Theme Engineering Services Pvt Ltd & Anr. v. National Highways Authority of India & Ors.

6. On 15 October 2019, a Show Cause Notice[2] came to be issued by the Manager (Technical) of NHAI pointing out that the designation of Mr. M.J. Alam as the Resident Engineer would clearly be contrary to the policy as formulated by NHAI since the said individual was still functioning as the Resident Engineer in respect of the Piska-More- Palma section of National Highway-23. The Manager (Technical) consequently proceeded to record that the designation of Mr. M.J. Alam as the Resident Engineer constituted a serious lapse and called upon the petitioner to show cause why action be not initiated in terms of the Contract Agreement. On 21 October 2019, the petitioner addressed a letter to the Manager (Technical) of NHAI pointing out that Mr. M.J. Alam had been approved as a key personnel for the project in question and that he had already completed the 18 Man- Months deployment from the date of mobilization on the Piska-More- Palma section of National Highway-23. It was, consequently, requested that the said individual be permitted to continue to work as the Resident Engineer.

7. The aforesaid communication appears to have been addressed in the backdrop of Mr. M.J. Alam’s appointment having been duly approved by NHAI on 30 September 2019 and the said individual having joined the project on that date. The petitioner has also referred to the Office Order of 18 October 2019 issued by the GM (T) cum Project Director itself designating Mr. M.J. Alam as the Acting Team Leader of the project. Despite the aforesaid request as made by the petitioner, the respondent on 30 October 2019 addressed a letter to the Chief General Manager (Technical), Jharkhand asserting that the petitioner had not exhibited adequate capacity to perform services and therefore it was proposed to debar it for a period of two years.

8. While no further action appears to have been taken on the aforesaid proposal as penned by the Regional Officer of NHAI, four and a half months later and more particularly on 23 March 2020, a second SCN proposing debarment of the petitioner came to be issued. The grounds on which the debarment was proposed would be evident from the following extracts of that notice:- “2. It may be noted that as per Clause 6.[2] of Data Sheet of Consultancy Agreement, the firm shall commence the provision of the services agreed ·to by it under the Agreement within 15 days after the effective date of the contract. However, it is pertinent to mention that your mobilisation was found abnormally poor. Even after passing of considerable time, only 05 numbers of Key Personnel have been mobilized at the site. Moreover, 60% of the key personnel have left the assignment (details enclosed at Annexure-1) which itself is a sufficient ground to terminate the Contract and blacklist your firm from taking any assignment of NHAI in future as per clause 4.[5] (c) of the Consultancy Agreement.

3. Your attention is drawn to Clause 6.[2] of Agreement related to "Duties and Responsibilities of the Engineer" which clearly stipulates, "the Engineer shall visit the site at every two months for a period of atleast two weeks or every 1 ½ months for a period of atleast one week to familiarize himself with the progress and event of the construction contracts." However, after passing of three months, the Engineer has reportedly not visited the site even once.

4. Apart from the above, RO Ranchi vide letter cited under reference {ii) has pointed out that Resident Engineer-Sh. M. J. Alam was the Resident Engineer in Piska More - Palma Section of NH-23 while the work on the Piska More - Palma Section of NH· 23 was still in progress. The aforesaid key personnel left the assignment incomplete without obtaining the consent of PD/RO- Ranchi office.

5. Further, another incident of utmost irresponsible behavior of your firm is evident from the letter issued by M/ s TESPL cited under reference {iii) which has disclosed the replacement of two key personnel whose CVs were found fake. Your attention is invited to Clause 3.[7] (ix) (b) of section-2 of the Consultancy Agreement which is states as follows: “if any information is found incorre3ct, at any stage, action including termination and debarment from future projects upto 2 years may be taken by employer on the personnel and the Firm”

6. It is submitted that vide letter cited under reference (v), you have further requested for replacement of Team Leader by one Shri A.N. Choudhary. In this regard, it is to mention and inform you that, so far, 5 out of 10 (50%) Key personnel have already been replaced. However, the Consultancy Agreement clearly limits such replacement upto 50% and for beyond, the Agreement under clause 4.[5] (c) of consultancy agreement interalia contemplates that, "for total replacement beyond 50% of the total of key personnel, the client may initiate action for termination/debarment of such consultants for the future projects of NHAI." Thus, the proposal for replacement of TL makes the total replacement equal to 60% and thus, not in accordance with the Provision of Consultancy Agreement which warrants initiating action for Termination/ debarment.

7. It is pertinent to mention that this office vide letter cited under reference (iv) had requested to extend the validity of additional BG (bearing no. 22631LG006119) which is valid upto 25.02.2021 and needs to be extended upto 25.05.2024 but as on date, you have neither extended the validity of the BG nor any communication has been made so far in this regard.

8. In addition to the above, your firm has also showed nonperformance in another project on NH-02 (six Laning of Bihar/ Jharkhand Border (Chordaha) to (Gorhar) Section of NH-2 from Km. 249.525 to Km.320.810 in the State of Jharkhand under NHDP Phase V on EPC Mode). The details of mobilisation of their personnel is enclosed herewith as Annexure-II for reference. Further, Engineer has reportedly not visited NH-02 site even once so far, due to which many decisions w.r.t. site are being delayed and are compromising of the larger public interest involved in the projects carried on by the Authority.

9. Furthermore, Engineer is reported to have hardly visited to supervise the work on NH-75 Site {4-laning from Kutchery More-Bijupara-Kuru section of NH-75 from Km. 0.000 to Km. 34.000, Bijupara-Kuru section of NH-75 from Km. 34.000 to Km. 55.000) (two times in two years period), due to which a decision on approval of drawings/ plan/ design had taken abnormally longer time than required thus, badly affecting the project progress.

10. Needless to state that the slow progress in mobilisation of personnel in the instant project and the negligence on the part of the Engineer in this respect has seriously affected the quality and quantity of the services on the abovementioned stretch. Hence, it is apparent on the face of it that M/s Theme Engineering Services Pvt. Ltd. does not have adequate capacity to perform the services as per required time line. The repeated violations of the conditions of the Agreement by you have been compelling the Authority to take appropriate measures in accordance with law and the provisions of the Contract against you. Therefore, an explanation is warranted from you as to why should your firm not be debarred for two years for participating in further bidding in NHAI.

11. For the facts and reasons stated hereinbefore, you are required to Show Cause within 15 days from the date of receipt of this notice as to why you should not be blacklisted/debarred from participating in the bidding process at NHAI for two years. You are also granted an opportunity to make oral representation to the Competent Authority, if you so desire.”

9. As would be manifest from a perusal of the allegations leveled in the SCN, the respondent had amongst various other grounds principally alleged that mobilization of key personnel was found to be “abnormally poor”. NHAI further alleged that only five of the key personnel had been mobilized at site and that 60% of the key personnel had already left the assignment. NHAI also took exception to the Resident Engineer, Mr. M.J. Alam having not visited the site every two months for a period of at least two weeks or every one and a half month for a period of at least one week as mandated in terms of Clause 6.[2] of the Contract Agreement. It also asserted that Mr. M.J. Alam had abandoned his assignment on the Piska-More-Palma section of National Highway-23 while it was still in progress and without obtaining the permission of the Regional Officer at Ranchi. The proposed action of debarment was additionally based on NHAI finding that two of the key personnel who had been selected by the petitioner had been found to have submitted fake Curriculum Vitaes’3. NHAI further asserted that Clause 4.5(c) of the Contract Agreement had also been violated since 50% or more of the key personnel originally identified had already been replaced.

10. The petitioner submitted a detailed reply in terms of its letter dated 24 March 2020 in response to the aforenoted SCN. Ultimately and by an order of 17 December 2020, a debarment order came to be passed blacklisting the petitioner for a period of two years. That debarment order was based on the grounds which have been noticed hereinabove and stood embodied in the SCN of 23 March 2020. The petitioner assailed the validity of the aforesaid order of 17 December 2020 by filing W.P.(C) 11167/2020 before this Court. While dealing with the aforesaid challenge, the Court in its order of 24 December 2020, took note of the contention of the petitioner that the SCN had been issued around the onset of the lockdown which followed the outbreak of the COVID-19 pandemic and which had clearly affected the right of the petitioner to submit a comprehensive reply.

