Jharkhand High Court
Ivrcl Infrastructures & Projects ... vs The State Of Jharkhand on 23 February, 2018
Author: Anubha Rawat Choudhary
Bench: Anubha Rawat Choudhary
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(C) No.4186 of 2013
IVRCL Infrastructures & Projects Limited through Venkatesh
Gonuguntla, Son of Late G. Pedda, Chimmappa, Sr. Assistant
General Manager (Projects), Jharkhand Sub-Regional Office,
Ranchi, having its Registered Office at M-22/3 RT, Vijay Nagar
Colony, Hyderabad-500057, Andhra Pradesh, having its
Regional Office at 498/B, Mandir Marg, Road No.-4, Ashok
Nagar, Ranchi, P.O.: Ashok Nagar, P.S.: Argora, District-
Ranchi. ... ... Petitioner
Versus
1. The State of Jharkhand, through the Chief Secretary,
Government of Jharkhand, Ranchi, P.O.: Project Bhawan,
P.S.: Jagarnathpur, District: Ranchi.
2. The Principal Secretary, Drinking Water & Sanitation
Department, Govt. of Jharkhand, Nepal House, Doranda,
P.O. & P.S.: Doranda, Ranchi, District: Ranchi- 834002.
3. The Engineer-in-Chief (HQ, Drinking Water & Sanitation
Department, Govt. of Jharkhand, Nepal House, Doranda,
P.O. & P.S.: Doranda, Ranchi, District: Ranchi- 834002.
4. The Chief Engineer, Drinking Water & Sanitation
Department, Zonal Office, Govt. of Jharkhand, Nepal House,
Doranda, P.O. & P.S.: Doranda, Ranchi, District: Ranchi-
834002.
5. The Superintending Engineer, Drinking Water & Sanitation
Department, Urban Circle, Ranchi.
6. The Superintending Engineer, Drinking Water & Sanitation
Department, Mech. Circle, Ranchi.
7. The Executive Engineer, Drinking Water & Sanitation
Department, Swarna Rekha Head Work Division, Ranchi,
Jharkhand.
8. Corporation Bank through the Branch Manager, 3-6-285,
Ground Floor, Ameur Mahal Apartment, Hyderabad,
Andhra Pradesh- 500 023. ... ... Respondents
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CORAM :HON'BLE MRS. JUSTICE ANUBHA RAWAT CHOUDHARY
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For the Petitioner :Mr. Rajiv Ranjan, Sr. Adv.
Mr. Pratyush Kumar, Adv.
For the Respondent-State :Mr. Himanshu Kr. Mehta, A.A.G. Mr. Sharad Kaushal, J.C. to A.A.G.
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18/23.02.2018
1. Heard Mr. Rajiv Ranjan, learned Senior counsel assisted by Mr. Pratyush Kumar, learned counsel appearing for the petitioner.
22. Heard Mr. Himanshu Kumar Mehta, learned Additional Advocate-General assited by Mr. Sharad Kaushal, learned counsel appearing on behalf of the respondent-State.
3. This writ petition has been filed by the petitioner for quashing the letter no.5/Miscellaneous-2196/12 2810 Ranchi dated 05.07.2013 issued by the respondent Engineer-in-Chief, Drinking Water & Sanitation Department, Government of Jharkhand, (respondent no.3) whereby the agreement no. JnNURM/SBD/Agreement/2009-10/1 Dated 15.03.2010 entered between the Executive Engineer, Drinking Water & Sanitiation, Swarnarekha Head Works Division, Ranchi, Jharkhand (Respondent No.7) and the petitioner has been rescinded and an order of blacklisting has been passed coupled with forfeiture of security money. The petitioner seeks quashing of the aforesaid order with consequential reliefs, including non-encashment of the Bank Guarantee, which is valid upto August, 2014.
