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2024:CGHC:47136
NAFR
HIGH COURT OF CHHATTISGARH AT BILASPUR
Reserved for Order on : 23.09.2024
Order Passed on : 29/11/2024
WPC No. 3207 of 2022
1 - M/s Mahatma Gandhi Salt Mundy (A Sole Proprietorship Firm Having
GSTN- 33 ABYPC 5638 B1 ZQ, Sole Proprietor Mr. Arumugam Chakravarthy
(Chakravarthy AB), S/o. Arumugam N., (UID No. 5932 5384 0584) Aged
About 47 Years, 14 Marappa 3rd Street Surampatti Nall Road, Erode, Tamil
Nadu 638009, Also At Kh. No. 197/66, Samnapur Road Kawardha
Chhattisgarh Through Their Legally Appointed Attorney Mr. Sagar Surana
S/o Mr. Dinesh Surana (UID No. 5687 1167 4369) Aged About 39 Years,
House No. 143, Ward No. 6, Berala, Bemetara (C.G.)
---- Petitioner
versus
1 - State Of Chhattisgarh Through Its Secretary, Department Of Food, Civil
Supplies And Consumer Protection (New Secretariat), Atal Nagar Nava
Raipur, Raipur District Raipur, Chhattisgarh
2 - Chhattisgarh State Civil Supplies Corporation Limited Through It's
Managing Director, Block 7A, II Floor, Sector 24, Office Complex, Head
Quarter, Atal Nagar, Nava Raipur, Raipur District Raipur (C.G.)
3 - Tender Evaluation Committee For The System Tender No. 99564 Of
Chhattisgarh State Civil Supplies Corporation Limited Through It's Managing
Director, Block- 7A, II Floor, Sector 24, Office Complex Head Quarter, Atal
Nagar, Nava Raipur Raipur, District Raipur (C.G.)
---- Respondents
For Petitioner : Mr. Raj Kamal Singh, Advocate with Mr.
Suryapratap Yuddhveer Singh, Advocates
For Respondents-State No.1 : Ms. Poorva Tiwari, Panel Lawyer
For Respondent No.2 & 3 : Mr. V.R. Tiwari, Sr. Advocate assisted by
Mr. Atul Kesharwani and Mr. Anish Tiwari,
Advocates
Digitally signed
by BALRAM
PRASAD
DEWANGAN
Date: 2024.11.30
12:32:08 +0530
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Hon'ble Shri Justice Parth Prateem Sahu
CAV ORDER
1. Petitioner has filed this petition seeking following relief (s) :-
“10.1 This Hon’ble Court may please be kind enough in
calling the entire record pertaining to the subject Tender
Process.
10.2 This Hon’ble Court may please be kind enough in
quashing and setting aside the impugned decision of the
respondent No.2 Corporation communicated vide
Annexure P-1 regarding Blacklisting of Petitioner and
Forfeiture of their Earnest Money Deposit related with the
respondent corporation’s Tender Reference Letter
No./Gur/Kray Nivida/2022-23/14 Nava Raipur dated
09.05.2022, System Tender No.99564.
10.3 This Hon’ble Court may please be kind enough in
granting the cost and any other relief to the petitioner.”
2.
Learned counsel for petitioner submits that respondents No.2 and 3
have floated NIT vide Letter No. Gur/Kray Nivida/ 2022- 23/14 Nava
Raipur dated 09.05.2022 (Tender No.99564). Petitioner along with
others participated in the tender process and submitted its technical
bid and financial bid. In the technical session, petitioner became
successful and thereafter its financial bids were also opened. Upon
opening of financial bids, petitioner was declared to be successful as
his financial bid was found to be lowest than of others (L-1) i.e.
Rs.52.00 per quintal. He contended that immediately after opening of
financial bid, petitioner realized that due to typographical error, instead
of Rs.5200/-, it was erroneously mentioned as Rs.52/- per quintal only,
which prima-facie appears to be an error. Petitioner immediately
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submitted letter on 21.06.2022 mentioning that it was not possible to
supply goods on Rs.52/- per quintal and requested to consider the
rates as Rs.5200/- per quintal. The said letter was not considered and
it was replied mentioning that financial bid of petitioner was found to
be L-1 and it was accepted by Corporation and further mentioned that
letter submitted by petitioner dated 21.06.2022 after opening of
financial bid was not accepted and directed to submit stamp paper of
Rs.100/-. Petitioner again submitted letter reiterating the same facts
and further requested to return back the earnest money if offer rate is
not acceptable. Respondent No.2 thereafter had issued impugned
letter dated 06.07.2022 (Annexure P-1) arbitrarily forfeiting the amount
of security deposit of Rs.1.00 Crore deposited along with bids,
blacklisted petitioner’s firm for a period of three years and further
stated that action would be taken under Clause 16.2 of the tender
documents. The action by respondent authorities is per-se arbitrary.
