The authority of the State to blacklist persons, the legitimate purpose for blacklisting, and the proportionality of blacklisting a delinquent bidder.

JUDGMENT :

J. Chelameswar, J. - The National Highways Authority of India (R-2) had decided to undertake development & operation/maintenance of "six laning of Dhankuni Kharagpur Section of NH-6" in the States of West Bengal & Orissa under NHDP Phase-V "on design, build, finance, operate & transfer" (DBFOT) "toll basis project through public private partnership". For the said purpose, R-2 decided to invite offers for selecting a private entity to which the project could be entrusted on the basis of a long term "Concession Agreement". An elaborate bidding process was devised by R-2, the full details of which are not necessary for the present purpose. Bids were invited on the basis of the "lowest financial grant required by a bidder for implementation of the project", or in the alternative "a bidder may, instead of seeking a grant, offer to pay a premium in the form of revenue share and/or upfront payment, as the case may be, to R-2, for award of the concession.

2. The Petitioner, a company, was one of the 14 persons, who submitted bids. Petitioner quoted a premium of Rs. 190.53 crores per year & was declared the highest bidder. By a letter dated 17-01-2011, R-2 informed the Petitioner that its bid had been accepted & the Petitioner was called upon to confirm its acceptance within 7 days [as required under Clause 3.3.5 of the Request for Proposal (RPF), volume 1]. By a letter dated 24-01-2011 the Petitioner company expressed its inability to confirm its acceptance on the ground that its bid was found not commercially viable on a second look. The Petitioner stated in the said letter that minutes of the pre-bid meeting, which included several amendment Inquires, were published on website of NHAI on 07-01-2011 & the bid had to be submitted within three days thereafter, i.e., on 10-01-2011, thereby leaving insufficient time to consider & assess impact of the clarifications published by R-2 on its website on 07-01-2011.

3. R-2 issued a show-cause notice on 24-02-2011 calling upon the Petitioner to explain as to why action debarring (blacklisting) the company for a period of 5 years from participating or bidding for future projects to be undertaken by R-2 should not be taken. On 01-03-2011, the Petitioner replied to the show cause notice. Two months later, R-2 through its letter dated 20-05-2011 communicated the order that barred the Petitioner from pre-qualification, participating or bidding for future projects to be undertaken by R-2 for a period of one year from the date of issue of the letter.

4. It appears that R-2, eventually, awarded the contract to M/s. Ashok Buildcon Limited, which quoted a premium of Rs. 120.06 crores, which, obviously, was significantly lower than what was offered by the Petitioner. On 28-05-2011, the Petitioner made a representation to the Ministry for Road, Transport & Highways seeking, in substance, the intervention of the Ministry & annulment of the decision of R-2 to debar the Petitioner. As there was no response from the Ministry, the Petitioner approached the High Court of Delhi through a Writ Petition under Article 226 of the Constitution with a prayer to quash the above mentioned order of R-2 dated 20-05-2011. A Division Bench of the High Court upheld the order passed by R-2 & dismissed the petition & held as follows:

the Respondent No. 2 was well within its rights to take appropriate action against the Petitioner, & taking into consideration the enormity of the loss, we are of the considered view that Respondent No. 2 has dealt with the Petitioner rather lightly.

Hence, the S.L.P.

5. The Learned Counsel for the Petitioner Mr. Mukul Rohatgi, argued that the decision of the 2nd Respondent to blacklist the Petitioner from participating, for a period of one year, in the future projects of the 2nd Respondent is without any authority of law. The Learned Counsel argued that, no doubt, according to (Clause 2.20.6 of) the bid document, the 2nd Respondent is entitled to forfeit & appropriate the bid security as dama