Girijesh Kumar v. National Highways and Infrastructure Development Corporation Limited

16. The Ld. Counsel for the petitioner has placed reliance on a judgment titled Gorkha Security Services vs Government (NCT of Delhi) & Ors, (2014) 9 SCC 105, stating that the Hon’ble Apex Court has held that it is mandatory to serve a show cause notice to the delinquent mentioning black listing as a penalty, so that the delinquent can appropriately address the same. The Hon’ble Apex Court further observed that the action of black listing is akin to a ‘civil death’ and if the show cause notice is not served then the proceedings declaring the delinquent can be declared as null and void.

17. The Ld. Counsel for the respondent submitted that as per the tender requirement, the respondent no.2 was to submit its proposal in two parts being the Technical proposal and the Financial proposal. The Technical Proposal (Part 1) required submission of various information and details. Clause 3.[4] (x) specifically mandated requirement for submission of CVs of following 6 [Six] key personnel on the INFRACON portal by the respondent no.2.

18. He further submitted that in accordance with the requirement of the tender, the respondent no.2 submitted the name of the petitioner herein along with his CV and a duly signed certificate of the petitioner. It is the contention of the Petitioner that the petitioner had given his consent for the post of Resident cum Highway Engineer in the said project in writing and that he was bound by the same. The act of the Petitioner and undertaking given in the certificate resulted in issuing the black listing order by Respondent No.1. The contents of the certificate are reproduced hereunder for the sake of reference: “I, the undersigned Mr. Girijesh Kumar, 16, Ravi Nagar, NIT Layout, Nagpur, Maharashtra 440033 undertake that this CV correctly describes myself, my qualifications and my experience and Employer would be at liberty to debar me if any information given in the CV, in particular the Summary of Qualification & Experience vis-a-vis the requirements as per TOR is found incorrect. I further undertake that I have neither been debarred by NHIDCL or any other central/stage government organization nor left any assignment with the consultants engaged by Employer I contracting firm M/s. K&J Projects Pvt. Ltd., for any continuing work of EmFtloyer without completing my assignment. I will be available for the entire duration of the current project "Consultancy services for Authority's Engineer for Supervision of Improvement of existing road to 2 Ianing with Hard Shoulders of Maram- Peren section (Package-Ill, length 34.494 km) from Design Chainage l<m 75+000 to km 109+494 on NH- 129A in the State of Manipur on EPC Mode." If I leave this assignment in the middle of the work, Employer would be at liberty to debar me from taking any assignment in any of the Employer works for an appropriate period of time to be decided by the Employer. I have no objection if my services are extended by the Employer for this work in future. I further undertake that my CV is being proposed for this project by M/sK&J Projects Pvt. Ltd., and I have not given consent to any other consultant(s) to propose my CV for any position for this project. I further undertake that if due to my inability to work on this project due to unavoidable circumstances, due to which consultant's firm is forced to seek replacement. In such unavoidable circumstances, I shall not undertake any employment in Employer projects during the period of assignment of this project and Employer shall consider my CV invalid till such time. I undertake that I have no objection in uploading/hosting of my credentials by Employer in public domain.” (emphasis supplied)

19. The Ld. Counsel for the respondent No.1 further argued that as per the email dated 30.06.2022 the Petitioner was given an opportunity to join the project work as Resident cum Highway Engineer and give reasons, if he was unable to join the assignment. It is, therefore, submitted that the argument of the Petitioner that no hearing being accorded to him by the respondents before passing the impugned black listing order is incorrect. He submits that the impugned order, blacklisting the Petitioner for two years, was passed as per clause 4.5.[6] of the General Clauses of the Contract of the RFP because of the failure of the Petitioner to join the project as a Key Personnel.

20. The Ld. Counsel also submitted that the petitioner was fully aware about the consequences of his failure to join the assignment as per his own certificate/ consent/ undertaking submitted by him for the said project and Petitioner, was aware of the consequences of his actions. He states that the impugned Order is in accordance with the terms and conditions of the Contract and also in accordance with the undertaking given by the Petitioner.

