IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT NAGPUR
Sunil B. Shukre, M.S. Jawalkar, JJ.
Bhagwati Builders – Appellant
Versus
Maharashtra State Warehousing Corporation & Ors. – Respondents
Writ Petition No. 3639 of 2021
Decided On : 17-06-2022
Blacklisting - Contractual Relationship - Condition No.xviii of Clause 'A' - [SUMMARY OF ACT SECTIONS]
Fact of the Case:
The Petitioner was awarded a contract but expressed inability to execute the work at the quoted rate due to price escalation. The Respondent blacklisted the Petitioner for one year and forfeited the earnest money deposit.
Finding of the Court:
The Petitioner suppressed a material fact from the Court, approached the Court with unclean hands, and was not entitled to equitable relief. The Petition was dismissed.
Issues: (1) Whether the Petitioner suppressed a material fact from the Court and approached the Court with unclean hands? (2) Whether any show cause notice and opportunity of hearing to the Petitioner before its blacklisting was necessary?
Ratio Decidendi: The Petitioner suppressed a material fact and approached the Court with unclean hands, leading to the dismissal of the Petition. The blacklisting was a consequence of the Petitioner's breach of a clear condition in the tender document, fulfilling the requirements of principles of natural justice.
Final Decision: The Petition was dismissed with no costs.
JUDGMENT
Sunil B. Shukre, J. - Heard. Rule. Rule made returnable forthwith. Heard finally by consent of the learned counsel appearing for the parties.
2. Respondent No.1 by tender notice No.18 had invited bids of eligible contractors for execution of the work of construction of 1/3000 Mt Cap. Pre Engineered Wh Bldg with Ancillary Works at Amgaon, District Gondia. Various bidders including the Petitioner had submitted their bids in response to the tender notice No.18 and upon due evaluation of the bids, submitted by the bidders, bid of the Petitioner was found to be lowest and it was decided to award the contract to the Petitioner. The petitioner was informed accordingly and was called upon to deposit Rs.70,91,948/- as a security performance amount before 05.03.2021, by letter dated 26.02.2021 issued to it by the Respondent No.1. The Petitioner was informed that upon it's failure to deposit the said amount within the time given, the work shall be awarded to second lowest bidder. The Petitioner was also requested to give it's explanation as well as rate analysis showing the ability of the Petitioner to perform the awarded work at the rate submitted by it, which was 24.28% below estimated cost, by maintaining the quality.
3. In response to the said letter dated 26.02.2021, the Petitioner deposited the security performance amount by a Demand Draft on 05.03.2021 and gave it's explanation by it's letter dated 05.03.2021 that since it had already purchased requisite material, quality of work will not be affected, despite it's lower quote. The Petitioner did not however, submit any rate analysis along with letter dated 05.03.2021. The Petitioner submitted it's rate-analysis with further explanation by it's letter dated 22.03.2021 and assured that in- spite of huge deficit in the estimated rate and the rate quoted by the Petitioner, the Petitioner would not compromise on quality and would complete his work as per the guidance of Respondent No.1. By this letter, the Petitioner also requested Respondent No.1 to execute the work agreement and issue work order in it's favour.
4. By a letter dated 16.04.2021, the Petitioner was informed by Respondent No.1 that the explanation given by the Petitioner and the rate analysis submitted by it were vague and unsatisfactory and, therefore, the Petitioner was again requested to submit proper rate analysis justifying the huge below quote of the Petitioner. By that time second wave of Covid-19 Pandemic had hit the region and the market was closed and therefore, by letter dated 23.04.2021, the Petitioner expressed it's inability to submit the explanation and the rate analysis as required and requested for grant of further time of one months for submitting it's rate analysis. On 09.07.2021, the Petitioner informed the Respondent No.1 that as Respondent No.1 did not execute the work agreement in spite of the rate analysis submitted by it and as there was escalation in rates of commodities such as steel, cement and so on, it was not possible for it to execute the work at the rate quoted by it, which was below 24.28% of the estimated cost. The Petitioner also requested the Respondent No.1 to allow it to execute the work at the escalated price and to execute the agreement at higher rate.
5. The Petitioner submits that it did not receive any reply to it's letter dated 09.07.2021 and suddenly, on 09.08.2021, the Petitioner came across another e-tender notice-18 and it was a IInd call notice for short period. The Petitioner without making any enquiry about the IInd call tender notice for the same work, submitted it's fresh bid and was surprised to receive an e-mail dated 02.05.2021, informing it that it's fresh bid was rejected during technical evaluation for the reason that it was blacklisted and debarred. Thereafter, the Petitioner received another e-mail on 07.09.2021 informing it that as the Petitioner expressed it's inability to execute the work at the rate quoted by it, the Petitioner was blacklisted for a pe
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The Petitioner's suppression of a material fact and approach to the Court with unclean hands led to the dismissal of the Petition.
The requirement for a fair hearing and a specific show cause notice before imposing the severe civil consequence of blacklisting, and the need for the authority to determine the period of punishment ....
The impugned actions of issuing the show cause notice and blacklisting the petitioner were arbitrary, unconstitutional, and violated principles of natural justice. The court emphasized the requiremen....
The main legal point established in the judgment is the requirement for a clear mention of the proposed blacklisting action in the show cause notice, as well as the need to adhere to principles of na....
Blacklisting a contractor for submitting a false experience certificate requires clear proof of intentional wrongdoing; failure to provide such evidence renders the action disproportionate.
Blacklisting as a penalty requires clear proof of intentional misconduct, and actions taken based on allegations alone may be deemed disproportionate and legally untenable.
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