Full Text
HIGH COURT OF DELHI
Date of Decision: 13th April, 2023
ISAN CORPORATION ..... Petitioner
Through: Mr. Rahul Sagar Sahay, Mr. Raghav Rajmalani, Advocates. (Mob. NO. 9818092206)
Through: Mr. Santosh Kumar and Mr. Daksh Arora, Advocates.
Ms. Pooja Singh, Advocate for R-2.
(M:9212527630)
JUDGMENT
12 WITH + W.P.(C) 15986/2022 & 13273/2023, 17991/2023 ISAN CORPORATION INDIA PVT LTD..... Petitioner Through: Mr. Rahul Sagar Sahay, Mr. Raghav Rajmalani, Advocates.
VERSUS
NATIONAL HIGHWAYS AUTHORITY OF INDIA & ANR...... Respondents Ms. Pooja Singh, Advocate for R-2. 34 AND + W.P.(C) 14882/2022 & CM APPL. 45746/2022, 4295/2023 SPECIALISED ENGINEERING SERVICES PVT LTD..... Petitioner Through: Ms. Pooja Singh, Advocate versus NATIONAL HIGHWAY AUTHORITY OF INDIA AND ANR..... Respondent CORAM: JUSTICE PRATHIBA M. SINGH Prathiba M. Singh, J. (Oral)
1. This hearing has been done through hybrid mode.
2. The NHAI floated a tender as a part of the Bharat Mala Project under the Bharat Mala Scheme for engaging entities to provide consultancy services, for the preparation of the ‘Detailed Project Report’ (DPR).
3. The Petitioners- Isan Corporation India Pvt. Ltd. (`Isan India’) and Specialized Engineering Services Pvt. Ltd., (`Specialised’) which had formed a consortium, had submitted their bid and were declared successful bidders. Pursuant to this, a ‘Consultant’s Contract Agreement’ (hereinafter ‘the agreement’) dated 11th May, 2017 was entered into between the Petitioner-consortium and NHAI. The said agreement described the project as under: “CONSULTANCY SERVICES FOR PROJECT PREPARATION OF FEASIBILITY STUDY/DETAILED PROJECT REPORT OF SELECTED PORT CONNECTIVITY ROAD STRETCHES/CORRIDORS FOR UP GRADATION TO TWO/FOUR LANE NH CONFIGURATION UNDER BHARAT MALA SCHEME. (1) UPGRADING OF EXISTING DEDICATED PORT CONNECTIVITY FROM KRISHNAPATNAM PORT NH-5 IN SPSR NELLORE DISTRICT THE STATE OF ANDHRA PRADESH (II)
DEVELOPMENT OF 5KM LONG GREEN FIELD ROAD CONNECTING SOUTH AND NORTH INDUSTRIAL CLUSTER OF KHANDALERU CREEK NEAR KRISHNAPATNAM PORT (III)
UPGRADING OF EXISTING R&B ROAD FROM NEAR KRISHNAPATNAM PORT IN SPSR DISTRICT NELLORE (TOTAL LENGTH - 55 KMS)
STATES OF ANDHRA PRADESH UNDER - CONTRACT PACKAGE NO.NHAI/PC/1”
4. In terms of the contract, various deadlines were fixed for submission of the report. The said deadlines are explained in the form of days from the date of the contract at page 411 of the counter affidavit of NHAI in WP (C) 15986/2022. The same are set out below- “ ”
5. The consortium had to make site visits, conduct topographic surveys and commence work for preparation of the report. The final deadline was 210 days for the submission of the DPR. The writ petitions have exhaustively set out the details of the correspondence between the consortium and the NHAI. It is not in doubt that a draft feasibility report was, for the first time, submitted in February, 2018. However, in view of the urgency involved in the matter, the NHAI appears to have requested the Petitioner-consortium for the submission of the tender documents. The Petitioner submitted the tender documents consisting of the format, template, etc. which were to be part of the DPR, on 21st December, 2017. The tender was floated on 28th December, 2017, however, the draft report was given for the first time in February, 2018. In the meantime, the DPR preparation continued parallelly and the processing of the tender which was floated also continued. Finally, the DPR was submitted only on 6th December, 2018.
