CJ DARCL LOGISTICS LTD v. OIL AND NATURAL GAS CORPORATION LTD

14.1. He further submitted on behalf of the Appellant in LPA No. 38/2021 that the said Appellant is pressing for relief of grant of interest at the rate of 9% per annum on the EMD amount of Rs. 2,95,26,590/- w.e.f. 27.03.2018, i.e., the date of forfeiture of the said amount till the date of the actual payment. He relies upon several judicial precedents referred to in the written submissions dated 02.08.2023 for relief of interest.

I. Claim for interest and the EMD refund

15. In our considered opinion, the Appellant’s prayer for grant of interest on the EMD amount is reasonable and was a consequential relief to which the Appellant was entitled after the learned Single Judge held that the forfeiture of the EMD was illegal. The judgment of the Supreme Court in Alok Shanker Pandey v. Union of India & Others[3] relied upon by the Appellant is apposite, wherein paragraph 9 reads as under: -

16. The impugned order does not note the prayer for interest claimed in the W.P. (C) 6827/2018 and therefore does not expressly deal with the said prayer in the writ petition. There is therefore, an implied rejection of the said Public Sector Undertakings

17. We are therefore of the considered opinion that the Appellant will be entitled to 8% simple interest per annum on the EMD amount of Rs. 2,95,26,590/-. The interest will be payable w.e.f. 27.03.2018 until the said amount stood deposited by the Respondent with the Registry of this Court in

2021. The Respondent will remit the amount to the Appellant directly within a period of two [2] weeks, along with a calculation sheet specifying the date of deposit of the EMD amount with the Registry in the year 2021.

18. We are, however, not inclined to direct the Respondent to pay any interest for the period after the principal amount of Rs. 2,95,26,590/- stood deposited with the Registry of this Court in the year 2021.

19. The Appellant was paid over the principal amount of Rs. 2,95,26,590/- by the Registry of this Court in the year 2022; however, the interest accrued thereon after the deposit, by the Respondent, in the year 2021 was not released to the Appellant and is lying deposited with the Registry in an FDR. The Registry is directed to release the entire amount lying in the said FDR to the Appellant within a period of two [2] weeks. The Registry is also directed to return the bank guarantee dated 12.05.2026 to the Appellant.

20. With the aforesaid directions, the prayer (a) in the LPA No. 38/2021 seeking interest on the EMD amount of Rs. 2,95,26,590/- stands allowed in the aforesaid terms.

II. Clarification sought qua impugned banning orders

21. We shall next consider the challenge in both the LPAs[4] to the respective impugned banning orders dated 06.06.2018. Letters Patent Appeals Signing

22. As noted above, Mr. Anil Goel, Advocate has submitted that the Appellants are no longer challenging the impugned order of the learned Single Judge to the extent it upholds the impugned banning orders, as the Appellants have already undergone the banning period of six months and instead only seek a clarification that it is permissible for the Appellants to henceforth participate in future contracts, without any reference to the impugned banning orders. The submission is also specifically pleaded at paragraph ‘13’ of the written submissions dated 02.08.2023 filed in LPA No. 38/2021.

23. In view of the submissions of Appellants with respect to the impugned banning orders dated 06.06.2018, we illustratively refer to the operative portion of the impugned banning order pertaining to the Appellant in LPA No. 38/2021, which reads as under: -

identical.

24. The operative part of the impugned banning orders makes it expressly clear that the ban on participation was limited to a period of 6 months and only vis-à-vis the Respondent [i.e., ONGC]. In the facts of these appeals, Signing since an interim order operated in favour of the Appellants during the pendency of the writ petitions, the banning period of 6 months commenced only on 07.01.2021, i.e., after the pronouncement of the impugned judgment by the learned Single Judge and this period expired on 06.07.2021.

25. It is a matter of record that after 06.07.2021, the Appellants have not faced any impediment in participation in any tender process issued by the Respondent or any third party due to the said impugned banning orders.

