1 IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P.(C) No. 3129 of 2014 M/s Krishna Kumar Singh through its one of the partners Krishna Nand, son of late Tapeshwar Singh, resident of Belwatikar P.O.- Daltonganj, P.S.- Daltonganj, District- Palamau …......... Petitioner. Versus 1. The State of Jharkhand through the Secretary, Rural Works Department, Government of Jharkhand, Project Bhawan, P.O. and P.S. Dhurwa, District- Ranchi.
2. The Chief Engineer, Rural Works Department, Government of Jharkhand, Engineers' Hostel, P.O. and P.S. Dhurwa, District- Ranchi.
3. The Superintending Engineer, Rural Works Department, Works Division, P.O. & P.S.- Daltonganj, District- Daltonganj 4. The Executive Engineer, Rural Works Department, Works Division, P.O. & P.S.- Daltonganj, District- Daltonganj. .. ... ... ... ...Respondents. ------ CORAM : HON'BLE MR. JUSTICE ANANDA SEN. ------ For the Petitioner : Mr. Rajiv Ranjan, Sr. Advocate. Mr. Shresth Gautam, Advocate For the Respondent-State: Ms. Shruti Shrestha, J.C. to A.G. …...... 09/28.10.2016: In this writ petition, two Orders dated 18.10.2012 and 18.10.2013 are under challenge.
2. Order dated 18.10.2012 has been issued by the Executive Engineer, Rural Works Department, Works Division, Daltonganj, whereby, the Agreement bearing No. F2/02/2009-10 has been cancelled and consequently, the earnest money and the Security Deposit has been forfeited.
3. The order dated 18.10.2013 has been issued by the Principal Secretary, Rural Works Division,-cum-Chief Executive Officer, JSRRDA, Ranchi, by which, it has been ordered that until and unless the work allotted to the Contractors is completed by them, they will not be allotted any further work by the Department.
4. The petitioner-contractor has approached this court since he is aggrieved by these impugned orders.
5. This petitioner was awarded a work of construction and 2 maintenance of Road under Prime Minister Gram Sarak Yojna (for short PMGSY) Package JH1701(VIth). An agreement was entered between the petitioner and the Authority for construction and maintenance of Mohammadganj to Mnahudand (22.00 km.). The said agreement has been brought on record by the petitioner.
6. It is alleged by the Department that inspite of allotment of work in favour of the petitioner, and even after execution of the agreement, the petitioner has not completed the work. Having no other alternative, the Department has issued the impugned order dated 18.10.2012, whereby, the Agreement bearing No. F2/02/2009-10 has been cancelled and consequently, the earnest money and the Security Deposit have been forfeited. Again on 18.10.2013, another order was issued by the Principal Secretary, Rural Works Division-cum-Chief Executive Officer, JSRRDA, Ranchi, by which, it has been ordered that until and unless the allotted work to a particular contractor is not completed, the said contractor will not be allotted any further work by the Department, which amounts to blacklisting.
7. The counsel for the petitioner submits that both the impugned orders are absolutely bad and it shows non-application of mind. He further submits that the agreement entered into between the petitioner and the State Authority could not have been cancelled in a mechanical manner. He submits that it is the State, which is at fault and only for the latches of the State, the petitioner was unable to complete the work. There is forest land over which, the road had to be constructed and it was the duty of State- authority to obtain no objection certificate and clearance from the Forest Department. The State, without obtaining necessary clearance, was pressurizing the petitioner to complete the work, which was not possible for 3 the petitioner. It is also submitted that several letters were written by the petitioner bringing to the notice to the concerned authority that in absence of No Objection Certificate as well as Clearance Certificate from the Forest Department, it was impossible for them to continue the construction work. The counsel for the petitioner further submits that the petitioner cannot be made to suffer because of the inaction on the part of the State authority. He submits that on the aforesaid background the termination order is absolutely bad 8. On the point of Blacklisting, the counsel for the petitioner submits that the order dated 18.10.2013 is absolutely bad and it also shows non-application of mind. He further submits that without giving any opportunity of hearing, the impugned order of blacklisting has been passed. He further submits that, the petitioner-company by virtue of the impugned order dated 18.10.2013 has been blacklisted forever as he cannot complete the allotted work now because of cancellation of the agreement. He lastly submits that both the impugned orders are absolutely bad and therefore, the same are liable to be set aside.