6. In the meantime, since the tender had also proceeded further, the contract was awarded to a contractor. NHAI was of the opinion that various issues have been raised by the contractor which pointed to deficiencies in the tender documents submitted by the Petitioner.
7. The case of the Petitioners is that the tender documents were sought before the submission of the DPR itself and was, therefore, tentative in nature. Thus, no blame could be ascribed to the Petitioners. This position was not accepted by NHAI which issued a show cause notice on 5th February, 2021.
8. The case of NHAI in the show cause notice, was that there were various deficiencies in the tender documents which led to delays in the implementation of the project. Further, deficiencies were pointed out by the contractor in the tender documents. The Contractor and NHAI are also in dispute which is stated to be under resolution, currently. In view of all these complications which arose, according to NHAI, due to the deficient tender documents, the show cause notice was issued.
9. In the reply to the show cause notice on 27th February, 2021, the deficiencies were answered by the Petitioners. However, after perusing the reply, the NHAI came to the conclusion that the reply was not satisfactory and, thus, the Petitioners i.e., both the consortium members, were debarred for a period of one year. The operative portion of the said debarment order dated 26th September 2022 reads as under:
10. Three writ petitions namely, W.P.(C) 14882/2022, W.P.(C) 15985/2022 and W.P.(C) 15986/2022 have been filed. • W.P.(C) 15985/2022 is a petition filed by the principal company of Isan Corporation India Pvt. Ltd. from Korea i.e. Isan Corporation. • WP(C) 15986/2022 has been filed by Isan Corporation India Pvt. Ltd. and • WP(C) 14882/2022 has been filed by Specialised Engineering Services Pvt. Ltd. Isan Corporation India Pvt. Ltd. and Specialised Engineering Services Private Limited are the consortium partners in the present case. All the three companies have challenged the debarment on various grounds including the fact that the debarment has been issued by an official who is not competent to do so.
11. The Court has heard the submissions of all the counsels today appearing for the Petitioners in the three petitions as also the counsel for NHAI. A perusal of the reply to the show cause notice shows that the explanation given by the Petitioner-Isan Corporation India Pvt. Ltd. is that none of the deficiencies were made out. In fact, the Petitioners’ case is that the tender itself was floated earlier in point of time and, thus, the blame could not be shifted upon the Petitioners. The argument on behalf of the NHAI is that extensions were repeatedly sought by the Petitioners and the Petitioners were guilty of deficiency of service. The explanation given by the Petitioner is relevant in this matter and is set out below: SI.No. Deficiencies/Errors Reply/Clarification
1. Construction of Flyover 4KM 151+400 included in Schedule-B but no payment given in Schedule-H. It is submitted that the Bids for the Package-I were invited within very short period of time of the preliminary submissions made by us. Accordingly, the draft Schedule-H was forwarded to the Authority on 22.12.2017 through email wherein the indicative overall weightages for road work structure work & other items were tentatively given. The Schedule-H was thereafter submitted on 26.02.2018 again with the respective percentages for various sub-items of works under road work, structure work & other items however, on account of inadvertent typographic error, the overall weightages for road work, structure work & other items couldn’t be changed and remained as such with were submitted earlier on 22.12.2017. However, this discrepancy was corrected in the DPR and was communicated on 26.4.2018 to the Authority.
2. Construction of 5 VUPs/LVUP included in Schedule-B but the weightage in percentage payment to the contract price is very low as compared to the estimated cost of these VUPs/LVUP in Schedule-H. We wish to submit that above mentioned typographic error, which was neither noticed by any bidder nor could be pointed by the Authority, was rectified by us in due course of time however. the same couldn't be corrected in the Contract document. In this regard, it is also mentioned that the weightages of all the items of work in Schedule-H are only for assessment of the financial progress of works for the payment and not for working out the cost of work for considering the negative Change of Scope (COS) of such items. As a matter of fact the negative COS is worked out in accordance with the provisions of Clause 13.[2] and is calculated on the current SOR and the actual quantities based on the design for the particular item. Hence, it is submitted that the cost of negative Change of Scope is not required to be worked out on the basis of Schedule-H and therefore, there is no consequent financial implication to NHAI on account of such negative COS.
