The central legal point established in the judgment is the requirement of an objective assessment and satisfaction before imposing a ban based on contractual non-performance, as well as the judicial review of the motive behind such decisions.

JUDGMENT

Moushumi Bhattacharya, J. - The petitioners are aggrieved by an impugned letter dated 17.10.2022 banning the petitioner no. 1 and its constituent partners from participating in future tenders of Eastern Coalfields Limited (ECL) for a period of three years from the date of issue of the order. The petitioner no. 1 is a joint venture company and was formed to extract, remove and transport coal in coalfields belonging to ECL.

2. The petitioners, through learned counsel, say that the urgency of the matter arises from the fact that ECL has issued other tenders in December, 2022 with last dates of submission of tender in the third week of December. Counsel submits that an order of banning requires an objective satisfaction on the part of the authority at the relevant point of time and places documents to show that the petitioners were unable to satisfactorily complete the work by reasons which cannot be attributed to the petitioners, namely, obstructions caused by local people. Counsel submits that the impugned order of banning suffers from procedural impropriety and that the replies of the petitioners were not taken into account.

3. Learned counsel appearing for ECL submits that the writ petition suffers from suppression of material facts in that a third show-cause notice dated 19.8.2022 has not been disclosed in the writ petition. Counsel submits that the banning order is only in respect of ECL and not all other Coal Companies. Counsel further submits that the banning merely enforces the clause in the contract entered into between the parties. Counsel relies on other documents to show that the petitioners were given revised targets but could only complete 31.33% instead of the required 70% of the work. It is submitted that the petitioners have no cause of action since ECL has not terminated the contract with the petitioners.

4. The issue before the Court is whether the impugned order of banning dated 17.10.2022 is arbitrary and should be quashed on that basis. The ground for banning the petitioners for three years is the alleged non-performance of the contract and the petitioners failing to execute the target percentage which was agreed to between the parties. The letter alleges loss suffered by ECL as a result of the petitioners' poor performance and the prospect of further losses if the petitioner is allowed to do business with ECL in future.

5. The impugned order indicates that the decision of imposing penalty of 'banning of business' has been taken under clause 9(b) of the General Terms and Conditions of the bid documents, 'Termination, Suspension, Cancellation & Foreclosure of Contract'. Clause 9(b) provides that the Company/ECL shall be entitled to cancel/terminate the contract if the contractor fails to achieve a monthly agreed quantity of 70% for a period of six consecutive months or for a cumulative period of six months save and except to the extent of non-availability caused by a Force Majeure event or an act of omission of the Company, not occurring due to any default of the contractor. The note to clause 9(b) provides that the contractor in such cases may be banned for a minimum period of one year. The clause hence indicates that failure to achieve the agreed target for a cumulative/consecutive period as indicated in the said clause would entitle ECL to ban the contractor for a minimum period of one year.

6. An FIR made by ECL to the Commissioner of Police, Asansol on 22.01.2022 states that the work has been stopped at the Siduli site by miscreants who have stopped the progress of the work thereby causing substantial loss of 3000 m3 of the target removal per day. The FIR states that the miscreants who have stalled the work of the project are neither title holders nor do they belong to Siduli Village. The FIR also records an earlier FIR lodged by ECL at Andal Police Station on 15.01.2022. More significantly, a 'Hindrance Register' which is part of the contract and signed by both parties reflects hindrance caused to th