2016 (10) TMI 1292 - HC - Indian Laws

Termination of temporary licences awarded to the petitioner of on-board catering services - termination on the ground that the petitioner failed to start the catering service w.e.f. 21st September, 2016 and did not pay the security deposit and licence fee on or before 19th September, 2016 - HELD THAT - This Court finds that since the petitioner had furnished its email address and the letters of Award dated 16th September, 2016 were communicated to the petitioner by way of email, which were admittedly received, the petitioner cannot complain of lack of communication of the three letters of Award. Consequently, it was possible for the petitioner to pay the licence fee on or before 19th September, 2016. This Court also finds that the tender documents in the present instance itself clearly stipulated that in the event the licence fee was not paid in whole or part, the applicant would be debarred from participating in any bidding process for future projects of the respondent-IRCTC for a period of one year. The plea for extension of time cannot be entertained as in the opinion of this Court, present proceedings cannot be used for renegotiation of contract and for fixing new dates for deposit of licence fee. In any event, if the respondent-IRCTC has wrongly debarred the petitioner, as claimed by the petitioner, then in the opinion of this Court, the petitioner would only be entitled for damages - this Court is in agreement with the contention of learned counsel for the petitioner that the punishment of debarment for a period of one year is not proportionate to the facts of the present case, especially keeping in view the fact that the petitioner has been an empanelled contractor/caterer with the Railways for more than ten years and is at the moment running five base kitchens. The punishment of debarment of the petitioner in the peculiar facts of the present case is reduced to one month w.e.f. 28th September, 2016. The amount of ₹ 15,55,799/- deposited by the petitioner with regard to Patna Ranchi Jan Shadabdi shall be refunded to the petitioner within a period of one week - petition disposed off.

Summary

Issues:
Challenging termination of temporary catering service licenses by IRCTC, non-payment of security deposit and license fee, debarment from future projects for one year, communication of termination letters, applicability of tender document clauses, proportionality of debarment punishment.

Analysis:
The petitioner challenged the termination of temporary catering service licenses by IRCTC for failing to start services and non-payment of fees. Petitioner argued that communication delay led to fee payment delay, citing Supreme Court precedent requiring specific notice before debarment. IRCTC contended that communication was timely via email and partial payments were made after the due date. The Court noted the petitioner's email communication and upheld the termination, emphasizing the tender document clauses allowing debarment for non-fulfillment. The Court found no requirement for additional notice and clarified that the tender terms did not permit fee extension with interest.

The Court distinguished the Gorkha Security Services case, emphasizing the specific debarment provision in the present tender document. Referring to recent Supreme Court rulings on judicial review in contractual matters, the Court highlighted the limited scope for interference in commercial transactions. The Court rejected the plea for fee extension, stating that the proceedings cannot be used for renegotiation but only for damages if wrongful debarment is proven. The Court acknowledged the disproportionate debarment punishment, citing the principle of proportionality in punishments.

Considering the petitioner's long-standing association with Railways and the excessive debarment period, the Court reduced the debarment to one month and ordered the refund of a specific fee amount. The judgment emphasized the concept of proportionality in punishments and cited previous cases where debarment periods were adjusted based on the circumstances. Ultimately, the Court disposed of the writ petitions and applications with the revised debarment period and refund directive.