M/S Thermo Blow Engineers vs Dda And Ors.

% Judgment reserved on : 29.05.2013 Judgment pronounced on : 31.05.2013 + W.P(C) No.669/2013 M/S THERMO BLOW ENGINEERS ..... Petitioner Through Mr. Sidharth Joshi and Mr. Ankur, Advocates versus DDA AND ORS. ..... Respondents Through Mr. Ajay Verma, Advocate

CORAM: HON'BLE MR. JUSTICE V.K. JAIN

V.K. JAIN, J.

1. The petitioner before this Court Shri Vijay Kumar Grover is

carrying business under the name and style of `M/s Thermo Blow

Engineers' and is engaged in manufacturing and supply of various sports

and fitness equipments. The respondent/DDA invited quotations for

supply of belts and decks for Johnsons make Treadmill, to be supplied

within 15 days of the order. The quotation of the petitioner having been

accepted, an order was placed with him for supply of the aforesaid

articles. After some days of the supply, the respondent complained that

jerk was felt during workout of treadmill and there were chances of the

user getting injured during the workout. The petitioner/respondent

W.P(C) No.669 /2013 Page 1 of 8 replied to the complaint, saying that the material supplied by him was as

per specifications and also requested them to lubricate the belts atleast

once a week. DDA, however was not satisfied with the response and

claimed that the belts supplied by him were of inferior quality and were

giving problem. This was followed by exchange of correspondence

between the parties but DDA continued to remain dissatisfied with the

products supplied to it. A letter dated 23.6.2012 was then issued by DDA

to the petitioner requiring him to show cause as to why action against

him be not initiated, as deemed fit. The petitioner submitted a reply

dated 29.6.2012. In the meantime, several complaints were received

from the trainer and members of the gym with regard to the problems

they were facing in the treadmills. DDA took the opinion of authorized

distributors of Johnsons make treadmill who advised against lubrication

and also reported that the belts supplied by the petitioner were of inferior

quality, short in length and not of proper elasticity, thereby creating more

load on the motor. The petitioner was, thereafter, again served with a

notice dated 25.7.2012 asking him to replace all the belts and decks

within three days. He, however, failed to do so, whereupon vide letter

dated 7.8.2012, he was debarred from further tendering in DDA. The

W.P(C) No.669 /2013 Page 2 of 8 petitioner made a representation dated 23.8.2012 against the order

debarring him from further tendering in DDA. Thereupon, he was given

yet another opportunity vide letter dated 10.9.2012 to change one belt

and deck of Johnson make treadmill with the belt and deck of the same

quality and size to prove his bona fide, but he did not do so. Thereupon,

DDA purchased the belts and decks from another vendor.

2. Aggrived from the order of debarring him from further tendering in

DDA, the petitioner is before this Court by way of this writ petition.

Besides, quashing of the Circular dated 7.8.2012, he has also sought a

writ directing DDA to make payment of Rs.1,65,150/-, being the price of

the goods supplied by him to DDA along with interest on that amount.

3. The order debarring the petitioner from further tendering in DDA

has been assailed by the learned counsel for the petitioner on the

following grounds:-

i) There was no provision in the terms of the notice inviting

quotations for debarring the supplier from further tendering in DDA;

ii) No show-cause notice against the proposed debarring was given to

the petitioner;

iii) The debarring was permanent and not for specified period.

W.P(C) No.669 /2013 Page 3 of 8 3. The learned counsel for the DDA, on the other hand, relied upon

the Rules of Enlistment of Contractor of DDA in support of his

contention that the petitioner could be debarred from further tendering in

DDA. Attention is drawn to Clauses 23.0 and 23.3 of the said Rules

which reads as under:-

"23.0 Disciplinary Actions : The contractor shall have to abide by all the rules of enlistment and also by the terms and conditions of the contract and the Notice Inviting Tenders. He shall have to execute the works as per contract on time and with good quality. The enlisting authority shall have the right to demote a contractor to a lower class, suspend business with him for any period, debar him or remove his name from the approved list of contractors indefinitely or for a period as decided by enlisting authority after issue of show cause notice. Decision of the enlisting authority shall be find and binding on the contractor. The following actions of the contractor shall, in general, make him liable to disciplinary actions.

