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2014 DIGILAW 929 (CAL)

State of West Bengal v. Rashmi Metaliks Limited

2014-09-24

ASHIM KUMAR BANERJEE, MANJULA CHELLUR

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JUDGMENT ASHIM KUMAR BANERJEE, J. Moot question involved in this appeal would relate to two clauses incorporated in the tender condition being Clause 3(h) and (i) which are extracted as under:- "(h) A declaration in the form of an affidavit on a non-judicial stamp paper of Rs. 10/- duly affirmed before a Notary public/1st Class Magistrate should be submitted as per format given in the proforma I, stating clearly that on the date of submission of the tender, the applicant is not disallowed/debarred/delisted/blacklisted for participation in any DI Pipe supply tender by any Government Department/Government Undertaking/ Statutory Body/Municipality/Municipal Corporation in India. If any such incident is otherwise discovered, the applicant’s tender/order shall be cancelled summarily without assigning any reason whatsoever. (i) A declaration in the form of an affidavit should be submitted on a non-judicial stamp paper of Rs. 10/- duly affirmed before a Notary public/1st class Magistrate should be submitted stating clearly that on the date of submission of the tender, there is no pending FIR/Charge Sheet against the tenderer in respect of an offence under the Prevention of Corruption Act. If any such case is declared in the affidavit or otherwise discovered, the applicant’s tender shall be cancelled summarily without assigning any reason whatsoever." FACTS The respondent No. 1 is involved in manufacture of D.I. Pipes used for water transmission, mostly used by municipalities or the Government Agencies through Public Health Engineering Department, State of West Bengal. The respondent no. 1 approached the learned Single Judge for quashing of those two conditions inter-alia on the ground, incorporation of those two clauses was done for oblique purpose only to exclude the said respondent from participating in any tender process. The respondent no.1 alleged, it was done at the behest of their competitors in the field. The learned Single Judge allowed the writ petition vide judgment and order dated August 5, 2014 appearing at pages 99-109 of the paper book, subsequently filed in Court in course of hearing. The respondent no. 1 also alleged, it was litigating with the State authorities over a considerable period of time as on the one pretext or the other, they were being disqualified from participating in the tender process. About twenty proceedings were initiated at the behest of the respondent no. 1 just to fight with such mala fide conduct on the part of the State authorities. The respondent no. About twenty proceedings were initiated at the behest of the respondent no. 1 just to fight with such mala fide conduct on the part of the State authorities. The respondent no. 1 would also claim, they were successful in most of the litigations that came to be disposed of, yet, the State was bent upon to disqualify them from participating in the tender process and the litigations are pending on that score. The present appeal would arise out of one of such writ petitions that the learned Single Judge allowed. JUDGMENT AND ORDER IMPUGNED The learned Judge observed, State could not consider a person to be guilty unless such guilt was established and he was found guilty of the offence that he was charged with hence, merely because an FIR was lodged or a charge-sheet was issued he could not be disqualified. The learned Judge observed, the clause that would debar someone from participating in the tender process merely on the ground of pendency of FIR charge sheet, was unreasonable. His Lordship quashed the Clause 3(i) quoted supra. With regard to Clause (h) the State made a clarification, the same should be read in the context of three eventualities namely debarred/delisted/blacklisted. His Lordship clarified, disallowed should not be construed to mean that a tenderer who was unsuccessful in any previous tender can be considered to be disallowed within the meaning of Clause 3(h) and the word disallowed should not be construed to mean that a tenderer who were not allowed to participate in any previous tender for any reason to be disallowed in participating such tender. It should be read ejusdem generis with the words debarred/delisted/blacklisted. The State accepted the clarification as above. State preferred the instant appeal only in respect of 3(i) that the learned Single Judge quashed hence, this appeal at the instance of the State. CONTENTIONS Mr. Partha Sarathi Sengupta learned senior counsel appearing for the appellants would refer to similar clauses prevalent in other Government tenders pertaining to other States and/or Central Government and/or undertakings. Relying on such clauses Mr. Sengupta would contend, it was nothing but to avoid unscrupulous persons who were being charged with the offence under the Prevention of Corruption Act and not for any other purpose. Elaborating his argument, Mr. Relying on such clauses Mr. Sengupta would contend, it was nothing but to avoid unscrupulous persons