Punjab-Haryana High Court
Supra Enterprises vs Punjab State Electricity Board And Anr. on 20 February, 2006
Equivalent citations: AIR2007P&H23, 2006(1)CTLJ270(P&H), (2006)143PLR539, AIR 2007 PUNJAB AND HARYANA 23, 2007 (2) AJHAR (NOC) 466 (P&H), (2006) 3 PUN LR 799, (2006) 4 RECCIVR 292, 2006 (3) RECCIVR 67.2, (2007) 1 CIVILCOURTC 119, (2006) 2 PUN LR 539, (2006) 3 RECCIVR 67(2)
Author: Ajay Kukar Mittal
Bench: H.S. Bedi, Ajay Kumar Mittal
JUDGMENT Ajay Kukar Mittal, J.
1. In this petition filed under Articles 226/227 of the Constitution of India, the prayer is for quashing the order dated 25.07.2005 (Annexure P12) issued by respondent No. 2 whereby the petitioner-firm has been blacklisted w.e.f. 13.07.2005.
2. As per the averments contained in the petition, the petitioner is engaged in the business of supply and delivery of C.I. Spun Pipes and other allied material and claims to have completed a contract of the value of Rs. 67,71,545 offered by the respondents for supply of 300 NB CI Pipe Barrels in 5.3 metre length at the rate of Rs. 2,323 per metre as reflected in the work order dated 28.02.2002 (Annexure PI). The respondents floated another tender for supply of C.I. Spun Pipes and received only petitioner's tender wherein the petitioner had quoted the rate of the Pipe Barrels at Rs. 7,662.95 per metre. Respondent No. 2 had received sole offer of the petitioner, therefore, decided to re-tender the same. During the second time as well, the petitioner was the solitary tenderer wherein he had quoted the rate of Rs. 7,662.95 per metre. Respondent No. 2 asked the petitioner to supply the break-up of basic price indicating expenses towards raw material, etc. in support of the rate quoted by it. The petitioner in response to this query, submitted a detailed break-up, vide letter dated 20.04.2004 (Annexure P5) of the cost of the material along with reasons for quoting higher rate than the bids submitted in the years 2000 and 2002, the main reason submitted was that the rate of pig iron had registered an unprecedented hike and an upward trend had also been witnessed in the rates of ferrosilicon, hard coke, electricity, etc. which also contributed to the quoting of higher rates. Thereafter, according to the petitioner, other correspondence was exchanged between the parties, the copies of which are at Annexures P6 to P11 whereby the respondents repeatedly asked the petitioner to give justification for the rates quoted by it in the bid and in turn, the petitioner went on to submit its justification for quoting the higher rates. Even after fresh negotiations in the meeting held on 06.07.2004, the petitioner agreed to reduce the rate of the material in question to Rs. 6,464.42 per metre and sent a communication in this regard to the respondents vide Annexure P9. Not only this, the petitioner again reduced the rate of the material to Rs. 3,640 per metre and requested the respondents vide letter dated 07.09.2004 (Annexure F11) for early acceptance of the revised rate. But, it is further averred, the respondents instead of finalizing the tender issued a notice to the petitioner dated 21.01.2005 calling upon it to explain as to why the petitioner-firm had tried to overcharge by more than double the rate and why action be not taken against it for quoting exorbitant rates in the bid. The petitioner claims to have responded to the respondents and clarified that the reduced rate was being quoted as there was reduction in the rates of pig iron, etc. But when the petitioner was sanguine of having a positive response from the respondents, astonishingly a letter dated 25.07.2005 (Annexure P12) was received by it whereby the petitioner-firm was blacklisted with effect from 13.07.2005.
3. In the written statement filed by the respondents, the averments contained in the petition were controverted. All that what has been said therein is that the explanation furnished by the petitioner for quoting higher rate was not satisfactory and convincing. It was further submitted that since the rates quoted by the petitioner in its letter dated 06.07.2004 (Annexure P9) were not acceptable, a direct enquiry was made from the principal supplier which quoted very low rates. It is further stated that the petitioner came to know about all this and consequently conveyed the reduced rates vide Annexure P11 which was nothing but a clever move and reflected on the conduct of the petitioner-firm. The petitioner also filed replication controverting the stand of the respondents.
4. We have heard learned counsel for the parties and have gone through the record.
5. The blacklisting of a commercial firm has serious civil consequences and at the same time it affects the reputation of the firm. The State is expected to proceed with care and responsibility before blacklisting any firm as it is a drastic step to be taken against a person,
6. At the negotiation stage, it shall be too harsh to debar a firm on the ground that it has quoted too high rates for its products. In a commercial transaction if the price or the quality of a product does not suit a person, he may choose not to enter into an agreement but that shall not be a cause or ground for blacklisting a firm. The object of blacklisting is to debar a firm for unbusiness like dealing. Normally, it should be carried out after the contract has been executed between the parties. The action of the State at the same time should not be arbitrary, unfair and discriminatory.
7. In the facts and circumstances of the case, the action of the respondent-State in blacklisting the petitioner-firm at the negotiation stage on the ground that it had quoted a high rate for its product does not stand the test of reasonableness under Article 14 of the Constitution of India and is liable to be quashed.
8. Accordingly, the writ petition is allowed and order dated 25.07,2005 (Annexure P12) passed by the respondent-Board blacklisting the petitioner-firm is quashed. No order as to costs.