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2019 DIGILAW 517 (UTT)

Jai Gopal Associates v. State of Uttarakhand

2019-09-23

ALOK KUMAR VERMA, RAMESH RANGANATHAN

body2019
JUDGMENT : Ramesh Ranganathan, J. 1. The application, seeking condonation of delay in preferring this Appeal, is not opposed by the learned counsel for the respondents and the delay is, therefore, condoned. Delay Condonation Application No. 13156 of 2019 stands disposed of. 2. Heard Mr. A. S. Rawat, learned Senior Counsel appearing on behalf of the appellant-writ petitioner, Mr. B.S. Parihar, learned Standing Counsel for the State of Uttarakhand/ respondent Nos. 1 to 3 and Mr. V.K. Kohli, learned Senior Counsel appearing on behalf of respondent No. 4-Bank and, with their consent, the Special Appeal is disposed of at the stage of admission. 3. The appellant herein filed WPMS No. 439 of 2019 seeking a writ of certiorari to quash Office Memorandum dated 10.01.2019 issued by the Program Manager, World Bank, P.I.U. (R&B) U.D.R.P. Dehradun to the extent the same pertains to the petitioner; a writ of certiorari to quash the letter dated 28.01.2019 issued by Program Manager, World Bank, P.I.U. (R&B) U.D.R.P. Dehradun to the concerned bank to forfeit the Fixed Deposit Receipt/Term Deposit Receipt of the petitioner. 4. Facts, to the limited extent necessary, are that the appellant-petitioner, a sole-proprietary concern, entered into a joint venture agreement with Mr. Prem Singh and Mr. Kishan Singh called M/s. Jai Gopal Associates, Prem and Kishan Singh to participate in the tender process for package No. UDRP/AF/RBP/02 for construction of the proposed protection works of the right bank of the Alakhnanda River at Kathiyalasain village, District Chamoli, Uttarakhand. The petitioner is a A Class Contractor, registered with the Irrigation Department for execution of civil works therein. On 31.01.2018, bids were invited for the subject work by the Program Manager, P.I.U. (R&B) U.D.R.P. Dehradun. The period during which the bids were required to be submitted was 31.01.2018 to 05.03.2018 and the last date of submission of the bid was 05.03.2018. The bidding involved a two stage process through the National Open Competitive Procurement using the Request for Bid (RFB) as specified in the World Bank Procurement Regulations for IPF borrowers. The total bid amount was Rs. 12.20 Crores. 5. Clause 3 of the Instructions to Bidders deals with fraud and corruption and stipulates that the Bank requires compliance with its Anti-Corruption Guidelines and its prevailing sanction policies and procedures, as set forth in Section VI of the World Bank Guidelines Sanctions Framework. 6. The total bid amount was Rs. 12.20 Crores. 5. Clause 3 of the Instructions to Bidders deals with fraud and corruption and stipulates that the Bank requires compliance with its Anti-Corruption Guidelines and its prevailing sanction policies and procedures, as set forth in Section VI of the World Bank Guidelines Sanctions Framework. 6. Clause 4 of the Instructions to Bidders stipulated that a Bidder may be a firm that is a private entity, or a State-owned Enterprise or Institution, subject to ITB 4.6, or any combination of them in the form of a Joint Venture under an existing agreement, or with the intent to constitute a legally enforceable Joint Venture unless otherwise specified in the BDS. Clause 4.1 required the Bid, submitted by the Joint Venture, to comply with certain conditions for the purposes of participating in the Tender Process. 7. Section VI of the Request of Bid dealt with fraud and corruption, and provided that the Bank requires that the Borrowers, the Bidders, the Consultants, the Contractor and the Supplier, and any of their personnel, to observe the highest standard of ethics during the procurement process and refrain from fraud and corruption. It also provides for rejection of the proposal if the Bank determines that the Firm or Individual, recommended for award, has directly or indirectly engaged in corrupt, fraudulent, collusive, coercive or obstructive practices in competing for the contract. 