who were being charged with the offence under the Prevention of Corruption Act and not for any other purpose. Elaborating his argument, Mr. Sengupta would contend, any individual or a group of individual or any concern would be free to lodge any FIR complaining of any alleged offence whereas the charge under Prevention of Corruption Act could only be raised by the authority empowered to do so under the statute hence, in absence of definite allegation of mala-fide the same could not be said to be frivolous as the public authorities were bound to act upon the prima facie opinion that they would form before they would lodge such complaint in the nature of FIR. Per contra, Mr. Suddhosatya Banerjee learned Counsel appearing for the respondent no. 1 would refer to earlier litigations as well as the pending litigations to establish the mala fide conduct of the State authorities at the behest of their competitors in the field. Mr. Banerjee would contend, unless someone was held guilty for any offence, merely because an FIR was lodged or a charge sheet was issued for such alleged offence, a person could not be deprived of his right to participate in the tender process that would violate the fundamental rights guaranteed under the constitution. To support his contentions, he would rely upon a single bench decision of this Court in the case of AKA Logistic Private Limited vs. Durgapur Projects Limited, 2013 Volume-I Calcutta High Court Notes Page 42. The learned Single Judge considered a clause that would compel a participating tenderer to give an undertaking that he had not initiated any legal proceeding against any Government or Public Sector Undertaking relating to handling of coal in West Bengal for a period of three years. The learned Judge held, ventilating someone’s right before the Court of law could not be a fetter upon him to participate in any tender process which he was otherwise entitled to. The Division Bench of this Court in the case of AKA Logistic Private Limited vs. Durgapur Projects Limited, 2013 Volume-III Calcutta High Court Notes page 545 affirmed the said decision. The Division Bench observed, the condition was such as a result of which several incumbents were unable to submit their tenders, as they were not able to furnish the said undertaking. The Division Bench observed, the condition was such as a result of which several incumbents were unable to submit their tenders, as they were not able to furnish the said undertaking. The condition operated at the threshold and disentitled the incumbents who had initiated legal proceedings against the Government/Public Sector/undertaking/Public Sector Enterprise relating handling of coal in West Bengal within three years from participating in the tender process. The Division Bench further observed, there was no illegality in the direction issued by the learned Single Judge. It further observed, the dismissal of other writ petitions could not be an impediment to participate in a fresh tender. Relying on the Single Bench decision, so affirmed by the Division Bench, Mr. Banerjee prayed for dismissal of the appeal. OUR VIEW Before we go into the subject controversy it would be apt to mention about a recent Division Bench decision of this Court in the case of Directorate of Public Health Engineering & Another vs. Rashmi Metaliks Limited & Another, A.P.O. No. 274 of 2014 dated 10.9.2014. In the said case the respondent no. 1 above named complained of the action on the part of the State restraining them to participate in the tender process on the ground, Rishra Municipality, a local self-Government of the State, debarred the said respondent from participating in the tender however, that debarring was subsequently withdrawn by the municipality expressing their regret because of their mistake. The facts would depict, the municipality tried to defend themselves by contending, they had done so being prompted by a communication of a Hyderabad Agency of the State of Andhra Pradesh. The Division Bench held, Rashmi was guilty of suppression of the fact of debarring by the municipality and imposed a penalty of rupees twenty lacs upon them. The Division Bench however, did not address on the core issue as to debarring in view of the fact, said municipality withdrew the notice of debarring as referred to supra. Coming back to the present controversy, since the Clause 3(h) was duly clarified by the learned Single Judge and the parties accepted such clarification, we would only deliberate on clause 3(i) that the learned single Judge quashed. Coming back to the present controversy, since the Clause 3(h) was duly clarified by the learned Single Judge and the parties accepted such clarification, we would only deliberate on clause 3(i) that the learned single Judge quashed. Clause 3(i) would require the tenderer to submit a declaration in the form of an affidavit stating clearly that on the date of submission of the tender, there was no FIR charge-sheet against the concerned tenderer in respect of an offence under the Prevention of Corruption Act. It would also suggest, if any such case is declared or otherwise discovered the tender would be cancelled summarily