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International Institute of Professional Studies v/s Union Territory of J.K. & Another

    W.P. (C) No. 807 of 2021 & C.M. No. 2432 of 2021
    Decided On, 29 June 2021
    At, High Court of Jammu and Kashmir
    For the Petitioner: Syed Faisal Qadri, Senior Advocate with Ms. Jasiya Ali, Advocate. For the Respondents: Shah Aamir, AAG with Ms. Sharaf Wani, Assisting Counsel.

Judgment Text

Ali Mohammad Magrey, J.

1. In this Petition, the petitioner has prayed for the grant of following relief(s) in his favour:

“(i) Issue a Writ of Certiorari and quash Order No. 53-JKMSCL of 2021 dated 08.02.2021 passed by respondent No. 2 cancelling the contract allotted in favour of the petitioner ab initio;

(ii) Issue a Writ of Certiorari and quash Order No. 69 JKMSCL of 2021 dated 06.04.2021 in terms of which the petitioner’s firm stands blacklisted for a period of 02 years for participating and competing in any of the tendering process to be initiated by the respondents in future;

(iii) Directions are sought declaring Condition No. 2 of the Policy framed by the respondents for black-listing/debarring of product or Company that stands invoked in respect of the case of the petitioner declaring it as illegal, arbitrary and unconstitutional with a consequential direction in the form of Writ of Mandamus commanding the respondents to allow the petitioner to participate in future tendering process initiated by the respondent-Corporation; and

(iv) Any other Writ, order or direction which this Hon’ble Court may deem fit and proper also be issued in favour of the petitioner and against the respondents.”

2. The background facts leading to the filing of the petition on hand, as stated by the petitioner in his petition, are that the petitioner claims to be a proprietorship concern, being run under the name and style of ‘International Institute of Professional Studies’ with its office located at Khanyar, Srinagar. It is stated that the activities in which the petitioner concern is involved relate to providing manpower facilities of trained professionals in the discipline of computer related software activities and the said trained manpower is supplied to both the Government agencies as well as Semi-Government agencies operating Within the Union Territory of Jammu and Kashmir. In terms of tender Notice No... of 2020 issued by respondent No. 2, quotations are stated to have been invited by the respondent-Corporation from different manpower supplying agencies for supply of different categories of manpower, including Assistant Programmer/Data Entry Operators/ other supporting staff for working in Jammu and Kashmir Medical Supplies Corporation Ltd. The petitioner, being eligible in all respects, claims to have responded to the aforesaid tender notice by submitting all the relevant documents. The respondent-Corporation accepted the bid of the petitioner and same was found to have qualified in the technical evaluation process amongst other eligible bidders. Accordingly, the case of the petitioner, along with other bidders, was recommended for purpose of financial evaluation by the Financial Evaluation Committee. The Financial Evaluation Committee, in its meeting held on 27th of November, 2020, opened the financial bids of the bidders who were recommended by the Technical Evaluation Committee, wherein, as stated, the petitioner was found to be the lowest bidder amongst the bidders who had qualified in the technical evaluation process upon opening up of the financial bids. Thereafter, in terms of order dated 28th of November, 2020, passed by the Purchase Committee of the respondent-Corporation, the rates offered by the petitioner were approved and, vide order dated 6th of January, 2021, the letter of intent was issued by the respondent-Corporation in favour of the petitioner, whereby the petitioner was asked to submit an undertaking in the shape of an Affidavit assuring therein the successful performance of the contract before the issuance of the formal contract in favour of the petitioner. It is submitted that the said condition on part of the respondent-Corporation was in excess of the terms and conditions provided in the original tender notice, as such, the petitioner approached the respondents with a representation seeking clarification on the excess condition(s) imposed by the respondents in the letter of intent. It is contended that instead of clarifying the entire issue that had crept in the contents of the letter of intent issued by the respondent No. 2, the respondents issued the impugned communication dated 8th of February, 2021 followed by impugned order dated 6th of April, 2021, in terms whereof not only the contract that was successfully allotted in favour or the petitioner stands cancelled, but the petitioner firm has also been blacklisted for a period of two years. It is this communication dated 8th of February, 2021 and order dated 6th of April, 2021 that have been assailed by the petitioner through the medium of the instant Petition.

