Top Printers vs State Of Assam And 4 Ors.

Heard Mr. P. N. Goswami, learned counsel for the petitioner. I have also heard Mr. B. Gogoi, learned Standing Counsel, National Health Mission (NHM), appearing for the respondents.

This writ petition is directed against the order dated 18.11.2016 issued by the Mission Director (NHM), Assam i.e. the respondent No.2 herein imposing penalty upon the petitioner. The facts of the case, in a nutshell, is that the writ petitioner is a proprietorship firm. Responding to a short tender notice dated 12.09.2016, the petitioner had participated in the tender process for printing and supply of "Mother and Child Protection (MCP) Cards". Upon conclusion of the tender process, the petitioner emerged as the successful bidder. The work was accordingly awarded in favour of the petitioner. However, after completion of about 85% of the supply, the petitioner had failed to supply the "Mat paper" as per the tender specification and instead, supplied the remaining 15% of the materials in the form of "glossy paper". Since the aforesaid failure of the petitioner to supply "mat paper" was in violation of the tender conditions, the respondents had issued a show cause notice dated 04.11.2016 calling upon the petitioner to answer as to why "punitive action" should not be taken against it for violation of the tender condition. The petitioner had submitted its reply on 08.11.2016. However, not being satisfied with the reply, the respondent No.2 had passed the impugned order dated 18.11.2016 imposing penalty upon the petitioner. The operative part of the order dated 18.11.2016 is reproduced herein below for ready reference :-

"Hence, it is ordered that :-

i) Ms Top Printer's agreement under tender NHM/MCP/2960/2018-17/6057 dated 12/09/2018 shall be terminated henceforth.

ii) Security deposit shall be forfeited.

iii) As certain amount of agreed upon quantity as per specifications is apparently supplied and consumed, such amount should be objectively identified and due amount should be paid to M/s Top Printers for the proper quality of supplies made. Director, Finance, NHM will make this assessment.

iv) M/s Top Printers, under the tender conditions No.15(a), is disqualified to participate in any tender process for next five years under National Health Mission, Assam."

By referring to the impugned order, Mr. Goswami submits that the petitioner was never intimated about the intent of the respondents to "blacklist" it for five years by invoking clause 15(c)(iii) of the tender document. As such, the petitioner could not submitted effective representation in the matter against the penalty imposed upon it. Mr. Goswami further submits that although the petitioner has assailed the impugned order to the extent the same terminates the contract agreement and has also prayed for a direction to release the balance amount payable to it in a time bound manner, yet, the petitioner does not intend to press for those reliefs at this stage. Therefore, by reserving its right to seek appropriate remedy in the above matter, as may be permissible under the law, the petitioner is confining its challenge to the impugned order only to the extent the same has an affect of "blacklisting" the petitioner firm for next five years.

Relying upon a decision of the Hon'ble Supreme Court rendered in the case of Gorkha Security Services vs. Government (NCT of Delhi) and others reported in (2014)9 SCC 105, Mr. Goswami submits that the respondents having failed to indicate the intended action in the show cause notice, the impugned order, in so far as para (iv) is concerned, is unsustainable in the eye of law and hence, deserves to be set aside.

Responding to the above contention, Mr. Gogoi, learned Standing Counsel, NHM, submits that clause 15(a) of the tender document clearly mentions that the supply has to be made by complying with the "specifications, stipulations and conditions specified in Annexure-V" and in the event of any deviation therefrom, it would be open for the authorities to impose any of the penalties mentioned in clause 15(c). Contending that a perusal of the show cause notice would furnish sufficient ground to infer that the penalty of debarring the petitioner from participating in any tender under the department for next five years was the only contemplated action in the matter, Mr. Gogoi submits that there is no justifiable ground for this Court to interfere with the impugned order in exercise of discretionary jurisdiction under Article 226 of the Constitution of India. Mr. Gogoi has also referred to and relied upon the decision of the Supreme Court in the case of Gorkha Security Services (supra) to content that if the contemplated action is inferable from the impugned order, no violation of natural justice can be alleged in such cases.

I have considered the submissions advanced by learned counsel for the parties and have also gone through the materials available on record.

