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2023 Supreme(Del) 2024
IN THE HIGH COURT OF DELHI AT NEW DELHI
Prathiba M. Singh, J.
M/s R & R Enterprises – Appellant
Versus
Union of India & Ors. – Respondents
W.P.(C) 4170 of 2020 and CM APPL. 15012 of 2020
Decided On : 07-02-2023
Ms. Ruchika Sharma & Ms. Seema Singh, Advocates, for the Petitioner.
Mr. Anil Soni (CGSC) with Mr. Devvrat Yadav, Advocate, for the UOI.
Debarment should not be permanent and should depend on the nature of the offense committed by the contractor. Objectivity and transparency are essential in formulating guidelines for debarment.
Headnote:
de-enlistment - Contractor Dispute - CA. No. 8944/2013 - The court discussed the nature of debarment and emphasized that it should not be permanent, and the period of debarment should depend on the nature of the offense committed by the contractor. The court also highlighted the need for objectivity and transparency in formulating guidelines for debarment, and concluded that permanent de-enlistment/debarment cannot be resorted to for slow progress of work as it would be disproportionate.
Fact of the Case:
The Petitioner, a contractor enlisted with the Military Engineering Services, sought quashing of adverse remarks and subsequent de-enlistment, which resulted in the firm being banned from participating in tender processes.
Finding of the Court:
The court restricted the debarment/de-enlistment of the Petitioner to the period already undergone and directed that going forward, the Petitioner would not be treated as a de-enlisted firm and is free to bid for MES tenders in its own name. The court did not go into the merits of the de-enlistment.
Issues: Dispute over delays in contract execution, debarment of the Petitioner, and the nature of debarment.
Ratio Decidendi: The court emphasized that debarment should not be permanent and should depend on the nature of the offense committed by the contractor. It also highlighted the need for objectivity and transparency in formulating guidelines for debarment.
Final Decision: The petition, along with all pending applications, is disposed of.
JUDGMENT
Prathiba M. Singh, J. (Oral)--This hearing has been done through hybrid mode.
2. The present petition has been filed by the Petitioner- M/S R & R Enterprises seeking quashing of the adverse remark "no slow progress" in the impugned WLR dated 20th June, 2018, and the subsequent impugned WLR dated 16th March, 2020 passed by Respondent No.2 - HQ Chief Engineer, Western Command, Chandimandir, and any subsequent order thereof as a consequence of which the Petitioner firm is banned from participating in tender process of the Respondents.
3. The Petitioner is a contractor who was enlisted with the Military Engineering Services (MES). It had been awarded various contracts from time to time by the MES. The contracts which are subject matter of this case are as under:
(i) GE/WS/D-04/16-17
(ii) GE/WS/D-05/16-17
(iii) GE/WS/D-28/16-17
(iv) GE/WS/D-30/16-17
(v) GE/WS/D-36/16-17.
4. During the subsistence of the said contracts, there were disputes between the parties due to the alleged delays in the execution of the contracts. It is the case of the Respondents that the Petitioner did not perform the allotted work within the time period prescribed in the work orders.
5. On the other hand, it is the Petitioner's case that there were delays by the Respondents in handing over the sites and other such disputes. It is further submitted by the Petitioner that it tried to resolve the issues on several occasions, however, it was unsuccessful in doing so. Finally, vide two circulars dated 20th June, 2018 and 24th April, 2020, the Petitioner was de-enlisted by the MES. The impugned WLR dated 20th June, 2018 further shows the adverse remark "no slow progress" against the Petitioner.
6. Ld. Counsel for the Petitioner submits that for the last several years, the Petitioner has continued to be de-enlisted and is thus unable to bid for tenders with the MES. Ld. Counsel has no objection if the de-enlistment is restricted to the period already served.
7. Mr. Soni, ld. Counsel for the Respondents submits that a detailed counter has been filed by the MES and that the Petitioner was de-enlisted/debarred due to slow progress.
8. A perusal of the de-enlistment communications shows that there was no period specified for the de-enlistment/debarment of the Petitioner. There is no clarity as to till when the Petitioner would continue to be de-enlisted. Indefinite debarment is clearly prohibited under the law as held by the Hon'ble Supreme Court in M/s Kulja Industries Limited v. Chief Gen. Manager W.T. Proj. BSNL & Ors., CA. No. 8944/2013. The relevant extract of the judgement reads:
25. Suffice it to say that "debarment" is recognised and often used as an effective method for disciplining deviant suppliers/contractors who may have committed acts of omission and commission or frauds including misrepresentations, falsification of records and other breaches of the regulations under which such contracts were allotted. What is notable is that the "debarment" is never permanent, and the period of debarment would invariably depend upon the nature of the offence committed by the erring contractor.
26. In the case at hand according to the respondent BSNL, the appellant had fraudulently withdrawn a huge amount of money which was not due to it in collusion and conspiracy with the officials of the respondent Corporation. Even so permanent debarment from future contracts for all times to come may sound too harsh and heavy a punishment to be considered reasonable especially when (a) the appellant is supplying bulk of its manufactured products to the respondent BSNL, and (b) the excess amount received by it has already been paid back.
27. The next question then is whether this Court ought to itself determine the time period for which the appellant should be blacklisted or remit the matter back to the authority to do so having regard to the attendant facts and circumstances.
28. A remand back to the competent authority has appealed to us to be a more appropriate option than a
