Madhya Pradesh High Court
Umc Technologies Private Ltd. A Company ... vs Food Corporation Of India on 13 February, 2019
Equivalent citations: AIRONLINE 2019 MP 985
Bench: S.K.Seth, Vijay Kumar Shukla
1
HIGH COURT OF MADHYA PRADESH : JABALPUR
W.P.No.2778/2019
UMC Technologies Private Limited
-Versus-
Food Corporation of India and another
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CORAM :
Hon'ble Shri Justice S.K.Seth, Chief Justice.
Hon'ble Shri Justice Vijay Kumar Shukla, Judge.
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Shri Jaideep Sirpurkar, Advocate for the petitioner.
Shri Mukesh Kumar Agrawal,Advocate for the respondents.
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ORDER
(Jabalpur dt.: 13.02.2019) Per : V.K. Shukla, J.-
The petitioner has invoked the writ jurisdiction under Article 226 of the Constitution of India for quashment of the order dated 09-01-2019, terminating the contract of the petitioner and debarring it from participating in future tenders of the respondent Food Corporation of India for a period of 5 years.
2. The facts enumerated in nutshell are that the respondents vide notice dated 25-11-2016 invited online bids for appointment of a recruitment agency in order to conduct a recruitment process for vacancies for the post of Watchman in their office. The petitioner participated in the said tender process and submitted its bids on 21-12- 2016. The technical bids were opened on 03-01-2017 and thereafter the price bids were opened on 01-02-2017. The petitioner emerged as a successful bidder/lowest bidder in the said tender process. The tender 2 work i.e. conducting examination/tests of eligible aspirants was for the vacant post in the respondent/corporation. The period for execution of tender work was 2 years w.e.f. 14-02-2017 to 13-02-2019. The respondents vide letter dated 14-02-2017 selected and appointed the petitioner as an agency for recruitment process and other related activities as envisaged in the Bid Document. By communication dated 10-04-2018, the respondent informed the petitioner that on 01-04-2018, they were informed by the Special Task Force that around 50 people have been arrested in Gwalior purportedly alongwith some papers which prima facie appeared to be question papers related to the written examination conducted by the petitioner. It was further stated in the communication dated 10-04-2018 that the STF has seized the documents in which there were hand written questions relating to the examination for recruitment of Watchman in Food Corporation of India conducted on 01-04-2018. Thus, it was alleged that the petitioner has committed breach of conditions postulated in the tender form governing the appointment of the petitioner agency. A show cause notice dated 10-04-2018 was issued. The petitioner filed the reply to the said communication dated 12-04-201. After taking into consideration the reply filed by the petitioner, by the impugned order dated 09-01-2019, the respondents terminated the contract with the petitioner in accordance with Clause 42.1(II). Further in exercise of powers conferred under Clause No.10.1 & 10.2, the petitioner was debarred from participating in any future tenders of the Corporation for a period of 5 years. It was further directed that the security deposit 3 was also stood forfeited as per Clause 15.6 of the tender conditions.
3. Learned counsel for the petitioner contended that the order debarring the petitioner from participating in future tenders is without jurisdiction . There is no clause in the tender conditions conferring the powers on the respondents to debar the petitioner from participating in further tenders. It is further contended that the respondents have failed to consider the explanation offered by the petitioner. To bolster his submissions, he relied on the judgment passed by the Apex Court in the case of Gorkha Security Services Vs. Government(NCT of Delhi) and others (2014)9 SCC 105.
4. The Supreme Court in the case of Erusian Equipment & Chemicals Ltd. Vs. State of W.B. reported in (1975)1 SCC 70 held that the blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting therefore, the relevant authority is to have an objective satisfaction. The Court held as under :-
"20. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the blacklist".4
5. The Hon'ble Supreme Court in a Judgment reported as Raghunath Thakur v. State of Bihar, (1989) 1 SCC 229, held that an order of blacklisting has the civil consequences and could not be passed without notice. In another case of Patel Engg. Ltd. Vs. Union of India reported in (2012) 11 SCC 257, the Court held that State is to act fairly and rationally without in any way being arbitrary thereby such a decision can be taken for some legitimate purpose. In M/s Kulja Industries Ltd. (supra) the Court held that order of permanent black listing the Contractor from entering into contracts making supplies tantamounts to rendering the Contractor jobless and economically defunct.