11. Taking cognizance of the aforesaid contention, a learned Judge of the Court passed directions requiring NHAI to grant an opportunity of hearing to the petitioner and to also permit it to file a supplementary response to the SCN. The Court directed the respondent to take a decision afresh and place the same on the records of the said writ petition. In light of the liberty so granted, the petitioner submitted a supplementary reply to the SCN on 30 December 2020.

12. Parallelly, the petitioner being aggrieved by the fact that no interim protection had been accorded in respect of the blacklisting order of 17 December 2020, preferred a Letters Patent Appeal[4] NO. 404/2020. Pursuant to the directions which had been framed by the learned Judge on the original writ petition, the petitioner was called for an oral hearing at NHAI Headquarters on 04 January 2021. On 12 January 2021, the Review Committee of NHAI proceeded to pass the impugned order of blacklisting. LPA 404/2020 came up for hearing ultimately on 13 January 2021. However, the Court taking cognizance of the passing of the order impugned, proceeded to dispose of the appeal and accorded liberty to the petitioner to challenge the said order independently. In the meanwhile, and since a fresh order of debarment had come to be passed [the impugned order], the petitioner withdrew W.P.(C) 11167/2020 with liberty to assail the impugned order afresh. The present writ petition thereafter came to be filed on 28 January 2021.

13. On 01 February 2021, the Court passed an interim order on the present writ petition placing the impugned order in abeyance till the next date of hearing. Notices were also issued on the writ petition and the respondents were granted time to file their counter affidavits. NHAI challenged the aforesaid interim order by way of LPA NO. 56/2021. On 10 February 2021, the Division Bench of the Court issued notice on that LPA. During the pendency of that appeal, the petitioner also instituted contempt proceedings which came to be registered as CONT.CAS(C) 182/2021 alleging that despite the order of 01 February 2021 passed on the present writ petition, NHAI was continuing to disqualify the petitioner from pending bids. NHAI in turn proceeded to challenge the order of 10 February 2021 passed on the LPA presumably on the ground that no interim orders had been granted thereon before the Supreme Court by way of a Special Leave Petition[5] No. 4741/2021. The SLP however came to be dismissed on 24 March 2021.

14. The LPA ultimately came up for consideration before the Division Bench of the Court on 25 March 2021 when the same came to be allowed in the following terms:-

It is in the aforesaid backdrop that the writ petition has been taken up for final disposal.

15. Appearing for the petitioners, Mr. Mehta, learned senior counsel, assailed the order of debarment and submitted that the only provision of the Contract Agreement which has been invoked in support of the impugned order is Clause 3.7(ix)(b) of the Instructions to Bidders[6]. Mr. Mehta submitted that as would be evident from Clause 3.7(ix)(b) of the ITB, the same related to the submission of information with respect to key personnel. It was contended that only Clause 3.7(ix)(b) of the ITB and Clause 4.5(c) of the General Conditions of Contract[7] contemplated an order of debarment being passed. It was thus submitted that the alleged infractions other than those which fall within the scope and ambit of Clause 3.7(ix)(b) of the ITB and Clause 4.5(c) of the GCC could not have been taken into consideration for the purposes of debarment and the passing of the impugned order.

16. The order of debarment was then assailed on a more fundamental ground with Mr. Mehta submitting that the ultimate order of blacklisting impugned in the writ petition travels far beyond the allegations leveled in the SCN itself. Reference was specifically made to the following conclusions as appearing in the impugned order and which according to Mr. Mehta were not even issues raised in the SCN:- “6.(iii) In the civil work the main contractor M/s Reliance Infrastructure Limited has subcontracted 49% of the project length ITB to M/s Rajkeshri Projects Limited. The SC has neither intimated the issue of sub-contracting to the NHAI HQ nor has ascertained the veracity of the documents furnished by the sub-contractor for its genuineness which is in contravention with the clause 3.1.[1] of GCC of the consultancy agreement which inter alia provides that "...... The Consultants shall always in respect of any matter relating to this contract or to the services, as faithful advisors to the client, and shall at all times support and safeguard the client's legitimate interest in any dealing with sub-consultants or 3rd parties". The issue of sub-contracting has been separately processed and placed before Competent Authority for taking necessary decision.

(iv) It is not out of place to mention that the lack of involvement of the Engineer with the site has led to descoping of around 11 km of stretch of DhanuaGhati from Km 249.525 to Km 261.150 in the aforesaid project. After about 17% progress, it was reported that the said stretch needs to be realigned as the stretch is accident prone and several accidents are taking place. However, no satisfactory reasons and justifications were provided by M/s TES for the accidents taking place without any proof and persistent pursuit was being made for realignment of DhanuaGhati, which would have made the previous investment in the four-laning work to be infructuous. During the various interactions with PD/RO it came to notice that the DhanuaGhati portion involves FC/WLC for the widening work as the entire DhanuaGhati portion lies in GautamBudha Wild Life Sanctuary. Since, it is a fact that Forest Clearance/Wildlife Clearance is a long-drawn process in the State of Jharkhand as is evident from past experience in many projects and M/s TES having 3 (having total 8 packages) assignments in the State would be well aware of this fact. Thus, it can be construed that instead of taking needful action for forest/wild life clearance, the matter was being diverted in the name of the stretch being accident prone without satisfactorily justifying for the realignment and thereby making the already constructed assets infructuous. Even M/s TES could have suggested remedial measures for the abatement of accident taking place. Finally, the six laning of Dhanua portion had to be de-scoped from the contract owing to delay in obtaining forest and wildlife clearance and also to ascertain the causes of accident. As the scheduled completion of the project i.e. Chordaha to Gorhar section of NH-02 is 29.11.2021 which is extended up to 28.05.2022 due to COVID-19 pandemic situation and the likely delay in the completion of the project due to non-availability of forest and wild life clearance may invite huge claims and disputes by the Contractor in shape of prolongation cost such as idling of men and machineries, loss of opportunities, etc. Here also M/s TES should have taken prudent action and would have advised NHAI for de-scoping of the forest affected stretch to avoid prolongation cost such as idling of men and machineries, loss of opportunities, etc. but they went on harping for re-alignment.

(v) In the previous work of 4-laning a 12-lane toll plaza (TP) was setup at km 278.925 of NH-2 better known as RasoiyaDhamna. In the six laning project it was proposed in the DPR for its shifting at km 279.500 (24lane) where later LA could not be done and shifting of the TP as envisaged in the DPR to a new location at km 279.050 was required. In the first instance, there should not had been requirement of shifting of Toll Plaza as has been envisaged in the DPR and retaining of the existing TP with the concept of staggering could have been thought of. But, now due to non-acquisition of land for the TP at the new location, as has been envisaged in the DPR, when an opportunity arose, the AE failed to apply the ingenuity of retaining the existing TP for one of the lane and looking for a staggered TP for the other lane. The staggering if had been envisioned the alignment of the bridge just ahead of the TP on Varanasi side could have been accordingly modified. This could have saved the dismantling of already created asset. But, by not thinking timely and the construction work of the bridge reportedly started on the river, staggering of TP cannot be made feasible now and shifting of the TP to a new location has to be only resorted to.

(vi) These clearly establishes lackadaisical approach of the

Consultant and clear-cut violation of Article 3.1.[1] of Contract agreement vide which they have to be faithful advisor of NHAI in every aspect of the project.

7. (ii) The representation of M/s TES towards timely approval of Designs/ Drawings and submission of proposal is not factually correct. In this regard, kind attention is drawn to the following facts: a. PD Ranchi vide letter dated 11.11.2019, requested SC for approval of various proposal of contractor of Package-Ill pending at their end by giving reference of three letters dated 09.10.2019 & one letter dated 10.10.2019. b. PD-Ranchi vide letter dated 11.11.2019, requested SC for approval of various proposal of contractor of NH-33, Package-II pending at their end by giving reference of total no of 09 letters (1345, 1278, 1269, 1268, 1250, 1249, 1242, 1241, 1232). Despite instruction/interference of PD-Ranchi regarding early approval of various proposal, SC didn’t give any heed to the request of PD which compelled contractor to request authority vide letter dated 19.11.2019 to intervene in the matter. Hence the issue was again taken up by PD-Ranchi vide letter dated 20.11.2019 with SC and indicated that such delay establishes that your company is not equipped to examine the designs. This clearly establishes the inefficiency/proficiency of M/s TES in discharging prompt action on engineering of the assigned to them. Therefore, it is amply clear that SC has failed to perform their duty as per the provisions of contract agreement.

