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2022 DIGILAW 1586 (CAL)

Bgm And M-ns (JV) v. Eastern Coalfields Limited

2022-12-19

MOUSHUMI BHATTACHARYA

body2022
JUDGMENT Moushumi Bhattacharya, J. - The petitioners are aggrieved by an impugned letter dated 17.10.2022 banning the petitioner no. 1 and its constituent partners from participating in future tenders of Eastern Coalfields Limited (ECL) for a period of three years from the date of issue of the order. The petitioner no. 1 is a joint venture company and was formed to extract, remove and transport coal in coalfields belonging to ECL. 2. The petitioners, through learned counsel, say that the urgency of the matter arises from the fact that ECL has issued other tenders in December, 2022 with last dates of submission of tender in the third week of December. Counsel submits that an order of banning requires an objective satisfaction on the part of the authority at the relevant point of time and places documents to show that the petitioners were unable to satisfactorily complete the work by reasons which cannot be attributed to the petitioners, namely, obstructions caused by local people. Counsel submits that the impugned order of banning suffers from procedural impropriety and that the replies of the petitioners were not taken into account. 3. Learned counsel appearing for ECL submits that the writ petition suffers from suppression of material facts in that a third show-cause notice dated 19.8.2022 has not been disclosed in the writ petition. Counsel submits that the banning order is only in respect of ECL and not all other Coal Companies. Counsel further submits that the banning merely enforces the clause in the contract entered into between the parties. Counsel relies on other documents to show that the petitioners were given revised targets but could only complete 31.33% instead of the required 70% of the work. It is submitted that the petitioners have no cause of action since ECL has not terminated the contract with the petitioners. 4. The issue before the Court is whether the impugned order of banning dated 17.10.2022 is arbitrary and should be quashed on that basis. The ground for banning the petitioners for three years is the alleged non-performance of the contract and the petitioners failing to execute the target percentage which was agreed to between the parties. The letter alleges loss suffered by ECL as a result of the petitioners' poor performance and the prospect of further losses if the petitioner is allowed to do business with ECL in future. 5. The letter alleges loss suffered by ECL as a result of the petitioners' poor performance and the prospect of further losses if the petitioner is allowed to do business with ECL in future. 5. The impugned order indicates that the decision of imposing penalty of 'banning of business' has been taken under clause 9(b) of the General Terms and Conditions of the bid documents, 'Termination, Suspension, Cancellation & Foreclosure of Contract'. Clause 9(b) provides that the Company/ECL shall be entitled to cancel/terminate the contract if the contractor fails to achieve a monthly agreed quantity of 70% for a period of six consecutive months or for a cumulative period of six months save and except to the extent of non-availability caused by a Force Majeure event or an act of omission of the Company, not occurring due to any default of the contractor. The note to clause 9(b) provides that the contractor in such cases may be banned for a minimum period of one year. The clause hence indicates that failure to achieve the agreed target for a cumulative/consecutive period as indicated in the said clause would entitle ECL to ban the contractor for a minimum period of one year. 6. An FIR made by ECL to the Commissioner of Police, Asansol on 22.01.2022 states that the work has been stopped at the Siduli site by miscreants who have stopped the progress of the work thereby causing substantial loss of 3000 m3 of the target removal per day. The FIR states that the miscreants who have stalled the work of the project are neither title holders nor do they belong to Siduli Village. The FIR also records an earlier FIR lodged by ECL at Andal Police Station on 15.01.2022. More significantly, a 'Hindrance Register' which is part of the contract and signed by both parties reflects hindrance caused to the work by outsiders in May, June, August, September and part of October, 2022. Each of these handwritten Reports mention the dates on which the work was obstructed/stopped. 7. The petitioners brought these factors to the notice of the respondents by two replies of 14.4.2022 and 27.4.2022. The impugned order of banning does not consider the grounds raised by the petitioners in these replies. 8. Each of these handwritten Reports mention the dates on which the work was obstructed/stopped. 7. The petitioners brought these factors to the notice of the respondents by two replies of 14.4.2022 and 27.4.2022. The impugned order of banning does not consider the grounds raised by the petitioners in these replies. 8. The non-consideration of the grounds read with the FIR's and the Hindrance Registers lead to a presumption that there was an absence of an objective assessment or satisfaction on the part of ECL as on the date of the impugned order of banning. The only reason given in the impugned order is that the petitioners' representations/replies were not found to be 'satisfactory' by the Area Management. This ground alone does not constitute objective satisfaction of the respondents which is particularly relevant when passing an order of banning against a contractor for three years as was done in the present case. Notably, clause 9(b) provides for a minimum ban of one year. Clause 9(b) pre-supposes that the contractor has a freehand to work but failed in performance nonetheless. 9. Considering the material on record, there appears to be no factual basis in applying clause 9(b) to the petitioner for imposing the ban. The impugned order does not give any reasons for imposing a ban of three years. 10. M/s. Erusian Equipment & Chemicals Ltd. vs. State of West Bengal; (1975) 1 SCC 70 stressed on the requirement of the relevant authority arriving at an objective satisfaction before blacklisting a person/entity. The Supreme Court in Kulja Industries Limited vs. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Limited; (2014) 14 SCC 731 held that the method or motive behind a decision of authority to enforce a contractual right can be made subject to judicial review on the touchstone of fairness. In the present case, the petitioner has challenged an arbitrary act on the part of ECL and the Court has in any event, found the impugned order to be unfairly applied under clause 9(b) of the contract. 11. The contention of the respondents that the petitioners have misrepresented or suppressed vital documents by failing to disclose the third show-cause notice is not acceptable. The respondents' case would not have improved even if the third show-cause had been disclosed. Hence, this is not a material suppression. 12. 11. The contention of the respondents that the petitioners have misrepresented or suppressed vital documents by failing to disclose the third show-cause notice is not acceptable. The respondents' case would not have improved even if the third show-cause had been disclosed. Hence, this is not a material suppression. 12. The action of banning the petitioners is all the more unconscionable since the respondents have not terminated the contract and have allowed the petitioners to continue with the work. 13. In Union of India vs. Modiluft Ltd.; (2003) 6 SCC 65 , the Supreme Court held against granting of final relief without deciding the issues involved in the writ petition. In the present case, all the issues in the writ petition have been considered upon submissions being made on the same. 14. Contrary to the arguments of the respondents, all the issues in the writ petition have extensively been argued and considered by the Court. Hence, there is no difficulty in passing an order in the nature of final relief. Since the impugned order of banning has already been given effect to and the petitioners are suffering the consequences of the same, there is no logic in keeping the issues pending and directing for affidavits. The writ petition may become infructuous by the time the matter is finally heard out. There are several instances where final relief has been granted at the interim stage depending on the urgency of the matter and the extent of prejudice suffered by a party. This is one of such instances. Learned counsel for the parties have also made extensive arguments on all the aspects of the dispute and nothing further remains to be decided in the writ petition. 15. WPA 24457 of 2022 is accordingly disposed of by quashing the impugned order dated 17.10.2022. The respondents shall not give effect to the said order of banning and shall permit the petitioners to participate in future tenders including the one of December, 2022. Urgent Photostat certified copies of this judgment, if applied for, be supplied to the respective parties upon fulfillment of requisite formalities.