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Chhagni Ram Gehlot v/s The State of Rajasthan, Through Secretary to the Government, Industrial Department, Secretariat Building, Jaipur (Raj.) & Others


Company & Directors' Information:- RAM INDUSTRIAL CORPORATION LIMITED [Strike Off] CIN = U74900DL1946PTC001081

Company & Directors' Information:- RAJASTHAN INDUSTRIAL CORPORATION PRIVATE LIMITED [Strike Off] CIN = U99999RJ1949PTC000737

    Civil Writ Petition No. 13973 of 2015

    Decided On, 14 February 2017

    At, High Court of Rajasthan Jodhpur Bench

    By, THE HONOURABLE MR. JUSTICE SANGEET LODHA

    For the Petitioner: B.D. Purohit, Advocate. For the Respondents: R2 & R3, Rajat Arora, Advocate.



Judgment Text

This petition is directed against order dated 10.11.15 issued by the Senior Regional Manager, Rajasthan State Industrial & Investment Corporation Limited (RIICO) , whereby on account of concealment of facts while submitting the technical bid pursuant to NIT No.13/15-16 dated 9.9.15 issued by the RIICO, the petitioner has been declared as disqualified for opening of the financial bid of the tender and earnest money amounting to Rs.7,99,980/- deposited by him, has been forfeited. Further, the petitioner has been debarred from participating in the tender process for a period of one year from the date of issuance of the said order.

2. The relevant facts are that Senior Regional Manager, RIICO Limited issued Bid Invitation Notice No.13/2015-16 dated 9.9.15 inviting online tender/bids for Development Works at Industrial Area, Boranada, Phase IV, Jodhpur. The petitioner submitted his bid for the said work. In the Schedule I attached to the tender, the tenderer was required to inter alia disclose as to whether he has ever been denied tendering facilities by any Government Department/Public Sector Undertaking. The petitioner herein answered the same in negative. On the information being sought by RIICO vide communication dated 27.10.15, the Public Works Department (PWD), Government of Rajasthan, informed that vide order dated 20.4.15 issued by the Chief Engineer, PWD, Rajasthan, Jaipur, the petitioner has been debarred from participating in tender process of the construction work to be undertaken by PWD till further orders. In view of the concealment of facts by the petitioner, the Senior Manager, RIICO Limited passed the order impugned as aforesaid. Hence, this petition.

3. Learned counsel appearing for the petitioner contended that the petitioner mentioning "No" in the relevant column was only an inadvertent mistake on the part of his employee, who has filled the tender form. Learned counsel submitted that a bare perusal of the order dated 20.4.15 makes it abundantly clear that it was not a final order debarring the petitioner from participating in the tender process of the work to be undertaken by the PWD. Learned counsel submitted as a matter of fact, questioning the legality of the order dated 20.4.15, the petitioner had preferred a Writ Petition No.1087/15 before this Court and as a matter of fact, the order dated 20.4.15 passed as aforesaid, was reviewed by the respondent as per the direction of this Court and same stands withdrawn vide order dated 5.2.16 (Annexure-7). Learned counsel submitted that by suppressing the facts relating the debarment by the PWD, Government of Rajasthan, the petitioner could not have availed any undue advantage inasmuch as the order of debarment passed was only qua the works to be undertaken by the PWD and by virtue of the provisions of Section 46 of the Rajasthan Transparency in Public Procurement Act, 2012 ('the Act of 2012'), the debarment order passed by the procurement entity, the PWD, Government of Rajasthan, the petitioner could not have been debarred by the RIICO from participating in tender process initiated by it. Learned counsel submitted that no order forfeiting the earnest money and debarring the petitioner could have been passed without giving an opportunity of hearing to the petitioner. Learned counsel submitted that admittedly, the order impugned passed was not preceded by any notice to the petitioner against the proposed action and therefore, the order passed in gross violation of principles of natural justice deserves to be set aside for this reason alone.

4. On the other hand, the counsel appearing for the respondent RIICO submitted that the factum of suppression of the facts regarding order debarring the petitioner from participation in the tender process passed by the PWD is not in dispute and therefore, on account of breach of code of integrity on the part of the petitioner, the action of the respondents in forfeiting the earnest money and debarring him from participation in procurement process does not suffer from any infirmity and illegality so as to warrant interference by this Court. Learned counsel submitted that Note below the clause 3.3 of the tender document provides that even though the bidders meet the qualification criteria, they are subjected to be disqualified if they have made misleading or false representation in the forms, statement and attachments submitted in proof of qualifying requirements; and/or record of poor performance such as abandoning works, not properly completing the work, inordinate delay in completion, litigation history or financial failure etc. Drawing the attention of this Court to the provisions of Section 11 (2)(a)(ii) & 11(2)(c) of the Act of 2012, learned counsel submitted that any omission including a misrepresentation that misleads or attempts to mislead so as to obtain financial or other benefit or avoid any obligation and further non disclosure by bidder of any previous transgression with any entity in India or any other country during the last three years or any debarment by any other procuring entity amounts to the breach of code of integrity referred to Section 11(1) of the Act of 2012, and therefore, the action taken by the respondent RIICO excluding the petitioner from procurement process, forfeiting the earnest money and debarring from participation in future procurements of the respondent procuring entity is in conformity with the provisions of sub-section (3) of Section 11 of the Act of 2012 and therefore, there is absolutely no reason as to why the petitioner should be extended any indulgence by this Court in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India.

