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PUNJAB AND HARYANA HIGH COURT
S.J. Vazifdar and Tejinder Singh Dhindsa, JJ.
R.S. Labour & Transport Contractor - Petitioner
Versus
Food Corporation of India & others - Respondents
CWP No. 12463 of 2015 (O&M)
Decided On : 16-10-2015
Blacklisting - Tender Disqualification - Conditions No. 4 and 6 of Model Tender Form - [DISQUALIFICATION, BLACKLISTING] - [4, 6] - The court discussed the disqualification conditions and earnest money regulations as per the Model Tender Form, highlighting the ineligibility criteria and the consequences of forfeiture of earnest money. The court emphasized the need for fair and rational action by the authority concerned and the principle of proportionality in decision-making while blacklisting a tenderer. It also stressed that blacklisting should not be used to commercially eliminate a contractor and should be commensurate with the acts of omission and commission by the tenderer.
Fact of the Case:
The petitioner-firm challenged the decision of the respondent-Food Corporation of India, which disqualified the firm from a tender, directed forfeiture of earnest money, and debarred the firm from future tenders for 5 years. The petitioner's bid was initially rejected due to a technicality, but a Division Bench directed re-evaluation. Subsequently, the respondent disqualified the petitioner based on the forfeiture of earnest money of one of its partners by another corporation.
Finding of the Court:
The court found that the blacklisting order was passed without affording the petitioner an opportunity to be heard, violating the principles of natural justice. It also emphasized the need for fair and rational action by the authority concerned and the principle of proportionality in decision-making while blacklisting a tenderer. The court set aside the blacklisting order but did not grant the petitioner's request to consider its financial bid for the work in question.
Issues: The issues included the disqualification of the petitioner based on the forfeiture of earnest money of one of its partners, the violation of principles of natural justice in passing the blacklisting order, and the impact of granting relief to the petitioner on the rights of a third party who had already been awarded the contract.
Ratio Decidendi: The court held that blacklisting must be preceded by a show cause notice and emphasized the need for fair and rational action by the authority concerned. It stressed the principle of proportionality in decision-making while blacklisting a tenderer and highlighted that blacklisting should not be used to commercially eliminate a contractor but should be commensurate with the acts of omission and commission by the tenderer.
Final Decision: The court set aside the blacklisting order but did not grant the petitioner's request to consider its financial bid for the work in question, as it would affect the rights of a third party. The respondent was directed to pass a fresh order with regard to blacklisting, if any, after affording the petitioner due opportunity of being heard and in the light of the court's observations, within a period of two weeks.
Tejinder Singh Dhindsa, J.
Petitioner-firm has challenged the decision of the respondent-Food Corporation of India, whereby it has been disqualified in respect of the tender in question, forfeiture of earnest money has been directed and the firm has been debarred from participating in any future tenders of the Corporation for a period of 5 years.
2. Brief facts are that an e-tender notice was published on 13.10.2014 inviting online tenders under the Two Bid System for appointment of Handling & Transport Contractor and Road Transport Contractor for movement of food grains and allied materials for a period of 2 years. The last date for online tender submission was stipulated as 3.11.2014 by 9 A.M and the technical bids were to be opened on the same date at 10 A.M. Condition No.4 laying down the disqualification conditions and Condition No.6 regulating earnest money as per Model Tender Form would be relevant to the issue at hand and are reproduced hereunder:-
"4. Disqualification Conditions.
(I) Tenderers who have been blacklisted or otherwise debarred by FCI or any department of Central or State Government or any other Public Sector Undertaking will be ineligible during the period of such blacklisting or for a period of 5 years from the date of blacklisting/debarment, whichever is earlier.
(II) Any Tenderer whose contract with the Food Corporation of India or any department of Central or State Government or any other Public Sector Undertaking has been terminated before the expiry of the contract period at any point of time during last five years, will be ineligible.
(III) Tenderer whose Earnest Money Deposit and/or Security Deposit has been forfeited by Food Corporation of India or any department of Central or State Government or any other Public Sector Undertaking, during the last five years, will be ineligible.
(IV) If the proprietor/any of the partners of the Tenderer firm/any of the Director of the Tenderer company have been, at any time, convicted by a court of an offence and sentenced to imprisonment for a period of three years or more, such Tenderer will be ineligible.
(V) While considering ineligibility arising out of any of the above clauses, incurring of any such disqualification in any capacity whatsoever (even as a proprietor, partner in another firm, or as director of a company etc.) will render the Tenderer disqualified.
(VI) A Hindu Undivided Family (either as a proprietor or partner of a firm) shall not be entitled to apply for tender. Any tender submitted in the capacity of Hindu Undivided Family (either as a proprietor or partner of a firm) shall be summarily rejected.
6. Earnest Money
(i) Each tender must be accompanied by an Earnest Money @ 2% value of contract amounting Rs............(Rupees.............) which must be submitted electronically through NEFT/RTGS/other electronic means by the tenderers for which concerned FCI, RO will provide its bank account no. & concerned branch of the bank where the account is held. In case of NEFT/RTGS/other electronic means the tenderer has to indicate transaction no.(UTR No.) of such payments appropriately in the Bid. The Tenderer shall be permitted to bid on the express condition that in the case he resiles, or modifies his offer, or terms & conditions thereof, after submitting his tender, for any reason whatsoever during the tender process, or any of the information furnished by him/her is found to incorrect or false, the Earnest Money Deposited by his shall stand forfeited without prejudice to any other rights and remedies of the Corporation under the Contract and law and the tenderer will be liable for any loss suffered by the Corporation on account of its withdrawal/modification etc. besides forfeiture of EMD. He will also be debarred from participating in any Tender Enquiry with the FCI for a period of Five Years.
(ii) The Earnest Money will be returned to all unsuccessful tenderers within a period of 15 days from the date of disqualification in the case of all Tend
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