1. The petitioners have filed the present petition, inter alia, impugning an order dated 01.04.2016 passed by the respondent (hereafter ‘GAIL’), debarring the petitioner from participating in bidding process relating to any tender floated by GAIL, for a period of three years to be reckoned from the date of the said letter. The effect of the said letter is that the petitioner has been blacklisted till 01.04.2019.
2. The aforesaid punitive measure was imposed on the petitioner on the basis of an allegation that the petitioner had submitted a forged certificate dated 10.05.2013, indicating that it had completed certain works for Indian Oil Corporation Limited (hereafter ‘IOCL’), for a total value of Rs. 39,82,850/-. There is no dispute that the said certificate was forged, however, the petitioner contends that the same did not warrant any punitive measure, as it was furnished by its employee, who was not authorised to do so and it did not affect the petitioner’s eligibility for participating in the tender in question. It is also contended that the show cause notice was issued much after the validity of the petitioner’s bid had expired and, thus, was of no relevance considering that the petitioner was not awarded the contract in question.
3. The petitioner is, inter alia, engaged in the business of Geospatial Software in India. GAIL had floated a tender for procurement and installation of online tracking system of foot patrolling of pipeline. Pursuant to said notice inviting tenders, the petitioner submitted a bid on 24.12.2013.
4. In terms of the eligibility criteria as specified in the tender documents, in order to be eligible for participating in the tender, it was necessary for the bidder to have successfully executed and completed at least one work of foot patrolling of tracking / security system of cross country pipeline of value not less than Rs. 30.7 lacs in the preceding seven years. The relevant bid eligibility criteria is set out below:-
“The bidder must have successfully executed & completed at least 01 (one) single work of foot patrolling tracking / security tracking system of cross country pipeline of value not less than Rs. 30.7 lacs in the preceding seven (07) years from the bid due date.
Documents to be submitted in support of Technical BEC:
(i) In support of above, copy of work order and completion certificate of the same work order indicating the executed value and completion date must be submitted along with the bid. Both the documents should be duly attested by notary public with legible stamp.
(ii) Bidder has to submit Format C for details of similar supply of Goods / Works / Services in past seven years and certification from a Chartered Engineer.
EXPERIENCE ACQUIRED AS A SUB-CONTRACTOR:
Experience acquired by a bidder as a sub-contractor may also be considered for qualifying the Technical BEC. In such case, bidder is required to furnish the following additional documents in support of meeting the BEC criteria:
Copy of work order along with SOR issued by main contractor.
- Copies of completion certificates from the end User/Owner and also from the main contractor. The completion certificates shall have details like work order no /date, brief scope of work ordered & executed value of the job, completion date, etc.”
5. In the bid documents submitted by the petitioner, it provided instances of seven works executed or being executed by it. Out of the seven instances given by the petitioner, only one work was above the requisite value to comply with the eligibility criteria and that was the work for supply, installation, testing and commissioning of GPS based tracking systems for security of M/s Atlas Comnet Private Limited (hereafter ‘Atlas Comnet’). The petitioner claimed that the value of the said works was Rs. 59,39,237/- and the said works were completed on 20.06.2010. In addition to the details of the works executed for Atlas Comnet, the petitioner also indicated certain other works executed or being executed by the petitioner. This is also included a contract with IOCL (PO No: 23694696 dated 29.09.2012). The petitioner claimed that the value of the said work was Rs. 29,00,000/- and the said contract was for a period of twelve months and was under execution (running).
6. GAIL desired to verify that the petitioner met the eligibility criteria (which was premised on the single contract executed for Atlas Comnet, as stated above). Accordingly, GAIL sent a letter dated 09.01.2014, calling upon the petitioner to submit various documents to establish the execution of the aforesaid works.
7. In response to the aforesaid letter, the petitioner sent an email dated 16.01.2014 enclosing therewith a completion certificate dated 10.05.2013 allegedly issued by IOCL (the forged certificate) indicating that the petitioner has completed works of the value ofRs. 39,82,850/-. .
8. In view of the above, GAIL considered the petitioner to be eligible for participation in the bid and, accordingly, considered the petitioner’s bid alongwith other bidders. The petitioner’s bid was not found to be competitive and, therefore, the petitioner was not awarded the contract in question.
9. GAIL, subsequently, found that the completion certificate dated 10.05.2013 sent alongwith the email dated 16.01.2014 was forged, as IOCL confirmed by its letter dated 01.04.2014 that no such completion certificate was issued by IOCL.
