Delhi High Court - Orders
(Exemption) M/S Msv International Inc vs National Highways Authority Of India on 17 June, 2021
Author: Asha Menon
Bench: Asha Menon
$~2
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P. (C) 5944/2021, CM APPLs.18749/2021 (by the petitioner u/S
151 CPC for interim directions), 18750/2021 & 18751/2021
(Exemption)
M/S MSV INTERNATIONAL INC. .....Petitioner
Through: Mr. Kirti Uppal, Senior Advocate
with Mr. Rohit Goel and Ms. Riya
Gulati, Advocates
Versus
NATIONAL HIGHWAYS AUTHORITY OF INDIA
.....Respondent
Through: Mr. Dayan Krishnan, Sr. Adv. with
Mr. AP Singh, Ms. Padma Priya,
Mr. Dhruv Nayar, Mr. Sumit
Gupta, Mr. Sukrit Seth and Mr.
Samarth Khanna, Advocates
CORAM:
HON'BLE MS. JUSTICE ASHA MENON
ORDER
% 17.06.2021 [VIA VIDEO CONFERENCING] Crl. M.A. No. 18750/2021 (Exemption)
1. Allowed, subject to all just exceptions.
2. The application stands disposed of.
CM APPL.No. 18751/2021 (Exemption from filing attested affidavits)
1. The application is allowed subject to the petitioner filing duly affirmed affidavit(s) alongwith the court fees/deficit court fees, if any, Signature Not Verified Signed By:MANJEET KAUR W.P. (C) 5944/2021 Page 1 of 9 Signing Date:19.06.2021 14:33:33 within 72 hours from the date of resumption of the regular functioning of this court.
2. The application stands disposed of.
CM APPL.18749/2021 (by the petitioner u/S 151 CPC for interim directions)
1. The petitioner, M/s. MSV International Inc., is a Corporation registered in the State of Washington, U.S.A. and entitled to carry on business in India. The petitioner is in the business of developing world- class infrastructure projects besides providing consultancy services in relation to such infrastructure projects. The Petitioner, in response to proposals sought by the respondent/National Highways Authority Of India (for short, "NHAI") for consultancy services as Authority Engineer, had responded and submitted a proposal/bid which culminated in a Contract Agreement dated 28th January, 2016 between the two parties. The consultancy services were for supervision of (i) Four Laning of Sultanpur to Varanasi (PKG-I) and (ii) Four Laning of Sultanpur to Varanasi (PKG-II).
2. The present petition has been prompted by the letter of the respondent/NHAI dated 10th June, 2021 (Annexure P-1). Sh. Kirti Uppal, learned Senior Counsel for the petitioner submitted that the impugned order was against the terms of the agreement and also violated the policy of the NHAI (Annexure P-7). Learned Senior Counsel submitted that two letters had been sent by the respondent/NHAI preceding the impugned order. It may be mentioned here that these letters were not filed with the petition and have since been forwarded by e-mail to the Court Master.
Signature Not Verified Signed By:MANJEET KAUR W.P. (C) 5944/2021 Page 2 of 9 Signing Date:19.06.2021 14:33:333. According to Sh. Uppal, the policy of the NHAI entailed that penal action against the consultant could be taken in a step-by-step manner and for „minor failures‟, the penalty could be Rs.5 lakhs and a written warning to the Firm and the key personnel being kept on watch and for „major failures with no casualties‟, a monetary penalty of Rs.20 lakhs could be imposed on the consultancy Firm with or without debarment upto one year, whereas the key personnel would be debarred upto two years from NHAI‟s works. However, where the „major failure‟ resulted in loss of human life and loss of reputation, etc., the monetary penalty would be of Rs.40 lakhs on the consultancy Firm and debarment upto two years, whereas the key personnel would be debarred for three years. In the present case, there is no such assessment of the nature of failure and the impugned order could not have been passed.
4. Sh. Uppal then submitted that even as per the terms of the Agreement, the action taken was unlawful. Referring to the General Conditions of contract (Annexure P-4), specifically to Clauses 2.8 and 2.9, it was submitted that while where there was provision made for suspension of the consultant or termination of the consultancy, there was no provision for black-listing. Further, before suspending the consultant, a Notice of Suspension, specifying the nature of failure and requiring the consultant to remedy the failure within a period of 30 days, was necessary, which, in the present case, was missing since the two letters dated 6th February, 2021 and 11th February, 2021 did not meet these requirements.
