M/s SAI Consulting Engineers Pvt. Ltd. v. The Chief Project Manager, S.T & Ors.

D.B.: Hon'ble Mr. Justice Abhay Manohar Sapre & Hpn'ble Mr. Justice G. Minhajuddin W.P.(C) No.5599of2011 PETITIONER M/s. Sai Consulting Engineers Pvt. Ltd. Versus RESPONDENTS The Chief Project Manager another WRITPETITION ARTICLE 226/227 OF THE CONSTITUTION OF INDLA Appearance : Mr. Abhinav Kardekar, Counsel for the petitioner. Mr. Abhishek Sinha, Counsel for the respondents. ORDER (05.07.2012) The following order of the Court was passed by Abhay Manohar Sapre, J. Heard. By filing this.writ petition under Article 226/227 of the (2) Constitution of India. the writ petitioner seeks to challenge the communication of the respondent dated 18.7.2011 (Annexure- P-1), respondents tender/proposal of the writ petidoner and returned to thera un- by which, opened as it is on the ground that since the acdon against the writ petitioner for blacklisting and debarring them is under contemplation and hence, it is not possible to open the tender proposal submitted by the writ petitioner.

(3) The impugned letter coinmunication reads as under : "To, Date.: 18.07.2011 M/s. Sai Consulting Engineers Pvt. Ltd. "SAI House", Sayyam Corporate Square, Ahmadabad - 380 059 Gujarat (India) Sub.: Ref.: MANAGEMENT PROJECT CONSULTANCY FOR "Balance works of Construction of Road bed, Major and Minor Bridges and installation of track fhick web (excluding supply of rails, switehes and weldable CMS crossings), and Electrical SignaUng (Railway Elecfa-ification and General electrification) in connection wifh provision of 3rd line in Bhatapara-Urkura section (58.71) km) in the State of Chhattisgarh (India)." Reg.- Submission of RFP for subject work opened on dt.21.06.2011. Corporate L.No.C- RVNL II/Sbowcause notice/Sal/2011/81 dated 28.06.2011. Office As directives the Bid Evaluation Conunittee and accepting authority, the financial bid for the subject work is left un- opened aad returned herewith. The bid security will be returned soon.

Encl.: One Un-opened packet containing Financial Bid. " Like wise the letter dated 28.6.2011 (Annexure-P-2) (4) referred to in the impugned letter quoted supra and which was made basis for issuing the aforesaid impugned letter reads as under: .:^A^V^ ..»><.fc ^- "All DGMs, JGMs & AGMs, AU CPMs/GMs, ALL EDs, RVNL Sub.: Banning of Business wifh PMC, M/s. Sai Consulting Engineers Pvt. Ltd., 4, Kuldeep Society, Near Ishwar Bhavan, Navarangpura, Ahmedabad (Gujarat) 380 009 engaged in "Constmction of Roadbed, Major and Minor Bridges and Installation of Track, (Railway Electrification connection wifh Bhatapara -Urkura Section in the State of Chhattisgarb. " and General Electrification) and Electric Signaling Ref.: This office letter of even nuinber dated

22.06.2011 M/s. Sai Consulting Engineers Pvt. Ltd. were a Show Cause Notice served with fhrough CPM/Raipur for banning business dealing for 5 in the (Five) Consultancy work for the above project. stating the deficiencies The Competent Aufhority has dedded in the interest of RVNL not to enter into fresh business with M/s. Sai Consulting Engineers Pvt. Ltd. pending banning of business proceedings. Action raay be taken accorduigly. (P.K. Singh) Executive Director/Infra Copy for infonnation to DF, DP,DO, DPE, AGM/CC (CVO)" The short question which arises for consideration in this (5) writ petition is whether respondents were justified in issuing the impugned communication dated 18.07.2011 (Annexure-P-1) and in consequence were jusdfied in their action contained therein ? ^:111;^ 'i~~- (6) Facts of the case are these. On 18.5.2011 (Annexure-P-8), the respondent - a (7) Government of India undertaking known as "Rail Vikas Nigam Limited formed for the purpose of effective working of railways in our country invited sealed proposal from persons at large for "PROJECT MANAGEMENT providing CONSULTANCY SERVICES" for their railway line [ 3RD LINE IN BHATAPARA-URKURA • SECTION (58.71 KM) ]. The writ petitioner claiming to be the person eligible for dong this work submitted their proposal/tender and offered to do the work for the Railways.

