Full Text
HIGH COURT OF DELHI
Date of Decision: 1st March, 2023
ADVANCE PRODUCTS AND SYSTEMS ..... Petitioner
Through: Mr.Vivek Pathak & Mr. Rakesh Panday, Advocates (M-880402759)
Through: Mr. Abhishek Birthray & Mr. Adeem Ahmed, Advocates for R-1
(M-9810645948)
Mr. Shailendra Sharma, Advocate for R-2 (M-9810267976).
Mr. Avishkar Singhvi, Mr. Naved Ahmed & Mr. Vivek Kumar, Advocates for GNCTD.
JUDGMENT
1. This hearing has been done through hybrid mode.
2. The Petitioner challenges its suspension on the Government E- Marketplace (‘GeM’) portal for a period of 21 days i.e., till 7th March 2023.
3. A supply order dated 1st December 2021 was placed by Indian Oil Corporation Limited (hereinafter ‘IOCL’) on M/s Advance Products and Systems - the Petitioner, through the GeM portal. The same was for the supply of `Intrinsically Safe Digital Multimeter’. The delivery period was between 1st December 2021 to 30th January, 2022.
4. The product ordered was not supplied by the Petitioner, leading to the IOCL filing an incident report on the GeM portal. The first incident was reported on 3rd March, 2022. The same was replied to by the Petitioner and the said incident was closed on 9th April 2022. The details of the said incident are set out below:
5. Even thereafter, the product was not supplied. The Petitioner claimed that timely delivery could not take place due to the delay in supply of materials, as there was a shortage of electronic components in the world market, due to the Russia-Ukraine war. Further, in terms of the letter received from the Original Equipment Manufacturer (‘OEM’), the renewal of the ATEX certification and a mismatch discovered in the material was resulting in delay from the OEM’s side.
6. Due to the continued delay, a second incident was reported on 9th April 2022, though on this occasion, the incident on the GeM portal records the wrong sub-category of products. A perusal of the second incident report shows that, on the one hand, the buyer IOCL repeatedly raises complaints while, the seller i.e., the Petitioner tries to offer an explanation for the delay. Due to the second incident, the Petitioner was suspended for 21 days i.e., from 21st July, 2022 to 20th August, 2022.
7. Finally, a third incident was reported by the purchaser IOCL on the ground that this was a critical product and the delay has caused enormous inconvenience. According to IOCL the same was required for its electrical maintenance department and the non-availability was hampering the work in the said Department. This incident which was reported, has now resulted in the suspension of the Petitioner for a period of 21 days i.e., till 7th March,
2023.
8. The case of the Petitioner is that in terms of the policy of GeM, qua one incident, a party can only be suspended once. In this case, on the first incident, the issue was resolved and, the Petitioner was suspended for the first time due to the second incident from 21st July 2022 to 20th August,
2022. Thus, as per the Petitioner, the second suspension due to the third incident is untenable.
9. In the GeM incident management policy, which was applicable from 6th April, 2022, clause 1.[7] is relied upon by ld. Counsel. He submits that the reasons for non-supply despite the best intentions was one which was beyond the control of the Petitioner and that the Petitioner is an MSME.
10. On the other hand, on behalf of IOCL, correspondence is shown and the replies to the incidents on the portal of the GeM are also shown to demonstrate that the Petitioner has been in gross default insofar as the contract with IOCL is concerned.
11. This Court has heard the ld. Counsels for the parties. The Government -E- Marketplace (‘GeM’) portal, is a National Public Procurement portal and end to end online marketplace from where both Central and State Government Ministries/Departments, CPSUs and SPSUs effect the procurement of goods and services. The portal enlists various goods and services providers, who may be used for public procurement by most government agencies including Ministries, PSUs, Autonomous Institutions etc.
