Suruchi Foods Private Limited v. State of Jharkhand through its Principal Secretary, Department of Women, Child Development & Social Security, Government of Jharkhand
2023-12-20
SANJAYA KUMAR MISHRA, SRI ANANDA SEN
body2023
DigiLaw.ai
ORDER : Ananda Sen, J. 1. The writ petitioner-appellant has preferred this Letters Patent Appeal against the judgment dated 22.06.2022 passed in W.P.(C) No. 260 of 2022, whereby learned Single Judge has dismissed the writ petition filed by the writ petitioner-appellant. 2. Learned counsel appearing on behalf of the appellant submits that the ground for not entertaining the technical bid of the appellant is absolutely bad, which has not been properly appreciated by the learned Single Judge while dealing with the writ petition. It is his contention that on two grounds, the appellant was declared technically unfit and both the grounds are nonest. The technical bid of the appellant was rejected on two grounds, namely, (1) foreclosure of contract of the appellant by the Government of Gujarat vide letter dated 08.11.2011 and (2) foreclosure of contract of Murliwala Agrotech Pvt. Ltd. (which is a group company of this appellant, having financial linkage) by the Government of Gujarat. Both the appellant and M/s Murliwala Agrotech Pvt. Ltd. are separate legal entities and interse share holding and financial linkage cannot be a ground to technically disqualify this appellant in this tender. So far as foreclosure of contract of the appellant by the Government of Gujarat is concerned, learned counsel submits that after foreclosure, there was an extension of the same agreement by the ICDS, Gujarat, which amounts to obliterating the foreclosure. This was also entertained by the Hon’ble Gujarat High Court. The Government of Gujarat itself permitted the appellant to complete the work and he further submits that even if the foreclosure is taken into account, though disputed, since the same happened in the year 2011, now after more than 11 years, the said stigma or impediment cannot be said to subsist. He submits that these facts have not been considered properly by the learned Single Judge. 3. Learned counsel appearing on behalf of the State and the private respondents, i.e., the successful tenderers, contend that the technical bid of the appellant was rightly rejected as admittedly, the agreement by one of the group companies of the appellant, namely, Murliwala Agrotech Pvt. Ltd. with Government of Gujarat was foreclosed. Pattern of share holding of Murliwala Agrotech Pvt. Ltd. and that of the appellant would suggest that majority of share holders are common and there is deep financial relationship between these two companies.
Pattern of share holding of Murliwala Agrotech Pvt. Ltd. and that of the appellant would suggest that majority of share holders are common and there is deep financial relationship between these two companies. They also submitted that the Government of Gujarat foreclosed the agreement of the appellant, which is also a disqualification. The respondents lastly submit that so far as the instant tender is concerned, the successful tenderers have entered into agreement with the State / instrumentalities of the State and have already complied the major part of their obligation of supply of the materials. Thus, they submit that no relief can be granted to the appellant in this Letters Patent Appeal. 4. In reply to the above, learned counsel for the appellant could not dispute the fact that major portion of the obligations under the contract / agreement have already been complied by the private respondents by supplying the product. 5. After going through the impugned order and the documents, we find that the Directorate of Social Welfare, Department of Women, Child Development and Social Security, issued a Notice Inviting Tender bearing e-tender reference No. PRO-01/2021-22 on 17.11.2021 for supply of “Micronutrient Fortified and/or Energy Dense Food (MFEDF) as supplementary nutrition for distribution under the Anganwadi Services Scheme of Umbrella ICDS through Anganwadi Centres. The appellant submitted the bid with requisite documents on 17.12.2021. Appellant’s technical bid was rejected by the Purchase Committee in its meeting held on 18.01.2022. The grounds for rejection are : (i) the action foreclosure of agreement was taken by the Department of Women & Child Development, Gandhinagar, Gujarat; (ii) Agreement of a company namely M/s Murliwala Agrotech Pvt. Ltd., which was allegedly found to be a group company having financial linkage, was foreclosed by the Department of Women & Child Development, Gandhinagar, Gujarat. This order of rejection was challenged before the learned Single Judge in a writ petition, which was dismissed resulting in this Intra Court Appeal. 6. It is an admitted fact that on 08.11.2011, ICDS Gujarat foreclosed the agreement with the appellant and a letter was also issued to that effect. There are documents to suggest that thereafter the agreement and the bank guarantee was extended also. The materials were supplied and the Bank Guarantee of the appellant was also released.