26. In these facts, the directions prayed for by the Appellants to the effect that this Court must clarify that the Appellants can participate in future tenders floated by any third party, including Government establishments or PSUs, without any reference to the impugned banning orders, are not only beyond the scope of the said banning orders but, in effect, seeks a relief in their favour against third parties [i.e., Government establishments, PSUs, etc.] who are not before this Court. Each tendering authority is entitled to stipulate its own eligibility and disclosure conditions, and it is for such authority to assess the relevance, if any, of any prior banning order in accordance with its governing tender conditions. Consequently, if the tender conditions of any such third party require disclosure of past banning orders, the Appellants would be contractually required to make such disclosure. In these circumstances, no omnibus declaration, as prayed for by the Appellants, can be granted. The Appellants have not placed before this Court any event post 06.07.2021, where a third party has denied them an opportunity to participate in the tender process due to the impugned banning orders and therefore, we find that the omnibus declaration sought is without any cause of action. Signing

27. It is trite law that since the impugned banning orders have already taken effect and the Appellants have undergone the ban, these banning orders would ordinarily not form the basis of denial of opportunity to participate in tenders issued by Government authority. If the Appellants are excluded from participation in tenders by any third party solely by placing reliance on the impugned banning orders, the Appellants would have to avail their legal remedies against such exclusion and the reasonableness of such action would be determined in those proceedings.

28. Even on the merits of the challenge to the impugned banning orders dated 06.06.2018, we find that the findings recorded by the learned Single Judge are well reasoned and do not merit any interference. The conclusion in paragraph ‘18’ of the impugned order is sufficient to uphold the impugned banning orders. The relevant paragraph 18 reads as under: -

Respondents have been rightly upheld by the learned Single Judge.

29. The prayer of the Appellants seeking a declaration qua the impugned banning orders is disposed of with the aforesaid directions.

III. Maintainability of the Cross-objections of the Respondent challenging the direction for refund of the EMD and merits of the said objection Signing

30. Lastly, we have to consider the cross-objections filed by the Respondent as CM No. 26138/2021 in LPA No. 38/2021 under Order XLI Rule 22 CPC impugning the order dated 07.01.2021 to the extent that it directs the Respondent to refund the EMD amount of Rs. 2,95,26,590/-.

31. The Appellants have raised an objection to the maintainability of the cross-objections. It is contended that the provision of Order XLI Rule 22 CPC has no application in the present appeal filed under Clause 10 of the Letters Patent. Learned counsel for the Appellants have relied upon the judgment of the full bench of the High Court of Madhya Pradesh in Jabalpur Development Authority v. Y.S. Sachan and others[5] to contend that a cross-objection filed under Order XLI Rule 22 CPC cannot be construed to apply to a proceeding under LPA. He relies upon paragraph nos. 9, 10, and 11, which read as under: -

11. On a perusal of the aforesaid Rule it is clear that there is provision for condonation of delay in preferring an appeal. But that does not necessarily mean that a cross objection or cross appeal can be filed awaiting notice in appeal. It is relevant to state that no cross objection is entertained under Article 226 of the Constitution of India like a counter claim in a suit. True it is, in a letters patent appeal the facts and law can be gone into by the Court deciding the intra-Court appeal but that does not necessarily convey that while hearing an appeal, a cross objection would be entertained when a counter claim or counter relief is not entertained in a writ petition, at the instance of the opposite party or respondent therein. Another facet is worth noting. A cross objection has its own independent existence under the Code of Civil Procedure but the same cannot be construed to apply to a proceeding under writ jurisdiction or an appeal arising therefrom. The High Court of Andhra Pradesh in the decision rendered in the case of Chittoor Co-operative Town Bank Ltd. (supra) has applied concept of the Order 41, Rule 22 in entirety. In our considered opinion the same is not permissible as per the law laid down in the case of Puran Singh (supra) in the case of Puran Singh (supra) the Supreme Court has held that the High Court should be left to adopt its own procedure for granting relief to the persons. An appeal from an order made under Article 226/227 is in a different realm altogether and can never be understood to mean that a cross objection which a matter of statutory right under the Code of Civil Procedure would lie to the Court when the LPA is admitted.” Signing

32. In response, Mr. Chetan Sharma, learned Additional Solicitor General, has submitted that a cross-objection is maintainable in an LPA and in this regard relies upon the judgment of the Supreme Court in Dheeraj Singh v. Greater Noida Industrial Development Authority and Others[6].

33. We are unable to agree with the contentions of the Respondent with respect to maintainability of the cross-objections under Order XLI Rule 22 CPC in an LPA.

