Research › Search › Judgment

Madhya Pradesh High Court · body

2021 DIGILAW 446 (MP)

Isolators and Isolators v. Madhya Pradesh Madhya Kshetra Vidyut Vitran Co. Ltd.

2021-04-23

MOHAMMAD RAFIQ, SANJAY DWIVEDI

body2021
JUDGMENT : Sanjay Dwivedi, J. 1. Petitioner has filed this petition under Article 226 of the Constitution of India seeking following relief: "(i) To set aside the impugned order dated 30.07.2020 (Annexure P/30). (ii) To set aside the impugned order dated 17.08.2020 (Annexure P/31). (iii) Grant any other relief that this Hon'ble Court deems fit and just in the facts and circumstances of the case." 2. The facts of the case adumbrated in a nut shell are that the petitioner firm is a proprietorship firm registered as an MSME firm and involved in the business of manufacturing and repairing of transformers since last' 30 years. The distribution companies (discoms) are their only customers. The petitioner firm was issued two tenders bearing Nos. 494 and 532. In regard to tender No. 494, the respondents issued purchase order dated 30.06.2017 for supply of 586 distribution transformers (DTR) - Level I. The period of supply was six months beginning from the 3rd month of the purchase order issued. As per the petitioner, the purchase order was delivered to them on 13.09.2017 through email and physically on 15.09.2017. It is claimed that the said purchase order was issued after a delay of about 75 days. The said order is filed as Annexure P/3 along with the petition. As per the petitioner, Government of India had implemented the Goods and Services Tax w.e.f. 01.07.2017 and after receiving the work order dated 13.09.2017, the petitioner requested the respondents to modify the delivery schedule as the work order was issued after a delay of 75 days and to adjust the rates incorporating GST. The drawings were approved by the department on 28.11.2017, but, no response regarding reschedule supply was given by the respondents. Finally, the respondents issued a revised order incorporating GST only on 02.01.2018, but, still the request was not heeded for reschedule supply. Since there was delay in supply, a notice was issued by the respondents on 13.02.2018, which was replied by the petitioner on 18.02.2018 submitting therein that there was no delay on their part, but, the respondents' had to modify delivery schedule. The petitioner also requested the respondents for extension of time and even after repeated letters no extension was granted, but, on the contrary, the respondents imposed late supply penalty on the petitioner's bill. 3. The petitioner also requested the respondents for extension of time and even after repeated letters no extension was granted, but, on the contrary, the respondents imposed late supply penalty on the petitioner's bill. 3. On 30.07.2020, a final debarment order was issued to the petitioner mentioning therein as to why there was no possibility to change the supply schedule. As per the petitioner, despite all efforts for supplying Level-I transformers, it could not be done in time for which the respondents charged penalty over Rs. 11 lakhs from the petitioner. As per the petitioner, there was no delay on their part. It is also submitted by the petitioner that in the intervening night of 20 and 21 August, 2018 there was extraordinary storm and heavy rain, which resulted in the collapse of the roof of the plant of the petitioner and most of the raw material stored for manufacturing of transformers got destroyed. The respondents did not consider all these aspects and also did not consider their shortcomings. The respondents finally passed an order on 19.11.2019 cancelling the supply of balance quantity of 286 L-I transformers, but, according to the petitioner, the real reason was a gazette notification dated 17.02.2017 issued by the Government of India, which revised the loss thresholds of transformers of various ratings and prohibited the manufacture and installation of Level I transformers. Likewise, the tender No. 532 was relating to supply of 63 KVA and 25 KVA Level II transformers. The total requirement of the respondents and other two Discoms for 25 KVA was 75,000 transformers for which the respondents issued a purchase order for 593 transformers to the petitioner. The tender No. 532 was in two parts and was relating to supply of two types of transformers i.e. 63 KVA and 25 KVA. For the first type of transformers (63 KVA), a contract was issued by the respondents on 23.01.2018 and the said order was completed by the petitioner without any default, but, for second type of transformer i.e. 25 KVA, the petitioner submitted its drawing for approval on 19.04.2018, which got approved on 09.05.2018. The petitioner started manufacturing of 100 transformers of LOT-I and also offered the respondents for inspection. The same was carried out on 04.06.2018 and clearance was given on 05.06.2018. The petitioner started manufacturing of 100 transformers of LOT-I and also offered the respondents for inspection. The same was carried out on 04.06.2018 and clearance was given on 05.06.2018. According to the petitioner, when manufacturing was in full swing, in the intervening night of 20 and 21 of August, 2018 due to heavy rain, loss of raw material and sever damage was caused to the plant and, therefore, supply of transformers could not be done. Finally on 21.11.2019, the respondents issued an order cancelling the supply of balance quantity of transformers. Thereafter, on 26.11.2019, a show-cause notice was issued to the petitioner asking as to why they should not be debarred on account of non-supply of transformers. A reply was submitted by the petitioner to the show-cause notice on 30.11.2019, then on 13.02.2020, the order of debarment was passed, which was finally set aside by the High Court vide order dated 08.07.2020 passed in WP No. 7579/2020 and thereafter again vide order dated 30.07.2020, the petitioner has been debarred from participating in further tender of respondents for a period of three years along with additional penalty. On 17.08.2020, another order was issued imposing penalty of Rs. 27,98,960/- in respect of alleged loss caused on account of non-supply of 593 DTRs of 25 KVA against the tender No. 532. 