TaxTMI 
TaxTMI 
TaxTMI 
2025 (2) TMI 1243
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.... no. 1 to the appellant firm, calling upon the firm to show cause as to why it should not be blacklisted for a period of three years and the EMD of Rs. 5,00,000/- (Rupees Five Lakh only), be forfeited. The appellant firm was also called upon to show cause as to why the loss incurred by the corporation, due to its default in fulfilling its terms of contract, be recovered. 4. Prima facie, it appears that the petitioner firm was declared as L-1 in one of the tenders issued by the corporation i.e. the respondent no. 1. According to the respondent no. 1, the appellant firm violated few clauses of the tender agreement. 5. The relevant clauses of the tender document/agreement which according to the respondent no. 1, have been breached, read thus:- "16.1 Period of supply of books maximum 90 days as per mentioned in the work order from the date of printing order. It will be imperative upon the bidder to complete the allotted printing & binding work within stipulated time period i.e. maximum 90 days as per mentioned in the work order. In emergency the CGPPN will reduce period for supply of books as per requirements. The 22/52 decision of the Managing Director in this regard will be final....
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....ral terms as Clause 13.3 purports that any failure to fulfill contractual obligations or breach of any provisions of agreement, may render the bidder to be blacklisted. Clause 13.6 further purports that if the printer is found to influence any staff of the Nigam in any unauthorised manner will also be blacklisted. In the Statement of Chinta Ram Sahu and in police enquiry against him, nothing was found against the petitioner and omnibus inference cannot be drawn that the petitioner had influenced the staff of the Corporation and had influenced the Police, thereby the petitioner was liable to be blacklisted. 24. Applying the principles laid down by the Supreme Court, I am of the view that the blacklisting order in this case travelled beyond the scope of show cause notice, as such, is liable to be quashed. Accordingly the order dated 02.01.2021 is quashed. With the above observations, this writ petition is allowed." 9. The plain reading of the aforesaid order would clearly give an indication that the challenge in the earlier round of litigation was confined to the order of blacklisting. Further that the High Court had only tested the order of blacklisting qua the show cause notice ....
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.... writ petition stands allowed which was exclusively challenging the order of blacklisting would it not amount to the respondents being precluded for all time to come from initiating any action in respect of any illegality which was detected by the respondents in respect of the contract entered into between the petitioner and the respondents. All the contentions and the allegations that the petitioner raises is only trying to establish the fact that the allegations leveled against the petitioner does not stand the test of law as it has already been subjected to test in the earlier round of litigation i.e. in WPC No. 1325/2021. Whereas on the perusal of the order of the earlier writ petition would clearly give an indication that the challenge in the said writ petition was only to the order of blacklisting. That it was only the order of blacklisting which was subjected to scrutiny by the writ Court and it was only the order of blacklisting which has been set aside/quashed. The writ Court in the earlier judgment in WPC No. 1325/2021 has not held that the allegations leveled against the petitioner is not made out. All that it has been held by the writ Court was that the grounds raised f....
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....High Court in our opinion ought not have interfered with the show cause notice. 13. Again, the Hon'ble Supreme Court in the case of Secretary, Ministry of Defence & Ors. v. Prabhash Chandra Mirdha [2012 11 SCC 565] in paragraph 8, 10 & 12 has held as under:- "8. The law does not permit quashing of chargesheet in a routine manner. In case the delinquent employee has any grievance in respect of the charge-sheet he must raise the issue by filing a representation and wait for the decision of the disciplinary authority thereon. 10. Ordinarily a writ application does not lie against a charge-sheet or show-cause notice for the reason that it does not give rise to any cause of action. It does not amount to an adverse order which affects the right of any party unless the same has been issued by a person having no jurisdiction/competence to do so. A writ lies when some right of a party is infringed. In fact, chargesheet does not infringe the right of a party. It is only when a final order imposing the punishment or otherwise adversely affecting a party is passed, it may have a grievance and cause of action. Thus, a charge-sheet or show-cause notice in disciplinary proceedings shoul....
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....tents of the show cause notice dated 13.04.2020. 10. The plain reading of the averments of the show cause notice would by itself show that the respondents have made certain serious allegations against the petitioner in respect of the lifting of the papers from the respondent-Corporation by material suppression of facts so far as furnishing of the Bank Guarantee is concerned. 11. Only because the earlier order of blacklisting having been quashed by the High Court would not preclude the respondent-Corporation from initiating appropriate proceedings for the irregularity committed by the petitioner, if any, in accordance with law. That it is for this reason that the petitioner has been issued with a fresh show cause notice spelling out the allegations that has been made against him. The petitioner can very well provide all the explanations to the allegations made to the respondents supported with all relevant documents in their support. Upon such explanation being submitted the respondent authorities are duty bound to duly consider the same and after due consideration alone, can they take an appropriate decision to proceed further, if required. 12. Further, what is also reflec....
