Back
IN THE HIGH COURT OF DELHI AT NEW DELHI
Manoj Kumar Ohri, J.
M/s Satish Chand Rajesh Kumar Pvt. Ltd. - Appellant
Versus
New Delhi Municipal Council & Anr. - Respondents
Civil Writ Petition No. 8599 of 2021, Civil Miscellaneous Application No. 26620 of 2021
Decided On : 29-04-2022
Article 226 - Debarment from NDMC tenders - Special Conditions of the Contract - Clause 15
Fact of the Case:
The petitioner was debarred from participating in NDMC tenders for 3 years due to alleged failure to perform contractual obligations. The petitioner claimed that the termination of the contract and the debarring order were arbitrary and violated principles of natural justice.
Finding of the Court:
The Court found that the debarring order was a consequence of non-performance of contractual obligations by the petitioner, and the respondent had invoked performance bank guarantee(s) furnished by the petitioner under Clause 3 of the contract. The Court held that the petitioner's choice of challenging the debarring decision in this forum was misplaced as it had already invoked the arbitration clause and approached the Court under Section 9 of the act for interim orders.
Issues: The issues included the maintainability of the petition under Article 226, the invocation of the arbitration clause, and the propriety of challenging the debarring decision in the present forum.
Ratio Decidendi: The Court held that the debarring decision was a contractual recourse taken by the respondent, and the petitioner was free to challenge it before the arbitrator as a contractual dispute, in terms of the remedies provided under the contract.
Final Decision: The present petition was dismissed, with liberty to the petitioner to approach the arbitral Tribunal for appropriate reliefs. The Court did not go into the merits of the case, and all rights and contentions of the parties were reserved.
JUDGMENT
Manoj Kumar Ohri, J. - The present petition has been filed under article 226 of the Constitution of India read with Section 151 CPC on behalf of the petitioner, assailing the decision dated 04.08.2020 of the respondent No. 1/Council and communication of same vide letter dated 06.11.2020, whereby the petitioner has been debarred from participating in the NDMC tenders for a period of 3 years with effect from the date of the decision i.e., 04.08.2020.
2. It is claimed by the petitioner that being the lowest bidder, it was awarded the tender by respondent No. 1/Council for the redevelopment work of Bapu Samaj Sewa Kendra, Panchkuian Road, New Delhi. The value of the work awarded was Rs.24,66,00,663/-, which was later on modified to Rs.24,54,00,633/-. In terms of the letter of acceptance dated 07.02.2018, the petitioner furnished Performance Guarantee(s) to the Council in the form of Bank Guarantee(s) as security for due performance of the contract which was to be completed within a period of 18 months with effect from 22.02.2018, i.e., the date of the start of work.
3. according to the petitioner, when it proceeded to the project site to commence the work, the site was found to be occupied and via letter dated 29.03.2018, it requested the Council to handover the project site free of all occupation. Eventually, the site was handed over to the petitioner after much delay, which in turn delayed the commencement of work. Even during the course of construction, the petitioner faced various difficulties, which inter-alia included, faulty drawings provided by the respondents, non-supply of structural drawings of beam and basement slab, stoppage of the use of batch mix plant at construction site by the CPWD, delay in approval of design mix etc. It is the petitioner's grievance that due to various reasons attributable to respondents, the work awarded to it was delayed.
4. The petitioner claims that until the termination of contract, it had completed works amounting to Rs. 6,71,83,639/- for which it raised its bills on 21.09.2019 that are still outstanding.
5. Learned counsel for the petitioner has argued that the Council vide its letter dated 11.11.2019 had first arbitrarily extended the time for completion of contract till 31.05.2020, and thereafter, the contract was terminated arbitrarily vide letter dated 15.11.2019. He has further submitted that the impugned decision of debarring the petitioner from participating in NDMC tenders for a period of 3 years was passed without complying with the principles of natural justice, as neither any Show Cause Notice nor any opportunity of hearing was granted to the petitioner prior to passing of the order. It is contended that the petitioner had rightly requested for termination of the contract, as the respondent failed to fulfil its obligations of handing over the vacant site and drawings to the petitioner, which prevented the completion of works within the stipulated time.
6. The petitioner has placed reliance on the decisions of the Supreme Court in Erusian Equipment & Chemicals Ltd. v. State of West Bengal and another reported as (1975) 1 SCC 70 and Patel Engineering Limited v. Union of India and another reported as (2012) 11 SCC 257, as well as the decision of this Court in Prakash atlanta JV & Ors. v. National Highways authority of India & Ors. reported as 2010 SCC OnLine Del 471 to contend that where after termination of contract, further action of debarring/blacklisting is taken during the pendency of challenge to termination of contract and without following the principles of natural justice, the same is liable to be set aside.
7. On the other hand, learned Standing Counsel for the respondent/Council has raised a preliminary objection to the maintainability of the present petition. It is argued that the petitioner has already invoked the arbitration clause provided in the agreement entered into between the parties. The petitioner has already filed a petition under Section 9 of the arb
The Court emphasized that contractual disputes, including debarring decisions, should be challenged before the arbitrator as per the remedies provided under the contract.
Debarring from tender participation without following natural justice principles is invalid; disputes arising under the contract should be resolved via arbitration, not through writ jurisdiction.
The severity of the effects of blacklisting and the resultant need for strict observance of the principles of natural justice before passing an order of blacklisting.
For a blacklisting or debarment order to be valid, a show-cause notice must explicitly inform the contractor of the potential for such penal action. Failure to provide specific notice of the intentio....
The court upheld the debarment of the contractor, ruling the action was not arbitrary and justified due to significant breaches impacting public interest, distinguishing it from minor breach preceden....
(1) Debarment as a remedy is to be invoked in cases where there is harm or potential harm for public interest particularly in cases where person’s conduct has demonstrated that debarment as a penalty....
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.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