12. As the introduction of the GeM Incident management policy itself states that it is a trust-based system and the conduct of the buyer and the seller has to be in a manner which requires high quality and prompt delivery of goods and services. The relevant paragraphs of the incident management policy of GeM are set out below: “1.[1] Government e-Marketplace (GeM) is a trustbased system. As self-declaration is the key, strong automated processes to penalize any deviant behavior at GeM platform is a must. Similarly, good buyer behavior is a key component to generate seller confidence on GeM so that they can offer the best price and quality. For this purpose, any action that is at variation from the terms and conditions of procurement on GeM and relevant Government rules and guidelines is termed as "deviation".” Whenever any buyer raises any issue in respect of the delay of quality of services or goods which are provided, an incident can be raised on the GeM portal. The clauses of the incident management policy shows that the incidents can be raised both by buyers, sellers/service providers, the GeM Administration and the GeM portal itself. The raising of an incident means that the same is immediately escalated and a resolution is sought. Clause 1.[7] and other operative clauses of the said incident management policy reads as under: “1.[3] All administrative actions under this Incident management Policy, taken by GeM against any of the stakeholders shall not cause any limitation on the legal and contractual remedies including any financial recoveries, available to Buyers/Sellers/ Service Provider (SP) under the Terms and Conditions of contract and/or GeM policies. In case the Buyer/ Seller /SP choose to pursue any of these remedies, GeM shall not be made party to such proceedings/remedial actions taken by Buyer/Seller/Service Provider under the contractual provisions. 1.[4] Who can raise incident:
(i) Buyer
(ii) Seller/Service Provider
(iii) GeM Admin
(iv) GeM portal
1.[5] Buyer/Seller/Service Provider can create incident and try to get a resolution within the stipulated time from the party against whom the incident has been raised. In case of no resolution at user end, the incident can be escalated to GeM Admin after completion of the stipulated time. GeM Admin takes suitable action based on available facts and merit of the case. 1.[6] All the stakeholders shall comment/ respond on IM Dashboard only and no resolution/response relating to incidents shall be provided through emails or any other mechanism. Also the stakeholders shall not attach/indicate the details which reveal their identity such as name of organization, name of any person or telephone numbers etc. on IM Dashboard. 1.[7] No penalty shall be imposed for the same reason under the same Contract more than once, except for non-delivery related incidents which are allowed lotwize in case of staggered delivery schedules. Similarly, in case of Services, more than one incident can be created for same reason of the contract with different duration. ”
13. As per clause 1.[7] a penalty cannot be imposed for the same reason under the same contract more than once except for non-delivery related incidents. Ld. counsel for the Petitioner argues that the Petitioner has been suspended due to the second incident as also the third incident, though, in the first incident reporting the same was resolved amicably. This according to him is not permissible.
14. A perusal of clause 1.[7] shows that the imposition of penalty is only once except in respect of non-delivery related incidents which can be allowed lot-wise in case of staggered delivery schedules. As discussed above, the present case, was a case of one-time delivery and hence the second suspension for the same reason, would not be permissible. In the case of services, however, more than one incident can be created for the same reason of the contract with different duration. The intention behind this is that the parties concerned cannot be repeatedly punished for the same incident. However, there is an expectation that in case time is sought in respect of a delivery and again the said time is not adhered to, the same could be reported as a second incident. Thus, if a party reports one incident due to delay in supplies and time is sought to make supply, it is expected that the delivery would be completed. If the default continues even on the second occasion, it cannot be said that there cannot be a suspension, as a new deadline for supply has been agreed upon and the reason would not be the same as the first suspension. It would depend on the facts of each case as to whether there can be a second suspension in a contract for supply of goods.
15. Be that as it may, in the present case, the facts would demonstrate that the delivery period was up to 30th January, 2022 and more than one year and one month has passed since the said date. Till date, the delay issue has not been resolved and the equipment has not been supplied. It appears from the incident reporting that there was some assurance at some point by the Petitioner that the Petitioner is making its best efforts to obtain the supply and to give the same. This may have, therefore, resulted in a second time suspension. Considering the nature of the dispute and the fact that the GeM portal expects high quality of goods and services in a prompt and efficient manner, the suspension is not unreasonable in the present case. If the Petitioner felt that it would not have the ability to supply the said product, it ought to have taken that position very clearly so that the issue with IOCL was resolved on its own and the third incident was not reported by IOCL. Under these circumstances, this Court is not inclined to interfere in the present case. However, it is made clear that the second suspension being only till 7th March, 2023, with effect from 8th March, 2023, there would be no suspension of the Petitioner. The suspension till 7th March, 2023 shall continue, however, thereafter the Petitioner would be free to offer its goods and services on the GeM portal.
16. An email dated 25th February, 2023 by GeM has been placed on record. The IOCL shall ensure that since the suspension has been suffered by the Petitioner twice, it shall not raise any more incidents on the GeM portal in respect of this particular contract of supply. The remedies of IOCL in respect of breach of contract, to be availed of in accordance with law, are however, left open.
17. With these observations, the present petition, along with all pending, applications are disposed of.
PRATHIBA M. SINGH JUDGE MARCH 1, 2023 dj/rp