8. The petitioner s firm was the lead partner of the Joint Venture with Mr. Prem Singh and Kishan Singh as the other partners. While the petitioner had a 40% share in the firm so did Mr. Prem Singh. Mr. Kishan Singh had a 20% share therein. A joint venture agreement, between all the three partners, was executed on 08.05.2019 for construction of the proposed protection works. The Agreement stipulated that action for blacklisting could be taken against any or all the partners of the Joint Venture, in case the parties to the Joint Venture sell, pledge, sign or dispose of all or a part of its interest, in the Joint Venture, to any party. A letter of bid was submitted on 08.05.2018 enclosing thereto the bid security amount. The bidders were required to submit a certificate issued by the Bank to the effect that the firm or individual had a good financial standing, and the Bank would provide overdraft/credit facilities to the bidder. A letter of bid was submitted on 08.05.2018 enclosing thereto the bid security amount. The bidders were required to submit a certificate issued by the Bank to the effect that the firm or individual had a good financial standing, and the Bank would provide overdraft/credit facilities to the bidder. The Punjab National Bank issued a certificate to the petitioner that they would provide credit facilities equivalent to Rs. 2.5 Crores. The Bank of Allahabad is said to have issued a certificate that it would extent overdraft facility to Sri Prem Singh to the tune of Rs. 5.00 Crores. Mr. Kishan Singh produced a certificate, from the Bank of Baroda, to the effect that it would provide credit facilities to the extent of Rs. 70.00 lakhs. Later on it came to light that the Bank of Baroda had, in effect, only issued a certificate for Rs. 10 lakhs and not for Rs. 70 lakhs. 9. A notice dated 11.09.2018 was issued to the petitioner, and the other partners of the Joint Venture, calling upon them to show cause why action should be taken against them regarding the credit limit certificates submitted by them. The said notice stated that the certificate, produced by Mr. Kishan Singh, was sent for verification to the Bank of Baroda and the Bank had, by email dated 07.06.2018, informed that the credit limit certificate of Rs. 70.00 lakhs had not been issued by them. The petitioner, and the other partners of the Joint Venture, were called upon to show cause why administrative or legal action should not be taken for the fraudulent conduct of the Joint Venture. The petitioner, and the other partners of the Joint Venture, submitted their reply thereto, to the Deputy Program Officer, on 02.01.2019 contending that submission of such a certificate was an act of inadvertence. By proceedings dated 10.01.2019, the Program Manager held the Joint Venture, including all its partners, guilty in view of Section 6 of the Bid Documents, and black listed them for a period of five years, besides forfeiting the Fixed Deposit Receipt/Term Deposit Receipt furnished by them. Aggrieved thereby, all the three partners separately invoked the writ jurisdiction of this Court. 10. While the petitioner filed WPMS No. 439 of 2019, Mr. Prem Singh filed WPMS No. 453 of 2019 and Mr. Kishan Singh filed WPMS No. 554 of 2019. All the three writ petitions were heard together. Aggrieved thereby, all the three partners separately invoked the writ jurisdiction of this Court. 10. While the petitioner filed WPMS No. 439 of 2019, Mr. Prem Singh filed WPMS No. 453 of 2019 and Mr. Kishan Singh filed WPMS No. 554 of 2019. All the three writ petitions were heard together. In the order under appeal dated 24.06.2019, the learned Single Judge opined that, on verification, it had been found that the certificate produced from the Bank of Baroda was a fabricated document in as much as the figure, which should have been Rs.10 lakhs, had been changed to Rs. 70 lakhs by interpolation and by forgery; consequently, the employer had not only declared the firm as non-responsive but, after giving notice to the petitioner and the firm, all the partners had been black listed for a period of five years on 10.01.2019 and the black listing covered all State projects. 11. The learned Single Judge, thereafter, opined that it was admitted that, one of the partners of the Joint Venture, Mr. Kishan Singh had given a forged and fabricated document before the respondent authorities and, since it was a Joint Venture, the other partners of the firm had to share this liability; there was nothing wrong, if all the petitioners had been blacklisted for a period of five years by the respondent authorities, as each partner would share the blame of the rest of the partners. All the three writ petitions were, accordingly, dismissed. While no appeal has been preferred as on date by the other two partners of the Joint Venture, i.e. Mr. Kishan Singh and Mr. Prem Singh, the petitioner in WPMS No. 439 of 2019 (M/s. Jai Gopal Associates) has filed the present appeal against the order passed by the learned Single Judge. 