5. As regards termination, a 30 day written notice of termination had to be issued to the consultant in case of occurrence of events described in Signature Not Verified Signed By:MANJEET KAUR W.P. (C) 5944/2021 Page 3 of 9 Signing Date:19.06.2021 14:33:33 that Clause, except where the client in its own discretion decided to terminate the contract, in which case, the notice period was 60 days. Again, according to learned Senior Counsel, neither the letter dated 6th February, 2021 nor did the letter dated 11th February, 2021 meet these requirements.
6. Learned Senior Counsel next submitted that the impugned order is titled as "Non-Performer Order". Yet the respondent/NHAI had, on their web-page, stamped the petitioner as having been blacklisted. Relying on the judgments of the Supreme Court, particularly in Gorkha Security Services v. Government NCT Delhi and Others (2014) 9 SCC 105 and UMC Technologies (P) Ltd. v. Food Corpn. of India (2021) 2 SCC 551, learned Senior Counsel submitted that if the respondent/NHAI had intended to black-list the petitioner, then a notice intimating the petitioner that such action was contemplated had to be served upon the petitioner. Without such explicit notice, by straightaway black-listing the petitioner, the principles of natural justice had been completely violated as black- listing was equivalent to civil death. It was thus prayed that an ad-interim injunction be issued directing the respondent/NHAI to remove the name of the petitioner from the black-list.
7. Sh.Dayan Krishnan, learned Senior Counsel appearing with Sh.A P Singh, Advocate on behalf of the respondent/NHAI, on advance notice, however submitted that action had been taken in accordance with the Terms of Reference (TOR). Referring to the Performance Clause (Clause 10 of Section 6 of the TOR to the Agreement), learned Senior Counsel pointed out that it referred to "Non-performance". According to learned Senior Counsel, the letters dated 6th February, 2021 and 11th February, Signature Not Verified Signed By:MANJEET KAUR W.P. (C) 5944/2021 Page 4 of 9 Signing Date:19.06.2021 14:33:33 2021 had set out what were the shortcomings. Supervising the project was the complete responsibility of the petitioner and deficiency in supervision was the reason why such serious fault in execution of the project with a contractor, had occurred, risking the safety of the road users. Learned Senior Counsel submitted that the deficiencies were on account of lack of supervision. The letter of the petitioner dated 12th June, 2021 to its Team Leader accepted that fault lay with them. It was submitted that the action taken was akin to black-listing and merely because black-listing was not referred to in the agreement or the policy, the respondent/NHAI could not be compelled to continue working with companies and personnel, whose performance was below par. Since there was reference to Schedule - D of EPC Contract Agreement and (Section 6 of the Consultancy Service Agreement) of the TOR in the letters dated 6th February, 2021 and 11th February, 2021, according to learned Senior Counsel, the consequences had been flagged and there was no violation of principles of natural justice.
8. Learned Senior Counsel further submitted that the "non- performance" order was not disproportionate to the omission of the petitioner as the petitioner had not been debarred for 2-3 years, but the order was a "self-dissolving order" in that, as soon as the deficiencies were rectified, the bar on the petitioner participating in the ongoing and future projects would stand revoked.
9. Finally, it was submitted that the prayers in the main petition and this application were identical and therefore, grant of interim order directing the removal of the petitioner from black-listing would tantamount to grant of the final relief. Reliance has been placed by Signature Not Verified Signed By:MANJEET KAUR W.P. (C) 5944/2021 Page 5 of 9 Signing Date:19.06.2021 14:33:33 learned Senior Counsel on Patel Engg. Ltd. v. Union of India (2012) 11 SCC 257, NCC-BGR Consortium and Another v. NTPC Limited and Another 2020 SCC OnLine Del 68, National Highways Authority of India & Ors v. Neeraj Upadhyay Order dated 21st February, 2014 in Civil Appeal No. 2732/2014 and National Highways Authority of India v. Theme Engineering Services Private Ltd. & Others 2021 SCC OnLine Del 1357, in support of his submissions.