4. As it appears from the order-sheet passed in this case that one Interlocutory Application No.7155 of 2017 was filed during the pendency of this case, wherein the petitioner had confined the prayer in the writ petition insofar as illegality, arbitrariness and permanent blacklisting of the petitioner is concerned and had also prayed for grant of leave and liberty to raise other reliefs prayed for in the writ petition to be raised before the Additional Judicial Commissioner-XII-cum-Presiding Officer, Commercial Court, Ranchi in Original Money Suit No.361 of 2016 instituted by the petitioner-company against the present respondents. The said prayer of the petitioner was allowed vide order dated 31.08.2017 and the following order was passed :
"In the attending circumstances, the petitioner is permitted to delete the prayer for other reliefs in the present writ petition in terms of the interlocutory application and the present writ application shall be heard on the limited question with regard to blacklisting of the petitioner by the respondents. The petitioner is at liberty to raise the plea for other reliefs in the Original Money Suit No.361/2016, pending before Commercial Court at Ranchi.
I.A. No.7155 of 2017 stands allowed."3
5. In this background, the writ petition is being disposed of by confining the prayer of the petitioner on the issue of blacklisting only.
6. The short facts for the purposes of considering the matter on the point of blacklisting as submitted by the petitioner is as follows:
(a) The matter relates to supply of drinking water in urban areas of Ranchi and the project is known as Jawaharlal Nehru National Urban Renewal Mission Scheme.
(b) A pre-bid meeting was held pursuant to tender advertisement on 09.01.2010 for the aforesaid project of water supply in Ranchi. Various issues were discussed under the Chairmanship of Engineer-in-Chief, Drinking Water and Sanitation Department. The petitioner submits that during the pre-bid meeting, various inconsistencies in the proposed project was duly brought to the notice of the department.
(c) On 15.03.2010, after successful completion of the tender process, as the petitioner being the lowest tenderer, the petitioner entered into agreement no. JnNURM/ SBD/Agreement/2009-10/01 dated 15.03.2010 which was executed by the Executive Engineer, Drinking Water and Sanitation Department, Swarnarekha Head Works Division, Ranchi and the petitioner for a value of Rs.234.71 crores.
(d) Case of the petitioner is that the petitioner found that the drawing and design as contained in the detailed project report were defective and there were various discrepancies.
(e) Accordingly, the revised cost estimated of the project as per the petitioner became Rs.374.55 crores.
(f) The financial cost of the project increased immensely.
(g) The tender to the petitioner was for Rs.234.71 crores only. The petitioner executed project work of Rs.115.25 crores 4 out of executable portion of Rs.162.46 crores. Work of Rs.72.25 crores were held-up for want of approvals/clearances from the Government and its agencies. The entire Contract was to be executed by 11.09.2012 but the project could not be completed.
(h) The counsel for the petitioner has also submitted that the project could not be completed for the reasons beyond its control.
(i) In the meantime, one Public Interest Litigation being W.P.(PIL) No.3080 of 2011 was instituted by one Babloo Kumar in connection with the drinking water supply in the city of Ranchi and in that Public Interest Litigation various orders were passed including orders affecting the credibility of the petitioner and touching upon the execution of the work by the petitioner, although the petitioner was never a party in the said Public Interest Litigation.
(j) Under such circumstances, the petitioner filed its intervention application in the said Public Interest Litigation which was numbered as I.A. No.2579 of 2014 and the petitioner tried to bring the aforesaid constraints being faced by the petitioner in the execution of that project and also the reasons for non-completion of the work within time.
(k) However, in the meantime various correspondences were issued by the department and tremendous pressure was created on the petitioner also for completion of the project and accordingly, a meeting was held between the petitioner-company and the authorities of the respondent-State and the project was directed to be completed by extension of time granted on 07.01.2013 and the project was to be completed till November, 2013.
(l) The petitioner submits that although the extension of time was granted vide order dated 07.01.2013 by the respondents, but in the meantime a number of letters were issued to the petitioner in connection with the work and lastly 5 the petitioner was served with letter no.1949 dated 18.05.2013, which was a show-cause alleging very slow progress of Ranchi Water Supply Scheme and failure to achieve the target of final and revised work execution plan which also referred to letter dated 07.05.2013. The letter dated 07.05.2013, as contained in Annexure-60 to the paper-book, was issued by the Superintending Engineer, Drinking Water and Sanitation Department, Urban Circle, Ranchi wherein it was mentioned that in the review meeting on 06.05.2013 under the Chairmanship of Additional Chief Secretary, the work of the petitioner was reviewed and found that the progress is very unsatisfactory showing complete unwillingness towards execution of work and therefore, the petitioner was asked to explain within a week as to why action should not be taken against the petitioner as per the agreement, Section-3, conditions of Contract, Clause No. 59.2 for very poor performance even after extension of time granted to the petitioner. In the said letter dated 07.05.2013, various facts in connection with lagging behind of the work of the petitioner has been mentioned.
