In the matter of an application under Articles 226 and 227 of the Constitution v. Agency Ltd., Guwahati
Case Details
ORISSA HIGH COURT: CUTTACK W.P(C) NO. 15404 OF 2022 In the matter of an application under Articles 226 and 227 of the Constitution of India. --------------- AFR M/s. VS Agency Ltd., Guwahati ..… Petitioner -Versus- Indian Oil Corporation Ltd., Kolkata & Ors. ….. Opp. Parties For Petitioner : M/s. S.R. Mohanty and D. Acharya, Advocates For Opp. Parties : M/s. (Miss) S. Mishra and N.K. Rout, Advocates, [O.P.No.2] P R E S E N T: THE HONOURABLE DR. JUSTICE B.R.SARANGI AND THE HONOURABLE MR JUSTICE M.S. RAMAN DECIDED ON : 29.03.2023 DR. B.R. SARANGI,J. M/s. VS Agency Ltd., a proprietorship concern, by means of this writ petition, seeks to quash the letter dated 04.02.2022 under Annexure-4, by which opposite party no.2-General Manager (OPS), Odisha // 2 // State Office, Indian Oil Corporation Ltd.(hereinafter to be referred as “IOCL” for short) has cancelled the letter of appointment issued in favour of the petitioner and forfeited its security deposit as per clause-9.4 of the special terms and conditions of contract and has placed the petitioner on Holiday List and debarred it from entering into any contracts with IOCL for a period of three years from the date of issuance of the said letter, i.e., from 04.02.2022 to 03.02.2025 as per clause-10.1(i) & 10.1(k) of the tender call notice. 2. The factual matrix of the case, in brief, is that opposite party no.1 floated a tender bearing reference no.RCC/ERO/37/2020-21/PT-175 under e-tender I.D. 2021_ERO_132630_1 for the purpose of hiring services of vehicles (MUV) for the official activities at Paradeep Refinery Co-ordination Office, Odisha for a period of three years. 2.1 Pursuant to the aforementioned tender notice, the petitioner participated in the process of tender by submitting its technical as well as financial bid. Upon // 3 // opening of bids, the petitioner was declared as successful and letter of acceptance bearing reference no. RCC/ERO/19/2021/22/98 dated 30.04.2021 was issued in its favour for a contract value of Rs.92,88,412.12 (w/o GST for 3 years). Thereafter, the petitioner time and again submitted proposals before the opposite parties for reconsideration of working estimates, because it had to bear minimum monthly expenses of Rs.3,27,000/- whereas the amount payable, as per the working estimate of the tender document, by the opposite parties to the petitioner was Rs.2,53,234/-. While the aforesaid revision of working estimate was under consideration before the opposite parties and the petitioner was waiting for positive response, it was served with a show-cause notice dated 01.11.2021. 2.2 After receiving the show-cause notice, the petitioner was astonished, as the opposite parties threatened it to the effect of termination of the bid and debarment from participating in future tenders. Accordingly, the petitioner submitted its reply, vide letter dated 15.11.2021, specifically averting that due to // 4 // advent of second wave of COVID-19 pandemic, the situation in the automobile markets were changed, inasmuch as most of the manufactures were on standby due to continuous lockdown and disturbance of supply chain. While enquiring with the vehicle dealer, it was intimated that due to lockdown, vehicles cannot be supplied for at least two months and while enquiring about the hiring of vehicles in and around the operational area, it realized that there was a technical error in the working estimates. As per the working estimates, the monthly amount payable to the contractor was only Rs.2,53,243/- whereas in the estimation of the agency, the monthly expenses came to Rs.3,27,000/-. Therefore, the petitioner would be suffering a loss of around Rs.73,776/- per month which if considered along with 10% minimum profit under a contract would be amounting to loss of Rs.85,000/- per month making the working estimates under the contract unworkable, impracticable and not viable to the business. In other words, the performance of the agreement with the contract value, as specified in the letter of acceptance, // 5 // was impossible, which frustrated the purpose of the contract. 2.3. Since the rates as per the letter of acceptance was unworkable and would have frustrated the purpose of the contract, the petitioner time and again requested the opposite parties to reconsider the working estimates taking into account the present situation. The petitioner also requested to do the negotiation in presence of the L2 bidder so that the reconsideration process can be done in a fair and transparent manner. But opposite party no.2, instead of reconsidering the working estimates submitted by the petitioner, issued letter dated 04.02.2023, i.e. after four months of the issuance of tender placing the petitioner on Holiday List and debarring it from entering into any contracts with IOCL for a period of three years from the date of issuance of the said letter, i.e., from 04.02.2022 to 03.02.2025 as per clause-10.1(i) & 10.1(k) of the tender. Hence, this writ petition. // 6 // 3.