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....r bad in law at this stage. The petitioner would have all the rights and liberty to put up their explanation so far as the allegations are concerned in their response which they are required to submit to the show cause notice. That upon such reply being furnished the authorities concerned are duty bound to duly consider the same and then take an appropriate decision whether to proceed further on the show cause notice proceedings in the light of the explanation so submitted by the petitioner or not?"" 10. In such circumstances record to above, the appellant is here before this Court with the present appeal. 11. We have heard Mr. Gaurav Agarwal, the learned senior counsel, appearing for the appellant and Mr. Ankit Mishra, the learned counsel appearing for the respondent nos. 1 and 2, respectively. 12. We take notice of the order passed by this Court dated 17.05.2023, the same reads thus:- "Mr. Priyank Upadhyay, learned Advocate on Record accepts notice on behalf of the respondents. Hence, issue of formal notice to the respondents is dispensed with. Objections to the petition, if any, be filed. In the meanwhile, there shall be stay of further proceedings pursuant to the not....
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....ng to indicate that the appellant deliberately defaulted. In such circumstances, the proceedings instituted against the appellant deserves to be dropped. 22. On the other hand, the learned counsel appearing for the corporation would submit that the action of blacklisting would not depend upon as to whether default of the appellant herein, was deliberate or not, or there was any intention to take undue advantage or to cheat or not. It depends upon the contravention of the contract and the damage caused to the respondents. 23. The show cause notice reads thus: "Chhattisgarh Textbook Corporation Office Complex, Block-B, Sector-24 Atai Nagar, Nava Raipur No./2806/PPN/Printing/2020-21 /2022 Raipur on 14/12/2022 To, Techno Prints, Behind Banjari Mata Mandir, Near Heera Steel, Rawanbhata Raipur Chhattisgarh. Subject: Show cause notice. Ref:-Your letter dated 23.12.2020, 06.01.2021, 03.06.2021, 08.11.2021, 03.12.2021, 15.02.2022 01.04.2022 regarding EMD refund for the academic session 2020-21. The EMD amount deposited by you in the textbook printing tender for the education session 2020-21 has been sought through the letters referred to in the subjec....
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.... APPROX PAGE NO. BOOK NO. 70 GSM PAPER QUANTITY IN M. TONNE 220 GSM COVER PAPER SHEET NO. L-1 1 B Science (SZ) 10 216 16563 7.737 4224 0.20 1 C Ganit (SZ) 6 244 246729 130.187 62926 0.20 1 A History and Civics (SZ) 6 128 8717 2.413 2223 0.20 20 B Paryawaran (SZ) 7 124 239544 64.234 61084 0.2090 20 A Hindi (SZ) 3 128 240413 66.546 61305 0.2090 20 A Hindi (SZ) 7 128 8850 2.450 2257 0.2090 B Yog Siksha Part -1 (SZ) 1 56 534393 64.715 53481 0.2090 C Ganit (SZ) 2 180 209730 81.637 55244 0.2090 B Ganit (SZ) 3 196 216645 91.825 38316 0.2150 A Shyamala Sanskrit (SZ) 10 192 150260 62.388 1472 0.2150 A Shyamala Sanskrit (SZ) 10 192 5772 2.397 478792 0.2150 Total 576.529 478792 Printing tender clause 16.1 mentions that 16.1 Period of supply of books maximum 90 days as per mentioned in the work order from the date of printing order. It will be imperative upon the bidder to complete the allotted printing & binding work within stipulated time period i.e. max....
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....d your complaint, in situation of date 11.03.2020, the books were supplied to the depot using only 136 MT of paper. According to provision of Printing Tender Clause 16.3:- 16.3 If the progress of work at any stage is found slower than expected and if the Nigam is convinced that the printer will not be able to complete the work in time, the Nigam shall cancel the contract in full or in part and give it to other printer at the cost and risk of defaulting printer. In the event of such cancellation, the security deposit/EMD of the printer shall be forfeited and the printer will not be entitled to any compensation. Accordingly, for the slow pace of printing work, you were issued notice letter No. 4825 dated 11.03.2020 by the corporation, after which you sent the letter dated 17.03.2020 to the positive branch of the corporation and gave the printing order No. 4480 dated 18.02.2020 due to non-availability of the following textbooks for positive printing, inability, was expressed in the printing work- GROUP MEMBER SUB GROUP NUMBER NAME OF BOOK CLASS APPROX PAGE NO. BOOK NO. 70 GSM PAPER QUANTITY IN M. TONNE 220 GSM COVER PAPER SHEET NO. L-1 B Science (....
