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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 9379   OF 2014 (Arising out of SLP (Civil) No.33798/2012)

SHREE SHYAMJI TRANSPORT COMPANY      ... Appellant  

Versus

FOOD CORPORATION OF INDIA & ORS.           ...Respondents

WITH

CIVIL APPEAL NO. 9380  OF 2014 (Arising out of SLP (Civil) No. 3928/2013)

M/S  R.S. LABOUR AND TPT. CONTRACTOR          ..Appellant

Versus

FOOD CORPORATION OF INDIA & ORS.    ..Respondents

J U D G M E N T

R. BANUMATHI, J  .   

Leave  granted.    These  appeals  arise  out  of  

common order of the Punjab and Haryana High Court dated

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26.7.2012  passed  in  CWP  Nos.  8415/2012  &  8416/2012  

whereby the High Court declined to interfere with the action  

of the Food Corporation of India (FCI) rejecting tender of the  

appellants-firms.

2. Brief facts leading to the filing of these appeals are  

as follows:-  The appellants are partnership firms having five  

partners.  Respondent No. 2 - FCI invited tenders for Mandi  

Labour Contract (MLC) for  its  centres at Uchana,  Sonepat,  

Narwana  and  Safidon  and  the  appellants  applied  for  the  

tender.  The tender consisted of two parts - technical bid and  

price bid.  As per the procedure, on successfully qualifying  

the  technical  bid,  the  price  bid  was  to  be  opened.   The  

appellants  were  eligible  in  technical  bid  thereby  making  

themselves qualified for opening of price bid.  The said price  

bid was opened on 2.3.2012.  The appellants’ bid was not  

considered  by  FCI,  in  view of  the  fact  that  in  the  earlier  

tender  of  Road  Transport  Contract  (RTC)  of  Hathin–

Rajasthan, the appellants had failed to deposit the security  

deposit and bank guarantee within the stipulated period as  

required  and  the  Earnest  Money  Deposit  (EMD)  of  the  

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appellants  had been forfeited vide Order  dated 5.11.2011  

and hence, the appellants’ MLC tender was rejected invoking  

sub clause (III) of Clause 4 of the Disqualification Conditions.  

According to the appellants, earlier tender of the appellants  

was rejected by an Order  dated 5.11.2011 invoking Clause 7  

of  the  Model  Tender  Form  (MTF).   The  appellant-Shree  

Shyamji  Transport  Company  challenged   the  said  Order  

dated  5.11.2011  by  filing  CWP No.21694/2011  which  was  

disposed  of  by  Order  dated  6.3.2012  in  which  the  Court  

observed that FCI had not invoked Clause 7 of the MTF  to  

debar  the appellant-Shree Shyamji  Transport  Company for  

the contract period and the apprehension of the appellant  

was  ill-founded.   In the light of the observations in CWP  

No.21694/2011,  appellants  contend  that  the  Order  dated  

21.3.2012 rejecting the appellants’ tender for MLC invoking  

Clause 4 (III) is unsustainable.  

3. Challenging action of the respondents - FCI in not  

considering their MLC tender,  the appellants filed two writ  

petitions  bearing  Nos.  CWP  8415/2012  and  8416/2012  to  

quash the communication dated 21.3.2012 and also prayed  

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for consideration of their price bid with regard to MLC tender  

dated  14.3.2012.   The  High  Court  dismissed  the  writ  

petitions by a common Order dated 26.7.2012, interalia, on  

the  grounds:-   (i)  In  the  Writ  Petition  No.21694/2011,  

forfeiture of Earnest Money Deposit (EMD) of the appellants  

was  not  set  aside  by  the  Court  and  forfeiture  of  earnest  

money stood sustained  justifying  the  invocation  of  Clause  

4 (III);          (ii) appellants had also not challenged the action  

of  the  respondents  declaring  it  to  be   disqualified  under  

Clause 4 (III) of the MTF.   Aggrieved appellants are before  

us.

4. Assailing  the  impugned  order,  Mr.  Jasbir  Singh  

Malik,  learned  counsel  appearing  for  the  appellants  

submitted  that  in  the  light  of  the  order  dated  6.3.2012  

passed  in  CWP  No.21694/2011,  it  was  not  open  to  the  

respondents  to  forfeit  the  earnest  money  in  respect  of  

Hathin –Rajasthan RTC tender by invoking Clause 7 of the  

MTF and the learned High Court did not correctly interpret its  

earlier  order  passed  in  CWP  No.21694/2011.   Learned  

counsel further submitted that the High Court has committed  

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an error in observing that the appellant has not challenged  

the action of the respondents declaring it to be disqualified  

under Clause 4 (III)  of the MTF whereas the appellant-firm  

had actually challenged the action of the FCI disqualifying  

the  appellant  under  Clause 4 (III)  of  the MTF  in  CWP No.  