They failed to realize that it was a bonafide mistake and no reasonable
man can come to conclusion that any person can supply jaggery
(subject matter of tender) at Rs.0.52 paise per KG and Rs.52/- per
quintal. Respondent No.2 being State subsidiary ought to have acted
fairly and reasonably. Petitioner has not committed any wrong to the
extent that he could have been blacklisted nor there is any basis for
initiating proceedings for recovery of relevant expenses or to impose
costs for risk and damages. He also contended that no show-cause
notice was issued to petitioner before passing the order of blacklisting
for a period of three years. Petitioner was not given an opportunity of
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hearing through a show-cause notice specifying the reasons for such
action. In support of his contention, he places reliance upon the
decision of Hon’ble Supreme Court in case of Gorkha Security
Services Vs. Govt. (NCT of Delhi) & Ors, reported in (2014) 9 SCC
105. He also submits that case of petitioner would fall within the
explanation called of by Hon'ble Supreme Court in case of W.B. State
Electricity Board Vs. Patel Engineering Co. Ltd. & Others, reported
in (2001) 2 SCC 451.
3.
Learned counsel for respondents opposes the submission of learned
counsel for petitioner and would submit that this writ petition is not
maintainable as petitioner is having efficacious alternate remedy of
arbitration as per tender documents. Petitioner has never asked to
revoke the bid. Bid was opened on 21.06.2022 and only after opening
of the bid, petitioner wrote letter mentioning that due to typographical
error, rate quoted in the financial bid has been mentioned as Rs.52.00
per quintal instead of Rs.52,000/- per quintal. He contended that
according to Section 5 of the Indian Contract Act, 1872 proposal can
be revoked before its acceptance and not thereafter. Acceptance of
petitioner’s bid was communicated on 28.06.2022 and thereafter,
petitioner has written letter on 01.07.2022 to consider the letter dated
28.06.2022. Amendment on the price of bid from Rs.52/- to Rs.5200/-
would amount to alteration of bid price, which is not permissible. He
contended that decisions of Hon'ble Supreme Court relied upon by
learned counsel for petitioner are of no help to petitioner. In fact the
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principles summarized in the case relied upon by learned counsel for
petitioner would be in favour of answering respondents.
4. I have heard learned counsel for parties and perused the documents
placed on record.
5.
Petitioner along with writ petition has filed tender documents
(Annexure P-3) issued by respondent No.2. In the tender documents,
bid start date is mentioned as 12.05.2022, bid opening date from
15.06.2022 to 17.06.2022 and pre-bid as 25.05.2022. NIT was for
supply of jaggery of 16670 MT. Petitioner has also enclosed
documents as Annexure P-7, which demonstrate the submission of the
financial bid by petitioner and other two participants. Under Item Code,
article is mentioned as GURR 01, Description – Gurr, Unit - in
Quintals, quantity and rate per unit. In the financial document, there is
specific mention that one unit means one quintal.
6.
Petitioner has participated in the tender process and mistake, if any, as
stated by learned counsel for petitioner, has been brought to the
knowledge of the authorities by petitioner only after opening of the
financial bid. Tender documents contain a specific dispute resolution
clause under Clause 35, which stipulates that any disputes would be
submitted to the Managing Director of Respondent No. 2 for
resolution. The decision relied upon by learned counsel for petitioner
in case of W.B. State Electricity Board (Supra) is on different facts
while dealing different issue for adjudication before Hon'ble Supreme
Court.
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7.
Respondents in the impugned order have also blacklisted petitioner for
a period of three years. Specific contention raised by learned counsel
for petitioner in the writ petition is that order of blacklisting is passed
without issuing show cause notice and without giving proper
opportunity of hearing to petitioner, which is not controverted by
respondents in their reply in categorical terms.
8.
Hon'ble Supreme Court in case of Gorkha Security Services (supra)
has observed in para 16, 17, 29, which is as under :-
“16. It is a common case of the parties that the blacklisting
has to be preceded by a show-cause notice. Law in this
regard is firmly grounded and does not even demand
much amplification. The necessity of compliance with the
principles of natural justice by giving the opportunity to the
person against whom action of blacklisting is sought to be
taken has a valid and solid rationale behind it. With
blacklisting, many civil and/or evil consequences follow. It
is described as “civil death” of a person who is foisted with
the order of blacklisting. Such an order is stigmatic in
nature and debars such a person from participating in
government tenders which means precluding him from the
award of government contracts.