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....uing the printing work even during the corona lockdown. According to the report of the NIC branch of the Corporation, the printing capacity till 22.03.2020, the date of implementation of the Corona Lockdown, by you as per 90 days (in the last 75 days, the printing work allotted by the Chhattisgarh Textbook Corporation was 1267.5 MT, out of which 15213 textbooks of Niton i.e. 11.15 percent Only the printing work was completed. According to provision of Printing Tender Clause 16.3:- 16.3 If the progress of work at any stage is found slower than expected and if the Nigam is convinced that the printer will not be able to complete the work in time, the Nigam shall cancel the contract in full or in part and give it to other printer at the cost and risk of defaulting printer. In the event of such cancellation, the security deposit/EMD of the printer shall be forfeited and the printer will not be entitled to any compensation. Printing and distribution work of unprinted 717.569 meter textbooks of your firm by the corporation. Printers had to be supplied and completed. Of the 1267.496 MT allocated by you, only 549.927 MT work was completed as follows:- GROUP MEMBER SUB GROUP ....
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....l Manager Chhattisgarh Textbook Corporation Raipur Page number//PPN/Printing/2020-21/2022 Raipur Date //2022 Copy to. 1. Personal Assistant, Honorable President, C.G, Textbook Corporation Raipur for information. 2. Personal Assistant Managing Director C.G. Textbook Corporation Raipur for information. General Manager Chhattisgarh Textbook Corporation Raipur" (Emphasis supplied) 24. Thus, according to the Corporation the appellant herein violated the clauses 13.3, 16.1, 16.3 and 16.9 respectively of the terms of the Agreement. The sum and substance of all these clauses is that if the appellant is unable to complete the work of printing within the stipulated period of time then the consequences would be blacklisting. The Corporation rejected the say of the appellant herein that he was unbale to adhere to the prescribed time limit due to the Covid-19 pandemic. 25. This Court in Kulja Industries Limited v. Chief General Manager Western Telecom Project BSNL & Ors. reported in AIR 2014 SC 9 has made pertinent observations as regards the power of an Authority to blacklist a company on the basis of the terms of the underlying contract. In the said case, Kulja Ind....
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.... our opinion such principles should also be borne in mind by the Authority at the time of issuing a show cause notice. We say so because in the facts of a given case like the one on hand, on the face of which it could be said that there was no good reason for the Authority to issue a show cause notice calling upon the contractor why he should not be blacklisted. Why ask the contractor to face the proceedings when applying the aforesaid principles, the issue of show cause notice would be an empty formality. We are saying all this keeping in mind the peculiar facts of this case. 30. Therefore, the Authority is expected to be very careful before issuing a show cause notice. It is expected to understand the facts well and try to ascertain what sort of violation is said to have been committed by the contractor. As noted above, there is always an inherent power in the Authority to blacklist a contractor. But possessing such inherent power and exercising such power are two different situations and connotations. There may be a power but there should be reasonable ground to exercise such power. 31. To put it by way of an illustration, the Police has the power to arrest but it is not neces....
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....ling the pending legal proceedings. 34. Plainly, if a contractor is to be visited with the punitive measure of blacklisting on account of an allegation that he has committed a breach of a contract, the nature of his conduct must be so deviant or aberrant so as to warrant such a punitive measure. A mere allegation of breach of contractual obligations without anything more, per se, does not invite any such punitive action. 35. Usually, while participating in a tender, the bidder is required to furnish a statement undertaking that it has not been blacklisted by any institution so far and, if that is not the case, provide information of such blacklisting. This serves as a record of the bidder's previous experience which gives the purchaser a fair picture of the bidder and the conduct expected from it. Therefore, while the debarment itself may not be permanent and may only remain effective for a limited, pre-determined period, its negative effect continues to plague the business of the debarred entity for a long period of time. As a result, it is viewed as a punishment so grave, that it must follow in the wake of an action that is equally grave. 36. In the overall view of the mat....