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2014 Supreme(Bom) 1045
In the High Court of Bombay at Nagpur
B.P. DHARMADHIKARI & P.R. BORA, JJ.
M/s. Punya Coal Roadlines through its proprietor Yugpradhan & Others
Versus
M/s. Western Coalfield Limited, Coal Estate, Civil Lines, through its Managing Director-cum-Chairman & Another
Writ Petition No. 1258 of 2014
Decided on: 06-05-2014
For the Petitioners:M.G. Bhangde, Senior Advocate with V.V. Bhangde, R.M. Bhangde, S.N. Tapadia, Advocates.
For the Respondents:Anil Kumar, Advocate.
Headnote:Constitution of India - Article 226 Judicial review. Grounds upon which an administrative action is subjected to control by judicial review, can be classified.
Constitution of India - Article 226 Judicial review of Government contract. - When steps taken by contractor after expiry of stipulated 15 days are reciprocated by respondents, contractor deserves to be exonerated for not commencing work within stipulated time. Such an SCN under Clause 6.1 is a composite move and cannot be split in to two stages as urged by petitioner. As there is no power to put an end to LOA on interim basis like suspending it till further decision, the reasons leading to SCN and facts prevailing on the date of its issue are bound to change due to later steps of contractor like petitioner. SCN, therefore, gives him time of 15 days to start work and simultaneously warns him of adverse consequences in default. It offers him an oral hearing or opportunity to file defense in writing. This opportunity is meant to be used only if work is not so started and it becomes necessary to find out whether contractor was at fault or not. When no reply is filed, chance of oral hearing is not taken and work is/was not commenced within said 15 days by present petitioner, respondents could have taken the suitable punitive action immediately at the end of said period of 1 5 days. When respondents do not take such decision after 15 days and allow petitioner to make amends or to start work even thereafter, a different inference may be drawn.
When steps taken by petitioner after expiry of 15 days are reciprocated by the respondents, later conduct of parties itself may bring on record material enough to exonerate the contractor for not commencing the work within stipulated time. Hence, evaluation of impact or relevance of such subsequent events must form part of decision making process. When LOA itself enables petitioner to commence work within 15 days, it could have been brought to an end immediately after expiry of said period for the reasons as recorded in the impugned order. But when that decision is postponed, subsequent changes in situation must enter the consideration process. Whether subsequent conduct of both the parties here leaves an impression that like first SCN dated 18.10.2013, later SCN was also dropped is the moot issue.
In any case, when such a type of decision is being taken after permitting the situation to change, it must be reached after considering the facts and situation prevailing on the date on which it is being taken. Absence of power to suspend the execution of contract with the respondent, necessarily paves way for changes in the situation prevailing on the date on which SCN was issued and therefore mandates evaluation of impact of such change on decision to be taken. This is the obligation cast upon respondent which is an instrumentality under Article 12 of the Constitution of India Contract under LOA has direct bearing on coal mining. A duty to act fairly, to avoid arbitrariness and highhandedness therefore obliged respondents not to avoid to consider any relevant aspect having direct bearing on the decision which in turn may cast stigma on any contractor or spoil its/his future.
Tender Process - Failure of earnest money deposit furnished by bidders - Permissibility of. - It is a clear case where the petitioners had by furnishing the tender accepted the terms and conditions subject to which the tender was liable to be dealt with. The petitioners were, therefore, not entitled to withdraw the bid till the period of its validity. The petitioners having applied for withdrawal of offer during the period of validity of bid, necessary consequence to follow is forfeiture of deposit. The respondents’ submissions on facts go totally unrefuted and unchallenged. The petitioners have failed to come out of their fault. They are bound by the terms of contract relating to procedure of tendering, and are liable for the result of breach committed by them. Subsequent cancellation of tender by the respondents has no bearing on the case, as it is a fact subsequent to the breach committed by the petitioners.
B.P. Dharmadhikari, J.
1. Petitioner 3-A before us is a joint venture firm (JV) of other petitioners and all of them challenge the order dated 19.2.2014 by which the Letter Of Allotment i.e. LOA of the contract of petitioner to supply hiring of equipments (HOE) for removal of overload burden of Padmapur opencast mine came to be cancelled and its earnest money deposit of Rs.42,76,100/- came to be forfeited. Similarly, the said JV and its all constituent firms or partners are debarred from participation in future tenders which may be floated by respondents for a period of one year. Letter of allotment by respondent is dated 20.9.2013 and as per the petitioners, as site was placed in its possession on 12.11.2013, events prior to that date are not decisive and not relevant. Clause 6 of Letter Of Allotment (LOA) is relied upon to urge that it casts obligation upon petitioners to commence work within 10 days thereafter. Show cause notice dated 18.10.2013 asking it to commence the work immediately therefore became redundant. Again another show cause notice was issued for very same purpose on 29.11.2013 and impugned order dated 19.2.2014 is passed in pursuance thereof.
2. On the 11.03.2014, this court has by interim order directed respondents to permit petitioner to participate in fresh tender process without prejudice to rights of parties and subject to further orders of the court. In this situation, with consent of parties, we have issued Rule and heard the matter finally by making it returnable forthwith.
3. Attention is invited by senior advocate Shri Bhangde to clause 6.1 of the LOA to contend that show cause notice (SCN) is without considering the ingredients thereof. Petitioner should have been given time to make amends or to start work and therefore not only SCN but impugned action based upon it is premature SCN dated 29.11.2013 pointed out that petitioner did not start work till then and called upon the petitioner to show cause as to why any of the actions suggested in it should not be taken for its failure to start work within 15 days. Petitioners were called for hearing on 5.12.2013. They were cautioned that if they did not appear for hearing or submit their explanation in writing, the respondents would take recourse to measures stipulated in it. Petitioner on 28.12.2013 submitted the manpower, list of equipments and sought permission of respondent to allow it to be deployed. On 30.12.2013, petitioners gave list of staff/workers for initial medical examination (IME) and vocational training (VT). Communication dated 4.1.2014 is relied upon to show that petitioners had started work on 25.12.2013 but it was suspended by the respondents and that petitioners were asked to start work on 2.1.2014. Respondents replied to it on 6.1.2014 pointing out that petitioner did not commence work and did not submit performance security for Rs.2,36,40,765/-. It also points out that no list of employees was submitted for IME and VT. Petitioners argue that performance security was not the cause mentioned in SCN. On 16.1.2014, petitioners made grievance about absence of a barrier on Tadoba road. On 22.1.2014, the respondents replied and pointed out that barrier was ready to operate and asked petitioners to start work.
4. Petitioners then wrote to respondents on 20th January 2014 and pointed out that they have already supplied two performance guarantees and remaining documents about performance security would be submitted up to 22nd January 2014, they requested respondents to grant permission to deploy manpower and machinery to start the work. Petitioners explain that this request became necessary as work was discontinued by respondents. This communication was replied to by respondents on 23rd January 2014. Respondents pointed out that some formalities needed to be completed by petitioners before starting actual execution of work. They pointed out that performance security deposit amounting to rupees 2,36,40,765/- was not supplied and site