9. Despite issuance of Show Cause Notice by flagging various lapses/deficiencies on the part of SC, M/s Theme Engineering Services Pvt. Ltd. didn’t bother to improve their performance rather they continue their lapses /defaults which is substantiated by the facts brought out below: PD-Ranchi vide letter dated 27.04.2020, 09.06.2020, 15.06.2020, 22.10.2020, pointed out various deficiencies in services on the part of SC like not to design balance structure/road work, not visiting project site by engineer, not submission of QPR, poor supervision with the request to act according to the term of contract without fear, favour bias or prejudice against anyone with an aim to complete the work within timeline mentioned in the contract agreement.”

17. Questioning the correctness of the ultimate conclusions recorded by the respondents and based upon the submission of incorrect CVs, Mr. Mehta submitted that the petitioner was bound to accept the details of key personnel as appearing on the web portal of INFRACON in terms of Clause 3.[3] of the ITB. It was submitted that the petitioner had undisputedly selected the key personnel from the list as available on the website of INFRACON. In view of the above, it was his submission that the petitioner could not have been faulted for an individual having uploaded false or incorrect details in the CV. It was his submission that merely because the petitioner as a matter of abundant caution initiated its own due diligence process and took steps to report incorrect information disclosed in the CVs of key personnel, it can neither be penalised nor be held guilty of any wrongdoing.

18. Mr. Mehta submitted that the petitioner had of its own volition, undertaken a verification exercise with respect to the disclosures appearing in the CVs of key personnel. During the course of that exercise, it found that incorrect information had been supplied by Mr. Vijay Kumar, (Senior Quality-cum-Material Expert I) and Mr. Shailendra Narayan Prasad, (Bridge/Structural Engineer II). Reference was made to the e-mail received from Jai Prakash Associates Limited and which intimated the petitioner that Mr. Vijay Kumar had never worked at the Yamuna Expressway Project and that the certificate submitted was fake. Similarly, in respect of Mr. Shailendra Narayan Prasad, the petitioner in the course of its verification exercise was informed by Sadbhav Engineering Limited that he too had not been employed with that entity in any project. The petitioner is thus stated to have discovered that both Mr. Vijay Kumar and Mr. Shailendra Narayan Prasad had proffered incorrect information.

19. According to Mr. Mehta immediately upon the aforesaid facts coming to light, the petitioner took steps to inform NHAI of the same in terms of its letter of 16 October 2019. It was also Mr. Mehta’s submission that while the process of verification had been commenced on 16 June 2019 itself, the discrepancy in the disclosures made by the key personnel came to be discovered only on 13/14 October 2019. It was his submission that the voluntary disclosure as made by the petitioner upon those discrepancies and incorrect information coming to light should have in fact been a factor which should have been viewed in favour of the petitioner.

20. It was then submitted that the petitioner was constrained to select key personnel as per the details available on the website of INFRACON. This was, therefore, not a case where the petitioner had willingly or knowingly designated key personnel despite having knowledge of them not possessing the requisite experience. Mr. Mehta further submitted that it is also not the case of NHAI that the petitioner despite having knowledge of false particulars having been included in the CVs proceeded to engage those individuals. The submission essentially was that it was the data available on the INFRACON portal which had been duly accepted by the petitioner and the petitioner could not have been penalised for having proceeded in accordance with Clause 3.3.

21. Mr. Mehta then submitted that the respondent had, in any case, approved the replacements as sought by the petitioner in terms of its letter of 18 December 2019. It was pointed out that the aforesaid replacement request was accepted without any penalties being imposed by NHAI. According to Mr. Mehta once that permission to replace had been granted, the same could not have constituted a valid ground to blacklist the petitioner.

22. On facts, it was additionally submitted that both Mr. Vijay Kumar and Mr. Shailendra Narayan Prasad had sufficient experience even if the period of employment as appearing in their fake certificates were to be excluded. It was submitted that a Senior Quality-cum-Material Expert had to have a minimum experience of ten years. The CV however, had incorrectly mentioned Mr. Vijay Kumar to have a work experience of fifteen years and nine months. According to Mr. Mehta, even if the period between 02 July 2010 to 30 March 2012 were to be excluded, the said employee would have had experience of fourteen years and one month. Similarly in the case of Mr. Shailendra Narayan Prasad, it was submitted that against the required minimum experience of fifteen years, the said employee had to his credit a work experience of eighteen years and seven months. The aforesaid work experience had been computed after discounting the experience as was claimed on the basis of the disputed certificates.

23. Mr. Mehta then submitted that the order of blacklisting insofar as it rests on the engagement of the aforenoted two key personnel is concerned cannot possibly be sustained bearing in mind NHAI’s own Policy of 20 July 2020[8]. It was submitted that as would be manifest from the 2020 Policy, the penalty was to attach to the key personnel rather than the consulting firm. For the purposes of appreciating the aforesaid submission, the Court deems it apposite to extract the relevant parts of the 2020 Policy hereunder:- “NHAI has issued guidelines on “Deterrent penalty action against defaulting consultants” vide Policy Matter: Technical (97/2012) dated 17.04.2012 for a uniform approach, while dealing with matters related to Errors, Omissions & Commissions or Misconduct of Consultants. Further, vide NHAI policy guidelines no. 10.2.18/2019 dated 11.06.2019, it was decided to dispense with the committee of 3 CGMs & the respective CGM was to deal with such cases. 2020 Policy

2. It has come to the notice that the different technical divisions are adopting different policies while deciding upon the extent of deterrent action against the consulting firms for proven misrepresentation of facts and fraudulent practices by the consulting firm/ key personnel. In order to have uniformity within the organization, following approach shall be adopted.

2. At any stage, if the CV of key personnel / false[1] & the experience is claimed with a firm other than the bidder.

(i) For all the stages of DPR

Consultancy Contracts / Before Commencement of AE & IE Contracts: CV of key personnel to be rejected and individual to be blacklisted for a period of 3 years. The CV shall be assigned zero marks, but evaluation of the proposal shall continue. In case of 1st instance, the bidding firm to be warned and a penalty of Rs. 2.0 Lakh to be levied. In case of 2nd instance, the bidding firm to be warned again and a penalty of Rs. 5.0 Lakh to be levied. For, repeated cases, an incremental penalty of Rs. 5.0 Lakh to be added from 3rd instance onward on the consulting firm.

(i) After Commencement of

AE & IE Contracts: Key personnel to be blacklisted for a period of 3 years. Monetary penalty to be imposed as per clause 9 of the GCC on Fake CVs.

3. At any stage, if the CV of key personnel is found to be inflated/ false & the experience is claimed with the bidding consulting firm itself. CV of key personnel to be rejected and individual to be blacklisted for a period of 3 years. Debarment of the bidding consulting firm for a period of 2 years. The proposal (RFP) of the bidder shall be cancelled.

4. If a key personnel is already engaged in other ongoing works on NHAI/ MoRTH/ NHIDCL & applies for a new assignment / consulting firm. If it is established that the individual has given consent for the new assignment prior to 3 months before the completion of original or extended tenure of assignment in hand, the individual to be blacklisted for a period of 3 years. In such case, no action will be taken against the firm. The CV shall be assigned zero marks, but evaluation of the proposal shall continue. If it is established that the individual has not given consent for the new assignment, the consulting firm be debarred for a period of 2 years. The proposal (RFP) of the bidder shall be cancelled. In such case, no action will be taken against the individual.

5. If the academic credentials of any candidate is found false/ fake at any point of time. CV of each candidate will be rejected and individual to be blacklisted for 3 years. Information will be sent to INFRACON portal. No action should be taken against the bidding firm.

