Failure To Mention Blacklisting As A Probable Action Does Not Disable Tenderer From Blacklisting The Delinquent Bidder: J&K&L High Court

The bench comprising Justice Sindhu Sharma was hearing a plea in terms of which the petitioner had thrown a challenge to the office circular declaring him ineligible from participating in the bidding process in any work undertaken by NHAI. The petitioner inter alia had premised his challenge mainly on the grounds:-

(i) That the office circular is misconceived as the contract agreement does not include Instructions to Bidders (ITB) of RFP in the request for proposal to be part of the contract agreement covering the petitioner and respondent-NHAI;

(ii) That the Instructions to Bidder (ITB) of RFP is only to inform the intending bidder requirements while making bid and does not cover the dispute of post completion of the execution of work in the contract;

(iii) That the Instructions to Bidder (ITB) is not an agreement between the bidders and the NHAI, as such, invoking Clause 35 of RFP is illegal and misconceived in law.

Perusal of the record revealed that the respondent National Highway Authority of India had invited bids through e-tender from experienced firms/organizations for short term improvement and routine maintenance of roads. The petitioner participated and his bid was accepted. Record also revealed that the respondent NHAI accordingly entered into a contract with the petitioner and the petitioner successfully completed the execution of the contract. Subsequently at a later point in time the respondent No. 4 i.e. Regional Officer, J&K, NHAI issued a show-cause notice dated 04.02.2021 to the petitioner, stating that since the experience certificates submitted by the petitioner were not genuine and have not been issued by the concerned authorities, as such, are false and fabricated, therefore, confirmation towards correctness of these documents is also false, which ultimately led to his blacklisting and the issuance of the impugned office circular that declared him ineligible for any future contracts undertaken by NHAI. It was this circular that was the matter of challenge before the bench.

Contesting the plea the respondent NHAI submitted that NHAI is well within its rights to debar the petitioner vide office circular dated 26.03.2021, as the petitioner had obtained the allotment of contract by submitting fabricated experience certificates and, thus, had resorted to fraudulent practice. Respondent further contended that the action taken by the NHAI is in consonance with the terms of the contract as the Instructions to Bidder (ITB) besides other documents also form part of contract agreement.

Adjudicating upon the matter and while dealing with the contention of the petitioner that the action cannot be initiated against him only on the basis of Clause 35 of the Instructions to Bidder (ITB) document, as the same does not form part of contract, the bench observed that the ITB document forms part of the contract agreement and, thus, Clause 35 of ITB document is to be read as part of the contract agreement. It cannot be said that agreement came into existence between the parties is not valid and the intention of the parties is to be gathered from expressions of correspondence and meaning of it conveys and in case it shows that there is a meeting of minds between the parties and they are actually in needful agreement upon the terms, then there can said to be a binding contract, the bench underscored.

Delving deep into the subject the bench recorded that the two certificates relied upon by the petitioner for participating and obtaining the contract were denied to have been issued by the concerned authority and thus the contract was secured by fraudulent practice.

"Though, the contention of the petitioner is that the contract awarded to him stood executed and he has completed the same successfully but this does not absolve the petitioner of his liability, as the very work executed by the petitioner was obtained by him through fraudulent means, therefore, the authority had rightly issued show-cause notice to the petitioner and petitioner had denied the same. ich are as a result of fraudulent practices" the court noted.

Deliberating on the issue of blacklisting the bench found it worthwhile to record the observations of supreme court in M/s Patel Engineering Ltd. V. Union of India and another‟, (2012) wherein SC observed

"The bid document is not a statutory instrument. Therefore, the rules of interpretation, which are applicable to the interpretation of statutes and statutory instruments, are not applicable to the bid document. Therefore, in our opinion, the failure to mention blacklisting to be one of the probable actions that could be taken against the delinquent bidder does not, by itself, disable the second respondent from blacklisting a delinquent bidder, if it is otherwise justified. Such power is inherent in every person legally capable of entering into contracts."

Fraud vitiates every solemn proceeding and, therefore, a person indulging in the same cannot claim any right on the basis of technicalities, concluded the bench while dismissing the plea.

Case Title : Rakesh Kumar Chaudhary Vs Union of India.

Citation : 2022 LiveLaw (JKL) 93