6. It is an admitted fact that on 08.11.2011, ICDS Gujarat foreclosed the agreement with the appellant and a letter was also issued to that effect. There are documents to suggest that thereafter the agreement and the bank guarantee was extended also. The materials were supplied and the Bank Guarantee of the appellant was also released. The appellant sought for a Performance Certificate upon which a certificate was issued by the authority but in the communication dated 30th October, 2013, a remark was made as follows: - “As per the tender enquiry mentioned above, during the tenure of supply the agreement of M/s Suruchi Foods Private Limited, Noida, UP was foreclosed due to prolonged delay in production and supply.” 7. The matter on the issue of the aforesaid comment went before the Hon’ble Gujarat High Court in Special Leave Application No.1581 of 2014. The Division Bench of the Hon’ble Gujarat High Court on 19.02.2014 quashed the aforesaid remarks and directed the authorities to issue a fresh certificate. This clearly suggests that the remark of foreclosure was quashed by the Gujarat High Court. Further, from the documents, it is clear that the order of foreclosure, which was passed is of 08.11.2011, which mentions that no supplies will be received after 22.11.2011 from the appellant. Thereafter vide letter dated 03.01.2012, the State of Gujarat requested the appellant to revalidate the Bank Guarantee before 31.01.2012. A certificate dated 22.02.2012, issued in favour of the appellant, suggests that the appellant had supplied the materials, which was supposed to be supplied and the same was accepted by the authorities. Such certificate issued by the authorities of Government of Gujarat, coupled with the order of the Hon’ble Gujarat High Court clearly suggests that the ground of foreclosure of agreement of the appellant by the Department of Women and Child Development, Government of Gujarat has become nonest. 8. Further, we are of the opinion that even if there was an order of foreclosure, the same cannot survive or can be treated as an impediment for a long period of more than 10 (ten) years. In this context, we take note of several judgments of the Hon’ble Supreme Court of India, wherein the Hon’ble Supreme Court has held that blacklisting cannot be for life long. Same analogy can be applied in this case also. 9.
In this context, we take note of several judgments of the Hon’ble Supreme Court of India, wherein the Hon’ble Supreme Court has held that blacklisting cannot be for life long. Same analogy can be applied in this case also. 9. The Hon’ble Supreme Court in the case of Kulja Industries Ltd. Versus Western Telecom Project BSNL reported in (2014) 14 SCC 731 , at paragraph 25 thereof has held as under : 25. Suffice it to say that “debarment” is recognised and often used as an effective method for disciplining deviant suppliers/contractors who may have committed acts of omission and commission or frauds including misrepresentations, falsification of records and other breaches of the regulations under which such contracts were allotted. What is notable is that the “debarment” is never permanent and the period of debarment would invariably depend upon the nature of the offence committed by the erring contractor. 10. Taking note of the aforesaid decision of Hon’ble Supreme Court of India, we are of the view that foreclosure of the agreement, even if the same is an impediment or a consideration for rejecting a bid technically, the same cannot be a ground to reject the technical bid, even after lapse of more than ten years of happening of the said event. 11. So far as the fact that the sister concern of the appellant, whose agreement with the Government of Gujarat was foreclosed, we find that admittedly share holdings are common and there is investment by one company in another. The present case is not an inter-corporate dispute nor a dispute relating to taxation or transfer of funds, rather the issue relates to floating of tender and participating in it. Admittedly, both the companies are incorporated private limited companies, having separate entity. As per Clause 4.1.3 - ii of the Bidding Document, if the bidding company or any entity / group having financial or administrative control is blacklisted / debarred or their agreement is discontinued or foreclosed by any Government, they would be treated to be ineligible for contract. It is necessary to quote 4.1.3 – ii of the Bidding Document, which reads as under: - “4.1.3 In case a bidder is: i. … ii.
It is necessary to quote 4.1.3 – ii of the Bidding Document, which reads as under: - “4.1.3 In case a bidder is: i. … ii. itself or being part of any entity / group by way of administrative or financial linkage, who is blacklisted or debarred by any State / Central / UT Government or PSU in relation to manufacture and supply of Supplementary Nutrition Food or any of their Agreement concerning procurement under ICDS Scheme has been annulled / foreclosed / discontinued / terminated by any Government or Court of Law, such bidder(s) shall be treated as ineligible or disqualified for this tender process.” 12. Even if there is a clause for disqualification when sister concern having financial or administrative linkage has been blacklisted or its agreement has been foreclosed, whether this disqualification of a sister concern can be said to be an impediment for time immemorial? Taking a cue from the judgment of the Hon’ble Supreme Court in the case of Kulja Industries Ltd. (supra), where the Hon’ble Supreme Court has held that debarment cannot be permanent, we are of the opinion that even if the agreement with the group company of the appellant was foreclosed, the same cannot be an impediment for the appellant to participate in future contracts for an indefinite period. There cannot be a permanent debarment / disqualification. In this case, it is an admitted case of the respondents-State that agreement with Murliwala Agrotech Pvt. Ltd. was foreclosed by the Government of Gujarat on 08.11.2011. Now in 2023, when more than 12 (twelve) years have passed, that action of foreclosure cannot have an everlasting effect to be treated as an impediment for the appellant to participate in future tenders. 13. The fact that major portion of the contract has been executed by the private respondents is also not disputed. 14. Considering what has been held above, we hold that the foreclosure of agreement with Murliwala Agrotech Pvt. Ltd. and the alleged recording of foreclosure of agreement of the appellant by the respondents will not come in the way of the appellant in participating in any future tenders. The same should not be treated to be a disqualification for the appellant in any bids in any tenders if the appellant is otherwise qualified. 15. With the aforesaid observations, this Letters Patent Appeal stands disposed of. 16. Pending interlocutory applications, if any, stand disposed of.
The same should not be treated to be a disqualification for the appellant in any bids in any tenders if the appellant is otherwise qualified. 15. With the aforesaid observations, this Letters Patent Appeal stands disposed of. 16. Pending interlocutory applications, if any, stand disposed of. 17. There shall be no orders as to costs. 18. Urgent certified copies of this order shall be issued as per the Rules.