Tender processes must adhere to principles of natural justice; terminating contracts without valid reasons and without due notice is arbitrary and mala fide.

JUDGMENT

Navin Chawla, J. (Oral)

1. This petition has been filed by the petitioner challenging the Tender dated 16.03.2022 floated by the respondent no. 1 for "Cleaning, Sanitation and Disinfection Service - Outcome Based- Office/Commercial/Institutions/Residential; General Cleaning (Sweeping, Mopping, Dusting); Outdoor, Cleaning, Sanitation and Disinfection Service - Outcome Based - Office/Commercial/Institutions/Residential; General Cleaning (Sweeping, Mopping, Dusting); Indoor".

2. The petitioner further prays for a direction to the respondent no. 1 to award the earlier Tender dated 05.11.2021-for the same work to the petitioner, who was declared as the successful bidder by the respondent no. 2 in the said Tender.

3. It is the case of the petitioner that the petitioner was awarded the contract for providing Housekeeping and Mechanised conservancy services (Yard) at ICD/TKD by the respondent no. 1, vide Letter of Intent/Work Order dated 03.11.2020, with effect from 10.11.2020, for a period of two years. The petitioner and respondent no. 1 had also executed the required Agreement dated 20.12.2020 for the said purpose. However, the respondent no. 1 issued a Show Cause Notice dated 13.05.2021, directing the petitioner to show the proof of ownership documents of the three skid steers loader machines. The petitioner complied with the same vide communication dated 18.05.2021. However, the respondent no. 1 issued a Letter of Termination dated 27.05.2021, intending to terminate the contract with effect from 31.05.2021, without considering the documents submitted by the petitioner and without giving any reasons.

4. The petitioner challenged the Termination Order dated 27.05.2021 by way of a petition under Section 9 of the Arbitration and Conciliation Act, 1996, being OMP(I)(COMM) 168 of 2021. The learned Single Judge of this Court, by its Order dated 02.06.2021, found prima facie merit in the submission of the petitioner that the termination of the contract was not based on valid grounds. The Court also found that the act of the respondent no. 1 awarding the Contract to a third party Contractor "on emergent and ad hoc basis" appeared to be lacking in bona fides. The Court observed and directed, as under:

"20. Be that as it may, the Court is satisfied, prima facie, that the act of terminating the contract was not justified either on facts or on the anvil of the contractual provisions. The manner in which the contract has later been awarded is also far from satisfactory, despite the justification sought to be advanced in that regard by Mr. Awasthi.

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25. Any work taken from the new contractor before the next date of hearing shall also be subject to the outcome of these proceedings, and shall not be as cited as a ground to urge any equities on behalf of the respondent. The awarding of the contract to the new contractor shall also remain subject to the decision taken by this Court in the present proceedings, and the respondent is directed to intimate the new contractor in writing accordingly."

5. The respondent, thereafter proceeded to issue the Tender dated 05.11.2021. The petitioner herein filed an application in the pending petition, that is OMP(I)(COMM) 168 of 2021, wherein the learned Single Judge of this Court passed an Order dated 26.11.2021, directing as under:

"2. It is clarified, in accordance with para 25 of the order dated 2nd June, 2021, that any work taken from the new contractor, in the event of any contract being awarded consequent on the tender dated 5th November, 2021, shall remain subject to the ou