6. Ownership of equipment in case of Associate partner is found to be false. The consulting firm to be warned and a penalty of Rs. 2.0 Lack in case of 1st instance and debarment of the associate for one year. The consulting firm to be warned again and a penalty of Rs. 5.0 Lakh in case of 2nd instance and debarment of the associate for one year. For repeated cases (more than 2 instance), bidding firm’s debarment for a period of 2 year may be considered and debarment of the associate for 3 years. Note: Due process of issuing notice, examining the reply, giving personal hearing, if sought, etc shall be followed before levy of penalty/ debarment, as given above.

4. In this regard, it is also clarified that the above methodology shall be applied for future cases only. In other words, it shall not be applicable to past/old cases where certain decision were already taken and communicated to all concerned.

5. Further, the deterrent actions taken against the consulting firms in the past on account of above specified defaults shall be considered in future cases to decide upon the applicability of second/ repeated instances”

24. Mr. Mehta also assailed the correctness of the view taken by the respondent in this respect and who had taken the position that the 2020 Policy would not apply to the case of the petitioner since it stemmed from a Request For Proposal[9] which had been issued in September 2019. It was submitted that the 2020 Policy was only a modification of the original policy dated 17 April 2020. It was his submission that a reading of the aforesaid policy would clearly indicate that it was to be uniformly applied and would thus apply to all RFPs’ irrespective of the date when they may have been published.

25. Mr. Mehta also referred to Clause 4.5.[2] of the RFP and which too had envisaged the debarment of key personnel who had furnished incorrect information rather than the Consulting Engineer. Clause 4.5.[2] as embodied in the RFP is quoted hereinbelow: - “Clause 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 the reduction in 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 for better score. The personnel so replaced shall be debarred from future projects for 2 years.”

26. It was then submitted that the impugned order of blacklisting is additionally founded on an allegation of abnormally poor mobilization of key personnel. It was Mr. Mehta’s submission that the aforesaid allegation is not recognized to be a ground for debarment under the Contract Agreement. Mr. Mehta had referred to the chart with respect to the deployment of key personnel and which forms part of the record to buttress the submission noted above: - “Supervision Consultancy Services for construction supervision of Balance work of 4-Laning of Ranchi Bypass section Package -1). 2 Balance Works for Four/ Six Laning of Ranchi-Rargaon Section Package-II). 3. Balance Works for Four Laning of Rargaon - Mahulia Section (Package-III). 4. Balance Works for Four/Six Laning of Jamshedpur-Mahulia Section (Package-IV) under NHDP Phase-III on EPC mode in Jharkhand state.

1. Team Leader Cum Senior Highway Engineer Amar Nath Chaudhary CV submission 25.10.2019 CV Approval 16.03.2020 Joining 16.03.2020

2. Resident cum Highway Engineer-1 Rakesh Kumar Vidyarthi Joining 15.10.2019

3. Resident cum Highway Md. Jahangir Alam Joining 30.09.2019

4. Resident cum Highway Engineer-3 Ajay Kumar Singh CV submission 01.12.2019 Joining 09.12.2019

5. Resident cum Highway Raghu Yadav Joining 10.10.2019

6. Bridge/Structural Vinod Kumar CV submission 29.09.2019 Reminder 28.02.2020 26.06.2020 Joining 26.06.2020

7. Bridge/Structural Rajiv Kumar CV submission 16.10.2019 Approval 18.12.2019 Joining 18.12.2019

8. Senior Quality cum Material Expert-2 Arun Kumar CV submission Approval 18.12.2019 Joining 18.12.2019

9. Senior Quality cum Material Expert-2 Hasnain Amer CV submission on Approval 20.02.2020 Joining 15.06.2020 (after lockdown)

10. Senior Contract Specialist Ashok Kumar Singh Intermittent Input Available from day 1 as working on company roll.”

27. It was also submitted that the responses which had been submitted by the petitioner would clearly establish that 80% of the staff had been duly mobilized as on the date of issuance of the SCN and that 100% had been duly deployed post the COVID-19 lockdown coming to be lifted. Out of the key personnel who had been selected by the petitioner, three could not be ultimately deployed at the project site since their CVs had not been blocked timely by NHAI in accordance with their Policy dated 07 September 2018. It was submitted that in terms of the aforesaid Policy framed by NHAI, the obligation to block the CVs of the key personnel as appearing on the INFRACON portal had been placed on the officers and employees of NHAI itself. The submission essentially was that the petitioner could not have been held to be guilty of selecting certain key personnel whose names had not been blocked on the INFRACON portal.

28. The blacklisting of the petitioner as a result of a purported failure to extend the validity of the additional Bank Guarantee10 was also challenged by Mr. Mehta who submitted that the additional BG was claimable till 25 May 2022. Quite apart from the fact that the claim of the additional BG was arbitrary in light of the petitioner having already submitted performance security of 5%, Mr. Mehta submitted that the said additional BG had in any case been extended by the time the impugned order came to be passed.

29. Reverting then to the issue of excessive replacement of key personnel, Mr. Mehta submitted that an action of debarment on that score could have been justified provided Clause 4.[5] of the GCC had been invoked. It was submitted that since the Review Committee had never invoked Clause 4.5, the petitioner could not have been debarred on that ground. In any case, it was his submission that on facts, the charge of excessive replacement of key personnel would not sustain.

30. This aspect was explained more elaborately by Mr. Mehta in his written submissions in the following terms:-  “Team Leader: Owing to earlier appointed expert's CV not being blocked on INFRACON web-portal, he had joined another project of NHIDCL (another executing agency of R-2)  Resident cum Highway Engineer-II: He was yet again selected for a project by R-2 on 22.07.2019 in the same way as the above case, and did not join the petitioner therefore, under such compelling circumstance, petitioner had to seek replacement.  Bridge Engineer-II: Also selected in another project of NHAI prior to his selection in the present project, after submission of bids by the petitioner in the present project.  Two more replacements of Bridge/Structural Engineer-2 and Senior Quality cum Material Expert-I became necessary in view of discovery of incorrect information in the CVs of such personnel.  Material Expert-II: This expert did not turn up on account of family and personnel issues. This was the only replacement which could be attributable to the petitioner.”

31. It was further contended that the petitioner was compelled to replace key personnel since it had proceeded to select personnel whose names were appearing on the INFRACON portal and who had not been blocked and thus shown as available for selection. In view of the aforesaid, it was contended that the petitioner could not have been presumed to be aware of their deployment in other projects. It was submitted that had the names of such key personnel been blocked on the INFRACON portal, there would have been no justifiable reason for the petitioner to have identified those individuals as key personnel.

32. In any case, Mr. Mehta submitted that since the sixth replacement had been duly permitted by NHAI itself, the alleged wrong doing stood duly condoned and consequently the same could not have constituted a valid ground for blacklisting. Mr. Mehta referred to the following extracts from the letter of 16 March 2020 in this respect: -

33. Coming then to the irregularity in the joining of the Resident Engineer, Mr. M.J Alam, it was submitted that firstly, the appointment had not been objected to by the Regional Officer of NHAI. It was also pointed out that Mr. M.J Alam was mobilized on 30 September 2019 and upon receiving an approval letter from the NHAI itself. It was the submission of Mr. Mehta that NHAI in terms of its communication of 21 June 2019 had circulated a letter addressed to all its Divisions asking them for information as to whether the identified key personnel already stood deployed or were proposed to be placed in any other projects. It was submitted that since no information in this respect was ultimately provided to the petitioner, it proceeded with the proposed deployment of Mr. M.J Alam. It was further submitted that in any case, the scheduled Man-Months of Mr. M.J Alam on the Piska- More Palma Section of National Highway-23 project was only eighteen months and he had undisputedly completed 26.77 months on the project. It was also submitted that the deployment of Mr. M.J Alam on the project site was in any case not opposed or questioned by NHAI as would be evident from its letter of 01 October 2019.

