Back
2018 Supreme(Del) 1013
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
Hyundai Rotem Company – Petitioner
Versus
Delhi Metro Rail Corporation – Respondent
W.P.(C) 5851 of 2016
Decided On : 09-01-2018
For the Petitioner: Mr. Kapil Sibal, Mr. Sudhir Sachdeva, Mr. Arunav Patnaik, Mr. Shikhar Saha and Mr. Karun Pahwa
For the Respondent: Mr. A.K. Singla, Mr. Tarun Johri, Mr. Ankur Gupta and Mr. Puneet Garg
The main legal principle established is the requirement for proportionality in punitive measures, considering the gravity of the offense and mitigating circumstances, as well as the relevance of specific rules and guidelines in assessing the proportionality of the punishment.
Headnote:
Fraudulent Practice - Blacklisting of Contractor - General Conditions of Contract (GCC) - Clause 4.33.1 - Article 14 of the Constitution of India - General Financial Rules, 2017 - JICA Rules on Measures against Persons Engaged in Fraudulent Practices - Proportionality Test
Fact of the Case:
The petitioner was blacklisted by the Delhi Metro Rail Corporation (DMRC) for a period of five years due to fraudulent practice in securing a contract for supply of Metro Cars. The petitioner challenged the decision, contending that the punishment was highly disproportionate.
Finding of the Court:
The court found that the petitioner had engaged in fraudulent practice as defined under clause 4.33.1 of GCC. While acknowledging DMRC's discretion in awarding contracts, the court held that the punishment must be commensurate with the offense and proportionate. The court directed DMRC to reconsider the period of blacklisting.
Issues: The key issues were whether the petitioner engaged in fraudulent practice, and if the punishment of blacklisting for five years was highly disproportionate and violated Article 14 of the Constitution.
Ratio Decidendi: The court emphasized the need for proportionality in punitive measures, considering the gravity of the offense and mitigating circumstances. It highlighted the absence of specific guidelines for determining the period of debarment and the relevance of JICA Rules and General Financial Rules, 2017 in assessing the proportionality of the punishment.
Final Decision: The court disposed of the petition, directing DMRC to reconsider the period of blacklisting in light of the observations and principles discussed.
VIBHU BAKHRU, J.
1. The petitioner has filed the present petition, inter alia, impugning an order dated 06.07.2016 (hereafter ‘the impugned order’) passed by the Managing Director of the respondent corporation (hereafter ‘DMRC’) blacklisting the petitioner and holding the petitioner to be ineligible for award of any contract by DMRC either as a firm or as a part of JV firm/JV SPV in any name and style for a period of five years with effect from 15.07.2015.
2. The aforesaid order has been passed on the basis that the petitioner had secured the contract (RS-10) with DMRC for supply of Metro Cars on the basis of a false declaration in its offer and thus, was guilty of a “fraudulent practice”. The petitioner had submitted its offer for supply of Metro Cars pursuant to an invitation to offer issued by DMRC. The petitioner‘s offer was the lowest and was accepted by DMRC on 24.05.2013.
3. Thereafter, on 16.06.2015, DMRC issued a show cause notice alleging that the petitioner had indulged in a fraudulent practice as defined under clause 4.33.1 of the General Conditions of Contract (GCC) as it had not disclosed the information at the time of making offer that the Airport Authority of India (hereafter ‘AAI’) had debarred the petitioner from bidding for its contracts for a period of three years.
4. The petitioner responded to the said show cause notice. However, the same was not found satisfactory and the Board of Directors of DMRC passed a resolution on 15.07.2015 blacklisting the petitioner for a period of five years. Consequently, a communication dated 29.07.2015 was issued by DMRC in view of the resolution passed by the Board of Directors of DMRC. The said communication was impugned by the petitioner in a writ petition filed before this Court (being W.P.(C) 7265/2015). In the said petition, an order dated 31.07.2015 was passed by this Court directing that a personal hearing be afforded to the petitioner with a further direction to DMRC to pass an appropriate order within a period of one week thereafter.
5. In compliance with the aforesaid order dated 31.07.2015, a personal hearing was afforded to the representatives of the petitioner by two Directors who, after hearing the petitioner, reiterated the earlier decision for blacklisting the petitioner for a period of five years with effect from 15.07.2015.
6. Aggrieved by the aforesaid decision, the petitioner preferred another petition (being W.P.(C) 7656/2015) impugning the communication dated 10.08.2015.
7. Since a Coordinate Bench of this Court did not accede to the petitioner‘s request for an urgent interim relief, the petitioner preferred an appeal before the Division Bench of this Court (being LPA No. 547/2015).
8. The said appeal was disposed of by an order dated 23.11.2015, whereby the Division Bench of this Court set aside the blacklisting orders dated 29.07.2015 and 10.08.2015. The Court allowed the petitioner‘s two writ petitions - W.P.(C) 7265/2015 and 7656/2015 - principally on the grounds that the said orders were unreasoned and the authority which had passed the said orders had not afforded the petitioner any opportunity of being heard.
9. The Managing Director of DMRC heard the representatives of the petitioner on 19.01.2016 and thereafter, passed the impugned order.
10. The present writ petition was moved on 08.07.2016. This Court found no infirmity with the decision of the Managing Director of DMRC in holding that the petitioner was guilty of a fraudulent practice as defined under clause 4.33.1 of GCC. The contentions advanced on behalf of the petitioner to contest the findings of the Managing Director as returned in the impugned order and the decision making process were rejected; however, this Court issued a limited notice on the question whether the punishment of blacklisting the petitioner for a period of five years, was highly disproportionate.
11. Aggrieved
