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SUPREME COURT OF INDIA
B.R. GAVAI, SANJAY KAROL, K.V. VISWANATHAN, JJ.
The Blue Dreamz Advertising Pvt. Ltd. & Anr. – Appellants
Versus
Kolkata Municipal Corporation & Ors. – Respondents
Civil Appeal No. 8516 of 2024 (@ Special Leave Petition (Civil) No. 11682 of 2018)
Decided On : 07-08-2024
(A) Government Contract – Black-listing/Debarment – Debarment as a remedy is to be invoked in cases where there is harm or potential harm for public interest particularly in cases where 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 notice inviting tenders, any person blacklisted is rendered ineligible – Blacklisting will not only debar person concerned from dealing with concerned employer, but because of disqualification, their dealings with other entities also is proscribed – Even in terms and conditions of tender in present case, one of conditions of eligibility is that agency should not be blacklisted from anywhere. (Para 25)
(B) Government Contract – Black-listing/Debarment – Failure to execute agreement for street hoardings and to submit bank guarantee – Where case is of an ordinary breach of contract and explanation offered by person concerned raises a bona fide dispute, blacklisting/debarment as a penalty ought not to be resorted to – Debarring a person for a certain number of years tantamounts to civil death inasmuch as said person is commercially ostracized resulting in serious consequences for the person and those who are employed by him – Too readily invoking debarment for ordinary cases of breach of contract where there is a bona fide dispute, is not permissible – Each case, no doubt, would turn on facts and circumstances thereto – There has been exchange of correspondence between parties with each side blaming other for not performing reciprocal obligations – Bank Guarantee was not mode of payment and as such there was no reason to insist on Bank Guarantee – Appellant very clearly has been subjected to a disproportionate penalty – Any decision to blacklist should be strictly within parameters of law and has to comport with principle of proportionality – Single Judge was right in setting aside order of debarment on the ground that there was a bona fide civil dispute between parties – Impugned judgment of Division Bench set aside and judgment of Single Judge restored. (Paras 26, 27, 28, 30, 31, 36 and 42)
Facts of the case:
Present Appeal is filed against judgment and order dated 21.06.2017 passed by Division Bench of High Court at Calcutta in M.A.T. No. 277 of 2017. By said judgment, High Court allowed Appeal of respondents and set aside judgment of Single Judge. Consequently, Writ Petition filed by appellant stood dismissed.
Findings of Court:
There has been no enquiry by the Division Bench as to whether the conduct of the appellant was part of normal vicissitudes in business and common place hazards in commerce or whether appellant had crossed the Rubicon warranting a banishment order, albeit for a temporary period in larger public interest.
Result : Appeal allowed.
JUDGMENT :
(K.V. Viswanathan, J.) :
1. Leave granted.
2. The present Appeal is filed against the judgment and order dated 21.06.2017 passed by the Division Bench of the High Court at Calcutta in M.A.T. No. 277 of 2017. By the said judgment, the High Court allowed the Appeal of the respondents and set aside the judgment of the learned Single Judge. Consequently, the Writ Petition filed by the appellant stood dismissed.
Brief Facts:
3. The respondent no. 1-Kolkata Municipal Corporation (hereinafter referred to as the ‘Corporation’) invited bids for allotment of contract for display of advertisement on Street Hoardings (including V Shaped), 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 letter dated 08.07.2014, demanded payment for the month of June. Thereafter, the appellant wrote a letter of 19.07.2014 stating that till date they have identified 200 numbers of street hoardings out of the 250 allotted and sought for a joint inspection to identify the rest of them. At this stage, the Corporation issued a letter of 10.09.2014 stating that there was no reason why the appellant was insisting for the Bank Guarantee Format since Bank Guarantee was not the mode of payment. According to the Corporation, the bills for 5 clusters of Rs. 4,62,67,500/- (for only July to September, 2014) had not been paid in spite of service of the bill on 08.07.2014. The Corporation also mentioned that in the joint inspection the appellant’s men failed to cover all the areas and thereafter, the appellant was asked to submit a list of allotted locations which, according to the Corporation, the appellant had not furnished. The appellant was warned that in case the payment as demanded was not paid, steps as per the tender clauses would be taken.
6. When the matter stood thus, the appellant wrote a letter on 14.11.2014 setting out all the earlier correspondence and the grievances raised by them and ultimately praying that they be granted diminution, reduction and/or adjustment of the license fee. They prayed that their demand for 174 hoardings be confirmed so that they could make the payment. The Corporation served a memo dated 06.12.2014 setting out that already a notice of 20.11.2014 was served demanding payment of 8,16,15,870/- up to December, 2014 but the same has not been cleared. The appellant was asked to appear on 12.12.2014 to show cause why the allotment of hoarding shall not be cancelled. On 28.02.2015, a Show Cause Notice was issued asking the appellant to show cause why the appellant’s allotment be not terminated as dues to the tune of Rs. 10,28,52,918/- plus interest had not been cleared.
7. In this scenario, on 29.07.2015, a notice was published in English Daily “The Times of India” Kolkata stating that the appellant had been blacklisted from participating in any advertisement in the city of Kolkata. However, on a chall
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