without assigning any reason. We have considered similar clause prevalent in other tenders referred to (supra). In some of the tender conditions such Clause would operate only in respect of pending criminal cases. The Clause 3(i) would have two limbs, the first one would relate to declaration that we do not find any irregularity or illegality whereas the second one would relate to summary cancellation of a tender in case of pending FIR charge-sheet. We fully agree with His Lordship, the second limb would offend the principles of natural justice. It would definitely violate the fundamental rights guaranteed under the Constitution. Under Article 19(1)(g) of the Constitution any citizen of India would be free to carry on any trade that is permissible in law. The fetter imposed by the Clause would definitely debar someone if he had a pending FIR/charge-sheet. The State, in our view, should have discretion to accept or not to accept a tender, however, such discretion must be exercised with valid and prudent reasons. The fundamental principle of criminal jurisprudence would suggest, someone could not be punished before he was found guilty of the offence by a competent Court of law. If a person is free to carry on trade otherwise permissible in law and if someone is entitled to participate in any public work being otherwise eligible for the same the State cannot discriminate without any valid reason. In our view, the summary cancellation would definitely offend the basic structures of our Constitution that would guarantee fundamental rights of every citizen. In our view, the learned Judge should not have quashed the entire Clause as we do not find any fault with the first limb. We repeat, the State must know with whom they would deal with. In our view, the summary cancellation would definitely offend the basic structures of our Constitution that would guarantee fundamental rights of every citizen. In our view, the learned Judge should not have quashed the entire Clause as we do not find any fault with the first limb. We repeat, the State must know with whom they would deal with. If any proceeding is pending against someone, whether under the Prevention of Corruption Act or any other Act suggesting offences that would have nexus with the tender process or the commercial dealings that the State would have, in case such tenderer would be successful in the process, State should know the details of such case. However, summary rejection in view of such pendency would be without any reason. We thus, opine, the second limb of Clause 3(i) is liable to quashed being ultra vires the Constitution. Mr. Banerjee raised the issue of mala fide by referring to the earlier litigations and the way, the subject Clause was incorporated. We are not fully impressed with such contentions. It might be a mere co-incidence that the State would continue to debar the respondent no. 1 for one reason or the other, from participating in the tender process. Each case would have to be considered on merits prevalent in such case. The respondent no. 1 assailed those decisions of the State/ local authorities. Wherever the Court found it unreasonable, held against the authorities and granted relief to the respondent no. 1 that could not be said to be a mala fide conduct on the part of the State or the local authorities. We are prompted to say so as the genesis would lie, inter-alia, in a communication that the Rishra Municipality received from Hydrabad agencies that was admittedly outside the State of West Bengal. We, however, find, the second limb of subject Clause unreasonable and as such uphold the decision of His Lordship on that score. The appeal thus, succeeds in part. The first limb of the Clause 3 (i): A declaration in the form of an affidavit should be submitted on a non-judicial stamp paper of Rs. We, however, find, the second limb of subject Clause unreasonable and as such uphold the decision of His Lordship on that score. The appeal thus, succeeds in part. The first limb of the Clause 3 (i): A declaration in the form of an affidavit should be submitted on a non-judicial stamp paper of Rs. 10 duly affirmed by a notary public/first class magistrate should be submitted stating clearly that on the date of submission of the tender, there is no pending FIR/charge-sheet against the tenderer in respect of an offence under the Prevention of Corruption Act, is upheld with the rider, the declaration may either be in the negative or in the affirmative. To that extent, the order of the learned Single Judge is set aside. The other part of subject clause being the second limb i.e. If any such case is declared in the affidavit or otherwise discovered, the applicant’s tender shall be cancelled summarily without assigning any reason whatsoever, is quashed and set aside. We, make it clear, in case any such declaration is made in the affirmative, the State would be within their right to exercise their discretion to accept or not to accept any tender. However, in case of refusal, they must assign reason so that the aggrieved party could apply for judicial review if they so feel appropriate. Appeal is disposed of accordingly without any order as to costs.