Legal Reasoning
Mr. S.R. Mohanty, learned counsel appearing for the petitioner vehemently contended that the order of debarment dated 04.02.2022 issued by opposite party no.2 in Annexure-4 is arbitrary, unreasonable and contrary to the provisions of law and, as such, the said order has been passed without following due procedure, which cannot be sustained in the eye of law. It is also contended that the debarment of the petitioner from participating in the future tenders of IOCL for a period of three years is a punitive action and while passing the order of debarment, the principle of natural justice has not been complied with. It is further contended that though the petitioner requested the opposite parties to reconsider the decision of debarment and revoke the same, but no action was taken. More so, the order of debarment against the petitioner from participating in the future tenders of the IOCL for a period of three years is in gross violation of sub-clause (II) of Annexure-XI to the tender document, i.e., the format of bid security declaration from bidders in lieu of EMD, which provides suspension of a bidder from being eligible for // 7 // bidding/award of all future contracts of IOCL for a period of one year from the date of committing any such breach. Therefore, the action so taken debarring the petitioner from participating in the future tenders for a period of three years, is contrary to the conditions stipulated in the tender document. Therefore, the order of debarment dated 04.02.2022 issued by opposite party no.2 in Annexure-4 has to be quashed. 4. Ms. S. Mishra, learned counsel appearing for opposite party no.2 contended that Paradeep Refinery Co-ordination Office (RCO) of the IOCL is engaged in handling critical activity of evacuation of essential petroleum products from Paradeep Refinery of Indian Oil Corporation Ltd. and dispatch of the same to different parts of Odisha and other States through various modes. Since it is the nodal office for evacuation of products from Paradeep Refinery of Indian Oil Corporation Ltd., its operation also becomes very much essential for smooth running of the refinery. It is contended that the petitioner was called upon to produce certain documents of the vehicles, vide letter dated 13.08.2021, but it did // 8 // not do so. The petitioner initially, vide e-mail dated 13.05.2021, had requested for one month’s time to start the work and subsequently, vide e-mail dated 22.06.2021, stated that for purchasing new cars there was a waiting period of 30 to 45 days. Thereafter, on 04.09.2021, forwarded the letter dated 04.06.2021 through e-mail stating that it will be difficult for the petitioner to adhere to the tender quoted rates and therefore requested to reconsider the tender rates to make it workable. It is further contended that in spite of several opportunities given, the petitioner did not comply LOA and tender terms and conditions. It is further contended that as per Clause-10.1(i) & k of the tender documents, a party may be put on Holiday List in the event the party abandons the contract or if the party after opening of price bid, on becoming L1, withdraws/revises its bid upwards within the validity period. Accordingly, a show-cause notice was issued on 01.11.2021 for abandoning the contractor for hiring services of vehicles (MUV) for the official activities at Paradeep Refinery Co-ordination Office for three years // 9 // for not placing the vehicles within the stipulated time, to which the petitioner submitted its reply stating that it would be difficult on its part to adhere to the rates which were quoted during the bidding process. Therefore, finding no other alternative, the authority passed the order impugned which may not be interfered with by this
Decision
Court. Therefore, the writ petition should be dismissed. 5. This Court heard Mr. S.R. Mohanty, learned counsel appearing for the petitioner and Ms. S. Mishra, learned counsel appearing for opposite party no.2 in hybrid mode. Pleadings have been exchanged between the parties and with the consent of learned counsel for the parties, the writ petition is being disposed of finally at the stage of admission 6. For just and proper adjudication of the case, the relevant provisions of the tender documents are referred below:- “Clause-9.4. … The contractor shall ensure that within four weeks from the date of LOA (Letter of Acceptance), copy of RC books of minimum no. of MUVs or Jeeps as specified in NIT (MUVs or Jeeps proposed the contract) should be submitted to IOC failing to be operated under // 10 // which EMKD/SD shall be forfeited… the LOA would be cancelled and (“Party” In case of 10.1 to comply above failure guidelines, IOCL may go for holiday listing of the party Bidder/Licensor means /Tenderer/Consultant/Contractor/Contractor/ Subcontractor/sub-contractor/Sub-consultant) A Party may be put on holiday list in the event of any one or more of the