34. The attention of the Court insofar as the issue of replacement of key experts is concerned was also explained by way of a chart which stands placed on the writ record and is reproduced hereinbelow: - “Supervision Consultancy Services for construction supervision of Balance work of 4laning of Ranchi Bypass Section Package –I), 2 Balance Works for Four / Six laning of Ranchi – Rargaon Section Package – II), 3. Balance Works for Four laning of Rargaon- Mahulia Section (Package-III), 4. Balance Works for Four/Six laning of Jamshedpur- Mahulia Section (Package-IV) under NHDP Phase-III on EPC mode in Jharkhand State. Bid submission date: 20/06/2019 Replacement of Key Experts S. No. Position Original Expert Replaced by Date of Submission / resubmissio n Date of Approval Date of Joining Remarks Reasons of Replacement Resident cum Highway Md. Jahangir Alam No Change 30.09.2019 Highway Engineer-4 Raghu Yadav No Change 10.10.2019 Highway Rakesh Kumar Vidyarthi No Change 15.10.2019 Senior Contract Specialist Ashok Kumar Singh No Change 05.11.2019 Intermittent Input Team Leader cum Senior Highway Engineer Rakesh Soni Amar Nath Choudhary 25.10.2019 16.03.2019 16.03.2019 Owing to his selection in other NHIDCL project on 06.08.2019 Highway Engineer-3 Ramashray Pandey Ajay Kumar Singh 25.10.2019 02.12.2019 06.12.2019 Owing to his selection on other MoRT&H project on 22.07.2019 Bridge/Struc tural Azad Ahmad Parsuram Singh 28.09.2019 Resubmissio n 16.12.2019 17.12.2019 Parshuram Singh is taking longtime to join the project due to his bad health. Vinod Kumar 28.02.2020 26.06.2020 29.06.2020 The original Expert Mr. Ahmad selected in another NHAI project on 28.06.2019 Bridge/Struc tural Shailendra Narayan Prasad Rajiv Kumar 18.12.2019 06.01.2020 CV found fake upon self verification of consultant and owing to self disclosure by consultant

9 Senior Vijay KumarArun Kumar 16.10.2019 18.12.2019 18.12.2019CV found Quality cum Material Expert-1 fake upon self verification of consultant and owing to self disclosure by consultant Senior Quality cum Material Expert-2 Birendra Kumar Singh Anil Kumar Pandey 05.12.2019 16.12.2019 Anil Kumar Pandey is taking longtime to join the project Hasnain Amer 22.01.2020 22.02.2020 15.06.2020 The only replacement on consultant’s part”

35. It was lastly urged by Mr. Mehta that the allegation of the Engineer having not discharged his duties with due diligence is clearly untenable in light of the following facts. It was submitted that although the impugned order proceeds on the basis of the Engineer having not made a single visit on site, the same is contradicted by the recitals appearing in the impugned order itself which records that he had made two site visits in September and January. It was submitted that the Engineer who had already made site visits both pre and post award of contract could not make a third site visit which was due in March on account of the unforeseen lockdown which came to be imposed. It was further submitted that although the Commencement Letter was issued to the petitioner on 30 September 2019, the project work had already started in April 2019.

36. Insofar as the issue of usage of VG-30 grade bitumen instead of VG-40 grade bitumen on site is concerned, Mr. Mehta drew the attention of the Court to the letter of 23 July 2019 in terms of which NHAI had recommended and approved the use of VG-30 grade bitumen. It was also pointed out that the petitioner itself had raised this issue in its letter of 03 January 2020 and which referred to the circular issued by Ministry of Road Transport & Highways11 dated 24 August 2018 which had opined the use of VG-40 grade bitumen in place of VG-30 grade bitumen would be advisable for the main carriageway. The Court’s attention was also drawn to the letter of 23 April 2020 issued by the NHAI to the Consultant which had recommended the usage of VG-30 grade bitumen. Mr. Mehta submitted that since as per the Detailed Project Report, the usage of VG-30 grade bitumen had been recommended, no fault could have been laid upon the petitioner.

37. Insofar as the alleged non-performance of the petitioner in other projects relating to National Highway-02 and National Highway-75 is concerned, it was the submission of Mr. Mehta that any alleged shortcomings which may have fallen for notice with respect to the work of the petitioner in relation to those projects could have not constituted a ground for its blacklisting in the present matter. The submission essentially was that the same at best could have constituted a ground for independent action being taken in accordance with the Contract Agreements relating to those projects.

38. It was lastly urged by Mr. Mehta that the impugned order of blacklisting is clearly disproportionate to the deviations which were noticed and which too had occurred only on account of factors clearly beyond the control of the petitioner. Reliance in this regard was placed on the judgment of the Supreme Court rendered in Kulja Industries Ltd. v. Western Telecom Project BSNL12 and more particularly to the following passages as appearing therein:- “17. That apart, the power to blacklist a contractor whether the contract be for supply of material or equipment or for the execution of any other work whatsoever is in our opinion inherent in the party allotting the contract. There is no need for any such power being specifically conferred by statute or reserved by contractor. That is because “blacklisting” simply signifies a business decision by which the party affected by the breach decides not to enter into any contractual relationship with the party committing the breach. Between two private parties the right to take any such decision is absolute and untrammelled by any constraints whatsoever. The freedom to contract or not to contract is unqualified in the case of private parties. But any such decision is subject to judicial review when the same is taken by the State or any of its instrumentalities. This implies that any such decision will be open to scrutiny not only on the touchstone of the principles of natural justice but also on the doctrine of proportionality. A fair hearing to the party being blacklisted thus becomes an essential precondition for a proper exercise of the power and a valid order of blacklisting made pursuant thereto. The order itself being reasonable, fair and proportionate to the gravity of the offence is similarly examinable by a writ court.

18. The legal position on the subject is settled by a long line of decisions rendered by this Court starting with Erusian Equipment & Chemicals Ltd. v. State of W.B. [(1975) 1 SCC 70] where this Court declared that blacklisting has the effect of preventing a person from entering into lawful relationship with the Government for purposes of gains and that the authority passing any such order was required to give a fair hearing before passing an order blacklisting a certain entity. This Court observed: (SCC p. 75, para

20)

Subsequent decisions of this Court in Southern Painters v. Fertilizers & Chemicals Travancore Ltd. [1994 Supp (2) SCC 699: AIR 1994 SC 1277]; Patel Engg. Ltd. v. Union of India [(2012) 11 SCC 257: (2013) 1 SCC (Civ) 445]; B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd. [(2006) 11 SCC 548]; Joseph Vilangandan v. Executive Engineer (PWD) [(1978) 3 SCC 36] among others have followed the ratio of that decision and applied the principle of audi alteram partem to the process that may eventually culminate in the blacklisting of a contractor.

19. Even the second facet of the scrutiny which the blacklisting order must suffer is no longer res integra. The decisions of this Court in Radhakrishna Agarwal v. State of Bihar [(1977) 3 SCC 457: (1977) 3 SCR 249]; E.P. Royappa v. State of T.N. [(1974) 4 SCC 3: 1974 SCC (L&S) 165]; Maneka Gandhi v. Union of India [(1978) 1 SCC 248]; Ajay Hasia v. Khalid Mujib Sehravardi [(1981) 1 SCC 722: 1981 SCC (L&S) 258]; Ramana Dayaram Shetty v. International Airport Authority of India [(1979) 3 SCC 489] and Dwarkadas Marfatia and Sons v. Port of Bombay [(1989) 3 SCC 293] have ruled against arbitrariness and discrimination in every matter that is subject to judicial review before a writ court exercising powers under Article 226 or Article 32 of the Constitution.