(m) Thereafter, the letter no.1949 dated 18.05.2013 was issued which was in continuation of letter no.475 dated
07.05.2013 wherein the following allegation was made:
"The works are lagging as per Revised Work Execution Plan by almost 100% in the span of almost last 5 months in some components i.e. Dewatering Works, excavation in Foundation of Intake Well and Gangway, Clear Water, Sump of WTP, UGR- II, Supply and laying of Rising Main, Distribution Main pipes and Electromagnetic work. In general, the progress is highly unsatisfactory.
Therefore you are requested to explain why your contract should not be closed and your Earnest Money/Security Money forfeited and why you should not be blacklisted by us?"
(n) Pursuant to the aforesaid show-cause which according to the petitioner is vague, the petitioner filed a detailed reply vide letter dated 04.06.2013 referring to various 6 communications including letter no.475 dated 07.05.2013 as well as letter no.1949 dated 18.05.2013 and assigned the reason for non-completion of work by the petitioner upon the respondents on account of their acts and omissions. In the show-cause reply dated 04.06.2013, various allegations have been made by the petitioner against the respondents and a detailed show-cause reply has been filed.
Pursuant to the show-cause reply, the respondents have passed the impugned order as contained in letter no.5/2810 dated 05.07.2013 wherein the Contract of the petitioner has been rescinded in public interest, the security money has been forfeited and the petitioner-company has been blacklisted.
(o) Counsel for the petitioner assailed the impugned order dated 05.07.2013 on various counts including:
(i) The show-cause notice as contained in letter no.1949 dated 18.05.2013 is itself vague and no proceeding for blacklisting can be initiated on the basis of such vague show- cause reply.
(ii) The petitioner had filed a detailed show-cause reply touching upon every aspect of the project vide reply dated 04.06.2013, but the respondents while passing the impugned order dated 05.07.2013 have not considered those aspects and have totally misled itself by referring to those points which have not been mentioned in the show-cause reply filed by the petitioner.
(iii) The counsel also submits that there are certain allegations regarding delay in submission of design and drawing which has been reflected in the impugned order dated 05.07.2013 but the same is neither mentioned in show cause notice dated 18.05.2013 nor mentioned in the letter dated 07.05.2013 and accordingly the impugned order has been passed on the ground which for the first time is mentioned in the impugned order itself.
7(iv) The order of blacklisting which has been passed by the impugned order dated 05.07.2013 is an order of permanent blacklisting which amounts to capital punishment and the facts and circumstances of this case do not warrant passing of such permanent blacklisting and a punishment of permanent blacklisting is totally disproportionate to the allegations if they are taken to be true even on the face value.
(v) The counsel for the petitioner has relied upon various judgments passed by this Hon'ble Court as well as the Hon'ble Supreme Court including the judgments reported in (2014) 14 SCC 731 para 21 to 29 , (2014) 9 SCC 105 para 21, (2010) 13 SCC 427 para 40 and (2010) 9 SCC 496 para 47 . The petitioner has also relied upon the judgments passed by this Hon'ble Court in L.P.A. No.395 of 2015, W.P.(C) No.4941 of 2016 and W.P.(C) No.3929 of 2014 in support of the contentions raised by the petitioner.
7. Counsel for the respondents, on the other hand submits that the show-cause notice which was issued to the petitioner, as contained in letter no.1949 dated 18.05.2013, although does not make specific allegations, but certainly the same deals with delay in the progress work and considering the fact that the work related to supply of drinking water in the urban area of Ranchi and the allegations made in the show-cause notice regarding slow progress of work is of very serious nature and accordingly, the order of blacklisting has been rightly passed.