5. I have considered the rival submissions and perused the material on record.

6. Indisputably, the order impugned declaring the petitioner disqualified for opening the financial bid of the tender, forfeiting earnest money amounting to Rs.7,99,980/- deposited by him and further, debarring him from participation in tenders for a period of one year from the issuance of the said order has been passed on the ground that while participating in the tender process in question he had concealed the facts related to his debarment by the PWD, Government of Rajasthan for a period of one year.

7. It is true that as per sub-section (3) of Section 11 of the Act of 2012, in case of any breach of the code of integrity by a bidder or prospective bidder, as the case may be, the procuring entity may take appropriate measures including the measures specified under clause (a) to (f) of sub-section (3) of Section 11, which includes exclusion of the bidder from procurement process, forfeiture or encashment of bid security and debarment of the bidder from participation in future procurement of the procuring entity for a period not exceeding three years under Section 46 of the Act of 1996. But then, while taking the appropriate measures as provided for under sub-section (3) of Section 11, it must be established that the bidder has breached the code of integrity. In terms of Section 11 (2)(a)(ii) of the Act of 2012, it has to be established that the omission including a misrepresentation that misleads or attempts to mislead on the part of the bidder was so as to obtain a financial or other benefits or avoid an obligation. It is pertinent to note that as per the provisions of Section 46 of the Act of 2012, the order of debarment passed by a procuring entity shall debar the bidder from participating in any procurement process undertaken by the procuring entity and therefore, the debarment order passed by the PWD, Government of Rajasthan, debarring the petitioner from participating in the tender process undertaken by the PWD by itself could not have been a ground for denying the petitioner from participating the tender process initiated by the RIICO. In this view of the matter, the respondent RIICO could not have taken the measures under sub-section (3) of Section 11 proceeding with the presumption that the misrepresentation alleged to have been made was an attempt on the part of the petitioner to mislead the procuring entity so as to obtain a financial or other benefit. Moreover, while passing the order impugned, the respondent RIICO has proceeded to debar the petitioner from participating in the tender process for a period of one year without giving him an opportunity of hearing, obviously, invoking the provisions of Section 46 of the Act of 2012 and thus, whereas by virtue of provisions of sub-section (5) of Section 46 of the Act of 2012, no order debarring the petitioner could have been passed without giving him a reasonable opportunity of being heard.

8. Likewise, non disclosure of the bidder of any previous transgression with any entity in India or any other country during the last three years or of any debarment by any other procuring entity cannot be a ground for straight away taking a penal action without giving an opportunity of hearing to the bidder. Further, under sub-section (3) of Section 11, the procuring entity on the breach of the code of integrity by a bidder being established has discretion to take the appropriate measures including the measures as specified but then, while taking the penal action, the procuring entity must record the reasons for taking one or more measures specified. Suffice it to say that the appropriate measures to be taken in terms of sub-section (3) for the breach of code of integrity must be proportionate to the gravity of breach of code of integrity proved.

9. It is well settled that no action having evil and civil consequences can be taken against any person without giving him a reasonable opportunity of being heard. It is to be noticed that while passing the order impugned the petitioner has not been put to financial loss by forfeiting the earnest money, he has been further debarred from participating in the tender process for a period of one year, thus, to say the least, the action of the respondent RIICO in passing the order impugned without extending an opportunity of hearing to the petitioner, is ex facie violative of elementary principle of natural justice and therefore, not sustainable in the eyes of law.

10. It also needs to be noticed that while debarring the petitioner from participating in the tender process till further orders by the PWD, the proceedings against the petitioner remained p

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ending and later, the order debarring the petitioner was reviewed and the debarment order stands withdrawn by the PWD, Government of Rajasthan, vide order dated 5.2.16. Suffice it to say that the debarment order which is made basis for passing the order impugned, does not survive and thus, this aspect of the matter also needs to be considered by the RIICO while passing the order on account of alleged breach of code of integrity. 11. In view of discussion above, the order impugned is liable to be quashed and the matter deserves to be remanded to the respondent RIICO for passing appropriate order afresh, after objective consideration and giving a reasonable opportunity of hearing to the petitioner. 12. Accordingly, the writ petition is allowed. The order impugned dated 10.11.15 issued by the Senior Regional Manager, Rajasthan State Industrial & Investment Corporation Limited is quashed. The matter shall stand remanded to the respondent RIICO for passing an appropriate order afresh, after objective consideration and giving a reasonable opportunity of hearing to the petitioner. No order as to costs. Petition allowed.
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