4. The petitioner has, therefore, filed this petition challenging the orders dated 30.07.2020 (Annexure P/30) and 17.08.2020 (Annexure P/31) saying that the same are illegal, arbitrary and in violation of the provisions of Articles 14 and 19 of the Constitution of India. 5. The impugned orders have also been assailed on the ground of violation of principle of natural justice. According to the petitioner, debarring or blacklisting follows an order of termination/cancellation of contract and that should be used only under extraordinary circumstances when extreme action is required to be incorporated against the contractor. As per the petitioner, there was no reason recorded in the orders impugned to exercise such an extreme action against the petitioner. It is also stated that after supply of 300 transformers of Level I against the purchase order No. 586, cancelling the order for supply of remaining transformers suffers from malice in law and as such the same is liable to be set aside. It is also stated that after supply of 300 transformers of Level I against the purchase order No. 586, cancelling the order for supply of remaining transformers suffers from malice in law and as such the same is liable to be set aside. The petitioner has further submitted that the respondents have deliberately not considered the fact regarding extraordinary rain fall, flood and storm between 20 and 21 of April, 2018, which resulted in severe damage to the plant and loss of almost entire raw material relating to the respective order. 6. Respondents have filed their return taking- stand therein that in the matter of blacklisting as per the settled principle of law when full opportunity is granted to the contractor, who is at fault for not supplying material as per the terms of the contract awarded, to maintain business discipline, the employer has a right to pass an order of blacklisting against the party that breaches the contract and to restrain him from entering into any further contractual relationship. As per the respondents Clause 14 of the purchase order deals with the power of blacklisting of contractor. The respondents submit that nothing illegal and arbitrary have been done by the respondents while passing the orders Annexure P/30 and P/31 because these orders contained reasons and have been passed giving opportunity of hearing to the petitioner. The respondents have shown the dates and events and substantiated their, action so as to establish the fault of the petitioner. The respondents have also relied upon several decisions of Supreme Court laying down the law of blacklisting the contractors. According to the respondents, it was the fault of the petitioner of not fulfilling the terms of the contract and after giving full opportunity of hearing the order of blacklisting has been passed. The respondents have also disputed and denied the facts mentioned by the petitioner to establish that they were not at fault and because of some unavoidable reasons the delay occurred in supplying the required transformers in pursuance to the work order issued to the petitioner. The respondents have also disputed and denied the facts mentioned by the petitioner to establish that they were not at fault and because of some unavoidable reasons the delay occurred in supplying the required transformers in pursuance to the work order issued to the petitioner. It is also stated by the respondents that as per the Force Majeure conditions of tender document, Clause 13 very specifically provides that the same shall be taken into consideration only if the supplier within 15 days from the occurrence of such delay notifies the answering respondents, but, here in this case, it can be easily seen that the petitioner cannot be given the benefit of such clause. It is also denied by the respondents that there was rain fall between 20 and 21 of April, 2018 leading to a loss of raw material and causing severe damage to the petitioner's plant. As per the respondents, had it been the situation like this, the respondents would have been informed timely, but, nothing was done by the petitioner informing the respondents about the said incident immediately. Thus, the respondents have supported the impugned orders saying that there is no infirmity in the same. 7. Considering the rival contention of the parties and perusal of record, we are also of the opinion that so far as the order of blacklisting is concerned, it contains the reason and in no way we find those reasons unjustified. Considering the existing fact situation of the case, we find that the assigned reason appear to be prima facie, plausible and are sufficient to maintain the order of blacklisting. In the circumstances, as have been set forth before us, exercising extraordinary power under Article 226 of the Constitution of India, interference in a decision making process is not permissible when the orders have been passed after following the principle of natural justice and are supported by plausible reasons. Indubitably the petitioner's firm failed to substantiate the lapses on their part for not supplying the required transformers as per the contract. We do not find any such reason available in the case holding the orders passed by the respondents illegal and arbitrary. Therefore, interference in the matter under Article 226 of the Constitution of India is not warranted. Indubitably the petitioner's firm failed to substantiate the lapses on their part for not supplying the required transformers as per the contract. We do not find any such reason available in the case holding the orders passed by the respondents illegal and arbitrary. Therefore, interference in the matter under Article 226 of the Constitution of India is not warranted. However, we have noticed that the order of debarment has been passed on 30.07.2020 restraining the petitioner from participating in further tender proceedings of respondents, but, factually the petitioner firm was debarred vide order dated 13.02.2020, the first order, which was set aside by this Court. Accordingly, the period of three years debarring the petitioner be considered to be reckoned w.e.f. 13.02.2020 and would be ended accordingly after completion of three years from the said date. 8. Accordingly, the petition is partly allowed modifying the order of debarment making the same effective w.e.f. 13.02.2020 till the period of three years.