3.5.2019 whereby it is debarred for 10 years on the ground that the work (removing/curing colour etc.) was not in its scope.

19.However above quoted clause prima facie demonstrate that work order prescribed that, "filter water from the plant should be clear, sparkling, devoid of all suspended matter and without any algae and colour."

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19.1 Thus, prima facie the contract obliged the petitioner to maintain and supply clean water.

19.2 Even otherwise, work related to public health (water supply to residents of the city) should be discharged with utmost diligence, care. caution and vigilance.

20.The Vadodara Municipal Corporation has relied on the Notices and letters written to petitioner. The said Notices prima facie show that petitioner was informed about shortfall and defect and was also asked to cure the defect and solve the problem. The Vadodara Municipal Corporation claims - in light of reply given by the petitioner - that the petitioner tried to blame others and refused to accept its obligation.

21.The petitioner opposes the order on the ground that the order is harsh and it would deprive the Petitioner opportunities of participating in other tender process.

22.Having regard to above quoted observations by Apex Court, the facts of the case and above discussed aspects and when;

   (i)        show-cause notice was issued;
   (ii)       reply / explanation was called for;
   (iii)      scope of work (as per work order) prima facie show that the

Petitioner was obliged to operate and maintain treatment plant and supply clear and sparkling water devoid of all suspended mater and without algae and colour.

(iv) the Respondent - VMC gathered from the report that water was unfit for drinking purpose while question of health of residents is involved;

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(vi) the step taken by virtue of impugned order is in nature of protection.

we are of the view that there is no justification to grant interim relief as prayed for.

23.Further, if other establishments, as alleged or apprehended by the Petitioner, do not accept Petitioner's bid then the option / alternative to take appropriate step in accordance with law against such action of other establishment is available to the Petitioner. Besides this, it is also relevant to consider that the Petitioner's submission on the ground that it would be deprived from participating in other tender process is based on a probability or distant possibility that it would be eligible to participate in such tender process. In our view, on such in future of possibility or probability, the operation of impugned order does not deserve to be stayed, more particularly, in light of above mentioned facts of the case.

24.Considering the factual aspect as well as the facts and circumstances of the case and in light of foregoing discussion and for above reasons, we are not inclined to stay the operation of impugned order.

25.However, to address said anxiety, we grant early final hearing to the petitioner and direct the office to list the petition for final hearing on 12.9.2019.

26.For said purpose, Rule is made returnable on 12.9.2019. Orders Page 18 of 19 Downloaded on : Thu Aug 01 00:05:08 IST 2019 C/SCA/9885/2019 ORDER accordingly.

27.Therefore, the relief prayed for in para 7(b) in the present Application is not granted and the Application stands disposed of.

28.Let the main matter be listed for hearing on 12.9.2019.

(K.M.THAKER, J) (V. P. PATEL,J) J.N.W Page 19 of 19 Downloaded on : Thu Aug 01 00:05:08 IST 2019

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