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IN THE HIGH COURT OF DELHI AT NEW DELHI
Rekha Palli, J.
Raj Corporation Ltd. - Appellant
Versus
National Highway Authority Of India & Anr. - Respondents
W.P.(C) 3448/2021
Decided On : 29-10-2021
NATIONAL HIGHWAYS AUTHORITY OF INDIA - DEBARRING ORDER - FRAUDULENT PRACTICE - MISREPRESENTATION - DISPROPORTIONATE PENALTY - PRINCIPLES OF NATURAL JUSTICE - BLACKLISTING.
Fact of the Case:
The petitioner, a construction company, submitted two bids for projects floated by the respondent, National Highways Authority of India (NHAI). The first bid was submitted as part of a joint venture, while the second bid was submitted individually. The respondent rejected both bids on the grounds of misrepresentation and fraudulent practices, alleging that the petitioner had submitted incorrect and inflated financial certificates to influence the bidding process. The petitioner challenged the rejection of its bids and the subsequent debarring order issued by the respondent, arguing that the alleged misrepresentation was a result of an inadvertent mistake by its chartered accountant and that the debarring order was disproportionate to the alleged wrongdoing.
Finding of the Court:
The court found that the respondent's conclusion that the petitioner had engaged in misrepresentation and fraudulent practices was based on a presumption of guilt rather than on concrete evidence. The court noted that the petitioner had promptly rectified the discrepancies pointed out by the respondent in its second bid and that there was no evidence of any willful or habitual wrongdoing on the part of the petitioner. The court also found that the debarring order was disproportionate to the alleged wrongdoing, especially considering that the petitioner had already suffered a debarment for eleven months and that the debarment had adversely impacted its workforce.
Issues: 1. Whether the petitioner had engaged in misrepresentation and fraudulent practices as alleged by the respondent. 2. Whether the debarring order issued by the respondent was disproportionate to the alleged wrongdoing.
Ratio Decidendi: 1. The court held that the respondent's conclusion that the petitioner had engaged in misrepresentation and fraudulent practices was based on a presumption of guilt rather than on concrete evidence. The court noted that the petitioner had promptly rectified the discrepancies pointed out by the respondent in its second bid and that there was no evidence of any willful or habitual wrongdoing on the part of the petitioner. 2. The court held that the debarring order was disproportionate to the alleged wrongdoing, especially considering that the petitioner had already suffered a debarment for eleven months and that the debarment had adversely impacted its workforce.
Final Decision: The court allowed the writ petition and modified the impugned debarring order to the extent that the debarment would cease to be in effect from the date of the decision. The court directed that the petitioner would be eligible to participate in any future tenders floated on or after the date of the decision.
JUDGMENT
Rekha Palli, J. - The present petition has been preferred under Article 226 of the Constitution of India seeking setting aside and quashing of Show Cause Notice dated 22.10.2020 and the consequential order dated 27.11.2020 passed by the respondent no. 1 debarring the petitioner from participating in any future projects to be floated by the respondent no. 1 for a period of two years.
2. The petitioner is a construction company providing infrastructure development services and claims to have successfully undertaken several construction contracts for various state governments and public sector undertakings. The respondent no. 1/National Highways Authority of India (hereinafter, “NHAI”), an authority established under the National
Highways Authority of India Act, 1988, is responsible for the construction of various highways across India. Even though the General Manager (T) of respondent no.1 has been arrayed as respondent no.2, no relief is sought against the said respondent and therefore, reference to the respondent hereinafter will be read only qua respondent no.1.
3. Upon the respondent issuing a Request For Proposal (hereinafter referred to as “RFP”) inviting bids for the construction of a “Six lane access controlled Highway (NH-152D) starting from junction with Kaithal-Safidon road (SH-11) near Rajound to junction with Jind-Safidon road (SH-14) near Kheri village (Ch. 56+000 to 80+000) (length 24 km)”, the petitioner on 30.07.2019, submitted a bid in the EPC Mode by a Joint Venture namely Raj Corporation Ltd. – Bhuvaneshwar Construction Company, of which the petitioner was the lead member. The bid (hereinafter referred to as “first Bid”) was accompanied by certificates of eligible projects by the Petitioner?s chartered accountant M/s Ramji Sriram & Associates. Vide its letter dated 29.08.2019, the respondent sought certain clarifications from the Joint Venture, to which no reply was furnished and consequently the bid submitted by the Joint Venture was declared as non-responsive on account of the Joint Venture having failed to meet the eligibility criteria as specified under clause 2.2.2.2(i) of the RFP, consequently, the petitioner was refunded the bid security amount.
4. On 03.07.2020, the petitioner company, this time in its individual capacity, submitted its bid (hereinafter referred to as, “second bid”) for another tender floated by the respondent. The same was for construction of a “Six lane access-controlled Highway from Junction with sector – 62/25 diving road on Faridabad-Ballabhgarh bypass to Junction near KMP expressway with NH-148N (Delhi-Vadodara Expressway) section of NH-148NA (Design CH 33+000 to 59+063) in the State of Haryana on Hybrid Annuity Mode under Bharatmala Pariyojna.” Vide its letter dated 17.07.2020, upon finding that some of the supporting documents submitted by the petitioner were not in accordance with the terms of the RFP, the respondent, while directing the petitioner to furnish some original documents as per the terms of the RFP, sought certain clarifications from the petitioner. One of the aspects on which clarification was sought from the petitioner was the reason for submission of the „Independent Auditor?s Report? for the years 2018-19 & 2019-20 instead of the „Tax Audit Reports? for the said years as required under the RFP.
5. In response thereto, the petitioner vide its letter dated 22.07.2020, while clarifying the issues raised by the respondent, submitted copies of the independent auditor?s reports for the relevant years along with the amended bank guarantee as well as a corrected copy of the letter accompanying the technical bid.
6. The petitioner?s bid was, however, once again rejected as being technically non-responsive, which rejection was based on a difference in the details and value of the projects claimed to have been undertaken by it alongwith the year wise break-up of the turnover as submitted by the petitioner in the two bids, the first dated 30.07.2019 where the peti
The court upheld the debarment of the petitioner for failing to submit a performance guarantee on time, affirming the procedural fairness and adherence to the RFP guidelines.
No order of debarment can be made against a party without first issuing a specific show cause notice, ensuring compliance with the principles of natural justice.
Fraudulent practices in securing a contract vitiate the process, and completion of the contract does not absolve the petitioner of liability. The authority has the right to debar the petitioner as pe....
The main legal point established in the judgment is the requirement for specific reasoning for debarment, the principles of debarment under GFR, 2017 Rule 151, and the balance of interests between th....
A consortium member is jointly liable for the actions of its partners during bidding, and blacklisting imposes severe consequences proportional to misconduct, requiring strict adherence to principles....
The necessity of a specific show cause notice for blacklisting and the requirement to state the proposed action.
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