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2016 Supreme(Del) 2306
IN THE HIGH COURT OF DELHI AT NEW DELHI
SANJEEV SACHDEVA, J.
HYUNDAI ROTEM COMPANY – Petitioner
Versus
DELHI METRO RAIL CORPORATION – Respondent
W.P. (C) No. 5851 of 2016
Decided On : 08-07-2016
For the Petitioner:Mr. Parag Tripathi, Sr. Adv. with Mr. Arunav Patnaik, Ms. Bhabna Das and Ms. Kirat Randhawa, Advocates.
For the Respondent: Mr. Tarun Johri, Mr. Satish Chandra, GM-Legal with Mr. Puneet Garg, Law Officer for DMRC Ltd.
Non-disclosure of material facts, such as a debarment order, in a procurement process can constitute fraudulent practice as defined in the contract, justifying severe penalties.
Headnote:
Fraudulent Practice - Blacklisting - Clause 4.33.1 of the GCC Contract - 21, 22, 26, 27, 28, 29, 30, 31
Fact of the Case:
The petitioner challenged the order blacklisting them for five years due to non-disclosure of a debarment order by the Airport Authority of India. The Division Bench quashed the initial orders due to lack of reasons and procedural irregularities. The Managing Director subsequently passed a detailed order after hearing the petitioner.
Finding of the Court:
The court found that the petitioner's non-disclosure of the debarment order amounted to fraudulent practice as defined in Clause 4.33.1 of the GCC Contract. The court rejected the petitioner's contentions regarding lack of fraudulent intent and disproportionate punishment. The court also dismissed the plea challenging the quantum of punishment.
Issues: Non-disclosure of debarment order, fraudulent practice, proportionality of punishment
Ratio Decidendi: The court held that the petitioner's non-disclosure of the debarment order constituted fraudulent practice as defined in the contract. The court also found that the punishment of blacklisting for five years was not disproportionate.
Final Decision: The writ petition challenging the blacklisting order was dismissed, and the plea regarding the quantum of punishment was also rejected.
SANJEEV SACHDEVA, J.
CM No. 24046-24047 of 2016 (Exemption) Allowed, subject to all just exceptions.
W.P. (C) No. 5851 of 2016
1. The petitioner has filed the present petition impugning the order dated 06.07.2016 passed by the respondent blacklisting the petitioner for a period of five years.
2. This is a third order passed by the respondent qua the petitioner for the same conduct. The first two having been set aside by a Division Bench of this court.
3. The petitioner had submitted a bid with the respondent and was successful. The letter of award was issued to the petitioner on 01.04.2013. As per the petitioner, subsequent to the award of contract, a letter was received from the respondent on 05.11.2014 stating that at the time of submission of its bid, the petitioner had not disclosed the debarment order dated 14.12.2011 passed by the Airport Authority of India. The debarment by Airport Authority of India was for a period of 3 years.
4. It is contended that on receipt of the letter dated 05.11.2014, the petitioner carried out an internal inquiry and found that two of the officials, who were handling the Airport Authority of India’s pre qualification bid, received the order of debarment but did not disclose it to the senior management of the company. It is further contended that the explanation of the said employees was found to be untenable and appropriate action was taken against them and the factum of action having been taken against the said employees was communicated to the respondent.
5. It is contended that on 16.06.2015, a show-cause notice was issued by the respondent seeking an explanation as to why an action contemplated in terms of Clause 4.33.1 of the General Clauses of Contract (GCC) of the RS-10 Contract should not be taken against the petitioner for having indulged in “fraudulent practice” by not disclosing the debarment order of the Airport Authority of India in the bid submitted with the respondent. A detailed response is stated to have been filed to the show-cause notice and a personal hearing was sought.
6. By order dated 29.07.2015, the respondent blacklisted the petitioner for a period of 5 years commencing from 15.07.2015. It is contended that the date i.e. 15.07.2015 is relevant, in as much as, on the said date the Board of Directors of the respondent took a decision to debar the petitioner for a period of five years.
7. The order dated 29.07.2015 was impugned by the petitioner by filing Writ Petition (C) No. 7265/2015. This court by order dated 31.07.2015 in W.P. (C) No. 7265/2015 directed the respondent to give a personal hearing and pass an order thereafter. On 10.08.2015, the respondent passed another order reiterating its earlier order dated 29.07.2015 of blacklisting the petitioner for a period of five years from 15.07.2015. The order dated 10.08.2015 was also impugned by the petitioner by filing W.P. (C) No. 7656/2015. Interim order was not granted in W.P. (C) No. 7656/2015. The petitioner filed an appeal challenging the non-grant of interim order before the Division Bench being LPA No. 547/2015.
8. The Division Bench by judgment dated 23.11.2015, allowed the LPA No. 547/2015 and the two Writ Petitions filed by the petitioner quashing the orders dated 29.07.2015 and 10.08.2015. The Division Bench, by its order dated 23.11.2015, held as under:
“21. The order in the present case dated 10.08.2015 is without any reasons. Respondent was obliged to deal with the submissions of the appellant in a broad manner before passing the order debarring the appellant. If after a hearing, a non-speaking order is passed, the person affected by adverse order would be at a loss to know the reason for the adverse order. Even if the decision is right, the person against whom it was made should be told why the decision has been made. The absence of reasons leads to denial of justice. Accordingly, in our view the impugned order dated 10.08.2015 is passed in violation of the principles of natural justice. The same is liab
