No Smog Tower Installation In Delhi As High Court Corrects Arithmetic Error In Order Imposing 12.5 Cr Cost

The Delhi High Court has made an arithmetic correction in its recent order vide which a hefty cost of Rs. 12.5 crores was imposed on a private company namely SARR Freights Corporation, for concealing the information about its blacklisting in a tender matter.

A division bench comprising of Acting Chief Justice Vipin Sanghi and Justice Jasmeet Singh, which had directed that the said cost shall be utilized for installation of a smog tower in the city, was of the view that the corrected amount would be highly inadequate to meet the purpose of setting up of the said Smog Tower.

On June 3, an application was filed seeking correction of the arithmetical error in the judgment. It was pointed out that the contract value of the contract awarded was Rs.12,14,98,210.

"Wherever the figure of Rs.12.5 Crores is appearing, the same be read as Rs.12,14,98,210. The amount that the respondent No.3 would plough back would be 10% of the aforesaid amount, i.e. Rs.1,21,49,821/-. Since the aforesaid amount would be highly inadequate to meet the purpose for which we directed the amount to be utilised, namely for setting up of a Smog Tower, we direct the respondent No.3 to deposit the said amount in this Court within six weeks," the Court thus ordered.

Therefore, the Court directed that an amount of Rs. 25 lakhs each will be deposited with the Delhi State Legal Services Authority, Delhi High Court Legal Services Committee, Prime Minister's National Relief Fund and Armed Forces Battle Causalties Welfare Fund. Moreover, an amount of Rs. 21,49,821 is to be deposited with the Indigent & Disabled Lawyers Committee.

The development came in a plea which was filed by CJDARCL Logistics Limited, a company engaged in the business of logistics and transportation of goods across India by Road and Rail, seeking directions to RITES Ltd., a government of India Enterprise, to cancel the bids of the private company and, consequently, for awarding the tender to the petitioner on account of being the L1 bidder.

The Bench also directed RITES Ltd., to pay cost of Rs 25 lacs to the petitioner, for improper due diligence in awarding the tender to the private company.

RITES Ltd had floated an E- Tender dated 30.08.2021, for engagement of freight forwarder for transportation of export project (cargo consisting of 34 Passenger Coaches on CIF basis). The petitioner participated in the tender. The terms and conditions laid down in clause 2 of the tender document provided certain grounds for disqualification, even for those bidders who may otherwise meet the qualification criteria as laid down in the tender document.

It was the case of the petitioner that in order to win the tender, respondent No.3 had deliberately suppressed the two banning orders, and submitted a false declaration as per clause 2 of the Tender document. It was added that despite the respondent No.1 being made aware of the said suppression and misdeclaration by respondent No.3, the respondent No.1 had still cleared the technical bid of the respondent No.3; declared them as the L1 bidder in contravention to their own tender conditions, and; proceeded to award the contract to respondent No.3.

The Court was of the view that the company was bound to disclose all their banning orders, and non- disclosure by them, at least, of the two banning orders, was clearly an attempt to hide the true correct factual position with an intent to steal a march, despite being disqualified, and upset the level playing field.

It thus opined that costs or damages should be imposed on the private company as it had obtained the tender by concealment and in violation of tender conditions. It added that RITES Limited should also be directed to pay costs for improper due- diligence; belated communications, and; proceeding with the award of work to the said company despite being informed of its disqualification.

Case Title: CJDARCL LOGISTICS LTD. v. RITES LTD AND OTHERS

Citation: 2022 LiveLaw (Del) 527

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