34. In addition to the judgment of the full bench of the High Court of Madhya Pradesh relied upon by the Appellants, we find it apposite to refer to the judgment of the Supreme Court in Puran Singh v. State of Punjab[7], wherein the Supreme Court, after referring to the Explanation to Section 141 CPC, unequivocally held that provisions of CPC have no application to proceedings under Article 226 of the Constitution of India. The relevant paragraphs read as under: -

11. We have not been able to appreciate the anxiety on the part of the different courts in judgments referred to above to apply the provisions of the Code to writ proceedings on the basis of Section 141 of the Code. When the Constitution has vested extraordinary power in the High Court under Articles 226 and 227 to issue any order, writ or direction and the power of superintendence over all courts and tribunals throughout the territories in relation to which such High Court is exercising jurisdiction, the procedure for exercising such power and jurisdiction have to be traced and found in Articles 226 and 227 itself. No useful purpose will be served by limiting the power of the High Court by procedural provisions prescribed in the Code. Of course, on many questions, the provisions and procedures prescribed under the Code can be taken up as guide while exercising the power, for granting relief to persons, who have invoked the jurisdiction of the High Court. It need not be impressed that different provisions and procedures under the Code are based on well-recognised principles for exercise of discretionary power, and they are reasonable and rational. But at the same time, it cannot be disputed that many procedures prescribed in the said Code are responsible for delaying the delivery of justice and causing delay in securing the remedy available to a person who pursues such remedies. The High Court should be left to adopt its own procedure for granting relief to the persons concerned. The High Court is expected to adopt a procedure which can be held to be not only reasonable but also expeditious.” Signing

35. In these proceedings, the writ petitions filed under Article 226 of the Constitution were entertained by the learned Single Judge in exercise of the original jurisdiction vested in the High Court under Section 5(1) of the Act of 1966. As held by the Supreme Court in Puran Singh (supra), the provisions of the CPC do not apply proprio vigore to proceedings under Article 226 of the Constitution of India, unless expressly made applicable by statute.

36. The appeal against the impugned order has been filed under Clause 10 of the Letters Patent of Lahore as applicable to Delhi. CPC has neither been made applicable to the proceedings entertained by the High Court under Article 226 of the Constitution of India nor to an appeal filed under Clause 10 of the Letters Patent. The Respondent therefore could not have filed cross-objections under Order XLI Rule 22 CPC, considering that CPC does not apply to the appeal filed under Letters Patent. The Respondent was not remediless and ought to have exercised its right to file an independent appeal against the impugned judgment, in accordance with law.

37. The reliance placed by the Respondent on the judgment of Dheeraj Singh v. Greater Noida (supra) is misconceived. The said judgment arose in proceedings arising under the Land Acquisition Act, 1894 [‘Act of 1894’]. The issue arising for consideration was with respect to nonconsideration by the High Court of the cross-objections filed by the Government authority in the appeal filed by the landowners against the rate of award of compensation. The Supreme Court, on a perusal of the impugned judgment of the High Court, found that the cross-objections were neither considered nor adjudicated by the High Court, and in this background, it was held that the High Court had erred. We are unable to Signing appreciate how this judgment would enable the Respondent herein to maintain the cross-objections in this LPA, as under the Act of 1894, provisions of CPC have been specifically made applicable to appeals, and in this regard, Sections 53 and 54 of the Act of 1894 are expressly clear. Thus, indeed, cross-objections under Order XLI Rule 22 CPC are available to a respondent in appeals filed under the Act of 1894.

38. Since the right to file cross-objections as per Order XLI Rule 22 CPC is a substantive right granted by the statute, unless the provisions of CPC have been made expressly applicable to the legal proceedings in question, a Respondent cannot file the cross-objections in an LPA, and its remedy to challenge the impugned order has to be exercised in accordance with the statute which governs the original proceedings.

39. Nevertheless, to put a quietus to the issue, we have examined the impugned order and the legality of the reasons recorded by the learned Single Judge for issuing a direction for refund of the EMD amount of Rs. 2,95,26,590/- on the grounds pleaded in CM No. 26138/2021.

40. The reasons recorded by the learned Single Judge are as under: -

30. In the present case, though Section 74 of the Indian Contract Act, 1872 may not have any application, Section 4 of the Integrity Pact itself requires a demand to be raised on the earnest money deposit and a right is created in favour of the bidder to show on such demand that no damage is suffered by the respondent or that the damage suffered is lesser than the earnest money deposit, in which case, either no such amount can be recovered from the bidder or a lesser amount is to be recovered.