8. The counsel for the respondents also submits that show-cause notice also refers to letter no.475 dated 07.05.2013 and from the perusal of the letter dated 07.05.2013 it is clear that specific allegations were made against the petitioner and accordingly, this show-cause notice should be treated as in continuation to letter dated 07.05.2013. The counsel for the respondents further submits that the petitioner, having given a detailed show-cause reply, shows that it had full idea about the allegations being levelled against the petitioner in the show-cause notice dated 8 18.05.2013 and accordingly, no prejudice has been caused to the petitioner by non-mentioning of the detailed allegation in the letter dated 18.05.2013 itself.
9. However the counsel for the respondents during the course of arguments could not dispute that there are certain allegations regarding delay in submission of design and drawing which has been reflected in the impugned order dated 05.07.2013 but the same is neither mentioned in show cause notice dated 18.05.2013 nor mentioned in the letter dated 07.05.2013 which is one of the grounds for passing of the impugned order.
10.Counsel for the respondents have also referred to Clause-59.2 of the tender document contained in the paper-book wherein it has been mentioned that if the Contractor stops work for 28 days when no stoppage of work is shown on the current Programme and the stoppage has not been authorized by the Engineer, that will amount to fundamental breach of Contract and accordingly, the counsel for the respondents have submitted that there was a fundamental breach of Contract by the writ petitioner. In view of this, the order of blacklisting has rightly been passed.
11.Counsel for the respondents also submits that the impugned order does not show that the petitioner has been permanently blacklisted and the petitioner could have approached the authority for permitting the petitioner to execute the work to participate in the various tenders or to revoke the order of blacklisting which has been passed by the impugned order.
12.After hearing the counsel for the parties and after considering the materials on record, this Court is inclined to allow the writ petition by setting-aside the order of blacklisting as contained in impugned order dated 05.07.2013 and direct the respondents to take a fresh decision on the point of blacklisting including the period for black listing of the petitioner on account of following facts and reasons:
9(a) From the fact of the case records this court finds that the notice which was issued for blacklisting vide letter no.1949 dated 18.05.2013 is a short letter which reads as follows:
"Government of Jharkhand Drinking Water & Sanitation Department, Jharkhand Letter No. 1949 Dated: 18.05.2013 From: Shardendu Narayan Engineer-in-Chief To,
1. Vice President, W.S. & E.P. Division Corporate Office, "MIHIR" B-2-350/5/A/24/13 Road No.2 Panchavati, Colony Banjara Hill, Hyderabad-500034
2. Sr. Assistant General Manager (Projects), Jharkhand, Sub-Regional Office, Ranchi H.No.498/B, Mandir Marg, Road No.4, Ashok Nagar, Ranchi-834002
3. Project in-Charge, IVRCL, Ashraya, Behind ShindiSai Hospital, Bariatu Road, Ranchi Sub: Show Cause for very slow progress of Ranchi Water Supply Scheme and failure to achieve the target of final and revised work execution plan Ser Urban Circle, Ranchi letter No.475 Dated 07.05.2013 Sir, The works are lagging as per Revised Work Execution Plan by almost 100% in the span of almost last 5 months in some components i.e. Dewatering Works, excavation in Foundation of Intake Well and Gangway, Clear Water, Sump of WTP, UGR-II, Supply and laying of Rising Main, Distribution Main pipes and Electromagnetic work. In general, the progress is highly unsatisfactory.
Therefore you are requested to explain why your contract should not be closed and your Earnest Money/Security Money forfeited and why you should not be blacklisted by us?
Yours Sincerely, s/d (Shardendu Narayan) Engineer-In-Chief
(b)From the perusal of the said letter dated 18.05.2013, this court finds that there is no specific details in this particular letter and accordingly, this show-cause itself is vague.
However, as per the respondents this show-cause dated 18.05.2013 has to be read with letter no.475 dated 07.05.2013 which finds reference in the show cause notice dated 07.05.2013. Even assuming that the said submission of the respondents is correct, this Court further finds that there are certain allegations regarding delay in submission of 10 design and drawing (which is one of the grounds for passing of the impugned order) which has been reflected in the impugned order dated 05.07.2013 but the same is neither mentioned in show cause notice dated 18.05.2013 nor mentioned in the letter dated 07.05.2013. This aspect of the matter could not be disputed by the counsel appearing for the respondents. Thus this Court finds that the petitioner has been blacklisted on account of certain allegations which has neither been mentioned in show cause notice dated 18.05.2013 nor has been mentioned in letter no.475 dated 07.05.2013.