3. Construction of 4 Nos. of VUPs and 1 No. of LVUP@Km.2+800 6Km. 6+700@Km. 13 Km.16+ 200 and 6Km.10+400 respectively included in Schedule-B which were not required as per site conditions. It is submitted that the drawings, technical schedules and bidding documents were diligently finalized in coordination with PIU/RO and discussed with NHAI HQ along with SCC presentations held on 31.01.2018. Accordingly, the proposed locations of VUP’s and LVUP were technically justified in view of various meetings conducted with the PD Nellore and RO Vijayawada before finalization of VUP locations. The same was also justified in PATSC and SCC presentations and all needful correspondences were shared with PIU/RO offices in this regard. Hence, keeping in view, the development of the entire area & other related aspects particularly with regard to safety of road users, the location, of these VUP's and LVUP are fully justified. However, in various meetings with RO NHAI and PIU in the matter of alteration of location of these VUPs/LVUP, it was apprised that proposed location VUP's and LVUP are technically justified and based on public demand the alteration in location/removal of the same can be considered. We have amply clarified the above issue of VUPs/LVUP through our letter dated 18.01.2021 (Ref:3) and the copy thereof is enclosed for ready reference.
4. Slip Road width is 5.5m from 150. g15 Km as per Schedule-B however in TCS IV it is given 7m. It is submitted that the bid for the Package-I were invited within very short period and at the same time bids for other packages Package II and Package III were also submitted, and extended by one month and later it was cancelled. Due to pressure of several bids at same time there was an inadvertent typographic error regarding width of slip road as 5.[5] m in Schedule B, as most of other stretches having LVUP/VUP width of slip road of 5.[5] m was proposed. The proposed width of Slip Road shall be 7.0 m as given in applicable TCS IV.
5. Provisions of minimum 5.0 median required including shyness was varied to 3.0 m median including shyness in Scheduled-D however in TCS IV it is given 5.0m. It is submitted that the median width of
3.0 m was proposed as standard practice based on the existing site condition, where in the existing median was utilized along with 2 lane carriageway and additional lane was on either side was proposed as widening. The same has been clarified in our letter dated 18.01.2021 (Ref: 3) and the copy thereof is enclosed for ready reference. Further the deviation from manual regarding median width has already been incorporated in Schedule D and the same has been given in TCS I. It is submitted that TCS IV mentioned the letter is applicable only for NH16 and not for NH67.
12. As can be seen from the above reply there are five deficiencies which have been pointed out which are sought to be explained by the Petitioners. In most of the deficiencies, it is admitted that the errors were there. For example, qua the non-incorporation of a payment schedule, it is admitted that the same was finally given in April 2018, i.e., four months after the submission of the Package I DPR. On some of the aspects typographic errors and other errors are admitted. The question as to what was the impact of these errors would require analysis of facts and would also require technical expertise for the purpose of determining whether the stand of the Petitioners or that of the NHAI is correct or not.
13. The overall chronology of events definitely point out that there was considerable delay in submission of the DPR and also the DPR was deficient in nature. The case of the Petitioners therein is that the Petitioners are not blameworthy for the delay. In terms of the policy matter and the guidelines for imposing debarment, the relevant clause of NHAI’s policy reads as under: “2. Deficiency of Services 2.[1] Consultants in Highways sector are being engaged generally for following services;
(i) Preparation of pre-feasibility and feasibility reports
(ii) Preparation of detailed project report
(iii) Supervision of projects and
(iv) Proof consultancy
2.[2] It has been observed that major omissions by the consultants lead to substantial time and cost overrun in the projects. Besides, in some cases contractual complications leading to arbitration/court cases, failures of structures etc causing serious accidents etc occur. To ensure a fair degree of accuracy on the part of the consultants in carrying out the tasks assigned to them, it is necessary to take deterrent penalty actions against the erring consultants. In case of minor deficiencies on consultant's part a warning may be issued. In the case of significant deficiencies in services causing adverse effects on the Project or on reputation of the Authority, other penal actions including debarring for a specified period shall be initiated as per this policy. The deterrent penalty action can be taken in any of the following ways:
(i) Issue warning to the consultants as decided by
(ii) Suspend their short-listing with NHAI and debar then from award of future works in NHAI for a period of less than 12 months in case of minor deficiency in services.