20. It is also well settled that even though the right of the writ petitioner is in the nature of a contractual right, the manner, the method and the motive behind the decision of the authority whether or not to enter into a contract is subject to judicial review on the touchstone of fairness, relevance, natural justice, nondiscrimination, equality and proportionality. All these considerations that go to determine whether the action is sustainable in law have been sanctified by judicial pronouncements of this Court and are of seminal importance in a system that is committed to the rule of law. We do not consider it necessary to burden this judgment by a copious reference to the decisions on the subject. A reference to the following passage from the decision of this Court in Mahabir Auto Stores v. Indian Oil Corpn. [(1990) 3 SCC 752] should, in our view, suffice: (SCC pp. 760-61, para 12)

39. Appearing for the respondents Mr. Dayan Krishnan, learned senior counsel, addressed the following submissions. Mr. Krishnan contended that blacklisting undoubtedly is a right which inheres in the employer and one which could be exercised even in the absence of a specific clause in the contract. It was his submission that the power to blacklist flows from the right vested in the respondent to choose to either deal or to not deal with a particular entity. Mr. Krishnan invited the attention of the Court to the judgment rendered by the Supreme Court in Patel Engineering Ltd. v. Union of India & Another13 in support of the proposition that the authority to blacklist is a necessary concomitant of the power of the State to carry on trade or business. It was highlighted that Patel Engineering had categorically held that the State or its authorities could debar an entity even in the absence of an express stipulation to that effect. Mr. Krishnan relied upon the following passages from Patel Engineering: - “15. It follows from the above judgment in Erusian Equipment case [(1975) 1 SCC 70] that the decision of the State or its instrumentalities not to deal with certain persons or class of persons on account of the undesirability of entering into the contractual relationship with such persons is called blacklisting. The State can decline to enter into a contractual relationship with a person or a class of persons for a legitimate purpose. The authority of the State to blacklist a person is a necessary concomitant to the executive power of the State to carry on the trade or the business and making of contracts for any purpose, etc. There need not be any statutory grant of such power. The only legal limitation upon the exercise of such an authority is that the State is to act fairly and rationally without in any way being arbitrary—thereby such a decision can be taken for some legitimate purpose. What is the legitimate purpose that is sought to be achieved by the State in a given case can vary depending upon various factors.

22. These two clauses become relevant in the context of the second submission made by the learned counsel for the petitioner that as per the bid document, the power to blacklist is available only in the cases of the commission of any or some of unacceptable practices by the bidder or his agents, etc. but not in the case, where the successful bidder declines to enter into a contract on being declared as a successful bidder. No doubt, the bid document expressly declares that in the case of the commission of a corrupt practice, etc. the bidder shall not be eligible to participate in any tender issued by the second respondent for a period of two years from the date on which it is found that a corrupt practice has been committed. Such an express stipulation is not to be found in the bid document, in the context of the failure of the successful bidder to execute the necessary documents to conclude the contract. In our opinion, that is not determinative of the authority of the second respondent to blacklist a bidder, such as, the petitioner herein, who declines to execute the necessary documents for creating a concluded contract after the offer made by the bidder, is accepted by the second respondent.

23. The authority of the second respondent to enter into contracts, consequently, the concomitant power not to enter into a contract with a particular person, does not flow from Article 298, as Article 298 deals with only the authority of the Union of India and the States. The authority of the second respondent to enter into a contract with all the incidental and concomitant powers flows from Sections 3(1) and (2) [ “3.Constitution of the Authority.—(1) With effect from such date as the Central Government may, by notification in the Official Gazette, appoint in this behalf, there shall be constituted for the purposes of this Act an Authority to be called the National Highways Authority of India.(2) The Authority shall be a body corporate by the name aforesaid having perpetual succession and a common seal, with power, subject to the provisions of this Act, to acquire, hold and dispose of property, both movable and immovable, and to contract and shall by the said name sue and be sued.”] of the National Highways Authority of India Act,

1988. The nature of the said power is similar to the nature of the power flowing from Article 298 of the Constitution, though it is not identical.

25. The bid document is not a statutory instrument. Therefore, the rules of interpretation, which are applicable to the interpretation of statutes and statutory instruments, are not applicable to the bid document. Therefore, in our opinion, the failure to mention blacklisting to be one of the probable actions that could be taken against the delinquent bidder does not, by itself, disable the second respondent from blacklisting a delinquent bidder, if it is otherwise justified. Such power is inherent in every person legally capable of entering into contracts.”

40. It was additionally submitted in this respect that the order impugned and in terms of which the petitioner has come to be blacklisted cannot be tested solely on the basis of some of the provisions of the GCC which may have been specifically alluded to. It was submitted that once it is accepted that the power to blacklist is one which inheres in the respondent independent of any express stipulations contained in the GCC, the impugned order would not merit any interference on grounds as urged in support of the petition. Reliance was additionally placed on Clause 15 of Section 6 of the Terms of Reference14 and which conferred a right on the respondent to proceed against the petitioner in case deficiencies in service were found to be established. Reliance was placed specifically on Clauses

(i) and (j) thereof and on the basis of which Mr. Krishnan submitted that the respondents were clearly justified in debarring the petitioner.

41. Turning then to the issue of the deployment of key personnel, Mr. Krishnan pointed out that in terms of Clause 6.[2] of the Datasheet, the commencement period was prescribed to be fifteen days from the effective date of the Contract Agreement. It was contended that undisputedly the latter was 30 September 2019. In view of the above, it was contended that mobilization of key personnel had to be completed on or before 15 October 2019. Reference was also made to Clause 2.[3] of the GCC read with Clause 2.[3] of the Special Conditions of Contract15 both of which stipulated that the Consultant was to commence providing services within fifteen days. Contrary to the aforesaid mandatory prescriptions, Mr. Krishnan pointed out that the respondents had in fact found that only three personnel had been mobilized on site. It was further submitted that as per the information and particulars gathered as on 15 October 2019 only four out of the ten required key personnel had been found present on the site. According to Mr. Krishnan, the aforesaid details can be duly gathered from the mobilization details which appear at page 240 of the paper book. TOR

42. It was further pointed out that as per Clauses 6.[2] and 11.[7] of the TOR, the Engineer was obliged to visit the site every two months for a period of at least two weeks or every one and a half month for a period of at least one week to familiarize himself to the progress made. It was pointed out that Sh. Chiranjee Lal, the Engineer designated by the petitioner had visited the project site on 17 September 2019 and 20 September 2019 and thus before the signing of the Contract Agreement on 24 September 2019. Sh. Chiranjee Lal came to be nominated as the Engineer on 01 October 2019 and he thereafter visited the project site for the first time in January 2020. Mr. Krishnan pointed out that after the visit in January, the Engineer made a visit to the project site after more than three months and that too for a duration of five days only. That visit, it was pointed out by Mr. Krishnan, was in respect of all four packages straddling a length of 163.[5] kms. It was in the aforesaid backdrop that it was contended that the Engineer had clearly failed to make any visits in November and December 2020 and visited the project site for a period of a mere five days in January. It was also pointed out that the Covid lockdown commenced from 25 March 2020. This itself would indicate that there was no justification for the Engineer to have not made regular visits in accordance with the TOR. It was further submitted by Mr. Krishnan that infrastructure works were in any case exempted from Covid restrictions and consequently, the nationwide lockdown would not constitute a justifiable ground for the Engineer not having visited the project site. Turning then to the nomination of the Resident Engineer, Mr. M.J Alam, it was pointed out that the said individual had been deployed on the Piska-More-Palma section of National Highway-23. Mr. Krishnan pointed out that Mr. M.J Alam left that project on 30 September 2019 when it was incomplete.

43. Insofar as the issues arising out of fake CVs of two key personnel is concerned, it was the submission of Mr. Krishnan that the RFP had clearly held out that if any information is discovered to be incorrect at any stage, the respondent would be empowered to initiate appropriate steps for termination as well as debarment. Reference in this respect was specifically made to Clause 3.7(ix)(b) which reads thus: - “Clause 3.7: The Technical proposal should provide the following information using but not limited to the formats attached in Section 4:

(ix) Requirement for submission of CVs

(b) Key information should include years with the firm and degree of responsibility held in various assignments. In CV format, at summary, the individual shall declare his qualification & total experience (in years) against the requirements specified in TOR for the position (Ref. Annexure- I, II & III of TOR). If any information is found incorrect, at any stage, action including termination and debarment from future projects upto 2 years may be taken by Employer on the personnel and the Firm.”

44. It was submitted further that the petitioner had itself initiated a verification exercise by addressing communications to previous employers of key personnel. It was submitted that in view of the above, it is not open for the petitioner to now contend that it is not liable to be debarred on account of fake CVs having been submitted. The submission essentially was that the petitioner cannot shift any blame on the INFRACON portal since it was its responsibility to independently verify the credentials of key personnel.

