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IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
M/S HIMALAYA COMMUNICATIONS LTD. – PETITIONER
Versus
BHARAT SANCHAR NIGAM LTD. – RESPONDENT
W.P.(C) 5438 OF 2017
Decided On : 03-07-2017
Blacklisting - Public Contracts - Clauses 1(a), 2, 6, 7, 10 & 12 of the Instructions to Bidders - The court set aside the impugned order due to lack of fair hearing before blacklisting the petitioner. The court directed the respondent to afford the petitioner sufficient opportunity of being heard before imposing any ban on future dealings.
Fact of the Case:
The petitioner challenged an order banning them from participating in tenders and transactions with the respondent for failing to accept Advance Purchase Orders (APOs) due to product approval issues.
Finding of the Court:
The court found that the impugned order was arbitrary and against the principles of natural justice as the petitioner was not given a fair hearing before being blacklisted.
Issues: The issues involved product approval, compliance with tender terms, and violation of natural justice in blacklisting the petitioner.
Ratio Decidendi: The court held that blacklisting without affording a fair hearing violates the principles of natural justice and fairness in public contracts.
Final Decision: The impugned order was set aside, and the respondent was directed to provide the petitioner with a fair hearing before imposing any future bans.
VIBHU BAKHRU, J.
CM No.22895/2017
1. Allowed, subject to all just exceptions.
2. The application is disposed of.
W.P.(C) 5438/2017 & CM No.22894/2017
3. Issue notice. The learned counsel for the respondent accepts notice.
4. With the consent of the parties, the petition is taken up for final hearing.
5. The petitioner has filed the present petition, inter alia, impugning the communication/order dated 02.03.2017 (hereafter “the impugned order”) issued by the respondent as being arbitrary and against the principles of natural justice.
6. The controversy in the present case concerns the question whether the respondent could ban the petitioner from participating in tenders and from entering into any transactions with the respondent for a period of three years on account of the petitioner having failed to accept the Advance Purchase Orders (APOs) placed on the petitioner. The APOs in question were issued pursuant to a tender submitted by the petitioner in response to a notice inviting tender dated 24.06.2016 (hereafter “the NIT”).
7. The respondent had issued the NIT for inviting bids from eligible bidders for supply of Optical Fibre Cables (OFCs). The petitioner had participated in the aforesaid tender and was declared as the lowest bidder (L-1). In terms of the NIT, APOs were placed on the petitioner on 28.10.2016 and the petitioner was called upon to furnish the performance bank guarantees as required in terms of the NIT. Admittedly, the petitioner failed to accept the said APOs and furnish the bank guarantees.
8. The petitioner claims that it was not in a position to accept the APOs since the respondent had not granted approval for its product. It is further claimed that the petitioner was entitled to participate in the tender while its product was pending such approval. The approval having been denied, the petitioner was, obviously, not in a position to supply the products (OFCs) to the respondent.
9. The learned counsel for the petitioner has assailed the impugned order essentially on three grounds. First, he submits that in terms of Clause 24.1 of the NIT, the respondent could not have placed the APOs on the petitioner since the petitioner’s products had not been approved. Second, he submits that the impugned order is contrary to the terms of the NIT. And third, he submits that the impugned order amounts to blacklisting the petitioner and is in violation of the principles of natural justice, since no hearing was afforded to the petitioner before the passing of the impugned order.
10. The NIT clearly lists out the circumstances in which a punitive measure of banning participation of the bidders in future tenders can be taken. Clauses 1(a), 2, 6, 7, 10 & 12 of the Instructions to Bidders are relevant and are reproduced below:-
| S.No. | Defaults of the bidder/vendor | Action to be taken |
| A | B | C |
| 1(a) | Submitting fake/forged | (i) Rejection of tender bid of respective Vendor.
(ii) Banning of business for 3 years which implies barring further dealing with the vendor for procurement of Goods & Services including participation in future tenders invited by BSNL for 3 years from date of issue of banning order.
(iii) Termination/Short Closure of PO/WO, if issued. This implies non-acceptance of further supplies/work & services except to make the already received material work/complete work in hand. |
| (a) Bank instruments with the bid to meet terms & conditions of tender in respect of tender fee and/or EMD; | ||
| (b) Certificate for claiming exemption in respect of tender fee and/or EMD; | ||
| and detection of default at any stage from receipt of bids till award of APO/issue of PO/WO. | ||
| Note 1:- However, in this case the performance guarantee if alright will not be forfeited. | ||
| Note 2:- Payment for already received supplies/completed work shall be made as per | ||
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