9. Counsel for the State submits that the order of debarment is absolutely justified and so is the order by which, the agreement has been cancelled. It has been submitted that admittedly the petitioner has not completed the work even after issuance of several reminders. She further submits that the petitioner on the one pretext or another came up with all sorts of excuses, which cannot be accepted. She also submits that it is well within the jurisdiction of the State to rescind the work and forfeit the security deposit and therefore, both the impugned orders are absolutely justified. It is lastly submitted that as per Clause 24 of the Standard Bidding 4 Document for PMGSY, there is a Dispute Redressal System and the petitioner should have taken recourse of the said Clause of the tender document before approaching this Court.
10. After hearing the parties, I find that the petitioner was awarded the work for construction of Road under PMGSY Scheme. The petitioner contended that the work, allotted to him, has not been completed because of inaction on the part of the State, as the State did not obtain necessary clearance certificate under various provisions of the Forest Act and allied laws. On the other hand, the State submits that it is the petitioner, who has not completed the work even after issuance of reminders and there being no other alternative, the agreement has been cancelled. Whether the cancellation of the contract was justified or not, cannot be decided by this Court. There is allegation and counter-allegation against each other by both the parties. The counsel for the petitioner contends that the petitioner has completed some part of the work and rest part of the work could not have been completed because of inaction on the part of the State, but the State has refuted all the allegations and submits that it is the petitioner/contractor, who deliberately has not completed the work and has been delaying the project. Therefore, it is a serious disputed question of fact which can be resolved only after leading evidence.
11. Clause 24 of the Standard Bidding Document for PMGSY provides for a Dispute Redressal System, which reads as under;
“24. Dispute Redressal System 24.1 If any dispute or difference of any kind what-so- ever shall arises in connection with or arising out of this Contract or the execution of Works or maintenance of the Works there under, whether before its commencement or during the progress of Works or after the termination, abandonment or breach of the Contract, it shall, in the 5 first instance, be referred for settlement to the competent authority, described along with their powers in the Contract Data, above the rank of the engineer. The competent authority shall, within a period of forty-five days after being requested in writing by the Contractor to do so, convey his decision to the Contractor. Such decision in respect of every matter so referred shall, subject to review as hereinafter provided, be final and binding upon the Contractor. In case the Works is already in progress, the Contractor shall proceed with the execution of the Works, inclu8ding maintenance the RWD of, pending receipt of the decision of the competent authority as aforesaid, with all due diligence. 24.2 Either party will have the right of appeal, against the decision of the competent authority, to the Standing Empowered Committee if the amount appealed against exceeds rupees one lakh. 24.3 The composition of the Empowered Standing Committee will be: I. One official member, Chairman of the Standing Empowered Committee, not below the rank of Additional Secretary to the State Government. II. One official member not below the rank of Chief Engineer; and III. One non-official member who will be technical expert of Chief Engineer's level selected by the Contractor from a panel of three persons given to him by the Employer. 24.4 The Contractor and the Employer will be entitled to present their case in writing duly supported by documents. If so requested, the Standing Empowered Committee may allow one opportunity to the Contractor and the Employer for oral arguments for a specified period. The Empowered Committee shall give its decision within a period of ninety days from the date of appeal, failing which, the contractor can approach the appropriate court for the resolution of the dispute. 24.5 The decision of the Standing Empowered Committee will be binding on the Employer for payment of claims up to five percent of the Initial Contract Price. The Contractor can accept and receive payment after signing as “in full and final settlement of all claims”. If he does not accept the decision, he is not barred from approaching the courts. Similarly, if the employer does not accept the decision of the Standing Empowered Committee above the limit of five percent of the Initial Contract Price, he will be free to approach the courts applicable under the law.” 6 12. From the aforementioned Clause, it is quite clear that if there is any dispute and difference which arise out of the Contract or the execution of works even after the termination, abandonment or breach of the Contract, it shall, in the first instance, be referred for settlement to the competent authority. It clearly envisages a system for redressal of the dispute. Even a dispute relating to termination of the contract will come within the purview of this clause. There is a provision of appeal also against the decision of the competent authority which is provided under Clause 24.2 of the said Standard Bidding Document for PMGSY.