Several othera persons also submitted. their proposals/tenders. railways The respondent by aforementioned impugned letter dated (8) 18.7.2011 informed to the writ petitioner that it is not possible the tender to entertain or/and accept the Railways /proposal submitted by the writ petitioner because it is decided internally not to have any business dealing in future with the writ petitioner due to writ petitioner's poor and unsatisfactory performance in past in other or/and similar work. The respondent, therefore returned the sealed proposal as it is to the writ petitioner without opening it. The respondent then proceeded to open all other proposals received by them from other persons (tenderers) and accepted one tender/proposal and accordingly, granted them the contract for the work in question. It is this action of the respondent i.e not opening their tender and not considering it on merits, is under challenge in this writ petition by the writ petitioner.

The notice of (9) respondents. They have filed their return supporting their the writ petition was served on the action inter alia in the light of their internal 28.6.2011 quoted supra as also by contending that since letter dated •\' »'- previous work given to the writ petidoner by the respondents was found poor and further found far from satisfactory on account of several reasons and hence, it was decided internally not to give any contract in question to the writ petitioner and it the impugned communication was is with this background, sent to the writ petidoner by the respondent. (10) Having heard the learned counsel for the parties and on perusal of the record of the case, we are inclined to allow the writ and quash the impugned communication (Annexure P-1). In our considered opinion, the action on the part of the (11) respondents in not opening the tender proposal submitted by the writ petitioner pursuant invited by the respondent and returning the said closed' envelope to the writ pedtioner is on the face of it bad in law and deserves to be set- aside being legally unsustainable. to the offers (12) The State or/and their authorities cannot deprive the citizen from entering in business with the State and thereby, cannot deprive them from pardcipating in the tender process initiated by the State for any work.

If it does then it constitutes a case of violation of citizen's rights guaranteed under Ardcle 14 read with Article 19( 1 ) (g)of the Constitution of India .The State cannot discriminate inter se cidzens when it enters into the field of business and has to give every citizen an equal opportunity to participate with all alike him. However, no citizen has a right to insist upon the State that he should be awarded the contract/work to fhe exclusion of others and nor this Court can issue a mandamus of this nature against the State but certainly a citizen has a right to insist that he should be allowed to submit his tender to the State and on that basis has a legitimate right to claim participation in such tender process along with others alike hiin. If this right of citizen is violated or /and taken away by the State without there being any ~\> 1 •^- justifiable reasons then he has a right to seek an appropriate writ against the State and its authorities.

It is only when the State after giving an opportunity to (13) the person concerned decide to blacklist or/and debar him from entering into any future business with them and communicate its reasons for doing so as per law laid down in such type of cases, then, and in that event, the State would be justified in not permitting such person to deal with the State but not otherwise. Indeed to when question (14) circumstances and by which manner/mode , the State and its agencies can debar and blacklist any person from entering and dealing with the business with the State /authorities, remains no more resintegra and stands answered by series of decisions and in what rendered by the Supreme Court reported in M/s. Erusian Equipment and Chenucals Ltd. v. State of West Bengal and another, AIR 1975 SC 266 and Raghunath Thakur v. State of Bihar and others. AIR 1989 SC 620. (15) This is what the Supreme Court held in M/s.

Erusaian Eoruipment and Chemicals Ltd. ISupra) : "19. Where the State is dealing with individuals in transactions of sales and purchase of goods, the two important factors are that an is entitled to ta-ade with the individual Govemment and an individual is entitled to a fair and equal treatment with others. A fairly can be interpreted as duty to act meaaing a duty to observe certain aspect of A body may be rules of natural justice. under a duty to give fair consideration to the facts and to consider the representations but not to disclose to those persons details of Sometimes information in its possession. fairly can also be sustained duty to act without providing opportunity for an oral hearing. It will depend upon the nature of the interest to be affected, the circurastances is exercised and the in which is power nature of sanctions involved therein. \'' \ s-.;

Blacklisting bas fhe effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Govemment for purposes of gains. The fact that a disability is created by the order of blacklisting indicates relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concemed should be opportunity to represent his case before he is put on the blacklist. " (16) The saine principle was then reiterated by their Lordships in Raghunath Thakur fSutira) in the same words as under :

passed business In' so far as ventures the future business of Indisputably, no notice had been given to the the proposal of blacklisting the appellant of It was contended on behalf of the appellant. State Govemment that there was no requirement in the rule of giving any prior notice before blacklisting any person. requireinent contention specifically of giving any notice is concemed, the respondent is right. But it is an implied principle of the rule of law that any order having civil should be consequence following the principles of nature justice. It bas to be realized that blacklisting any person in civU respect consequences for person concemed in any event. Even if the rules do not express so, it is an elenientary principle of nature justice that parties affected by any order should have right of being heard and making representations against the order. In that view of the matter, fhe last portion of the order in so far as it directs blacklisting of the appellant respect of future contracts, cannot be sustained In the premises, fhat pordon of fhe order in law. the appeUant be placed in the directing fhat blacklist in respect of future contracts under fhe Collector is set aside.