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IN THE HIGH COURT OF DELHI AT NEW DELHI
Subramonium Prasad, J.
M/s State Engineers - Appellant
Versus
Pragati Power Corporation Ltd. - Respondent
W.P.(C) 5580 of 2022
Decided On : 01-02-2024
Debarment - Contract Termination - 37, 38 - The court discussed the clauses 37 and 38 of the tender document which deals with banning/blacklisting/debarment and termination of the contract. The court highlighted the necessity of a valid, particularised and unambiguous show-cause notice before passing an order of blacklisting or debarment. The communication dated 17.06.2020, issued by the Respondent debarring the Petitioner for a period of three years from participating in any tenders floated either by the IPGCL or PPCL was set aside.
Fact of the Case:
The Petitioner challenged the communication debarring them for a period of three years from participating in tenders due to non-payment of wages to contractual employees.
Finding of the Court:
The court found that the order of debarment without a prior show cause notice informing the Petitioner about the likelihood of debarment is violative of the law. The communication debarring the Petitioner was set aside.
Issues: The main issue was the validity of the debarment order without a prior show cause notice.
Ratio Decidendi: The court emphasized the necessity of a valid, particularised and unambiguous show-cause notice before passing an order of blacklisting or debarment. Debarment without show cause notice cannot be sustained.
Final Decision: The communication debarring the Petitioner was set aside and it was open for the Respondent to issue a fresh show cause notice for debarment on the ground of non-payment of wages to its employees.
JUDGMENT (Oral)
1. Petitioner has approached this Court challenging the communication dated 17.06.2020, issued by the Respondent herein debarring the Petitioner for a period of three years from participating in any tenders floated either by the Indraprastha Power Generation Co. Ltd. (IPGCL) or Pragati Power Corporation Ltd. (PPCL).
2. The facts, in brief, leading to the present Writ Petition are that in pursuance to a tender floated by the Respondent for awarding annual maintenance contract for Control and Instrumentation (C&I) maintenance at the Pragati Power Station - I for a period of one year, the Petitioner made a bid for the said tender. The Petitioner was the successful bidder. A letter of intent was issued by the Respondent to the Petitioner. A contract, being contract No.7200000620 was entered into between the Petitioner and the Respondent on 04.01.2019 and the tender was awarded to the Petitioner. A work order was issued to the Petitioner. It is stated that a show cause notice dated 07.12.2019 was issued to the Petitioner by the Respondent. A perusal of the show cause notice shows that several e-mails and letters have been given to the Petitioner regarding failure on their part to pay wages, over-time, bonus, etc. to the contractual employees hired by the Petitioner. The show cause notice indicates that vide e-mail dated 28.11.2019 the Petitioner was advised to clear all pending dues by 07.12.2019 and compliance of the same was to be submitted by the Petitioner by 10.12.2019. The Petitioner did not submit any documents to show that steps have been taken to rectify complaints regarding non-payment of wages to its employees. The show cause Notice also indicates that the Petitioner was made aware that stringent action will be taken against the Petitioner and the contract with the Respondent would be terminated if Petitioner is not able to rectify the complaints. The show cause notice dated 07.12.2019 reads as under:
"Subject: Show Cause Notice against Contract 7200000620 dt 04.01.19 (PO: 4020004083 dt. 08.02.19)
1. Annual Maintenance Contract of Control & Instrumentation maintenance at Pragati Power Station-1 work contract no 7200000620 with PO No: 4020004083 awarded to your firm ie. M/s State Engineers for a period of one year valid upto 07.01.20.
2. With referring to e-mail from user/indenting department dated 02.02.19, 12.02.19. 13.02.19. 14.02.19. 16.02.19, 20.02.19, 02.04.19, 10.04.19, 24.05.19, 10.06.19, 02.07.19, 10.07.19, 11.07.19, 19.07.19, 03.10.19, 19.10.19. 04.11.19, 05.11.19. 08.11.19, 10.11.19 and e-mail by C&M Deptt. darad 16.11.19, 22.11.19 & unattended meeting scheduled for dated 28.11.19 you have failed to credit the payment of wages, overtime, bonus etc. to your contract employees since last four months up to November, 2019. Vide e-mail dated 28.11.19 you were advised to clear all pending dues by 7 December. 2019 and compliance of the same may be submitted to PPCL immediately by 10 December, 2019.
3. You also failed to submit any document that proves to redemptive of complaint received from PUMS Cell, Delhi Govt., vide complaint I.d. No. 2019131821 [w.r.t. e-mail dated 05.11.19]
As per the recent meeting held with the Minister of Labour, GNCTD and Commissioner of Labour, it is mandatory for IPGCL-PPCL to submit compliance of payment of minimum wages notified by GNCTD on 22.10.2019, status before 13.12.2019. Accordingly, you are given the last opportunity to present, in writing, to submit the compliance of payment of wages to contractual worker deputed by your firm at site and all other compliances (deliberated in e-mail dated 16.11.19), latest by 12.12.19.
Your attention is invited to the respective rights of the Government to take stringent action as deemed fit, as per rule, which may be invoked to terminate for default and circulated in other Govt. departments and companies whose credentials have been submitted by you to participate in this tender
Any communication about the above subject should be directed
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