10. In view of the above, GAIL issued a show cause notice calling upon the petitioner to show cause as to why action should not be taken against the petitioner and it should not be debarred from doing any business with GAIL for indulging in fraudulent practices.
11. The petitioner responded to the show cause notice by a letter dated 14.06.2014. GAIL did not find the same merit-worthy and, accordingly, passed the order dated 01.04.2016, debarring the petitioner from participating in any tender floated by GAIL for a period of three years.
12. The petitioner preferred an appeal against the said order, which was dismissed by an order dated 04.11.2016.
13. Mr Sahay, the learned counsel appearing for the petitioner has assailed the impugned order on, essentially, five fronts. First, he submits that the forged completion certificate was not issued by its authorised officer. He has drew the attention of this Court to the copy of the Power of Attorney furnished alongwith the bid, which indicates that one Mr Rahim Anwar, General Manager of the petitioner company was constituted as the attorney to act on behalf of the petitioner in respect of the said tender. He submits that in this view, the email dated 16.01.2014 ought to have been ignored.
14. Second, he submits that the forged certificate did not, in any manner, affect the petitioner’s eligibility for participating in the bidding process, inasmuch as, the petitioner did not claim to fulfil the eligibility criteria on the basis of the work being executed for IOCL. He has referred to the bid documents which indicate that the contract with IOCL was for a value of Rs. 29,00,000/- and was running at the material time. He submitted that since the eligibility criteria required one completed work of a value of Rs. 30.7 lacs, the work executed for IOCL was inconsequential.
15. Third, he submitted that the bid was valid for a period of three months and the said period expired in March, 2014. He contended that the show cause notice was issued by GAIL after the period of almost one and a half years and, therefore, no punitive action could be taken on that basis after the expiry of the bid validity period, considering that the petitioner was not awarded the contract in question and had derived no benefit from the same.
16. Fourth, he contended that if forged documents were submitted, the only recourse available to GAIL, in terms of clause 40.1(b) of the tender documents, was to reject the bid but the petitioner could not be blacklisted.
17. Lastly, Mr Sahay also relied upon the decisions in Gorkha Security Services v. Govt. (NCT of Delhi) and Others.: (2014) 9 SCC 105 and Kulja Industries Ltd. v. Chief General Manager, Western Telecom Project BSNL & Ors.: AIR 2014 SC 9, in support of his contention that the petitioner ought to have been specifically put to notice as to the blacklisting period, and further that the punishment imposed on the petitioner ought to have been commensurate with the alleged misconduct.
18. Ms Purnima Maheshwari, learned counsel appearing for GAIL countered the aforesaid submissions.
19. She submitted that the petitioner had also issued an authority letter dated 07.06.2013, which was furnished to GAIL specifically authorising Mr Sandeep Rathore (Bid Manager) “for attending any ‘Negotiations’ / ‘Conferences [Pre-tendering Conference]’, ‘Un-priced Bid Opening’, ‘Price Bid Opening’ and for any subsequent correspondence / communication against the above Bidding Documents.” She submitted that in this view, the contention that Mr Sandeep Rathore was not authorised to send the email in response to the query, is erroneous.
20. Second, she submitted the contention that the petitioner did not qualify the eligibility criteria based on the forged completion certificate, is also erroneous. She submitted that although the petitioner had claimed to be eligible for participation in the bid based on the works proportionately executed for Atlas Comnet, the petitioner did not furnish any documents to establish the same. In response to IOCL’s queries regarding documents pertaining to the said works, the petitioner (through an email sent by Sh. Sandeep Rathore) had furnished documents pertaining to the contract with IOCL claiming that value of the works was above Rs. 39,82,850/-, which was above Rs. 30.7 lacs.
21. Lastly, she also countered the submission that no action could be taken against the petitioner after the expiry of the bid validity period.
Reasoning and Conclusion
22. It is apparent from the above that the essential facts, on the basis of which the impugned measure has been inflicted upon the petitioner, are not in dispute. It is not in dispute that a forged document had been submitted by the petitioner indicating that the petitioner had completed works for IOCL of a value of Rs. 39,82,850/-.
23. The contention that the said document had been furnished by an unauthorised person, is wholly unpersuasive. First of all, the petitioner had furnished a letter of authority in favour of Sh. Sandeep Rathore, which also indicated that he was authorised for any “for any subsequent correspondence / communication against” the bid documents submitted by the petitioner. In this view, it is not open for the petitioner to now claim that Sh. Sandeep Rathore was not authorised to do so.
