Haraparbati Cons. vs State

Since all these petitions are between the same parties and involve common questions of facts and law, the same are being disposed of by this common order.

The petitioner has put in issue the validity of order dated 17.4.2013, vide Annexure-7 in WP(C) No. 11850 of 2013, debarring the petitioner from participating in the tender of Water Resources Department of the Government of Odisha for five years on the allegation that the petitioner submitted fraud/fabricated/bogus documents (work experience certificate) with its bid in the tender process.

Case of the petitioner is that it gave its bid in pursuance of the tender call notice dated 19.1.2013 for the work of improvement of communication facilities under the NABARD Assistance for two packages. The tender bid was to be submitted online and the terms and conditions of the tender required furnishing of certificate of experience for the work. The petitioner submitted certificate issued by the Executive Engineer, Jajpur, Irrigation Division, Jajpur. On verification of the certificate issued by the said Executive Engineer, it allegedly transpired that the certificate produced by the petitioner was not the same as issued by the said Executive Engineer but was manipulated/fabricated. Accordingly, show cause notice dated 19.1.2013, Annexure-4 series annexed to WP(C) No. 6714 of 2013 was issued to the petitioner. The said show cause notice has been challenged by way of WP(C) No. 6714 of 2013. It is alleged that the State was acting in an unfair manner at the behest of a local MLA with a view to hand over the entire package to M/s. Orissa Construction Corporation Limited which will put extra financial burden on the State to the extent of Rs. 4 crores. M/s. Orissa Construction Corporation Limited will get 10% extra service charges over and above the market charges.

Counter affidavit has been filed by the Executive Engineer, Jajpur Irrigation Division, opposite party no. 4, to the effect that on verification the certificate produced by the petitioner was found not to be genuine.

WP(C) No. 8250 of 2013 seeks quashing of tender process and issuance of work order dated 20.3.2013 to M/s. Orissa Construction Corporation Limited, opposite party no. 6. Apart from the averments in WP(C) No. 6714 of 2013, it is alleged that the local MLA demanded a sum of Rs. 50 lakhs from the petitioner and since the petitioner did not give the said amount, the MLA persuaded the Department to take action against the petitioner.

A counter affidavit has been filed on behalf of opposite party no. 4, inter alia, stating that the allegations against the MLA, Jajpur have been made without impleading him as a party. The decision has been sought to be justified on merit.

In WP(C) No. 11850 of 2013, apart from seeking quashing of order dated 17.4.2013, debarring the petitioner from participating in the tender for five years, direction has been sought to open the petitioner''s bid.

We have heard learned counsel for the parties. On 21.1.2014, following order was passed in WP(C) No. 6714 of 2013:-

The contention raised on behalf of the petitioner is that the decision to black-list the petitioner was taken on 16.1.2013 though the order was issued on 17.4.2013 and show cause notice was issued on 19.1.2013, which was after the decision already taken.

Learned Government Advocate seeks time to produce the file to show that on 16.1.2013 final decision was not taken and it was on prima facie decision, which was to be reconsidered in the light of the reply of the petitioner.

List again on 3rd February, 2014 at 2 P.M.

Accordingly, the original file has been produced which contains the proceedings of the Tender Committee Meeting dated 16.1.2013, inter alia, stating as follows:-

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The Chief Engineer has not evaluated the technical bid of M/s. Haraparbati Construction as the Chief Engineer confirmed from the E.E., R.W., Division No. II, Jajpur at Jaraka that the work certificate furnished by the agency for the work PMGSY Package No. OR-13-91/VIII has not been issued from his office.

In view of the above, the Chief Engineer found the technical bids of all bidders as non responsive.

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The bidder M/s. Haraparbati Construction, Super Class Contractor has uploaded a work experience certificate issued by the Executive Engineer, Rural Works Division No-II, Jajpur at Jaraka "Improvement to Road and C.D. works including maintenance under PMGSY Package No. OR-13-91/VIII in the Dist. of Jajpur (River embankment NH-5 to Paridabad road Khorasrota left" vide agreement No. 01(PMGSY) 09-10. The work experience certificate was sent to the Executive Engineer, Rural Works Division No-II, Jajpur at Jaraka for confirmation. In reply, the Executive Engineer denied that he has not issued such work experience certificate in favour of M/s. Haraparbati Construction, Super Class Contractor. Hence, the work experience certificate found to be false/fabricated/bogus one. According to the clause-34(d) of the Detailed Tender Call Notice the bidder is liable for black listed and his EMD/Bid Security shall be forfeited.

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The committee after detailed discussion unanimously approved the technical bid of M/s. OCC Ltd. for opening of their financial bid. The committee recommended to ban the bidder M/s. Haraparbati Construction, Super Class Contractor for participation in tenders of Water Resources Department for a period of 5 (five) years and also recommended to black list and forfeit his EMD/Bid Security in accordance with the DTCN clause-34(d) as the bidder has submitted false/fabricated/bogus document (work experience certificate) in this tender.

From the above, it is clear that though the Tender Committee which, inter alia, comprises of the Principal Secretary to Government, Department of Water Resources recommended to ban participation of the petitioner for five years and also forfeiture of EMD/Bid Security, the said decision could not be treated as final decision of the competent authority. On the basis of the said recommendation, the impugned show cause notice dated 19.1.2013 was issued to the petitioner to which the petitioner submitted reply, Annexure-6, dated 29.1.2013. Thereafter the recommendation of the committee was approved by the Principal Secretary to Government, Department of Water Resources on 1.3.2013. The impugned order dated 17.4.2013 has been passed, which is as follows:-

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In view of the above, Govt. in DoWR have been pleased to ban the bidder M/s. Haraparbati Construction, Super Class Contractor for participation in tenders of Water Resources Department for a period of 5 (five) years in accordance with the DTCN clause-34(d) due to submission of false/fabricated/bogus document (work experience certificate) in this tender.