12. Mr. A.S. Rawat, learned Senior Counsel appearing on behalf of the appellant-writ petitioner, would submit that action, if any, could only have been taken against Mr. Kishan Singh and Mr. Prem Singh, the petitioner in WPMS No. 439 of 2019 (M/s. Jai Gopal Associates) has filed the present appeal against the order passed by the learned Single Judge. 12. Mr. A.S. Rawat, learned Senior Counsel appearing on behalf of the appellant-writ petitioner, would submit that action, if any, could only have been taken against Mr. Kishan Singh for having produced fabricated documents; no action could have been taken against the appellant-writ petitioner, since the documents submitted by them were found to be valid and genuine; even otherwise, it is only the Bank which should have taken action for blacklisting the petitioner in accordance with its guidelines; and even if the respondents are held entitled to hold the petitioner s bid non-responsive, and to black list them, they could only have been blacklisted for the projects being executed by this department, and not by the other departments of the Government of Uttarakhand. 13. On the other hand, both Mr. V.K. Kohli, learned Senior Counsel appearing for the Bank and Mr. B.S. Parihar, learned Standing Counsel for the Government of Uttarakhand, would submit that the subject work is a World Bank project; the provisions for blacklisting were applicable, in terms of the World Bank guidelines, for all projects financed by the World Bank; the third respondent-Program Manager was the competent authority to supervise execution of the projects financed by the World Bank, it was within his competence to blacklist the petitioner; if, as is now contended before this Court, the petitioners were blacklisted by the other departments of the Government of Uttarakhand, such orders of blacklisting should have been subjected to challenge and not the present order and the order impugned in the writ petition, blacklisting the petitioner, was passed because one of the partners of the Joint Venture had produced a forged and fabricated certificate of a Nationalized Bank reflecting a credit limit far higher than what was originally certified by the Bank. 14. It is not in dispute that Mr. Kishan Singh, one of the partners of the Joint Venture which submitted the bid, had produced a certificate from the Bank of Baroda to the effect that the Bank would provide a credit limit of Rs. 70.00 lakhs when, in fact, the certificate issued by the Bank of Baroda was only for Rs. 10 lakhs. Kishan Singh, one of the partners of the Joint Venture which submitted the bid, had produced a certificate from the Bank of Baroda to the effect that the Bank would provide a credit limit of Rs. 70.00 lakhs when, in fact, the certificate issued by the Bank of Baroda was only for Rs. 10 lakhs. The Joint Venture, which submitted the bid, was a partnership firm consisting of the petitioner, Mr. Prem Singh and Mr. Kishan Singh, as its partners. For the act of submission of fabricated documents by one of the partners on behalf of the Joint Venture, all the other partners must also be held accountable, and must share the blame since the bid was submitted not by Mr. Kishan Singh in his individual capacity, but by the partnership firm consisting of three partners which also included the appellant-writ petitioner. Submission of fabricated documents by the Joint Venture partnership firm, falsely certifying the credit limit of one of the partner, would justify their bid being held non- responsive, since the bid was submitted on the basis of this fabrication document. 