24. Notwithstanding the above, it is relevant to note that GAIL had addressed the queries of the petitioner and it is not the petitioner’s case that the said query was responded to by the authorised persons as well as an unauthorised one. Only one response was submitted for the said query and that was by Sh. Sandeep Rathore. The said response was in relation to the bidding documents submitted by the petitioner and, therefore, the contention that the same ought to have been ignored is unmerited and is rejected as such.
25. Insofar as the contention that the petitioner has not derived any benefit from the forged documents is concerned, the same is required to be viewed from two angles. The fact that the petitioner has submitted a forged document is sufficient enough for GAIL to have taken a decision not to deal with the petitioner. The question whether the petitioner had derived any benefit from the same is relevant to determine the quantum of punishment that is required to be imposed on the petitioner. This Court is unable to accept that the submission of forged document by the petitioner ought not to be of any consequence at all.
26. In Kulja Industries (supra), the Supreme Court had referred to the guidelines governing the blacklisting of suppliers in the USA and the UK, and summarised the factors that would influence the debarring official’s decision. Paragraph 22 of the said decision is relevant and is set out below:-
“22. The guidelines also stipulate the factors that may influence the debarring official's decision which include the following:
(a) The actual or potential harm or impact that results or may result from the wrongdoing.
(b) The frequency of incidents and/or duration of the wrongdoing.
(c) Whether there is a pattern or prior history of wrongdoing.
(d) Whether contractor has been excluded or disqualified by an agency of the Federal Government or have not been allowed to participate in State or local contracts or assistance agreements on a basis of conduct similar to one or more of the causes for debarment specified in this part.
(e) Whether and to what extent did the contractor plan, initiate or carry out the wrongdoing.
(f) Whether the contractor has accepted responsibility for the wrongdoing and recognized the seriousness of the misconduct.
(g) Whether the contractor has paid or agreed to pay all criminal, civil and administrative liabilities for the improper activity, including any investigative or administrative costs incurred by the government, and have made or agreed to make full restitution.
(h) Whether contractor has cooperated fully with the government agencies during the investigation and any court or administrative action.
(i) Whether the wrongdoing was pervasive within the contractor's organization.
(j) The kind of positions held by the individuals involved in the wrongdoing.
(k) Whether the contractor has taken appropriate corrective action or remedial measures, such as establishing ethics training and implementing programs to prevent recurrence.
(l) Whether the contractor fully investigated the circumstances surrounding the cause for debarment and, if so, made the result of the investigation available to the debarring official.”
27. It is apparent from the above that although the question as to the benefit derived by the petitioner by submission of a forged document may be relevant as to the quantum of punishment imposed on the petitioner, however it may not be a relevant factor to consider whether the petitioner should be blacklisted in the first place.
28. Having stated the above, it would now be apposite to examine whether the petitioner derived any benefit from submission of the forged document. This Court is of the view that the petitioner did seek to derive benefit from submission of the forged document. This is so because although the petitioner had claimed to be eligible on the basis of the works executed for Atlas Comnet, it did not provide the documents sought by GAIL for establishing the same. Instead, the petitioner supplied the forged completion certificate allegedly issued by IOCL showing that the petitioner had completed works at the value of Rs. 39,82,850/-. Whereas, in the bidding document, the petitioner had indicated that the contract with IOCL was for Rs. 29,00,000/-, it now sought to represent that the value of the works completed for IOCL was beyond Rs. 30.7 lacs. It is obvious that the intention of the petitioner was to claim eligibility to participate in the bidding process based on the contract with IOCL. The petitioner had conveniently ignored providing any documents pertaining to Atlas Comnet (on the basis of which the petitioner had initially sought claimed to be eligible for participation in the bidding process).
29. The learned counsel for the petitioner has contended that the petitioner had not presented any document pertaining to the contract with Atlas Comnet, as no such allegation had was mentioned by GAIL in its show cause notice and that the petitioner’s bid already stood rejected. This contention is also unpersuasive. Clearly, if the petitioner was eligible to participate in the bidding process based on completion work with Atlas Comnet, it would have, in defence of the allegation made against it, produced the relevant documents to clearly establish that notwithstanding the forged certificate issued by IOCL, the petitioner was nonetheless, eligible to participate in the bidding process on the basis of the contract with Atlas Comnet. It is not necessary for this Court to speculate as to whether the petitioner had, in fact, completed the works as claimed by it for Atlas Comnet. Suffice it to notice that the relevant documents were not provided by the petitioner, instead the petitioner had provided the forged completion certificate of IOCL.
30. The contention that no action could have been taken after expiry of the bidding validity period, is also bereft of any merit.