Learned counsel for the petitioner submitted that the petitioner uploaded the certificate which the Executive Engineer has duly issued. On the other hand, the stand of the Department is that the certificate issued to the petitioner was not the one which was uploaded. On being asked as to whether the petitioner had the original certificate, learned counsel for the petitioner stated that only a photocopy was given to him by the opposite parties.

We have given due consideration to the rival submissions. Learned counsel for the petitioner submits that ban on participation is a serious matter and mere denial by the Executive Engineer that he had issued the certificate could not be taken as conclusive when the petitioner had admittedly carried out the requisite quantity of work for the Department. Fairness requires that the bid of the petitioner should not have been rejected and decision debarring for long period without independent corroboration of stand of the Executive Engineer should be held to be arbitrary. In any case, non-interference by this Court may not debar the petitioner from approaching the Department to reconsider the matter at least to the extent of period of debarring. Learned counsel for the Department submits that the view taken cannot be weighed in golden scales and is a possible view with which interference by this Court was not called for.

It is well settled that the scope of interference with the decision of black listing is limited to ascertain whether a fair procedure has been followed and principles of natural justice have been complied with. Once due opportunity has been given before passing of the order of black listing, interference is called for only when the order is perverse. If two views are possible, interference with the view taken by the administrative authority may not be called for. Reference may be made to Patel Engineering Limited Vs. Union of India (UOI) and Another, as follows:-

It follows from the above judgment in Erusian Equipment case that the decision of the State or its instrumentalities not to deal with certain persons or class of persons on account of the undesirability of entering into the contractual relationship with such persons is called blacklisting. The State can decline to enter into a contractual relationship with a person or a class of persons for a legitimate purpose. The authority of the State to blacklist a person is a necessary concomitant to the executive power of the State to carry on the trade or the business and making of contracts for any purpose, etc. There need not be any statutory grant of such power. The only legal limitation upon the exercise of such an authority is that the State is to act fairly and rationally without in any way being arbitrary�thereby such a decision can be taken for some legitimate purpose. What is the legitimate purpose that is sought to be achieved by the State in a given case can vary depending upon various factors.

Though, the petitioner has levelled serious allegation of mala fides against the MLA, the MLA has not been impleaded as a party. At the same time, it cannot be forgotten that in a democracy, every power of a public authority is coupled with duty and cannot be exercised arbitrarily. In Noida Entrepreneurs Association Vs. NOIDA and Others, , it was observed:

The State or the public authority which holds the property for the public or which has been assigned the duty of grant of largesse, etc. acts as a trustee and, therefore, has to act fairly and reasonably. Every holder of a public office by virtue of which he acts on behalf of the State or public body is ultimately accountable to the people in whom the sovereignty vests. As such, all powers so vested in him are meant to be exercised for public good and promoting the public interest. Every holder of a public office is a trustee.

State actions are required to be non-arbitrary and justified on the touchstone of Article 14 of the Constitution. Action of the State or its instrumentality must be in conformity with some principle which meets the test of reason and relevance. Functioning of a "democratic form of Government demands equality and absence of arbitrariness and discrimination." The rule of law prohibits arbitrary action and commands the authority concerned to act in accordance with law. Every action of the State or its instrumentalities should neither be suggestive of discrimination, nor even apparently give an impression of bias, favouritism and nepotism. If a decision is taken without any principle or without any rule, it is unpredictable and such a decision is antithesis to the decision taken in accordance with the rule of law.

The public trust doctrine is a part of the law of land. The doctrine has grown from Article 21 of the Constitution. In essence, the action/order of the State or State instrumentality would stand vitiated if it lacks bona fides, as it would only be a case of colorable exercise of power. The rule of law is the foundation of a democratic society.

Power vested by the State in a public authority should be viewed as a trust coupled with duty to be exercised in larger public and social interest. Power is to be exercised strictly adhering to the statutory provisions and fact situation of a case. "Public authorities cannot play fast and loose with the powers vested in them." A decision taken in an arbitrary manner contradicts the principle of legitimate expectation. An authority is under a legal obligation to exercise the power reasonably and in good faith to effectuate the purpose for which power stood conferred. In this context, "in good faith" means "for legitimate reasons". It must be exercised bona fide for the purpose and for none other.

Having regard to the fact that allegation of mala fide is not supported by any material nor the person against whom such allegation has been made has been impleaded as party nor the petitioner has produced original of the certificate which has been uploaded, we do not find any ground to interfere. The matter has been considered by the committee and the impugned order has been passed after giving the petitioner an opportunity of being heard by way of reply to show cause notice. At the same time, in view of seriousness of consequences of the impugned order and the fact that the petitioner claims to have, in fact, executed requisite work for the Department, which is a verifiable fact, we leave it open to the concerned authority to reconsider the matter if the petitioner seeks review of the said decision on the basis of past performance or other circumstances.

Learned counsel for the petitioner submits that there was a vigilance inquiry against some of the officers at petitioner''s instance on account of which the petitioner''s grievance may not receive impartial consideration by departmental officers. Without expressing any opinion on the said apprehension, we direct that the representation of the petitioner may be considered by the Chief Secretary within three moths from the date of receipt of the same.

The petitions are disposed of accordingly.