15. As has been stated by the petitioner themselves, in the affidavit filed in support of the writ petition, Section VI of the Request for Bid deals with fraud and corrupt practices and stipulates that the World Bank required the bidders to observe high standards of ethics, and refrain from fraud and corruption. The said Clause VI provides for blacklisting, which we shall refer to a little later in this order. It is in terms of this request for bid that the petitioner, along with Mr. Prem Singh and Mr. Kishan Singh, had formed a Joint Venture. Having submitted their bid, in terms of the Request for Bid, the petitioner cannot now claim that Section 6 thereof would not apply to them. 16. Section 6 of the Request for Bid relates to fraud and corruption. Prem Singh and Mr. Kishan Singh, had formed a Joint Venture. Having submitted their bid, in terms of the Request for Bid, the petitioner cannot now claim that Section 6 thereof would not apply to them. 16. Section 6 of the Request for Bid relates to fraud and corruption. Clause 2.2 (d) of Section 6 reads as under:- Pursuant to the Banks Anti-Corruption Guidelines and in accordance with the Bank s prevailing sanctions policies and procedures, may sanction a firm or individual, either indefinitely or for a stated period of time, including by publicly declaring such firm or individual ineligible (i) to be awarded or otherwise benefit from a Bank-financed contract, financially or in any other manner; (ii) to be a nominated sub-contractor, consultant, manufacturer or supplier, or service provider of an otherwise eligible firm being awarded a Bank financed contract and (iii) to receive the proceeds of any loan made by the Bank or otherwise to participate further in the preparation or implementation of any Bank-financed project. 17. In terms of the afore-extracted clause, the Bank would, in terms of Banks prevailing sanctions policies, sanction the firm or individual, either indefinitely or for a stated period of time, declaring such firm or individuals ineligible to be awarded a Bank financed contract, or to be nominated as a subcontractor, supplier or service provider of an otherwise eligible firm being awarded a Bank financed project. It is in exercise of such a power, was the Joint Venture, which included the petitioner as a partner, blacklisted from future World Bank projects for a period of five years. Exercise of power by the third respondent, in accordance with the World Bank guidelines referred to hereinabove, to blacklist the appellant-writ petitioner cannot, therefore, be said to be illegal. The only obligation before a firm, or a partner of a firm, is blacklisted is that it should be preceded by a show cause notice. M/s. Erusian Equipment and Chemicals Ltd. vs. State of West Bengal and Another, (1975) 1 SCC 70 . 18. In the present case, this requirement has been complied with, since the petitioner was issued a show cause notice. While a feeble attempt is made by Mr. M/s. Erusian Equipment and Chemicals Ltd. vs. State of West Bengal and Another, (1975) 1 SCC 70 . 18. In the present case, this requirement has been complied with, since the petitioner was issued a show cause notice. While a feeble attempt is made by Mr. A.S. Rawat, learned Senior Counsel, to submit that the said show cause notice does not specifically provide for blacklisting, the fact remains that the said notice does refer to the Request for Bid which, in turn, refers to Section VI, which specifically refers to blacklisting. It matters little that the show cause notice does not specifically refer to blacklisting, when the petitioners themselves have admitted that the certificate produced by them, from the Bank of Baroda, was fabricated. We see no reason, therefore, to interfere with the order under appeal. 19. Mr. A.S. Rawat, learned Senior Counsel, would then contend that, while the third respondent may have the power to blacklist bidders for World Bank financed projects, he lacked jurisdiction to blacklist the petitioner for works being executed for other departments of the Government of Uttarakhand. The impugned order makes no reference to the petitioner having been blacklisted for all works being executed by various departments of the Government of Uttarakhand. Mr. A.S. Rawat, learned Senior Counsel, would, however, submit that a copy of the impugned order was marked to various departments of the State Government for information and necessary action. Mere marking a copy of the order would not justify the inference that the third respondent had blacklisted the petitioner from executing works of all departments of the Government of Uttarakhand. All that the impugned order stipulates is that the petitioners were being blacklisted from all World Bank financed projects. In case they are blacklisted by any other department of the Government of Uttarakhand, it is always open to them to question the said order in appropriate legal proceedings. That would, however, not justify interference with the order impugned in the writ petition. 20. The Special Appeal fails and, is accordingly, dismissed. No costs.