(c) From perusal of the show-cause reply, which has been filed by the petitioner, this Court finds that a detailed point- wise reply has been filed vide show-cause reply dated 06.06.2013, in which the petitioner has made counter allegations that the respondents themselves were responsible for non-completion of the work within the stipulated time. But this point which has been raised by the petitioner in the show-cause reply has not been considered in the impugned order dated 05.07.2013.
(d)Thus from perusal of the impugned order dated 05.07.2013, this Court finds that the points which have been raised by the writ petitioner in the show-cause reply have not been considered and further order has been passed on some of such grounds which is neither reflected in show-cause notice dated 18.05.2013 nor reflected in letter no.475 dated 07.05.2013.
(e) It has been held in the case reported in (2014) 9 SCC 105 at para 21 as follows:-
"21. The central issue, however, pertains to the requirement of stating the action which is proposed to be taken. The fundamental purpose behind the serving of show-cause notice is to make the noticee understand the precise case set up against him which he has to meet. This would require the statement of imputations detailing out the alleged breaches and defaults he has committed, so that he gets an opportunity to rebut the same. Another requirement, 11 according to us, is the nature of action which is proposed to be taken for such a breach. That should also be stated so that the noticee is able to point out that proposed action is not warranted in the given case, even if the defaults/breaches complained of are not satisfactorily explained. When it comes to blacklisting, this requirement becomes all the more imperative, having regard to the fact that it is harshest possible action."
(f) It has been held in the case reported in (2014) 14 SCC 731 at para 25 as follows:-
"25. Suffice it to say that 'debarment" is recognised and often used as an effective method for disciplining deviant suppliers/contractors who may have committed acts of omission and commission or frauds including misrepresentations, falsification of records and other breaches of the regulations under which such contracts were allotted. What is notable is that the "debarment' is never permanent and the period of debarment would invariably depend upon the nature of the offence committed by the erring contractor."
(g) This Court finds that in view of the aforesaid findings and the facts and circumstances of this case, the ratio of the judgments reported in (2014) 9 SCC 105 and (2014) 14 SCC 731 as quoted above is applicable.
(h)This Court finds that the impugned order dated 05.07.2013 to the extent it relates to blacklisting of the petitioner, amounts to permanent blacklisting as no period of blacklisting has been mentioned in the impugned order.
(i) This Court further finds that the show cause notice also does not provide for the proposed period of blacklisting and by the impugned order the petitioner has been permanently blacklisted.
(j) Accordingly, the impugned order dated 05.07.2013, to the extent it relates to permanent blacklisting of the petitioner, is hereby set-aside with a liberty to the respondents to pass a fresh order after giving an opportunity to the petitioner to respond to the allegations which have been levelled against the petitioner in letter no.475 dated 07.05.2013 read with show-cause notice dated 18.05.2013 read with the impugned letter dated 05.07.2013. The respondents are also 12 directed to give in writing the proposed punishment regarding blacklisting i.e the proposed period of blacklisting to the petitioner within a period of one month from the date of production of a copy of the this order by the petitioner so that the petitioner may suitably respond to the same.
(k)The petitioner is directed to appear before the Respondent No. 3 along with a copy of this order within a period of four months from today and upon their appearance the Respondent No. 3 is directed to give in writing the proposed punishment regarding blacklisting i.e the proposed period of blacklisting to the petitioner within a period of one month from the date of production of a copy of the this order. Thereafter the petitioner may file a response to the allegations which have been levelled against the petitioner in letter no.475 dated 07.05.2013 read with show-cause notice dated 18.05.2013 read with the impugned letter dated 05.07.2013 within a period of one month. The respondent no 3 is directed to pass a reasoned order after considering the facts and circumstances and after hearing the petitioner and also consider the fact that the petitioner has already suffered the punishment of blacklisting since 07.05.2013.
13. With the aforesaid observations and directions, the writ petition is disposed of.
(Anubha Rawat Choudhary, J.) Pankaj A.F.R.