(iii) Debarring the consultants for a period of 1 to 5 years for major negligence/deficiency in services. 2.[3] Financial Penalty In addition to any penalty action (i) or (ii) or (iii) under Para 2.[2] above, financial penalty of appropriate percentage of contract value can further be imposed. For avoidance of doubt it is clarified that this financial penalty shall form part of penalty action which is in addition to all other actions such as recoveries, appropriation of Performance Security, liquidated damages etc as per the agreement. 2.[4] Wide publicity will be given to the deterrent action taken against the erring consultants for major negligence/deficiency (category (iii) above) through circulation to Ministry of Road Transport and Highways, all State Governments/Government departments dealing with National Highways and centrally sponsored schemes and publication of notices in newspapers and IRC journals. Publicity shall also be given to all concerned on actions taken under category (i) & (ii) above as may be decided in the circumstances of the case.”
14. As can be seen from the above policy, in case of deficiency of service, there are three levels of penalty that can be imposed. The first is a warning. The second is a suspension or shortlisting and debarment for less than twelve months and the third is for debarment for one to five years. The deficiencies which have been pointed out by the Respondent and the explanation given, in the opinion of this court, are not issues which can be gone into in writ jurisdiction. Only a preliminary assessment can be made by the Court. Broadly, the NHAI has given a show cause notice. Reply has been sought and thereafter the impugned order has been passed. There is no arbitrariness or perversity in this process of debarment.
15. Thus, insofar as Isan Corporation India Pvt. Ltd and the consortium partner are concerned, the matter would have to be relegated to the dispute resolution clause in terms of the contract between the parties.
16. Insofar as Isan Corporation, Korea is concerned, though, the Indian subsidiary has relied upon the Korean company’s experience and vice versa, from the materials available, the Korean Company appears to have not been directly involved in the implementation of the DPR. Insofar as the Korean company is concerned, the practical work on ground during the implementation of the DPR project was being undertaken by Isan India and its consortium partner. The Korean company has already suffered a seven month debarment and there was no interim order which was granted in this matter.
17. Debarment is like blacklisting which results in civil death as has been held by the Supreme Court in Gorkha Security Services v. Government of (NCT of Delhi) & Ors. [2014 9 SCC 105.
18. In ‘Kulja Industries Limited v. Chief Gen. Manager W.T. Proj. BSNL & Ors.’ [AIR2014SC9], the Supreme Court has also held that the debarment/blacklisting has to be proportional.
19. Considering the overall facts and circumstances of this case, it is directed that insofar as Isan Korea is concerned, the debarment shall be restricted to the period which has already elapsed. Going forward, there shall be no impediment in Isan Korea bidding in future contracts of the NHAI or any tenders of the Ministry of Road Transport and Highways (MoRTH).
20. Insofar as Isan India and the consortium member Specialised, are concerned, there is no cause for interference. The entire period of blacklisting shall be served by the Petitioners. The technical issues which have been raised in terms of the deficiencies, etc., being factual in nature, this court has not rendered any final opinion in respect of the same. The parties are relegated to the disputes resolution clause. The said proceedings shall be adjudicated without being affected by any observations of this Court in the present order.
21. The present writ petitions, along with all pending applications, are disposed of in these terms.
PRATHIBA M. SINGH JUDGE APRIL 13, 2023 dj/rp