SHREE SHYAMJI TRANSPORT COMPANY Vs F.C.I. .
Bench: T.S. THAKUR,R. BANUMATHI
Case number: C.A. No.-009379-009379 / 2014
Diary number: 35174 / 2012
Advocates: Vs
AJIT PUDUSSERY
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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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