45. Proceeding then to the issue of replacement of more than 50% of key personnel, it was the submission of Mr. Krishnan that Clause 4.5(c) of the GCC had clearly stipulated that the replacement of more than 50% of key personnel would result in debarment. Sub clause (c) of Clause 4.[5] of the GCC is extracted hereinbelow: - “(c) Any of the Personnel provided as a replacement under Clauses (a) and (b) above, the rate of remuneration applicable to such person as well as any reimbursable expenditures (including expenditures due to the number of eligible dependents) the Consultants may wish to claim as a result of such replacement, shall be subject to the prior written approval by the Client. Except as the Client may otherwise agree, (i) the Consultants shall bear all additional travel and other costs arising out of or incidental to any removal and/or replacement, and (ii) the remuneration to be paid for any of the key Personnel provided as a replacement shall be 95% of the remuneration which would have been payable to the key Personnel replaced. for the reason other than death/extreme medical ground and for total replacement upto 33% of key personnel, (iii) for total replacement upto between 33% to 50%, remuneration shall be reduced by 10% and (v) for total replacement beyond 50% of the total of key personnel, the client may initiate action for termination/debarment of such consultants for future projects of NHAI.” It was submitted that merely because NHAI approved the sixth replacement in larger public interest and on consideration of the project itself having been unduly delayed, the same cannot operate as an estoppel. According to Mr. Krishnan, the details as provided by the petitioners itself would express ex facie evidence that more than 50% of the key personnel had been replaced.

46. Turning then to the submission that a failure to extend the validity of the additional BG could not constitute a ground for debarment, Mr. Krishnan addressed the following submissions. It was contended that quite apart from the inherent right of NHAI to blacklist or debar the petitioner, the record would bear out that it had given an undertaking on 11 September 2019 that it would extend the validity of the additional BG before it expires. It was pointed out that the petitioner was firstly asked to extend the validity of the additional BG vide Commencement of Services letter dated 30 September 2019 and on numerous occasions thereafter. SCN also came to be issued upon the petitioner on 23 March 2020 and in terms of which yet another opportunity was granted to it to comply with the directives issued. Mr. Krishnan pointed out that the validity of the additional BG was extended only on 09 February 2021 and during the claim period.

47. Mr. Krishnan lastly submitted that the nature of the challenge as has been addressed by and on behalf of the petitioner fails to bear in mind the extent of the power of judicial review that the Court would exercise under Article 226 of the Constitution. It was submitted that the Court while undertaking a judicial review of an administrative decision neither sits as an appellate authority nor would it be justified in reappraising the entire evidence and material on the basis of which an impugned action is taken. It was Mr. Krishnan’s submission that the Court under Article 226 is concerned principally with the procedure undertaken by the authority and whether the principles of natural justice had been adhered to. The power of judicial review, Mr. Krishnan pointed out, would not extend to the Court substituting its own opinion for that of the competent authority.

48. Insofar as the power of debarment is concerned, Mr. Krishnan placed reliance upon the judgment rendered by this Court in NCC- BGR Consortium & Another v. NTPC Limited & Another16 the relevant passage whereof is extracted hereinbelow: -

49. Mr. Krishnan also sought to draw sustenance for the aforenoted submission from the following observations as appearing in the decision of the Supreme Court in State of Odisha and Others v. Panda Infraproject Limited17: -

50. It is the aforenoted rival contentions which fall for consideration. Before proceeding further, it may be noted, that the allegations stemming from the diversion of Mr. M.J Alam from the Piska-More-Palma section of National Highway-23 project was ultimately not pressed by NHAI at the time of final arguments. The same would thus have to be ignored for the purpose of evaluating the validity of the impugned order.

51. The Court at the outset notes that there cannot be a dispute with respect to the right of NHAI to debar or refuse to deal with an entity while entering into a contract in the commercial sphere. The proposition that blacklisting is an inherent right and can be exercised even in the absence of a specific clause empowering them to take such action is also not one which can be said to be debatable. This clearly flows from the decision of the Supreme Court in Patel Engineering. However, what strikes the Court is the fact that the ultimate order of debarment which has come to be passed, rests and is founded on various allegations which did not even form part of the SCN. While, Mr. Krishnan was correct in his submission that an order of debarment could be founded even in the absence of explicit provisions contained in the contract or even in exercise of an inherent right, the same does not detract from the legal obligation of NHAI to have placed the petitioner on notice of the allegations on the basis of which the debarment was proposed. Basing an order which undoubtedly has serious civil consequences on grounds and allegations with which the petitioner had not even been confronted cannot possibly be countenanced in law. NHAI being State was clearly liable to proceed in the matter of a proposed blacklisting of the petitioner bearing in mind the foundational principles which flow from Article 14 of the Constitution. It would be apposite to refer to the succinct enunciation of the legal position in this regard in UMC Technologies Private Limited Vs. Food Corporation of India and Another18:-

52. As is evident from the aforesaid principles as laid down in UMC Technologies and the previous precedents rendered on the subject, it is imperative that the SCN sets out with sufficient clarity the material grounds on which the debarment is proposed. In fact, the very purpose of the SCN is to enable the contractor to respond to the charge as levelled and furnish an explanation as to why it should not be debarred. The ultimate order of debarment, thus, cannot be founded on grounds which were not even conveyed to the contractor and in respect of which it had never been placed on notice. The Court is thus of the firm opinion that notwithstanding the fact that the power to blacklist is one which inheres in the Government or its organs when entering into the commercial arena, the same does not absolve them from adhering to the fundamental principles of natural justice.

53. As is clearly evident from a reading of the impugned order, the ultimate conclusions which have come to be recorded in Paras 6(iii), 6(iv), 6(v), 6(vi), 7(2)(a), 7(2)(b) as well as Para 9 were clearly not allegations contained in the SCN. These are allegations which came to form part of the impugned order passed by NHAI without the petitioner having been afforded any opportunity to proffer an explanation or defense. Even if the Court were to assume that those could constitute valid grounds which merited the debarment of the petitioner, the same did not detract from the obligation of NHAI to have confronted the petitioner with those charges. This aspect of the present matter clearly constitutes a manifest illegality and an evident failure to abide by the principles of natural justice.

54. Mr. Mehta also appears to be correct in his submission that the non-performance of the petitioner in separate contracts could not have formed the basis for the blacklisting of the petitioner in relation to the contract in question. While the non-performance of obligations in the National Highway-02 and National Highway-75 site contracts may have constituted sufficient grounds to proceed against the petitioner in accordance with the contracts pertaining to those projects, an alleged non-performance in connection with those contracts could not have possibly constituted a ground for debarment of the petitioner. Similarly, the allegations which have been found to be proved in terms of Paras 7 and 9 of the impugned order do not even find mention or reflection in the SCN. The Court is thus of the considered opinion that the impugned order insofar as it rests on the conclusions recorded in Paras 6, 7 and 9 cannot possibly justify the debarment of the petitioner. The impugned order is thus liable to be quashed on this ground alone.

55. That then takes the Court to consider the allegation relating to submission of incorrect CVs. Undisputedly, the contract documents obliged the petitioner to source key personnel only from the INFRACON portal. In discharge of that mandatory stipulation in the Contract Agreement, the petitioner did select the key personnel. However, the discrepancies in respect of the declarations made by Mr. Vijay Kumar and Mr. Shailendra Narayan Prasad came to light only in the course of a due diligence exercise which was undertaken by the petitioner of its own volition. Once the petitioner had been compelled to source key personnel only from those whose names found mention on the INFRACON portal, a false or inaccurate statement appearing in the CVs posted on that website cannot possibly lead to the Court concluding that it was the petitioner who must bear the brunt of those false statements or fake certificates. Acceptance of such a submission would not only defy logic but would also result in wholly arbitrary consequences.

56. It becomes pertinent to observe here that Clause 3.7(ix)(b) of the RFP and which was relied upon by Mr. Krishnan also cannot be read as lending credence to the ultimate conclusions which have come to be recorded in the impugned order. On a plain reading of that clause, it is manifest and apparent that the same would necessarily stand restricted to any incorrect information that may have been submitted or furnished by the petitioner. The submission of CVs of key personnel downloaded from the INFRACON portal cannot possibly be viewed as incorrect information submitted by the petitioner. The stand of the NHAI in this regard is clearly arbitrary and unsustainable. While it compels the Contractor to source all key personnel from particulars and details appearing on the INFRACON portal, it is the Contractor which is ultimately sought to be held guilty of false or incorrect statements or declarations that may have been made by those key personnel. The Court finds itself unable to countenance the submission of NHAI addressed on the aforesaid lines.

