Rajat Enterprises v. Govt. of N.C.T. of Delhi

1. By way of the present petition filed under Articles 226 and 227 of the Constitution of India, the petitioner has assailed order dated 08.02.2022 passed by the respondent, whereby it has been debarred from participating in any tenders of Delhi Jal Board (in short, ‘DJB’) and/or having any business dealing with DJB for a period of five years from the date of issuance of the order. Other ancillary reliefs have also been sought.

2. The facts of the case are that vide NIT dated 27.03.2018, the DJB had issued an e-tender for 24 separate works. One such work was Item 21, i.e. “improvement of electrical supply system in main LT panel at BHARATNAGAR SPS”. The petitioner participated in the e-tender process and was awarded work order No.2 dated 25.04.2018 for supply of two Air Circuit Breakers (hereinafter, ‘ACBs’) and other items/adjoining accessories, as well as to install/test/commission work. The work was valued at Rs.6,49,264/- and was to be carried out in 30 days. Pursuant to award of the work, the parties entered into Agreement dated 01.05.2018. On 02.04.2019, the respondent issued Show Cause Notice to the petitioner asking it to explain as to why blacklisting/removal/temporary suspension action be not taken against it for raising bills despite not having carried out the work as per specifications and causing financial loss of Rs.6,49,264/- to DJB. The same was replied to by the petitioner vide letter dated 26.04.2019. An opportunity of personal hearing was granted to the petitioner on 08.07.2019. The respondent, thereafter, passed a circular dated 14.10.2019 debarring the petitioner. Aggrieved, the petitioner approached this Court by way of W.P.(C) No.2252/2020, praying for setting aside of the proceedings against it including circular dated 14.10.2019. Vide order dated 10.12.2021 passed in the said writ petition, this Court directed that the circular dated 14.10.2019 shall not operate against it till the respondent passed ‘a reasoned and speaking order, after considering the petitioner’s reply’. Pursuant to order dated 10.12.2021, the respondent passed the impugned order and the petitioner has filed the instant petition assailing the same.

3. Learned counsel for the petitioner has submitted that the impugned order dated 08.02.2022 suffers from the same infirmity as circular dated 14.10.2019, being bereft of reasons and for not having considered the petitioner’s reply. It is contended that the decision-making authority in connection with the impugned order dated 08.02.2022 is different from the authority who gave personal hearing to the petitioner. As such, the principle ‘he who hears must decide’ has not been adhered to. It is also contended that the impugned order dated 08.02.2022 debarred the petitioner for a reason beyond the show cause notice dated 02.04.2019.

4. Learned counsel for the respondent, on the other hand, has supported the impugned order. She has contested the maintainability of the present petition. Without prejudice, it is submitted that the petitioner’s conduct has caused financial losses to the respondent. It is also submitted that the petitioner was granted two opportunities to present its case, however, it was unable to give a satisfactory explanation. Therefore, the debarment committee decided to debar the petitioner.

5. I have heard learned counsels for the parties and perused the material placed on record.

6. The petitioner contends that the work under order dated 25.04.2018 stood completed on 24.05.2018, the guarantee period of 6 months expired on 24.11.2018, and after installation of the equipment, it had no watch and ward over the site i.e. Bharatnagar Sewage pumping station (SPS). The inquiry by the respondent started in a premeditated manner by letter dated 13.02.2019, which was not served on the petitioner and showed that the competent authority had decided to debar the petitioner even before the issuance of the show cause notice. It is alleged that the impugned order debars the petitioner without considering its reply, contrary to the import of order dated 10.12.2021 passed by this Court.

7. The respondent alleges that during an inspection on 04.10.2018, its Vigilance Department had found two ACBs lying at the site. The concerned A.E. admitted that the work was yet to be started by the petitioner. Yet, the concerned division of DJB had not initiated any action for non-completion of work by the petitioner in time. Instead, entries relating to the work were found in the Measurement Book, the Job Register as well as in old material registers, leading to a conclusion that fictitious work was done by the petitioner in collusion with officials of DJB. The bills raised by the petitioner were accompanied by purchase vouchers, which were endorsed by the Engineer-in-charge. But in view of the discrepancies coming to light, the payments processed in favour of the petitioner were stopped and not released.

8. A perusal of the case records would show that in its reply to the respondent’s show cause notice, the petitioner had taken certain defences, including – (i) that it did not have the responsibility to maintain watch and ward at the site after completing the work and handing over to Engineer-in-charge, (ii) that the respondent had issued a similar tender for EDO type ACBs around the time of completion by petitioner and the removal of petitioner’s MDO type ACBs installed at the site could not be ruled out, and (iii) that in furtherance of the awarding of work, the petitioner had purchased materials from M/s Narendra Electricals and M/s Shree Electro, and the procurement proofs were deposited. However, the same have not been referred to, much less deliberated upon, in the impugned order dated 08.02.2022 despite the direction passed by this Court in order dated 10.12.2021.

9. At this stage, it is deemed expedient to refer to UMC Technologies Private Limited v. Food Corporation of India & Another reported as (2021) 2 SCC 551 where the Supreme Court, while reiterating settled principles, has highlighted the severe consequences of blacklisting orders and the stigmatization that accrues to the person/entity being blacklisted. Relevant excerpt from the said decision reads as follows:

20. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the blacklist.” xxxxx

25. The mere existence of a clause in the bid document, which mentions blacklisting as a bar against eligibility, cannot satisfy the mandatory requirement of a clear mention of the proposed action in the show-cause notice. The Corporation's notice is completely silent about blacklisting and as such, it could not have led the appellant to infer that such an action could be taken by the Corporation in pursuance of this notice. Had the Corporation expressed its mind in the show-cause notice to blacklist, the appellant could have filed a suitable reply for the same. Therefore, we are of the opinion that the show-cause notice dated 10-4-2018 does not fulfil the requirements of a valid show-cause notice for blacklisting. In our view, the order of blacklisting the appellant clearly traversed beyond the bounds of the show-cause notice which is impermissible in law. As a result, the consequent blacklisting order dated 9-1-2019 cannot be sustained.”

10. Pertinently, a Co-ordinate Bench of this Court in Kamlesh Engineering Works v. Delhi Jal Board, Govt. of N.C.T. of Delhi, W.P.(C) 10052/2021, while observing that “he who hears must decide”, had found fault with the blacklisting of the petitioner therein following circular dated 14.10.2019. It was noted that the respondent had not granted any opportunity of either personal hearing by the Managing Director or CEO of the Board, or opportunity to challenge the recommendations of the Executive Engineer, the Superintendent Engineer or the Debarment Committee, who in fact had taken the decision to debar the petitioner.