8415/2012,  contending  that  Clause  4  (III)  could  not  have  

been invoked against the appellants.

5. Refuting  the  above  contentions,  Mr.  Ajit  

Pudussery, learned counsel appearing for the respondents,  

submitted   that admittedly EMD of the appellant-firm in RTC  

Hathin–Rajasthan tender was forfeited and forfeiture of EMD  

was  not  set  aside  by  the  High  Court  in  the  CWP  

No.21694/2011 and FCI rightly invoked clause 4(III)  of  the  

MTF against the appellants in MLC Tender.  It was submitted  

that  in  CWP  No.21694/2011,  the  High  Court  has  wrongly  

assumed that Clause 7 of the MTF was not being invoked,  

when  in  fact  action  had been taken  under  Clause 7  only  

and thus the presumption made by the High Court in CWP  

No.21694/2011 is  contrary  to  the record.  Learned counsel  

further submitted that strict compliance of tender conditions  

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are  provided  to  ensure  that  only  serious  tenderers  

participate in the bids as in case after the award of contract  

if  the tenderer  fails  to perform his due obligations,   huge  

amount of public money is wasted in re-tendering and also  

creating a situation affecting the movement and distribution  

of food grains which is not in public interest and the High  

Court  rightly  interpreted  Clause  4(III)  and  the  impugned  

order warrants no interference.  

6. We have considered the rival  submissions made  

by  the  learned  counsel  for  the  parties  and  perused  the  

record.  The question falling for consideration is that in the  

light  of  the  observations  made  in  CWP  No.21694/2011  

whether the High Court was right in upholding the action of  

the  respondents-FCI  declaring  the  appellants-firms  to  be  

disqualified under Clause 4 (III) of the MTF.    

7. Clause  4  (III)  of  the  MTF  stipulates  that  the  

tenderer whose EMD was forfeited in any other contract with  

FCI during the last five years will be ineligible to participate  

in  the  bid.  For  better  appreciation,  we  may  refer  to  the  

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relevant clause 4 (III) and relevant paras in Clause 5 of the  

MTF which read as under:-

“Clause  4. Disqualification Conditions  ………

(III) Tenderer  whose  Earnest  Money  Deposit  and/or  Security  Deposit  has  been  forfeited  by  Food  Corporation of India  or any Department of Central or  State  Government  or  any  other  Public  Sector/Undertaking,  during  the last five years, will  be ineligible.   

  “Clause 5.  Details of Sister Concerns.  

……….. (i)  The blacklisted parties  by FCI  or  Govt./Quasi  Govt.  

Organization will not be qualified.   (ii) The parties whose EMD is forfeited by FCI will not be  

qualified.   (iii) Food Corporation of  India reserves the right not to  

consider  parties  having  any  dispute  with  Food  Corporation of India in order to protect its interest.”

8. According  to  the  respondents,  EMD  of  the  

appellant- Shree Shyamji Transport Company was forfeited  

in  the  earlier  tender  of  Road  Transport  Contract  (RTC)  

-Hathin-Rajasthan,  making the appellant ineligible to bid in  

the MLC tender and therefore, the bid  of the appellant for  

MLC was rightly rejected by the respondents-FCI by Order  

dated 21.3.2012.

9. Insofar  as  RTC  tender  for  Hathin–Rajasthan  is  

concerned, it appears from the record and the observations  

of the High Court in CWP No. 21694/2011 that there was no  

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intentional lapse on the part of the appellant and the delay  

in furnishing the security and the bank guarantee appeared  

to be on account of failure of banking operations.   As per  

Clause 7 (iii) of MTF, the successful tenderer within fifteen  

days  of  acceptance  of  its  tender,  must  furnish  security  

deposit for the due performance of his obligation under the  

contract.   While  dismissing  the  writ  petition  CWP  No.  

