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TMI Blog2024 (8) TMI 469X X X X Extracts X X X X X X X X Extracts X X X X ..... Bus Passenger shelter and Kiosks within its jurisdiction. Under the tender conditions, the contract was to be awarded for a period of one year, subject to extension of two more years. By an award of 28.05.2014, the appellant who had participated in the tender and quoted the highest rate at Rs. 3,70,00,000/- each for cluster no. I, II, III, VI and VIII was notified as a successful bidder and was requested to confirm the acceptance. On 29.05.2014, the appellant conveyed its acceptance. 4. Thereafter, a series of correspondence ensued with the appellant on matters like, alleged non-receipt of any formal work order (on 11.06.2014); non-receipt of any format of the Bank Guarantee (on 13.06.2014); request for a 'No Objection Certificate' for obtaining new connection from Calcutta Electric Supply Corporation Ltd. (on 26.06.2014); problems with the execution like, non-matching of the unit code numbers with the hoardings or the non-matching of locations; existence of same unit code for different locations, rendering the commencement of work incapable (letter of 26.06.2014) and existence of lesser hoardings out of the 250 street hoardings (letter of 07.07.2014). 5. The Corporation, by its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would proceed with the matter in accordance with law after providing opportunity of hearing. The Writ Petition was disposed of. 8. The appellant had earlier filed Writ Petition No. 261 of 2015 challenging the Show Cause Notice of 28.02.2015. The learned Single Judge dismissed the Writ Petition on 04.03.2015. An appeal bearing APOT No. 89 of 2015 was preferred along with GA No. 782 of 2015. The Appeal and G.A. were disposed of by an order of 24th August 2015 recording the submissions of the Learned Additional Advocate General appearing for the Corporation and disposing of the matter in the following terms:- "Due to typographical errors in the show cause notice dated 28th February, 2015, the learned Additional Advocate General very fairly submitted he is not pressing this show cause notice but the appropriate proceedings shall be taken before the Arbitrator." 9. Thereafter, the Corporation issued a Show Cause Notice dated 27.08.2015 to the appellant, stating that as on the said date Rs. 16,84,34,431/- along with interest is due and payable towards license fee/advertisement tax. The Show Cause Notice also alleged that the appellant had failed to execute the agreement for street h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of huge amount or till the date of payment of entire dues with interest under the direction of any authority/forum/court, whichever is later. The order, after recording the history of the dispute and after noticing the fact that at the hearing given, the company took the same plea as stated by them in their reply, observed as under:- "... .... The company had alleged that it could find only 174 hoarding out of 250 hoardings but the company in their letter dated 14th November, 2014 stated, inter alia, that they were able to find 200 street hoarding including 26-V-shaped. The company cannot take such plea particularly when the display sites/hoardings were specified in the lists under annexure-I, Il & III to the tender notice. The description of works under clause-2 of the tender notice clearly stated that the street hoarding in the annexure would be allotted in "As in where is basis". The company after having understood the scope and effect of the terms and condition of the notice the offers which were accepted by the authorities. The bills for 5 clusters amounting to Rs.4,58,97,360/- had already been served. The company was informed of its failure to pay the sum of Rs.4,58 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10,28,52,918/- as then calculated plus interest to take defense upon certain facts in the written argument. I am not fully convinced and/or satisfied with the stand and/or explanation for several reasons and/or ground as stated hereinbefore. It appears to me that the company did not have the financial capacity to have the display of advertisement rights in 5 clusters and as such the company started creating problems on one plea to another since after obtaining the allotment of Sites. The company in one hand stopped the KMC to allot the said site to others and on the other hand itself stopped the due payment for 5 clusters. The KMC has thus suffered in both counts. Moreover the company has made an attempt to set up a bad example to others having interest to enjoy the advertisement rights. That being the position the KMC has no alternative but to blacklist the company for gross negligent action. The company is therefore debarred from participating in any tender to have the award of contract for a period of 5 years or till the date of exoneration of the company from the allegation of negligent, performance/action and also of nonpayment of huge amount or till the date of payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereafter, they proceeded to show cause the writ petitioner. This shows considerable fault on the part of the respondent Corporation. It also goes to indicate that expressly or impliedly the respondent Corporation had accepted the alleged breach of contract made by the petitioner. Moreover, the defence of the writ petitioner in their written notes of argument is that 174 hoardings which were awarded to them were "non-lucrative". As the respondent Corporation did not issue a no objection certificate, CESC Limited could not give permission to light the hoardings. The writ petitioner could not put them to any use. If this is the defence raised by the writ petitioner it could not be cast aside as one totally devoid of any merit. Therefore, following the ratio laid down by Mr. Justice Sinha in the case of B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd and another reported in (2006) 11 SCC 548 blacklisting proceeding should not have proceeded with because the writ petitioner in my opinion raised a bona fide dispute. Furthermore, blacklisting ought not to have been made until and unless this dispute was resolved. For all the above reasons, the impugned order dated 2nd March, 2016 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices Ltd. & Ors. (2006) 11 SCC 548. The appellant also assailed the judgment of the Division Bench by contending that the Division Bench failed to consider that there was no element of violation of public interest involved in the conduct of the appellant and in fact the Corporation was guilty of having not acted fairly and reasonably and that the Division Bench has completely overlooked this aspect. The appellant further contended that the order of blacklisting was disproportionate and contrary to the judgment in Kulja Industries Ltd. vs Chief General Manager Western Telecom Project BSNL & Ors. (2014) 14 SCC 731. 