57. The Court also finds itself unable to hold in favour of NHAI when it contends that it was the responsibility of the petitioner to independently verify the credentials of key personnel. Notwithstanding that exercise having been undertaken by the petitioner itself and in the course of which the discrepancies in the CV declarations came to light, it would be wholly illogical for the petitioner to be first compelled to select key personnel from the INFRACON portal and thereafter be placed under an additional obligation to verify the correctness of the information available on that website. If no exercise of verification had been undertaken by NHAI or INFRACON before uploading the particulars of key personnel on its website, surely the same cannot result in visiting the petitioner with grave civil consequences.

58. It may further be noted that NHAI policy guidelines as comprised in the Circular dated 07 September 2018 itself recognizes the obligation and the duty cast upon it to ensure the accurateness and sanctity of the data appearing on the portal. This is evident from a reading of Para 4 of the Policy Document which is extracted hereinbelow: -

59. The obligation to periodically update all particulars appearing on the INFRACON portal was again reiterated by MoRTH in its letter dated 13 December 2017 addressed to NHAI. The Court deems it apposite to extract Paras 2, 3 and 4 of that communication hereinbelow: -

60. On a more fundamental plane, the Court finds itself unable to sustain the order of blacklisting bearing in mind the provisions contained in the 2020 Policy for reasons which follow. As is evident from the table which forms part of the 2020 Policy, liabilities stand attached to the key personnel if at any stage, the CV submitted is found to be “inflated / false”. The Policy as framed further stipulates that upon the CV being found to be false, it is the key personnel and the individual concerned who is liable to be blacklisted for a period of three years. Insofar as the bidding firm is concerned, the Policy contemplates the levy of monetary penalties only.

61. The respondents on being faced with their own policy statement had then urged that the same would not apply since and as per Para 4 thereof, the same was to operate in respect of “future cases only”. It must be observed that the aforesaid contention is clearly misconceived for the following reasons. As this Court reads the policy statement in its entirety, it finds that it clearly cannot be read as either operating prospectively or being applicable only to contracts that may come to be executed and awarded post 20 July 2020. The subject heading of the 2020 Policy essentially discloses the adoption of a uniform policy for taking deterrent action. It also appears to be a clarification issued by NHAI so as to embody all provisions relating to debarment which otherwise stood comprised in the Guidelines dated 17 April 2012 and 11 June 2019. The 2020 Policy thus clearly comes across as a comprehensive iteration of the various policy measures already framed by NHAI and which were designed to guide the competent authorities with respect to debarment. The expression “future cases only” in Para 4 cannot possibly be read as pertaining to the grant or award of contracts in future since the 2020 Policy was principally concerned with the subject of debarment. The aforesaid phrase must thus be understood as indicating the factors which would guide the exercise of debarment post that date. Viewed in that light, it is manifest that it would apply to all cases where an order of debarment is made post 20 July 2020. The phrase “future cases only” must necessarily be understood in that light.

62. The facts of the present case would bear out that the SCN was issued initially on 15 October 2019. It was followed by another SCN issued on 23 March 2020. While it is true that the SCNs’ precede the promulgation of the uniform policy for debarment on 20 July 2020, undisputedly the original order of debarment came to be passed only on 17 December 2020 and thus evidently subsequent to the issuance of the aforenoted Policy. The decision of the Review Committee too came to be made after the policy had come into effect.

63. It may be additionally noted that pursuant to the directions issued on the writ petition and the LPA, the Review Committee took a fresh decision on 12 January 2021. Undoubtedly, the uniform policy of debarment was in force both at the time when the original order of debarment came to be passed on 17 December 2020 as well as when the Review Committee passed the impugned order. The Court is of the firm opinion that it was the policy prevalent on the date of the passing of the order of blacklisting which would apply. There exists no justification to accept the contention that since the SCN or the Contract preceded the adoption of the uniform policy, its provisions would have no application.

64. This Court thus comes to the firm conclusion that it was the Policy existing on the date of the passing of the debarment order which would apply. The action of debarment could thus not have been taken contrary to the express terms of that Policy. There is thus no merit in the submission of NHAI that the said policy did not apply. The submissions addressed on this score are consequently negatived.

65. That then takes the Court to the replacement of more than 50% of the key personnel and issues arising therefrom. The petitioner has explained the causes which constrained it to replace staff in terms of a table which has been placed on the record and marked as Annexure P-

21. As is evident from the details which appear in respect of employees whose names find mention at serial nos. 5, 6, 7, 8 and 9, the replacements clearly appear to have been warranted for reasons beyond the control of the petitioner. The petitioner appears to have enlisted the key personnel mentioned at serial nos. 5 and 6 based on the particulars which appeared on the INFRACON portal. Since the names of those employees had not been blocked, they were clearly available to be selected by an intending bidder. It is in the aforesaid backdrop that the petitioner appears to have made the selection in question. However, and upon discovery that they already stood selected and deployed in other National Highways & Infrastructure Development Corporation Limited and MoRTH projects, it was compelled to make replacements.

66. The Court has already held and at the cost of repetition reiterates that the petitioner could not have been faulted for making replacements on account of the CVs of originally selected employees being ultimately found to be fake. If the aforesaid facts are borne in consideration, it is apparent that the charge as laid against the petitioner clearly self-destructs. It has been the categorical case of the petitioner that it had enlisted Mr. Rajesh Soni, Mr. Ramashray Pandey and Mr. Azad Ahmad since their names had not been blocked on the INFRACON portal.

67. The Court, on an ultimate analysis and on an overall consideration of the aforesaid facts is also of the opinion that the ultimate order of blacklisting also fails to meet the tests of proportionality. Undisputedly, the original order of 17 December 2020 had debarred the petitioner for a period of two years. The impugned order has foisted an order of blacklisting upon the petitioner for a period of six months. Significantly, the Review Committee neither records nor proffers any explanation which may be read or discerned as justification for the evident disparity in the tenure of debarment. While the Review Committee does downgrade the period during which the debarment was to operate, that still leaves open the question whether blacklisting was justified at all.

68. An order of debarment cannot be made merely because such a power vests in the authority. As is manifest from the conclusions recorded hereinabove, the respondent has proceeded to debar the petitioner on grounds which are wholly untenable. The respondent has based its action to debar the petitioner on grounds which did not even form part of the SCN. It has then sought to justify the impugned action on circumstances which were a direct outcome of shortcomings existing on the INFRACON portal. The respondent has also failed to consider the detailed explanation which was tendered by the petitioner with respect to the replacement of key personnel. The replacement of key personnel was undoubtedly triggered by the furnishing of false and incorrect testimonials and some names of personnel not being blocked on the INFRACON website. The aforesaid factors cannot possibly be viewed as constituting a failure on the part of the petitioner to diligently discharge its obligations under the contract. The impugned order then proceeds to debar the petitioner based on its alleged non-performance in independent contracts. This too was clearly impermissible especially when the impugned order was not preceded by any action taken under those contracts.

69. The Court while being conscious of the parameters of judicial review, finds on the facts of the present case that the impugned order fails to meet the basic postulates of non-arbitrariness and proportionality. It would be pertinent to recall that Kulja Industries bids us to examine the validity of a blacklisting action on the touchstone of “fairness, relevance, natural justice, non- discrimination, equality and proportionality”. The Court finds that the impugned order when tested on those principles cannot be sustained.

70. Accordingly, and for all the aforesaid reasons, the instant petition is allowed. The impugned order 12 January 2021 shall stand quashed. CONT.CAS(C) 182/2021

71. Since the Court has proceeded to quash the impugned order of debarment, it finds no justification to take further action on the contempt petition which has remained pending. The same shall stand disposed of.

YASHWANT VARMA, J. MAY 23, 2023 SU/bh