13. It is thus clear that there is a Dispute Redressal System. Since there is serious disputed question of fact, allegation and counter allegation and since there is an alternative forum for redressing the dispute, as envisaged under Clause 24 of the Standard Bidding Document for PMGSY, it would be appropriate for the petitioner to take recourse of Clause 24 of the Standard Bidding Document for PMGSY for redressal of his grievance in respect of cancellation or termination of the agreement. Thus, this Court, in this writ petition, is not inclined to interfere with the impugned order dated 18.10.2012, whereby, the Agreement bearing No. F2/02/ 2009-10 has been cancelled and consequently, the earnest money and the Security Deposit has been forfeited. If the petitioner take recourse to clause 24 of the Standard Bidding Document for PMGSY, the respondent will try to resolve the dispute at the earliest.
14. So far as the order with regard to blacklisting/debarment of the petitioner is concerned, the same needs interference. The impugned order dated 18.10.2013 with regard to blacklisting of the petitioner clearly mentions that the name of the contractor would be kept in the blacklist 7 unless and until, he completes the work, which was allotted to him. The name of the petitioner-company finds place at Sl. No. 5 of the said List of the Contractors, who have been debarred from participating in tenders under RWD/JSRRDA. The said list suggests that the work for construction and maintenance of Road from Mohammadganj to Mnahudand (22.00 km.) remained incomplete. From the letter of the Department, it is quite clear that unless and until the petitioner completes the work for construction of Road from Mohammadganj to Mnahudand (22.00 km.), his name will be kept in the black list. On the one hand, the agreement entered into by the petitioner with the State for construction of the said Road has been cancelled and on the other hand, the State comes with an order, by which, the petitioner has been informed that until and unless he completes the said construction, he will be debarred from participating in the tender under RWD/JSRRDA. Consequence of this, would be, that the petitioner, because of cancellation of the agreement, cannot take up the construction work, and because the petitioner cannot take up the construction work, allotted to him, his name cannot be removed from the blacklist.
15. It is well settled that the power to blacklist a contractor is with the party allotting the contract. Debarment is used as an effective method for disciplining the contractor, who commits acts of omission and commission or frauds or commits any other breaches, but this debarment cannot be permanent. The Hon’ble Supreme Court in the case of Kulja Industries Ltd. Vs. Western Telecom Project BSNL reported in (2014) 14 SCC731has held in paragraph 25 as follows:-
“25. Suffice it to say that “debarment” is recognized and often used as an effective method for disciplining deviant suppliers/contractors who may have committed acts of omission and commission or frauds including 8 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.”
16. Thus, it is well settled principle that any Debarment cannot be permanent. In this case, the debarment has become permanent for the reasons that by virtue of cancellation of the agreement, this petitioner cannot complete the construction work, allotted to him and as per the order of the department, unless and until, the work is completed, the name of the petitioner cannot be taken out from the Debarment List. Thus, in fact, so far as this petitioner is concerned, it is a permanent debarment.
17. Since it has been held by the Hon'ble Supreme Court in the aforesaid decision that there cannot be a Permanent Debarment, the order of debarment dated 18.10.2013, so far it relates to this petitioner is concerned, is absolutely bad and is liable to be set aside. Thus, I have no hesitation to hold that the order of debarment dated 18.10.2013, relating to this petitioner is of permanent in nature and is bad in law and is liable to be set aside.
18. Thus, the impugned order dated 18.10.2013 issued by the Principal Secretary, Rural Works Division,-cum-Chief Executive Engineer, JSRRDA, Ranchi, whereby, debarring the petitioner from participating in the tenders under RWD/JSRRDA, is set aside and quashed.
19. With the aforesaid observations and directions, this writ petition is allowed in part. (ANANDA SEN , J) Anu/-