6. In the background of the aforesaid enunciation of law, the validity of the impugned order dated 09-01-2019 (Annexure P-10) is examined. Upon perusal of the record, we find that before passing the impugned order of debarring the petitioner from participating in future tenders of the Food Corporation of India, a notice dated 10-04-2018 was issued to the petitioner providing an opportunity to explain the reason for violating the conditions contained in various clauses governing the contract. The aforesaid alleged clauses were reproduced in the notice dated 10-04-2018 which were clauses 4.14, 4.15, 4.29, 6.5, 6.10 and 25.4. It was clearly mentioned in the said notice that in the event of failure of submission of explanation within a period of 15 days of receipt of the notice, appropriate decision shall be taken ex-parte as per terms and conditions mentioned in the contract without prejudice to any other legal 5 rights and remedies available with the Corporation. The petitioner filed reply to the aforesaid notice and thereafter the impugned order debarring the petitioner from participating in any future tenders of the Corporation for a period of 5 years has been passed as per Clause 10.1 and 10.2 of the tender notice . The relevant clauses 10.1 and 10.2 reads as under :
"10.1. Any Bidder whose contract with FCI or Central/State Govt. or any Central/State PSU /Statutory Corporations has been terminated before the expiry of the contract period for breach of any terms and conditions at any point of time during the last five years, shall be ineligible. 10.2. Bidder whose Earnest Money Deposit and/ or Security Deposit have been forfeited by the FCI or Central/State Govt. or any Central/State PSU/Statutory Corporations, during the last five years, for breach of any terms and conditions, shall be ineligible."
Thus the order of debarring the petitioner from participating in future contract is passed in accordance with the conditions of the contract.
7. The law relating to scope of interference in judicial review of an administrative action is no longer res integra. In the case of Tata Cellular Vs. Union of India (1994)6 SCC 651, the Apex Court observed that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, there are inherent limitations in exercise of that power of judicial review. The Government is the guardian of the finances of the State. It is expected to protect the financial interest 6 of the State. The right to refuse the lowest or any other tender is always available to the Government. The Court does not sit as a court of appeal but merely reviews the manner in which the decision was made. The same view has been reiterated in the recent decision by the Apex Court in the case of Municipal Corporation, Ujjain and another Vs. BVG India Limited and others (2018) 5 SCC 462. Relevant paras 15 and 16 are reproduced as under :
"15. It is well settled that the award of contract, whether it is by a private party or by a public body or by the State, is essentially a commercial transaction. In arriving at a commercial decision, the considerations which are of paramount importance are commercial considerations. These would include, inter alia, the price at which the party is willing to work; whether the goods or services offered are of the requisite specifications; and whether the person tendering the bid has the ability to deliver the goods or services as per the specifications. It is also by now well settled that the authorities/State can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation.
16. The State, its corporations, instrumentalities and agencies have a public duty to be fair to all concerned. Even when some defect is found in the decision-making process, the Court must exercise its discretionary power under Article 226 with great caution and should exercise them only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should interfere.7
8. In view of the aforesaid facts and in the light of the judgments passed by the Apex Court, we find that the order of blacklisting is passed after giving due notice to the petitioner. We do not find any illegality in the order impugned debarring the petitioner from participating in future tenders of the respondents for a period of 5 years.
9. Accordingly, the writ petition stands dismissed.
(S.K.SETH) (VIJAY KUMAR SHUKLA) CHIEF JUSTICE JUDGE hsp. Digitally signed by HARSAHAI PATERIYA Date: 2019.02.19 16:17:35 +05'30'