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IN THE HIGH COURT OF DELHI AT NEW DELHI
Navin Chawla, J.
DSS Imagetech Pvt. Ltd. - Appellant
Versus
Indian Council Of Medical Research - Respondent
Writ Petition (Civil) No. 10740 of 2019; Civil Miscellaneous No. 44399 of 2019, 47959 of 2019
Decided On : 06-07-2020
Natural Justice - Procurement Dispute - Manual of Procurement of Goods, 2017 - [HOLIDAY LIST] - [PROCUREMENT DISPUTE] - [Manual of Procurement of Goods, 2017] - The court set aside the decision to put the petitioner on the Holiday list as it was found to be unjustified, unreasonable, and arbitrary. The decision was held to be in violation of the principles of natural justice, as the petitioner was not granted an opportunity of oral hearing before the decision was made. The court also found that the decision-making process was vitiated due to the failure to supply the Committee Report to the petitioner and the failure to grant an opportunity of hearing at the appellate stage.
Fact of the Case:
The petitioner challenged the decision to put them on the Holiday list for failing to fulfill contractual obligations. The respondent alleged that the petitioner failed to provide the application demonstration of the machinery, leading to an extension of the warranty period. The petitioner argued that they were not obligated to provide the demonstration and that the respondent's demand was unwarranted.
Finding of the Court:
The decision to put the petitioner on the Holiday list was set aside as unjustified, unreasonable, and arbitrary. The court found a violation of the principles of natural justice due to the lack of an opportunity of oral hearing and failure to comply with the decision-making process. The court did not conclusively determine if the petitioner failed to perform its obligations under the Purchase Order.
Issues: Violation of Principles of Natural Justice, Unjustified Decision to Put Petitioner on Holiday List
Ratio Decidendi: The decision to put a contractor on the Holiday list must be reasonable, fair, and proportionate to the gravity of the offense. The decision-making process must comply with the principles of natural justice, including granting an opportunity of oral hearing to the affected party.
Final Decision: The Impugned Orders dated 18.04.2019 and 06.08.2019 were set aside. The court did not conclusively determine if the petitioner failed to perform its obligations under the Purchase Order.
JUDGMENT
Navin Chawla, J. - This petition has been filed by the petitioner challenging the order dated 06.08.2019 passed by the Appellate Authority of the respondent dismissing the Appeal filed by the petitioner challenging the order dated 18.04.2019 passed by the Director, National Institute of Nutrition, Indian Council of Medical Research (hereinafter referred to as the "ICMR").
2. By the order dated 18.04.2019, the Director, National Institute of Nutrition, Hyderabad (hereinafter referred to as the "NIN"), has invoked the provision and powers conferred on it by the Manual of Procurement of Goods, 2017 (hereinafter referred to as the "Manual") issued by the Department of Expenditure, Ministry of Finance, Government of India and inflicted a penalty of placing the petitioner on the Holiday List for a period of one year from the date of the order. As noted hereinabove, by the Impugned Order dated 06.08.2019 passed by the Director General of the ICMR as an Appellate Authority, the Appeal filed by the petitioner challenging the said order has been dismissed.
3. In brief, the facts of the case are that by a Purchase Order dated 13.10.2008, the NIN had placed an order for supply of "Automated Protein Digester" on M/s Digilab Genomic Solutions Inc (hereinafter referred to as "Digilab Inc"). The petitioner had acted as an agent of the said M/s Digilab Inc. in the transaction and the Purchase Order records the additional warranties extended by the petitioner during the negotiations held on 21.02.2008 as under:-
"OTHER TERMS AND CONDITIONS:
As per the negotiations held on 21-02-2008 with our Headquarters ICMR, New Delhi the Indian Agent M/s. DSS Imagetech Pvt. Ltd., New Delhi has agreed to provide the following:
1. Agreed to provide Three Years comprehensive warranty and two years non comprehensive services for equipment at free of cost.
2. Agreed to provide non-comprehensive annual Maintenance from 6 th to 10th years @ 3% per year.
3. Agreed to provide spare parts to maintain the equipment up to 10 years.
4. The firm agreed to give discount of 10% on the price list of all the spare parts up to 10 years.
5. The firm agreed to provide 2 preventive maintenance visits per year and also breakdown visits as and when required.
6. Agreed to submit Performance Bank Guarantee of 10% of the FOB value of the order and which will be retained by the Council till the end of the warranty period.
7. Agreed that the duration of warranty period will start after proper installation of the equipment and submitting user satisfactory report.
8. The maximum response time of 72 hrs was accepted by the firm.
9. Agreed to accept 0.1% of FOB as penalty per week till the warranty period, if the instrument remains in non-working condition for more than 18 days.
10.When the equipment is under warranty/comprehensive maintenance, it would be the responsibility of the manufacturer/dealer/agent to procure spare parts and the Institute will not incur any expense on duty, octori or handling charges.
11.The detailed circuit diagram along with trouble shooting procedure and operational manual would be provided to the institute along with the equipment.
12.Agreed to provide on site training with foreign trainer to the users.
13.The firm also agreed to provide pre installation training for two scientists free of cost.
14.The firm agreed provide consumable for 2000 reactions.
15.The firm agreed to prepare the dust free room and will provide 2 ton AC.
16.The firm agreed to Compaq/Dell laptop with centrino Duo, HDD 80 GB, Intel Process with Window Vista operating software.
17.The firm agreed to give additional 5% discount.
18.The firm agreed to supply above mentioned equipment at a cost of USD 1,71,350.55 CIF Dibrugarh inclusive of all above mentioned items and conditions.
19.All above terms & conditions are applicable for RMRC, Dibrugarh and NIN, Hyderabad."
4. The order dated 18.04.2019 records that the Protein Digester was supplied on 03.04.2009 and was installed on 09.10.200
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