Blacklisting a contractor without a fair hearing violates principles of natural justice, rendering such actions invalid, while the termination of the contract for non-compliance with security requirements is upheld.

JUDGMENT

S.G. Chattopadhyay, J. - By filing this writ petition, the petitioner who is a company registered under the Companies Act, 1956 has challenged:

(i) The notice dated 18.06.2021 (Annexure-12) issued by the Tripura State Electricity Corporation Limited (TSECL for short) whereby the contract awarded to the petitioner by Notification of Award (NOA) dated 11.01.2021 (Annexure-5) was terminated and the Earnest Money Deposit (EMD for short) submitted by the petitioner in the shape of bank guarantee of an amount of Rs.2,73,83,153/- (Rupees two crores seventy three lakhs eighty three thousand one hundred fifty three only) was forfeited by TSECL.

A N D

(ii) The memorandum dated 23.06.2021 (Annexure-13) whereby the petitioner was put on the blacklist and debarred from participating in any tender of TSECL for next 5 years w.e.f. the financial year 2021-22.

2. The factual context of the case is as under:

The petitioner submitted its bid to the tender floated by TSECL for the works and supply contract, being a turnkey project, for up-gradation of Surjamaninagar Substation of TSECL from 132 KV to 400 KV. TSECL by issuing Notification of Award (NOA) dated 11.01.2021 (Annexure-5) confirmed the acceptance of the bid of the petitioner and awarded the contract to him. Among the other terms and conditions, petitioner was called upon to sign a contract agreement with TSECL within 28 days from the date of issuance of the Notification of Award (NOA) and furnish performance security at the rate of 10% of the contract price in the shape of bank guarantee. The petitioner furnished the EMD in the shape of bank guarantee of Rs.2,73,83,153/- (Rupees two crores seventy three lakhs eighty three thousand one hundred fifty three only) vide B.G. No.495801GL0006620 dated 22.01.2020. Subsequently, the Government of India, Ministry of Finance, Department of Expenditure by issuing office memorandum No.F.9/4/2020-PPD dated 12.11.2020 (Annexure-8) decided to reduce performance security from existing 5-10% to 3% of the value of the contract for all existing contracts except the contracts which were under dispute in arbitration proceedings or Court proceedings respecting such dispute already started or contemplated. After such reduction of the rate of performance security, the petitioner approached TSECL by making several communications for reducing the performance security for the said contract to 3% of the contract price. But TSECL did not reduce the amount of performance security. Rather, by the impugned notice dated 18.06.2021 (Annexure-12) TSECL terminated the contract and forfeited the EMD submitted by the petitioner in the shape of bank guarantee on the ground that the petitioner failed to adhere to the schedule given by TSECL and comply with the instructions issued by TSECL for completing the contractual formalities which tantamounted to loss of faith and delayed the time bound centrally sponsored project of TSECL causing immense loss of credibility to TSECL.

3. By another memorandum dated 23.06.2021 (Annexure-13), TSECL blacklisted the petitioner and debarred it from participating in any tender of TSECL for next 5 years.

4. Petitioner's case is that despite reduction of performance security from 5-10% to 3% by the Ministry of Finance, Government of India by office memorandum dated 12.11.2020 (Annexure-8), TSECL insisted for 10% performance security and on the ground of failure of the petitioner to deposit 10% performance security, t