19. The learned counsel for the Corporation defended the order of blacklisting as well as the judgment of the Division Bench and prayed that there was no case for interference by this Court. 20. We have considered the submissions of the learned counsels and perused the record. Questions for consideration: 21. The following questions arise for consideration: a. Whether in the facts and circumstances of the case, the order of the Corporation dated 02.03.2016, debarring the appellant for a period of five years is valid and justified in the eye of the law? b. If so, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered reasonable especially when (a) the appellant is supplying bulk of its manufactured products to the respondent BSNL, and (b) the excess amount received by it has already been paid back." 25. What is significant is that while setting out the guidelines prescribed in USA, the Court noticed that comprehensive guidelines for debarment were issued there for protecting public interest from those contractors and recipients who are non-responsible, lack business integrity or engage in dishonest or illegal conduct or are otherwise unable to perform satisfactorily. The illustrative cases set out also demonstrate that debarment as a remedy is to be invoked in cases where there is harm or potential harm for public interest particularly in cases where the person's conduct has demonstrated that debarment as a penalty alone will protect public interest and deter the person from repeating his actions which have a tendency to put public interest in jeopardy. In fact, it is common knowledge that in notice inviting tenders, any person blacklisted is rendered ineligible. Hence, blacklisting will not only debar the person concerned from dealing with the concerned employer, but because of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod of five years, the reason given is that the tender notice had clearly stated that the street hoardings in the annexures would be allotted on 'as is where is' basis; that the company having understood the scope and effect of the terms and conditions of the notice accepted the award; that, 'No Objection Certificate', is not required in respect of the existing hoardings; that there was no document to show that the company had applied to the Calcutta Electric Supply Corporation Ltd. for connection and that it appeared to the Corporation that the company did not have the financial capacity to pay and as such the company was creating problems on one pretext or the other since obtaining the allotment of sites. The order also stated that the appellant had set up a bad example to others having interest to enjoy the advertisement rights. 30. All these reasons fall far short of rendering the conduct of the appellant in the present case, so abhorrent as to justify the invocation of the drastic remedy of blacklisting/debarment. The appellant very clearly has been subjected to a disproportionate penalty. The Corporation has lifted a sledgehammer to crack a nut. We disapprove of the said co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the KMC, the respondent, suffered substantial loss in revenue? 8. Was there any obligation of the respondents to identify the location of the street hoardings as the agreement was on 'as is where is basis'? 9. Did the parties discharge their respective liabilities under the contract and if so to what extent? 10. Is the claimant entitled to the claim amount as claimed? 11. Are the respondents entitled to the amount of counter-claim as claimed in their statement of counterclaim? 12. To what other relief or reliefs the parties are entitled?" 35. The Division Bench has, in our opinion, not appreciated the case in its proper perspective. Merely saying that the blacklisting order carried reasons is not good enough. Do the reasons justify the invocation of the penalty of blacklisting and is the penalty proportionate, was the real question. 36. The Division Bench has observed that blacklisting is a business decision by which the party affected by the breach decides not to enter into any contractual relationship with the party committing the breach. It also observed that between two private parties the right to take any such decision is absolute and untrammeled by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear to be a rational explanation. 36. .... The dereliction, such as the one indulged in by the petitioner, if not handled firmly, is likely to result in recurrence of such activity not only on the part of the petitioner, but others also, who deal with public bodies, such as the second respondent giving scope for unwholesome practices....." 40. Equally so in Kulja Industries (supra), the party blacklisted was alleged to have fraudulently withdrawn a huge amount of money which was not due to it in collusion and conspiracy with officials of the respondent Corporation. 41. Patel Engineering (supra) and Kulja Industries (supra) bring out the contrast between cases of that ilk and others, like the case in question. It is this distinction the Division Bench has grossly overlooked which, however, the learned Single Judge had rightly brought to the fore. 42. For all the reasons set out hereinabove, we set aside the impugned judgment of the Division Bench dated 21.06.2017 passed in M.A.T. No. 277 of 2017 and restore the judgment of the learned Single Judge. The result will be that the Writ Petition No. 6616(W) of 2016 filed by the appellant before the High Court at Calcutta would stan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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