21. Heard the learned counsels for the parties and perused the material on record.

22. Undoubtedly, the project was accorded by the respondent no.1 to respondent no.2 and as per the terms of the RFP the respondent no.2 submitted the CV of the petitioner as one of the Key Personnel/ Resident cum Highway Engineer for the job at site in the State of Manipur, after signing the contract. in April, 2022, the petitioner had given a certificate signed by him to the respondent no.2 giving his consent and willingness to join the project. The material on record shows that the petitioner thereafter in July, 2022 had apprised the respondent no.2 about his inability to join the project at site due to his medical condition and doctor’s advice. The material on record also discloses that the respondent no.2 had vide letter dated 15.07.2022 conveyed to the respondent no.1 his inability to join the project. The facts of the case reveal that respondent No.2 had offered respondent no.1 a replacement for the petitioner to be appointed as the Resident cum Highway Engineer.

23. There is no privity contract between the Petitioner and Respondent No.1. The contract for the project under reference was signed between the respondent no.1 and the respondent no.2. The relevant extract of the terms dealing with Removal/ Replacement of Personnel under the contract signed between the respondents are reproduced hereunder for reference: “4.5.[2] In case notice to commence services is given within 120 days of signing of contract the, the Authority expects all the Key Personnel specified in the Proposal to be available during implementation of the Agreement. The Authority will not consider any substitution of Key Personnel except under compelling circumstances beyond the control of the Consultant and the concerned Key Personnel Such substitution shall be limited to not more than three Key Personnel subject to equally or better qualified and experienced personnel being provided to the satisfaction of the Authority. Replacement of the Team Leader will not normally be considered and may lead to disqualification of the Applicant or termination of the Agreement. Replacement of one Key Personnel shall be permitted subject to reduction of remuneration equal to 5% (five per cent) of the total remuneration specified for the Key Personnel who is proposed to be replaced. In case of second replacement there ductionin remuneration shall be equal to 10% (ten per cent) and for third and subsequent replacement, such reduction shall be equal to 15% (fifteen per cent) If the consultant finds that any of the personnel had made false representation regarding his qualification and experience, he may request the Employer for replacement of the personnel. There shall be no reduction in remuneration for such replacement. The replacement shall however be of equal or better score The personnel’s replaced shall be debarred from future projects for 2 years.” (emphasis supplied)

24. The Petitioner not being a party to the contract cannot be blacklisted by the Respondent No.1. Further, it is well settled that before passing an order blacklisting a person/entity, the person/entity has to be given adequate notice and the notice must also specify the proposed punishment of blacklisting. Unless the person/entity, against whom the order of blacklisting is proposed to be passed, is made aware of the consequences of the action of blacklisting, such an order cannot be passed. An order of blacklisting has been termed as civil death and, therefore, such an order cannot be passed without giving adequate opportunity to the Noticee to establish that he does not deserve the severity of punishment that can be passed in the realm of contract.

25. In the present case, no Show Cause Notice has been given to the Petitioner informing him that an order of blacklisting will be passed against him which will disentitle him from participating in any tender floated by the MoRTH/NHIDCL. Needless to state that the order blacklisting the Petitioner will also render him ineligible to participate in several other tenders of State Governments/PSUs in future.

26. The Apex Court in Gorkha Security Services vs Government (NCT of Delhi) & Ors., (2014) 9 SCC 105, has in clear terms observed that serving a show cause notice upon a delinquent with black listing as a possible penalty is a mandatory requirement. The relevant extract is reproduced hereunder for the sake of reference:

30. We are conscious of the following words of wisdom expressed by this Court through the pen of Krishna Iyer,

31. When it comes to the action of blacklisting which is termed as “civil death” it would be difficult to accept the proposition that without even putting the noticee to such a contemplated action and giving him a chance to show cause as to why such an action be not taken, final order can be passed blacklisting such a person only on the premise that this is one of the actions so stated in the provisions of NIT. *****