following If a Party xxx xxx xxx (i) Has committed breach of Contract or has failed to perform a contract or has abandoned the contract. xxx xxx xxx (k) After opening of Price Bid, on becoming L1, withdraws/revises his bid upwards within the validity period.” Relevant part of clause-11 of the Special Terms and Conditions of the Contract reads as follows:- “11.0 No conditions or counter conditions to above rate schedule and terms and conditions will be accepted. xxx xxx xxx” Due to non-compliance of the conditions stipulated in the contract, the petitioner, vide order dated 04.02.2022, was placed on Holiday List and debarred from entering into any contracts with Indian Oil Corporation Ltd. for a period of three years w.e.f. 04.02.2022 to 03.02.2025 as per clause-10.1(i) and 10.1(k) of the tender documents. // 11 // 7. The specific contention of Mr. Mohanty, learned counsel appearing for the petitioner is that the debarment of the petitioner from participating in any contract with IOCL for a period of three years cannot be sustained in the eye of law, in view of clause-II of Annexure-XI, i.e., the format of bid security declaration from bidders in lieu of EMD, which reads as follows: fail timeline OR “II. That in the event we withdraw/modify our bid during the period of validity OR I/we fail to execute formal contract agreement within the given to submit a I/we performance security within the given timeline OR I/we commit any other breach of Tender Conditions/Contract which for forfeiture of EMD; I/we will be suspended from being eligible for bidding/award of all future contract (s) of Indian Oil Corporation Limited for a period of one year from the date of committing such breach”. amounts On perusal of the aforementioned clause, it is made clear that breach of tender conditions/contract will amount to forfeiture of EMD and the bidder will be suspended from being eligible for bidding/award of all future contracts of IOCL for a period of one year from the date of committing such breach. Thereby, the action taken by the authority debarring the petitioner from participating in any tenders of the IOCL for a period of // 12 // three years cannot be sustained in the eye of law, as contended by learned counsel for the petitioner. 8. In course of hearing, this Court, on 11.01.2023, passed the following order:- “This matter is taken up through hybrid mode. 2. Heard Mr. S.R. Mohanty, learned counsel for the petitioners and Ms. Sanjibani Mishra, learned counsel appearing for the opposite parties. that due fairly stated Mr. S.R. Mohanty, learned counsel for the 3. petitioner to non- compliance of the condition stipulated in the agreement, the petitioner was blacklisted for a period of three years. In the meantime he has undergone one year of blacklisting and in the event the punishment of blacklisting to one year, then he will be able to participate in other bids which are made available to him. The blacklisting of long period of three years is causing prejudice to the petitioner. the opposite parties can reduce 4. Ms. Sanjibani Mishra, learned counsel appearing for the opposite parties wants to take instruction in this matter. 5. Call this matter after one week.” This Court, on 02.02.2023, passed the following order:- “This matter is taken up through hybrid mode. In compliance of 2. the order dated 11.01.2023, Ms. Sanjibani Mishra, learned counsel appearing for the Opp. Party No.2 states that the Opp. Parties are not agreeable to the reduced blacklisting period from 3 years to // 13 // the petitioner because one year even after forfeiting the amounts deposited by the petitioner himself is causing difficulty to the Opp. Parties, so far as the execution of work is concerned. Since the Opp. Parties has not agreed for reduction of the blacklisting period, matter requires final disposal. 3. Let the parties are directed to be ready by filing written note of arguments and citation for final disposal. 4. Put up this matter after two weeks.” 9. In compliance of the above order, Ms. S. Mishra, learned counsel appearing for opposite party no.2 contended that due to internal communication the petitioner was deprived of participating in any tenders of the IOCL for a period of three years, therefore, the order impugned is well justified which cannot be interfered with. But fact remains, if the conditions, on the basis of which the petitioner has been placed on Holiday List and debarred from participating in any tenders of the IOCL for three years, do not form part of the contract itself, any internal communication made thereunder, cannot take away the rights of the petitioner which have already been crystalized by entering into an agreement between the parties. There is no dispute that the petitioner was the successful bidder and it is bound by the conditions // 14 // as per the agreement executed between the parties. Therefore, the letter dated 04.02.2022 issued to the petitioner debarring it from participating in any tenders of the IOCL for a period of three years is de hors the terms and conditions stipulated in the tender call notice and, thus, violates the doctrine of proportionality of administrative action. 