The central controversy in this proceeding revolves around interpretation of clause 15 of the tender document. Therefore, I deem it appropriate to reproduce clause 15 in its entirety, herein below :-

"15. SUPPLY CONDITIONS

a. Specifications and Quality

The items supplied by the successful bidder shall be of the best quality and shall comply with specifications, stipulations and conditions specified at Annexure-V.

b. Delivery Period the items should be delivered at NHM State Warehouse, Guwahati within 25th September 2016. Sample copy of the item should be approved on 16th September 2016 and not later than 17th September 2016.

c. Penalty for Delayed Delivery

i. In case there is delay in delivery beyond the stipulated period as mentioned in the purchase order, there shall be reduction in price @ 0.5 per cent of the value of the delayed goods per week of delay or part thereof.

ii. Items delivered after 26th September 2016 shall not be accepted.

iii. After 26th September 2016, termination of the contract may be considered. Non-compliance of the contract provisions shall made the successful bidder liable to be disqualified to participate in any tender for the next 5 years, in addition to forfeiture of Security Deposit and other penal actions.:"

From a careful reading of clause 15, it would be clear that sub-clause (a) of clause 15 mandates that the successful bidder should comply with specifications, stipulations and conditions specified at Annexure-V and any violation thereof would invite penalty as mentioned in sub-clause (c). It is, however, to be noted herein that while sub-clause (c)(i) and (ii) of clause 15 deals with termination of contract and imposition of penalty of disqualification including forfeiture of security deposit and other penal actions, a plain reading of sub-clause (c)(iii) would go to show that there are several components of penalty envisaged thereunder and disqualification to participate in any tender for the next five years is only one of such penalty.

As noted above, the show cause notice only indicates as to why "punitive action" should not be imposed upon the petitioner without in any manner indicating as to whether the authorities were contemplating to impose any one or all the punitive actions envisaged by clause 15(c)(iii). Under the circumstances, this Court is of the opinion that the petitioner was not intimated about the fact that the punitive action of disqualifying it from participating in any tender process for the next five years was one of the punitive actions contemplated by the authorities in the show cause notice.

Coming to the operative part of the impugned order, it would be apparent from para (iv) of the order that the action was taken under condition No.15(a) of the tender document. Since the petitioner has not disputed the fact that the specified quality could not be supplied by it to the extent of 15%, there can be no controversy about the fact that there has been violation of the tender condition in this case. The circumstances which had led to such violation need not be gone into in this proceeding since the petitioner is not pressing the relief, in so far as termination of the tender is concerned. Suffice it to mention herein that clause 15(a) of the tender document does not deal with any punitive action but merely stipulates the requirement on the part of the bidder to comply with the tender specification. If that be so, there can hardly be any doubt about the fact that by invoking clause 15(a) of the tender document the petitioner could not have been disqualified from participating in any departmental tender for five years. Moreover, the petitioner was also not given any opportunity to show cause against the punitive action of disqualification to participate in any tender process. Hence, the action on the part of the respondent No.2 is in clear violation of the principles of natural justice.

In the case of Gorkha Security Services (supra) the Hon'ble Supreme Court has made the following observations :-

"27. We are, therefore, of the opinion that it was incumbent on the part of the Department to state in the show-cause notice that the competent authority intended to impose such a penalty of blacklisting, so as to provide adequate and meaningful opportunity to the appellant to show cause against the same. However, we may also add that even if it is not mentioned specifically but from the reading of the show-cause notice, it can be clearly inferred that such an action was proposed, that would fulfil this requirement. In the present case, however, reading of the show-cause notice does not suggest that noticee could find out that such an action could also be taken. We say so for the reasons that are recorded hereinafter."

Since the affect of the impugned order would amount to blacklisting of the petitioner firm for five years and considering the fact that no proper opportunity was given to the petitioner to represent against the proposed penal action, the impugned order dated 18.11.2016, in so far as the disqualification of the petitioner from participating in any tender process for next five years under the department is concerned, is held to be unsustainable and hence, stands interfered with. However, notwithstanding this order, it would be open for the department to issue a fresh show cause notice to the petitioner before taking any further action in the matter, if so advised, after giving proper opportunity of being heard to the petitioner. The writ petitioner would also be at liberty to avail any other appropriate legal remedy in the matter, if so advised.

The Writ Petition stands disposed of.