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2018 Supreme(AP) 484
IN THE HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH
A.V. SESHA SAI, J.
ACPE Infrastructures Pvt. Ltd. - Petitioners
Versus
State of Andhra Pradesh & Others - Respondents
W.P. Nos. 17644 & 17645 of 2018
Decided On : 18-07-2018
For the Petitioner:Swaroop Oorilla, Advocate.
For the Respondents: G.P. for Municipal Administration & Urban Development (AP), S. Laxminarayana Reddy, SC for GVMC.
Headnote:
Infrastructure Law – Joint Venture Agreement – Tender notification – Cancellation of contracts – Challenge is to the orders of the Chairman and Managing Director, Industrial Water Supply Company, the third respondent herein informing the decision of cancellation of the contracts and black listing of the petitioner –Petitioner in these cases entered into a Joint Venture Agreement with M/s. Prasad Irrigation Engineering Consultancy Limited for Bidding, Executing Civil Engineering Consultancy, Third Party Quality Assurance and Control, and Project Works – Response to tenders floated by third respondent for preparation of detailed project reports for improving the storage capacity of Penjeruvu Tank in the said Joint Venture submitted its tenders and thereafter having agreed to cost quoted, second respondent herein issued work orders – By way of the impugned proceedings the third respondent herein communicated their decision to cancel the works, duly forfeiting the EMD and also informed that both the agencies in the joint venture would be disqualified to participate in tenders in Greater Visakhapatnam Municipal Corporation and Visakhapatnam Industrial Water Supply Company. The third respondent also issued fresh tender notification – Held, It is very much evident from the principles laid down in the above referred judgments that writ petitions under Article 226 of the Constitution of India in respect of contractual matter is maintainable when there is involvement of public interest element, violation of principles of natural justice, unfairness and when there is malafide action – It is not stated anywhere in the pleadings of the petitioner herein that the impugned action is tainted with malafides nor it is the case of the petitioner herein that there is involvement of public interest. On the other hand, the time stipulated for completion of work was only three months, but the work could not be completed even after lapse of 1 ½ years and the same would affect interest of the public as such the impugned action cannot be faulted – It is also pertinent to note that by way of the impugned orders respondents resorted to the action of blacklisting the petitioner herein also Admittedly, respondents have resorted to such an action of blacklisting without being preceded by issuance of any show-cause notice and affording opportunity of being heard – It is a patent violation of principles of natural justice to extent of such action – Impugned action cannot be faulted on the grounds of promissory estoppel and legitimate expectation. Therefore, the judgments cited by counsel for petitioner in order to substantiate its contentions would not render any assistance to the petitioner herein on ground of maintainability and the principles of promissory estoppel and legitimate expectation – Setting aside impugned orders only to the extent of blacklisting the petitioner herein to execute further works to participate in further tenders in GVMC and VIWSCO. It is also made clear that so far as other issues are concerned i.e., cancellation of subject works contracts and forfeiture of the EMDs, writ petitions are dismissed – Petitions partly allowed.
1. Since these two writ petitions are identical in nature and as the issues involved in these cases are also similar, this Court deems it appropriate to dispose of these two writ petitions by way of this common order.
2. In these two writ petitions, challenge is to the orders dated 03.04.2018 of the Chairman and Managing Director, Visakhapatnam Industrial Water Supply Company, Visakhapatnam/the third respondent herein informing the decision of cancellation of the contracts and black listing of the petitioner.
3. Petitioner in these cases entered into a Joint Venture Agreement with M/s. Prasad Irrigation Engineering Consultancy Limited for Bidding, Executing Civil Engineering Consultancy, Third Party Quality Assurance and Control, and Project Works.
4. In response to the tenders floated by the third respondent on 14.09.2016 for preparation of detailed project reports for improving the storage capacity of Penjeruvu Tank in Yelamanchili Mandal, V.K. Sagaram Tank in Rayavaram Mandal and Kondakarla Ava in Munagapaka Mandal, Visakhapatnam District, the said Joint Venture submitted its tenders and thereafter having agreed to the cost quoted, the second respondent herein issued work orders.
5. By way of the impugned proceedings the third respondent herein communicated their decision to cancel the works, duly forfeiting the EMD and also informed that both the agencies in the joint venture would be disqualified to participate in tenders in Greater Visakhapatnam Municipal Corporation and Visakhapatnam Industrial Water Supply Company. The third respondent also issued fresh tender notification on 28.04.2018.
6. This Court, by way of interim orders directed the respondents not to finalise the tenders pursuant to the said tender notification. Seeking vacation of the said orders and supported by counter affidavits deposed by the third respondent on behalf of the respondents 2, 3 and 5, now the vacate applications have been filed.
7. With the consent of the learned counsel for the petitioner and as the pleadings are complete, this Court is inclined to dispose of these writ petitions finally.
8. Heard Sri Swaroop Oorilla, learned counsel for the petitioner and the learned Advocate General, representing Sri S. Laxminarayana Reddy, learned Standing Counsel for the Greater Visakhapatnam Municipal Corporation apart from perusing the material available on record.
9. Submissions/contentions of the learned counsel for the petitioner:
9.1. The questioned action is highly illegal arbitrary, unreasonable and violative of Article 14 of the Constitution of India and the principles of natural justice.
9.2. Petitioner herein executed 80% of the work and without taking into account the earlier correspondence i.e., letters of the Superintendent Engineer addressed to the petitioner and the Chief Engineer, North Coast Water Resources Department, Visakhapatnam, the third respondent herein resorted to the impugned action.
9.3. Without communicating the impugned order dated 03.04.2018, the third respondent issued a fresh tender notification on 28.04.2018 and the said action is highly illegal, arbitrary and cannot stand for judicial scrutiny and in fact the third respondent passed the impugned orders on 01.05.2018.
9.4. The third respondent did not mention the ground in the impugned order dated 03.04.2018 that are now raised at paragraphs 8 and 9 of the counter affidavit.
9.5. The impugned action is liable to be declared as illegal and arbitrary and is hit by the principles of promissory estoppel and legitimate expectation. The cancellation order dated 03.04.2018 does not refer to the letter dated 19.08.2017 issued by M/s. Prasad Irrigation Engineering Consultancy Ltd.
9.6. The impugned action of blacklisting the petitioner herein is a patent violation of principles of natural justice.
In support of his submissions and contentions, the learned counsel for the petitioner places reliance on the judgments of the Hon’ble Apex Court in ZONAL MANAGER, CENTRAL BANK OF INDIA v. DEV