31. As noted, the respondent has not denied that no loss was suffered by Signing the respondent due to the disqualification of the petitioners from the bid on account of their transgression of the Integrity Pact. There would therefore, be no disputed question of fact to be adjudicated. The forfeiture of the earnest money deposit of the petitioner, therefore, cannot be sustained and is ordered to be refunded to the petitioners.

32. Accordingly, while the impugned orders in so far as they ban the petitioners from all business dealings with the respondent for a period of six months are upheld. The respondent is however, directed to refund the Security Deposit/Earnest Money Deposits of the petitioners forfeited by it, within a period of four weeks of this order.”

41. The learned Single Judge directed the refund on two grounds: (a) Non-following of the procedure set out in Section 4 of the Integrity Pact by issuing a notice of demand; and (b) No loss having been suffered by the Respondent due to the exclusion of the bidder from the tender process.

42. The Respondent has impugned the said findings of the learned Single Judge on the ground that it has indeed suffered losses, as the disqualification of the Appellants from the bidding process made the tender process less competitive. It also contended that the communications dated 16.03.2018 and 26.03.2018 sufficiently complied with the requirement of issuing a notice as required under Section 4 of the Integrity Pact.

43. In our considered opinion, the submission of the Respondent in the pleadings that it has suffered losses due to the exclusion of the Appellant from the bidding process cannot be accepted as proof of loss. In the facts of this case, the tender process continued [smoothly] and was awarded to the successful bidder, Western Carrier Pvt. Ltd., on 10.03.2018, even prior to rejection of the Appellant’s bid on 26.03.2018 and initiation of the banning proceedings against the Appellant herein, which only began on 09.04.2018. The award of the tender on 10.03.2018 to the Signing successful bidder belies the contention of the Respondent that it suffered any loss due to the exclusion of the Appellant from the bidding process. We have also perused the SCN and the impugned banning orders; neither the SCN nor the order records that any loss was suffered by the Respondent due to the Appellants’ transgression of the Integrity Pact. Similarly, the e-mail dated 26.03.2018 issued by the Respondent communicating to the Appellants the rejection of their bid due to the violation of the Integrity Pact does not make any assertion of loss. Also, the initial letter dated 16.03.2018 issued by the Respondent to the Appellant in response to the letter dated 14.03.2018 only makes reference to the initiation of banning proceedings and does not assert any loss suffered.

44. In these facts, the finding recorded by the learned Single Judge that the Respondent had not suffered any loss is correct and does not require any interference. Also, the finding of the learned Single Judge that the issue of alleged loss is not a disputed question of fact is correct in the facts of this case, as no documents or information have been placed on record by the Respondent to even remotely prove the alleged loss suffered by it.

45. The Respondent has also challenged the finding of the learned Single Judge with respect to the non-following of the procedure of forfeiture of EMD contemplated under Section 4 of the Integrity Pact with respect to issuance of notice of demand. The Respondent has contended that the communications dated 16.03.2018 and 26.03.2018 would amount to implied notice of forfeiture of the EMD. We have perused the contents of the said communication and are unable to find any merit in this submission of the Respondent. These communications make no reference to any demand for liquidated damages and also make no reference to any intention of the Signing Respondent to forfeit the EMD. The said communications cannot even be read to imply any intention of the Respondent to forfeit the EMD. Clause 16.[7] of the said tender and Section 4 of the Integrity Pact no doubt entitles the Respondent to forfeit the EMD; however, the said right of the Respondent is subject to compliance with the twin conditions of notice and suffering actual loss. In the facts of this case, the Respondent has not been able to satisfy these twin conditions, and therefore, the findings of the learned Single Judge do not merit any interference.

46. The grounds raised by the Respondent in CM No. 26138/2021 challenging the findings and direction in the impugned order directing them to refund the EMD amount of Rs. 2,95,26,590/- are bereft of merits and are accordingly dismissed.

47. The Respondent and the Registry are directed to comply with the directions set out at paragraph nos. ‘17’ and ‘19’ respectively of this judgment, within two [2] weeks.

48. With the aforesaid findings and directions, the present appeals along with the cross-objections filed by the Respondent are disposed of.

MANMEET PRITAM SINGH ARORA, J

V. KAMESWAR RAO, J