31. It is well settled that the Executive authority has the discretion to decline entering any contract with the person if such Authority is of the opinion that it is undesirable to enter into a contractual relationship with such s person. This, of course, is subject to the limitation that such a decision cannot be arbitrary or unreasonable. It is in this context that GAIL had issued a show cause notice to the petitioner and the petitioner was given full opportunity to meet the allegations made against the petitioner. The fact that the validity of petitioner’s bid had expired is of little relevance for determining whether GAIL’s decision to not enter into contracts with the petitioner, on the basis of the petitioner having indulged in fraudulent practices, is legitimate or not.
32. The contention that if any information or documents forming a part of the evaluation to be found formed/forged, the only recourse available with GAIL would be to be rejected the bids and forfeit the earnest money, is also erroneous. It would be relevant to refer to Paragraph 40 of the GCC, which is set out below:-
“40. CORRUPT OR FRAUDULENT PRACTICES
40.1 GAIL requires that Contractor(s) observes the highest standard of ethics during the execution of the Contract. In pursuance of this policy, the Employer:
(a) Defines, for the purposes of this provision, the terms set forth below as follows:
(i) “Corrupt Practice” means the offering, giving or soliciting of anything of value to influence the action of a public official in the procurement process or in Contract execution; and
(ii) “Fraudulent practice” means a misrepresentation of facts in order to influence a procurement process or the execution of a Contract to the detriment of the Employer, and includes collusive practice among Bidders [prior to or after Bid submission] designed to establish Bid prices at artificial non-competitive levels and to deprive the Employer of the benefits of free and open competition.
(b) Will reject a proposal for award if it determines that the Bidder recommended for award has engaged in corrupt or fraudulent practices in competing for the Contract in question;
(c) Will declare a Firm ineligible and put on Holiday, either indefinitely or for a stated period of time if it at any time determines that the Firm has engaged in corrupt/fraudulent practices in competing for, or in executing a Contract.
40.2 Bidder is required to furnish the complete and correct information / documents required for evaluation of their bids. If the information / documents forming basis of evaluation is found to be false / forged, the same shall be considered adequate ground for rejection on the Bids and forfeiture of Earnest Money Deposit.
40.3 In case, the information / document furnished by the vendor/contractor forming basis of evaluation of his bid is found to be false / forged after the award of the contract, GAIL shall have full right to terminate the contract and get the remaining job executed at the risk & cost of such vendor/ contract without any prejudice to other rights available to GAIL under the contract such as forfeiture of CPBG/security Deposit, withholding of payment etc.
40.4 In case this issue of submission of false document comes to the notice after execution of work, GAIL shall have full right to forfeit any amount due to the vendor/contractor along with forfeiture of CPBG/Security Deposit furnished bthe vendor/contractor.”
33. A plain reading of paragraph 40.1(c) and 40.5 clearly indicates that any fraudulent practices would not only be visited with cancellation
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of the bid and forfeiture of earnest money deposit, but also by placing the bidder on a blacklist / holiday list and debarring the contractor for future business. 34. It is also relevant to state that notwithstanding the provisions of the terms of the contract, GAIL would always have the authority to take a decision not to enter into business with a contractor if it is found that the contractor had indulged in fraudulent practices. This is an inherent right available with the any authority and it is not necessary to be specified in the terms of the contract (See: Patel Engineering Ltd. v. Union of India and Anr.: (2012) 11 SCC 257). 35. The contention of the petitioner that a show cause notice must also specifically state the period of blacklisting is also unmerited. In Gorkha Securities (supra), the Supreme Court had observed that it was essential that the show cause notice indicates that an action of blacklisting is proposed against the contractor, the principle being that the petitioner must have full opportunity to meet the case being set up against him and the action which is proposed to be taken against him. In the present case, the action proposed against the petitioner was to blacklist and debar it from participating in tenders. The petitioner was duly put to notice of this proposed action. The period for which the blacklist would have to be determined based on the allegation as well as the response. Thus, a show cause notice issued by GAIL cannot be held to be invalid on the ground that it did not indicate the period for which the petitioner was proposed to be debarred. 36. Insofar as proportionality of the punishment imposed on the petitioner is concerned, it is pointed out that the same is in terms of the banning policy issued by GAIL. However, there may be merit in the petitioner’s contention that the quantum of punishment ought to have been considered on the factors as noticed by the Supreme Court in Kulja Industries (supra). However, this Court is not inclined to examine the said aspect in the matter, since the petitioner has already undergone almost the entire period of blacklisting, which expires in a few days. 37. In view of the above, the petition is dismissed as unmerited. All pending applications are also disposed of.