21694/2011  on  6.3.2012,  High  Court  observed  that  

respondents-FCI did not have any intention to invoke that  

part of Clause 7 of the MTF indicating that the respondents-

FCI  preferred  not  to  debar  the  appellant  for  the  contract  

period.   For  proper  appreciation  of  the  contention  of  the  

parties, it is relevant to refer to the order of the High Court in  

CWP No.21694/2011 which reads as under:-

“In  so  far  as   the  argument   of  the  learned  counsel for the petitioner  apprehending  debarment  under clause 7  of the MTF is concerned, we are of  the view that there is nothing  in the impugned order  dated 05.11.2011 (P-16) which may indicate that the  respondents have any intention to invoke that part of  clause 7 against the petitioner.  The reason for not  invoking   clause 7  of  the  MTF  appears  to  be  that  there  is  no  intentional   lapse  committed  by  the  petitioner and the delay  in furnishing  the security  and the bank guarantee appears to be on account of  failure  of  banking   operations.    Therefore,  we  appreciate  the respondents  for not having  invoked  clause 7 of the MTF to debar the petitioner  for the  

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contract period.  Therefore, the apprehension of the  petitioner    expressed  through  their  counsel  is  ill  founded.”           

10. The  respondents-FCI,  in  fact,  filed  Civil  

Miscellaneous  Application  No.4480/2012  seeking  

modification of the above order dated 6.3.2012 and prayed  

to hold that Clause 7(iii) of the MTF includes the debarring of  

the  contractor  and  its  partners  i.e.  the  appellants  from  

participating in any future tender of the FCI for a period of  

three years. By order dated  2.4.2012, the Division Bench of  

the High Court disposed of  the said application and other  

applications reiterating its earlier order dated 6.3.2012 that  

FCI in its order dated 5.11.2011 (pertaining to RTC Hathin–

Rajasthan) did not indicate any intention to invoke  that part  

of  Clause  7  of  MTF  to  debar  the  appellants’  firm for  the  

contract  period.   The said  Order  of  the  High  Court  dated  

2.4.2012 reads as under:-

“It  is  thus evident  that  this  Bench has taken  the view that in the order dated 05.11.2011 (P-16),  the  respondents  did  not  indicate  any  intention  of  invoking  that part of clause 7 of MTF which could  debar  the petitioner.  The reason for adopting  the  aforesaid course has also been noted by the Division  Bench  by observing  that there  was no intentional  lapse  committed by the petitioner and the delay in  

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furnishing  the security and the bank guarantee was  on account of  failure  of banking operations.  The  Bench, in fact, appreciated the respondents for not  invoking the part of  clause 7 of  the MTF  to debar  the petitioner  for the contract period.”      

11. Insofar  as  RTC  Hathin–Rajasthan  is  concerned,  

finding of the High Court that there was no intentional lapse  

on the part of the appellant and that delay in furnishing the  

security  and bank guarantee was on account of  failure of  

banking  operation  had  attained  finality.  In  response  to  

appellants’  apprehension of  debarment  under  Clause 7 of  

MTF,  Division  Bench  has  recorded  its  finding  that  it  

appreciates that FCI has not invoked Clause 7 of the MTF  

to debar the appellants for the contract period.   It appears  

that  apprehension  of  debarment  of  appellants  invoking  

Clause 7 was brought to the notice of the Court and the High  

Court did consider the same as a necessary point.  In our  

view, the finding of the Court on the same is binding on FCI.  

Inspite of FCI’s modification petition, the finding that there  

was no intentional lapse on the part of the appellant- Shree  

Shyamji  Transport Company,  was neither modified nor set  

aside.    That  being so,  while  considering  the appellant’s  

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tender  for  MLC, FCI was not justified in invoking Clause 4  

(III)  of  the  MTF   on  the  ground   that   the  tender  of  the  

appellants  pertaining  to  RTC Hathin–Rajasthan was  earlier  

rejected and that appellant’s EMD was forfeited. High Court,  

in  our  view,  has  not  properly  appreciated  its  own  

observations  in  CWP  No.21694/2011  that  FCI  has  not  

invoked Clause 7 of the MTF to debar the appellants for the  

contract period.       

12. The  impugned  tenders  pertain  to  Mandi  Labour  

Contract (MLC) for which the appellants submitted their bid  

on  2.3.2012  and  the  appellants  have  already  suffered  

debarment for about three years.   Considering the facts and  

circumstances of the case and in the light of High Court’s  

observation made in CWP No.21694/2011, in our view, the  

debarment  of  the  appellants  is  not  justifiable  and  the  

impugned order of the High Court cannot be sustained.    

13. In the result, the impugned order of the High Court  

is set aside and the appeals are allowed.  No order as to  

costs.

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…………………….J. (T.S. Thakur)          

…………………….J.         (R. Banumathi)       

New Delhi; October 9, 2014

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