IMPORTANT POINT
A false declaration regarding blacklisting in tender documents leads to automatic forfeiture of Earnest Money Deposit, and subsequent legal developments do not retroactively affect the validity of such declarations.

ORDER :

1. This intra-court appeal is preferred by the appellant, General Manager, Construction, N.F. Railway, Maligaon, Guwahati, and another seeking to assail the legality and validity of the order dated 20.11.2020, passed by the learned Single Judge accepting the writ petition, being WP(C) 7454/2015, filed by the respondent herein and setting aside the action of the appellants in forfeiting the Earnest Money Deposit (EMD) made by the respondent in pursuance to its bid submitted seeking construction works under the Tender Notice bearing No. CON/2014/MAY/03 dated 12.05.2014 issued by the appellant.

2. The respondent submitted its bid as a joint venture entity with M/s Vasistha Construction Pvt. Ltd. being the lead partner. Along with the bid, three Call Deposits towards EMD were also furnished. On evaluation of the bids, the respondent was declared to be the lowest bidder. Before the contract could be finalised and work order could be issued, information came to be provided to the appellant employer that the lead partner of the joint venture entity had been blacklisted by the Madhya Pradesh Public Works Department till 19.06.2018, which fact was concealed by the joint venture entity while filing its bid. The lead member of the joint venture entity was issued a letter dated 26.12.2014 calling upon it to clarify its stand regarding the aforesaid blacklisting order and the declaration made by it as per the tender clauses.

3. The respondent filed an affidavit-in-reply taking a stand that the Madhya Pradesh Government had uploaded the order dated 20.05.2013 in their website, whereby Vasistha Construction Pvt. Ltd., i.e. the lead partner of the joint venture entity had been blacklisted. The said firm was the lead constituent of the petitioner’s joint venture, but it was not aware of the order of blacklisting. Knowledge about the blacklisting order dawned upon the firm, M/s Vasistha Construction Pvt. Ltd., sometime in August, 2015 whereupon a writ petition, being WP(C) 5920/2015 was filed before the Hon’ble Madhya Pradesh High Court. The Madhya Pradesh High Court, vide order dated 20.06.2016, quashed the order of blacklisting. It was also projected in the affidavit-in-opposition that the joint venture partner was not aware of such blacklisting.

4. In the writ petition [WP(C) 7454/2015], the writ petitioner raised numerous grounds, amongst which those relevant to the controversy raised in this appeal, are reproduced herein-below for the sake of brevity:

(1) That Clauses (i) and (j) of the declaration appended to the tender documents, whereby the bidder was required to give a declaration to the effect that it had not been previously blacklisted, did not authorise the respondents to forfeit the EMD without putting the bidder to notice and, thus, the proposed action of forfeiture was vitiated on account of non-adherence to principles of natural justice.

(2) That the petitioner and its constituents were not aware of the blacklisting of the lead partner of the joint venture entity. No sooner this fact came to the knowledge of the blacklisted lead partner, M/s Vasistha Construction Pvt. Ltd., a writ petition was filed before the Madhya Pradesh High Court and the order of blacklisting was quashed by the Madhya Pradesh High Court vide order dated 20.06.2016. It was urged that the order of the Madhya Pradesh High Court quashing the order of blacklisting would have the effect of it being effaced from record and, hence, the same could not have been considered to have an adverse effect against the bidder.

5. However, the argument advanced on behalf of the writ petitioner (respondent herein) regarding its lead partner not being aware of the blacklisting did not receive imprimatur of the learned Single Judge. In paragraph 11 of the impugned order, the learned Single Judge observed thus:

“11. The plea urged by the learned counsel for the petitioner that the petitioner was not aware that its lead joint venture partner, namely, Vasishtha Construction Pvt. Lt