17. Way back in the year 1975, this Court in Erusian
Equipment & Chemicals Ltd. v. State of W.B. [Erusian
Equipment & Chemicals Ltd. v. State of W.B., (1975) 1
SCC 70] , highlighted the necessity of giving an
opportunity to such a person by serving a show-cause
notice thereby giving him opportunity to meet the
allegations which were in the mind of the authority
contemplating blacklisting of such a person. This is clear
from the reading of paras 12 and 20 of the said judgment.
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Necessitating this requirement, the Court observed thus:
(SCC pp. 74-75)
“12. Under Article 298 of the Constitution the executive
power of the Union and the State shall extend to the
carrying on of any trade and to the acquisition, holding
and disposal of property and the making of contracts for
any purpose. The State can carry on executive function
by making a law or without making a law. The exercise
of such powers and functions in trade by the State is
subject to Part III of the Constitution. Article 14 speaks
of equality before the law and equal protection of the
laws. Equality of opportunity should apply to matters of
public contracts. The State has the right to trade. The
State has there the duty to observe equality. An ordinary
individual can choose not to deal with any person. The
Government cannot choose to exclude persons by
discrimination. The order of blacklisting has the effect of
depriving a person of equality of opportunity in the
matter of public contract. A person who is on the
approved list is unable to enter into advantageous
relations with the Government because of the order of
blacklisting. A person who has been dealing with the
Government in the matter of sale and purchase of
materials has a legitimate interest or expectation. When
the State acts to the prejudice of a person it has to be
supported by legality.
* * *
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
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require that the person concerned should be given an
opportunity to represent his case before he is put on the
blacklist.”
29. No doubt, rules of natural justice are not embodied
rules nor can they be lifted to the position of fundamental
rights. However, their aim is to secure justice and to
prevent miscarriage of justice. It is now well-established
proposition of law that unless a statutory provision either
specifically or by necessary implication excludes the
application of any rules of natural justice, in exercise of
power prejudicially affecting another must be in conformity
with the rules of natural justice.
9.
Hon'ble Supreme Court in case of UMC Technologies (P) Ltd. v.
Food Corporation of India & Anr., reported in (2021) 2 SCC 551 has
observed in para 18, 19, 21, which reads as under :-
“18. This Court in Gorkha Security Services v. State (NCT
of Delhi) [Gorkha Security Services v. State (NCT of
Delhi), (2014) 9 SCC 105] has described blacklisting as
being equivalent to the civil death of a person because
blacklisting is stigmatic in nature and debars a person
from participating in government tenders thereby
precluding him from the award of government contracts. It
has been held thus: (SCC p. 115, para 16)
“16. It is a common case of the parties that the
blacklisting has to be preceded by a show-cause notice.
Law in this regard is firmly grounded and does not even
demand much amplification. The necessity of
compliance with the principles of natural justice by
giving the opportunity to the person against whom
action of blacklisting is sought to be taken has a valid
and solid rationale behind it. With blacklisting, many civil
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and/or evil consequences follow. It is described as “civil
death” of a person who is foisted with the order of
blacklisting. Such an order is stigmatic in nature and
debars such a person from participating in government
tenders which means precluding him from the award of
government contracts.”
19. In light of the above decisions, it is clear that a prior
show-cause notice granting a reasonable opportunity of
being heard is an essential element of all administrative
decision-making and particularly so in decisions pertaining
to blacklisting which entail grave consequences for the
entity being blacklisted. In these cases, furnishing of a
valid show-cause notice is critical and a failure to do so
would be fatal to any order of blacklisting pursuant
thereto.
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.
10.
In the case at hand, no show cause notice as to why action of
blacklisting be taken against petitioner is issued, hence, the
letter/order dated 06.07.2022 (Annexure P-1) so far as it relates to
blacklisting petitioner for a period of three years is not sustainable and
accordingly it is set-aside.
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11.
With respect to other part of the order, in view of specific Clause -16 in
the tender document of the consequence of amendment in rates,
turning back and not executing agreement, petitioner is having other
efficacious alternate remedy under Clause-35 of the tender documents
of raising dispute before the Managing Director of respondent No.2
and time is also specified therein and further procedure is also
prescribed, therefore, in view of the efficacious remedy available in
favour of petitioner I am not inclined to entertain this writ petition with
respect to forfeiture of amount submitted towards bid.
12.
Considering the fact that petitioner has approached this Court within
time prescribed for raising the dispute, petitioner is granted further two
months time to raise the dispute pursuant to the communication dated
06.07.2022 and if such dispute is raised, the respondent authorities
shall consider and decide the same expeditiously in accordance with
law within the time as prescribed under Clause -35 of the tender
documents.
13. Accordingly, this petition is allowed in part to the extent indicated here-
in-above.
Sd/-
(Parth Prateem Sahu)
Judge
Balram