10. At this stage, it is profitable to quote the format of bid security declaration to be furnished in lieu of EMD:- “FORMAT OF BID SECURITY DECLARATION FROM BIDDERS IN LIEU OF EMD (On Bidders Letter Head) the authorized I/We, of M/s………………………, participating in the subject Tender No……………………, for the job Tender against No………………., do hereby declare. of…………………, signatory I. II. That I/We have availed the benefit of waiver of EMD while submitting our offer against the subject Tender and No EMD being deposited for the said Tender. That in the event we withdraw/modify our bid during the period of validity OR I/we fail to execute formal contract agreement within the given timeline OR I/we fail to submit a performance security within the given timeline OR I/we commit any other // 15 // breach of Tender Conditions/Contract which amounts for forfeiture of EMD; I/we will be suspended from being eligible for bidding/award of all future contract (s) of Indian Oil Corporation Limited for a period of one year from the date of committing such breach. Signature and seal of authorized signatory of bidder Name of authorized signatory: …………………..” When the conditions stipulated in the format of bid security declaration in lieu of EMD specifies imposition of penalty of one year, in the name of internal communication, debarment of the petitioner from participating in any tenders of the IOCL for a period of three years, vide letter dated 04.02.2022, cannot be sustained in the eye of law. Therefore, the same is liable to be quashed. 11. The bid documents stipulating various conditions seek to regulate the relationship between the parties. Therefore, any order passed bereft the conditions stipulated therein cannot be sustained in the eye of law. 12. In Ram Gajadhar Nishad v. State of U.P., (1990) 2 SCC 486 : AIR Online 1990 SC 98, it has been // 16 // specifically mentioned that conditions mentioned in the tender documents are mandatory and for non- compliance thereof if the bid is not accepted, the same cannot be interfered with by the Court. Since the tender conditions are sacrosanct and binding on the parties, anything contrary to the same cannot be taken into consideration and, as such, the action so taken by the opposite party-authority is in gross violation of the conditions of tender document and the same cannot be sustained in the eye of law. 13. In Goldyne Technoserve Ltd. v. State of M.P. & Ors., AIR 2011 SC 2574, the apex Court referring to Ram Gajadhar Nishad (supra) Sorath Builders v. Shreejikrupa Buildcon Limited., (2009) 11 SCC 9, has also taken the same view that any action taken contrary to the conditions stipulated in the contract itself cannot be sustained in the eye of law. 14. In the above premises, whatever conditions may be resorted to debar or blacklist the petitioner, its period should be confined to one year, in view of the // 17 // conditions stipulated in the format of bid security declaration furnished in lieu of EMD. So it cannot be for a period of three years pursuant to internal decision taken by the authority, as has been contended by the learned counsel for the petitioner. The reason for non- production of so called internal communication before this Court is well inferred that the same was never communicated to the petitioner nor formed part of the contract so as to binding on the parties. 15. In the above view of the matter, opposite party no.2 cannot take advantage of his position and act contrary to the conditions stipulated in the tender documents debarring the petitioner from participating in any tenders of the IOCL for a period of three years in place of one year. Therefore, the impugned letter/order dated 04.02.2022 issued by opposite party no.2 under Annexure-4 placing the petitioner in Holiday List and debarring it from participating in any tenders of the IOCL for a period of three years, i.e., from 04.02.2022 to 03.02.2025, cannot be sustained in the eye of law and, rather, such debarment of the petitioner should be // 18 // confined to one year, as per the conditions stipulated in the format of bid security declaration in lieu of EMD, and it is ordered accordingly. The impugned order dated 04.02.2022 debarring the petitioner for a period of three years, having been modified by this Court to one year, the said period of one year has already expired in the meantime and, as such, the petitioner is now free to participate in any upcoming tenders of the IOCL. 16. With the above observation and direction, the writ petition stands disposed of. However, there shall be no order as to costs. (DR. B.R. SARANGI) JUDGE M.S. RAMAN, J. I agree. (M.S. RAMAN) JUDGE Orissa High Court, Cuttack The 29th March, 2023, Alok