23.3 Removal from the approved list : The name of the contractor may be removed from the approved list of contractos, by the enlisting authority, if he:

A) has, on more than one occasion, failed to execute a contract or has executed it unsatisfactorily; or

W.P(C) No.669 /2013 Page 4 of 8 B) is proved to be responsible for constructional defects in two or more works;"

4. It is an undisputed proposition of law that since an order debarring

a person from doing business with the Govt. or its agencies carries

serious civil consequences, no such order can be passed without giving

notice to him, requiring him to show cause against the proposed

debarring/blacklisting. Reliance in this regard may be placed upon the

decision of the Supreme Court in Raghunath Thakur vs. State of Bihar

and Ors. (1989) 1 SCC 229, where Supreme Court, inter alia, held as

under:-

"4. ... It has to be realized that black-listing any person in respect of business ventures has civil consequence for the future business of the person concerned in any event. Even if the rules do not express so, it is an elementary principle of natural justice that parties affected by any order should have right of being heard and making representations against the order."

5. The communication dated 23.6.2012 which is stated to be the show

cause notice given to the petitioner reads as under:-

W.P(C) No.669 /2013 Page 5 of 8

".....An assurance was given by your rep. that the defective parts installed by them will be replaced within 4 days. Since the defective parts have not been replaced after the assured period, you are therefore informed that why not actions should be intiated as deemed fit."

It would, thus, be seen that there was no reference to the proposed

debarring/blacklisting in the above-referred communication. In case the

notice inviting quotations did not contain a term for debarring the

tenderer in case the goods supplied by him were found to be defective, as

the case of the petitioner is, the aforesaid commuinication cannot be

interpreted to be a show-cause notice against the proposed

debarring/blacklisting. In any case, the petitioner could not have taken

this communication as an opportunity to explain his position qua the

proposed blacklisting/debarring. The notice issued to the petitioner does

not specify the action DDA proposes to take against it. The show cause

notice could have met the requirement of the principles of natural justice,

only if it specifically indicated that the respondents were proposing to

debar the petitioner from tendering in future. Therefore, the aforesaid

communication, in my view, does not meet the requirement of a show

cause notice which is required to be given to a vendor before

W.P(C) No.669 /2013 Page 6 of 8 blacklisting/debarring him from tendering in future. The impugned

Order/Circular dated 7.8.2012 therefore, is liable to be quashed on this

ground alone.

6. In Vinay Construction Co. & Ors. vs. Municipal Corporation of

Delhi and Anr. [116(2005) DLT 14], this Court rejected the contention

that there can be indefinite period of blacklisting, holding that since

blacklisting carries a very severe consequence and needs to be for a

prescribed period.

In A. Rajendran vs. The General Manager [Writ Petition

No.17517 of 2002 decided on 16.10.2003], the Madras High Court,

noticing that the order of blacklisting the petitioner did not specify the

period of blacklisting, quashed the said order, thereby upholding the

contention that blacklisting could not be for an indefinite period.

7. In the case before this Court, since the Circular dated 7.8.2012,

debarring the petitioner from further tendering in DDA applies for an

indefinite period and not for a specified period, such an order cannot be

sustained in law.

8. For the reasons stated hereinabove, the impugned Circular dated

7.8.2012 is hereby quashed. It is, however, made clear that DDA shall be

W.P(C) No.669 /2013 Page 7 of 8 at liberty to pass a fresh order debarring the petitioner for specified period

after giving a proper show cause notice and an opportunity of hearing to

the petitioner.

The petition stands disposed of accordingly. No order as to costs.

V.K.JAIN, J

MAY 31, 2013 ks/rd

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