10. At this stage, only a prima facie view has to be taken to determine whether any interim relief can be granted to the petitioner. The Supreme Court in Gorkha Securities (supra) had held that an order of black-listing without giving the concerned person notice thereto, would be contrary to the principles of natural justice, particularly when it was not specifically proposed in the said Notice that the action likely to be taken included black-listing of the Noticee. It was observed by the Supreme Court as under:-
"33. When we apply the ratio of the aforesaid judgment to the facts of the present case, it becomes difficult to accept the argument of the learned Additional Solicitor General. In the first instance, we may point out that no such case was set up by the respondents that by omitting to state the proposed action of blacklisting the appellant in the show-cause notice, has not caused any prejudice to the appellant. Moreover, had the action of blacklisting being specifically proposed in the show-cause notice, the appellant could have mentioned as to why such extreme penalty is not justified. It could have come out with extenuating circumstances defending such an action even if the defaults were there and the Signature Not Verified Signed By:MANJEET KAUR W.P. (C) 5944/2021 Page 6 of 9 Signing Date:19.06.2021 14:33:33 Department was not satisfied with the explanation qua the defaults. It could have even pleaded with the Department not to blacklist the appellant or do it for a lesser period in case the Department still wanted to blacklist the appellant. Therefore, it is not at all acceptable that non-mentioning of proposed blacklisting in the show-cause notice has not caused any prejudice to the appellant. This apart, the extreme nature of such a harsh penalty like blacklisting with severe consequences, would itself amount to causing prejudice to the appellant."
11. Similarly, in UMC Technologies (supra), the Supreme Court reiterated as under:
"21. Thus, from the above discussion, a clear legal position emerges that for a show-cause notice to constitute the valid basis of a blacklisting order, such notice must spell out clearly, or its contents be such that it can be clearly inferred therefrom, that there is intention on the part of the issuer of the notice to blacklist the noticee. Such a clear notice is essential for ensuring that the person against whom the penalty of blacklisting is intended to be imposed, has an adequate, informed and meaningful opportunity to show cause against his possible blacklisting."
12. A perusal of the letter dated 6th February, 2021 shows that while the deficiencies were listed, all that was required from the petitioner was the following:
"In view above lapses on your part, you are directed to explain, why, suitable action, as per consultancy contract provisions shall not be initiated against your firm? Your reply must reach this office Signature Not Verified Signed By:MANJEET KAUR W.P. (C) 5944/2021 Page 7 of 9 Signing Date:19.06.2021 14:33:33 within 3 days of issuance of this notice. Also, you are directed herewith to ensure immediate remedial measures for rectification of observed deficiencies by the Contractor and submit the Action Taken Report within one week of this notice."
and in the letter dated 11th February, 2021, the shortcomings were set out, as observed by the Quality Audit Team, and the petitioner was directed as below:
"In view above lapses on your part, you are directed to explain, why, suitable action, as per consultancy contract provisions shall not be initiated against your firm? Your reply must reach this office by tomorrow. Also, you are directed herewith to ensure immediate remedial measures for rectification of observed deficiencies by the Contractor and submit the Action Taken Report within one week of this notice."
13. Prima facie, there is force in the contention of learned Senior Counsel for the petitioner that the notices do not alert the petitioner that the respondent/NHAI was also contemplating black-listing.
14. However, it is also well-settled in law that interim orders cannot have the effect of granting the final relief. It is noted that the prayer in the petition is for quashing the impugned order dated 10 th June, 2021 to permit the petitioner to participate in on-going and future projects bids and also for deletion of the name of the petitioner from their intra-com portal where the petitioner has been described as black-listed. The same relief has been sought by way of the instant application for interim relief.
15. In these circumstances, no relief can be granted at this interim Signature Not Verified Signed By:MANJEET KAUR W.P. (C) 5944/2021 Page 8 of 9 Signing Date:19.06.2021 14:33:33 stage.
16. The application is accordingly dismissed.
W.P. (C) 5944/2021
1. Issue notice.
2. Mr. AP Singh, learned counsel accepts notice on behalf of the respondent/NHAI.
3. Time is sought and granted to file counter-affidavit within a week. Rejoinder thereto, if any, be filed within a week thereafter.
4. List on 5th July, 2021 before the Roster Bench.
5. The order be uploaded on the website forthwith.
(ASHA MENON) VACATION JUDGE JUNE 17, 2021 At/s Signature Not Verified Signed By:MANJEET KAUR W.P. (C) 5944/2021 Page 9 of 9 Signing Date:19.06.2021 14:33:33