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2008 Supreme(Guj) 2
2008 (2) GCD 1237 (Guj)
Hon’ble Mr. Justice A.S. Dave
Electrosteel Infrastructure Services
Versus
Gujarat Urban Development Co. Ltd. (GUDCL) & Anr.
Special Civil Application No. 7450 of 2007—Decided on 08/01/2008
Appearance :
Mr. K.S. Nanavati, Sr. Adv. for Nanavati Associates for the Petitioner No. 1.
Mr. J.R. Nanavati, for the Respondent No. 1.
Mr. A.R. Thacker, for the Respondent No. 2.
Decided in Favour of :
Respondent
Petition Dismissed
Headnote:Subject :
Construction of elevated service reserves — Collapsed — Blacklisting of petitioner permanently — Principle of proportionality and unreasonableness— Applicability — Scope of.
Point in Issue :
Whether in the facts of the case blacklisting of petitioner permanently justified.
Head Note :
Companies Act, 1956 (Central Act 1 of 1956) — Prison Act, 1952 — Section 47(1) — Constitution of India, 1950 — Articles 12, 14, 19, 226 — Construction of ESR — Collapsed — Blacklisting of petitioner permanently — Principle of proportionality and unreasonableness— Applicability—Scope of — Petitioner constructed Elevated Service Reserves (ESR) under contract with respondent but it soon collapsed and fall down — Respondent issued notice and blacklisted petitioner — Petitioner has contended that respondents have appointed expert committee for the purpose of investigation and find out responsibility — They concluded that it was on account of fault and negligence of both parties ESR collapsed — It was argued on behalf of petitioner that the action of respondent was harsh, therefore, decision should be reviewed judicially by invoking principles of doctrine of proportionality and wednesbury principle of unreasonableness — Court considering the fact that there is limited scope of judicial review of administrative actions and factual controversies involved in the matter directed petitioner to make a representation to Respondent No. 1 to curtail the period of blacklisting the petitioner which petitioner shall decide within six weeks.
Held :
The action of the Respondent No. 1 blacklisting the petitioner is harsh, excessive and disproportionate to the alleged negligence and carelessness in performance of the contractual obligation by the petitioner, therefore, the above decision required to be reviewed judicially by invoking principles of doctrine of proportionality and Wednesbury principle of unreasonableness. Learned Counsel for the petitioner submits that blacklisting the petitioner permanently and debarring from entering into any commercial and contractual relations with the petitioner forever will certainly affect the business interests of the petitioner and it will have bearing not upon further relations with the Respondent No. 1 but also with other assignments to be procured by the petitioner inasmuch as this incident is unfortunate and even technical experts and divergent views about the cause of collapse of ESR. [Para 31]
As per the law of the land, the scope of judicial review of administrative action is very limited as discussed hereinabove. Therefore, considering the factual controversy of the case about the collapse of ESR and the responsibility and obligations of the petitioner arising out of the terms of contract vis-a-vis the collapse of ESR and somewhat divergent views of technical experts and past record of the petitioner in execution of such kind of contracts and also completion of other projects arising out of the same contract to the satisfaction of the Respondent No. 1, I deem it just and proper to direct the petitioner to make a representation to the Respondent No. 1 with a request to curtail the period of blacklisting the petitioner for a reasonable period in light of the above facts, discussion and law. If such a representation is made by the petitioner within a period of three weeks from today, the Respondent No. 1 shall decide the same within six weeks from the date of the receipt of the representation, keeping in mind the facts of the case and grounds mentioned in it. [Para 35]
A.S. Dave, J.—This petition under Article 226 of the Constitution of India is filed by the petitioner challenging the action of Respondent No. 1 in blacklisting the petitioner vide order dated 20.02.2007 with regard to the work performed under contract No. GUDC/GEL/G-2-WSS-15(B11), entered into between the parties, on the ground of gross negligence, bad workmanship and serious lapse in due performance of responsibility on the part of the petitioner, as being illegal, unjust, unreasonable and arbitrary.
2. The petitioner company is Public Limited Company incorporated under the provisions of the Companies Act, 1956 and engaged in the manufacturing of Ductile Iron (DI) pipes. The petitioner is the turn key-EPC Projects Division of Electrosteel Casting Ltd. engaged in the implementation of world class water and waste water infrastructure management system.
3. The Respondent No. 1 is a company, incorporated under the provisions of the Companies Act, 1956 and is essentially a Government of Gujarat undertaking. Respondent No. 2 herein was a consultant appointed by the Respondent No. 1 and was at the relevant time exercising power and authority for and on behalf of the Respondent No. 1.
4. For the sake of brevity, the petitioner is referred to as ‘EIS’ and Respondent No. 1 is referred to as ‘GUDCL’ and Respondent No. 2 is referred to as ‘GEL’.
5. It is the case of the petitioner that Respondent No. 1 being an Authority and instrumentality of the State within the meaning of Article 12 of the Constitution of India, is subject to the provisions of Part-III and Part-IV of the Constitution of India, therefore, amenable to the writ jurisdiction of this Court.
6. Short facts of the case are as under.
7. That in the year 2002, after devastating earthquake in the State of Gujarat in the year 2001, the Respondent No. 1 under the Gujarat Earthquake Reconstruction & Rehabilitation Program, invited bids from pre-qualified bidders for Water Distribution System (Part-I) in Zone IV for construction of Elevated Service Reservoirs (for short ‘ESR’) viz. Over Head Tank and also for Water Pump Systems, Water Transmission Mains, Construction of Pump Houses, Staff Quarters etc. at various places at Bhuj, Kachchh. The petitioner being lowest bidder, tender of the petitioner was accepted and contract was signed and executed by and between the petitioner and the Respondent No. 1 on 11.10.2002. The project was turnkey project which contained several works to be executed by the petitioner as per the site date, civil and structural engineering designs, construction drawings and works specifications provided by the Respondent No. 1 and respondent No 2. under the supervisions of Respondent No. 2. Out of various projects, so far as this petition is concerned, we are concerned with construction of ESR of 10,00,000 liters capacity at Shivkrupanagar area in Bhuj, District Kachchh, and the value of which was Rs. 38,79,471/-. Along with aforesaid project, the petitioner was given some other projects as per the terms of the contracts.
8. It is the case of the petitioner that construction of ESR at Shivkrupanagar was shifted from the earlier site. In view of that the Respondent Nos. 1 and 2 could not get necessary clearance and permission for construction of ESR site as it was forest land and site was changed, which is 300 meters away from the original site. According to the petitioner, Respondent Nos. 1 and 2 are solely responsible for site selection and compared to the old location, new location was having considerable amount of soft strata the soil bearing capacity of soft strata is very low. Since the strata also consisted of lot of shale, therefore, the petitioner brought to the notice of the Respondent No. 2 to carry out Geo Technical Investigation. However, as per terms of the contract, the petitioner commenced the execution of ESR at the new site and adhered to the strict quality control norms and procedures laid down by the respondents and the material used and