33. When we apply the ratio of the aforesaid judgment to the facts of the present case, it becomes difficult to accept the argument of the learned Additional Solicitor General. In the first instance, we may point out that no such case was set up by the respondents that by omitting to state the proposed action of blacklisting the appellant in the showcause notice, has not caused any prejudice to the appellant. Moreover, had the action of blacklisting being specifically proposed in the show-cause notice, the appellant could have mentioned as to why such extreme penalty is not justified. It could have come out with extenuating circumstances defending such an action even if the defaults were there and the Department was not satisfied with the explanation qua the defaults. It could have even pleaded with the Department not to blacklist the appellant or do it for a lesser period in case the Department still wanted to blacklist the appellant. Therefore, it is not at all acceptable that non-mentioning of proposed blacklisting in the show-cause notice has not caused any prejudice to the appellant. This apart, the extreme nature of such a harsh penalty like blacklisting with severe consequences, would itself amount to causing prejudice to the appellant.

34. For the aforesaid reasons, we are of the view that the impugned judgment [Gorakha Security Services v. Govt. (NCT of Delhi), (2013) 205 DLT 309] of the High Court does not decide the issue in the correct perspective. The impugned Order dated 11-9-2013 passed by the respondents blacklisting the appellant without giving the appellant notice thereto, is contrary to the principles of natural justice as it was not specifically proposed and, therefore, there was no show-cause notice given to this effect before taking action of blacklisting against the appellant. We, therefore, set aside and quash the impugned action of blacklisting the appellant. The appeals are allowed to this extent. However, we make it clear that it would be open to the respondents to take any action in this behalf after complying with the necessary procedural formalities delineated above. No costs.” (emphasis supplied)

27. The certificate provided by the petitioner to the respondent no.2 giving his willingness to join the project was given in the month of April,

2022. The petitioner stated that due to his health, doctors have not permitted him to travel to high altitudes and in July, 2022 the petitioner informed the respondent no.2 about his inability to join the project on medical grounds which in turn was duly communicated to the respondent no.1 by the respondent no.2 vide a letter dated 15.07.2022. It is not in dispute that the respondent no.1 was put to notice about the non-availability of the petitioner and it has nowhere been argued that any loss or prejudice has been caused to the respondent no.1 due to the absence of the Petitioner.

28. Even assuming that Respondent No.1 could pass the Order blacklisting the Petitioner, Respondent No.1 has not given any notice to the Petitioner informing him about the proposed action of blacklisting him. No Show Cause Notice was issued to the Petitioner and the Blacklisting Order has been passed by Respondent No.1 without even giving any opportunity to the Petitioner of being heard. Further, the respondent no.1 did not follow the provisions laid down in the contract in Clause 4.5.2, which lays down a procedure to debar and black list a Key Personnel. It is trite law that the purpose behind the serving of a show cause notice is to make the noticee understand the precise case set up against him with detailed nature of accusations which are proposed to be taken, which the noticee has to meet. This would require the statement of imputations detailing out the alleged breaches and defaults he has committed, so that he gets an opportunity to rebut the same.

29. The petitioner herein is a Civil Engineer having 32 years of experience in the field of road and highway construction. The Apex Court in Vetindia Pharmaceuticals Ltd. v. State of U.P., (2021) 1 SCC 804 has observed as under:

possibility always remains that if a proper show-cause notice had been given and the reply furnished would have been considered in accordance with law, even if the respondents decided to blacklist the appellant, entirely different considerations may have prevailed in their minds especially with regard to the duration.”

30. In the facts of the present case, the action of the Respondents in blacklisting the Petitioner without issuing any show cause notice to him informing about the proposed action of blacklisting, is contrary to the law laid down by the Apex Court and, therefore, the order impugned herein is set aside.

31. The Writ Petition is allowed, and pending applications, if any, stand disposed of.

SUBRAMONIUM PRASAD, J AUGUST 08, 2023