3. Mr. Syed Faisal Qadri, the learned Senior Counsel appearing for the petitioner, submitted that the impugned communication of blacklisting the petitioner has been issued by respondent-Corporation in gross violation of the principles of natural justice inasmuch as no opportunity of hearing was accorded to the petitioner before issuance of the impugned communication/order of cancellation of the contract/blacklisting the petitioner. It is pleaded that since the impugned communication/order has visited the petitioner with penal consequences qua cancellation of contract as well as blacklisting the petitioner, thus it was incumbent upon the respondent-Corporation to provide adequate opportunity to the petitioner to put forth his stand before issuing the impugned communication/order. It is further submitted that the impugned action of the respondent-Corporation is without jurisdiction and authority. It is averred that upon assessment of the petitioner’s bid as L1, the respondent No. 2 issued a letter of intent in favour of the petitioner, whereby he was asked to submit an undertaking duly attested by the Judicial Magistrate to the effect of the completion of the contractual liability on part of the petitioner. The petitioner, as stated, in compliance to the said direction submitted the requisite undertaking with respect to completion of the contract allotted in his favour, however, the respondent-Corporation did not accept the undertaking so furnished by the petitioner and, as a consequence thereof, cancelled the contract. The learned Senior Counsel vehemently argues that the offer made by the petitioner was not accepted by the respondents leading to the non-completion/execution of the contract in between the petitioner and the respondent-Corporation, hence, the action of the respondents is without jurisdiction and authority.

4. Objections stand filed on behalf of the respondents, resisting and controverting the averments made by the petitioner in his petition. It is submitted that since the petitioner firm failed to submit the undertaking in the shape of Affidavit for successful performance of the contract, therefore, the respondent-Corporation cancelled the contract ab initio. It is further submitted that, thereafter, a meeting of the Purchase Committee of the respondent-Corporation was held on 27th of January, 2021 wherein, amongst other decisions, the General Manager (Adm) was permitted to issue letter of intent to enter into an agreement and issue rate contract in favour of L2 bidder on matched rates of L1. The said Purchase Committee, as stated, also approved debarring/blacklisting of L1 bidder-petitioner firm for participating in future tenders issued by the respondent-Corporation for a period of two years.

5. Heard learned Counsel for the parties, perused the pleadings on record and considered the matter.

6. At the very outset, what requires to be stated is that the decision to allot the works or enter into contract with citizens has to be rational, non-arbitrary and reasonable. The decision-making process of the Government or Government Agencies in contractual matters has to be reasonable and conforming to the requirements of fundamental rights of the petitioner guaranteed under Articles 14 and 19 of the Constitution of India. In the case on hand, the respondents have cancelled the contract in favour of the petitioner and blacklisted the petitioner firm on the ground that the petitioner did not submit the undertaking in the manner required. The pleadings on record bring it to fore that prior to the issuance of the impugned communication dated 8th of February, 2021 and Order dated 6th of April, 2021, the respondent-Corporation did not provide any opportunity of being heard to the petitioner. This course of action adopted by the respondent-Corporation has visited the petitioner with major punishment, and for such major punishment, as per procedure, fair and due opportunity of hearing had to be offered to the petitioner by associating him in the entire process.

7. Law is no more res integra to the effect that there must be judicial restraint in interfering with the administrative action, particularly in the matters of tender or contract and that, ordinarily, the soundness of the decision taken by the tender issuing authority ought not to be questioned, but the decision-making process can certainly be subject to judicial review. The soundness of the decision may be questioned, firstly, if the decision made is so arbitrary and irrational that the Court can say that the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached or, second, if the process adopted or decision made by the authority is malafide or intended to favour someone or, third, if the public interest is affected. In the instant case, when the petitioner was not given any opportunity, muchless a fair and adequate one, to show cause against the proposed punishment to be imposed against him, in such eventuality, the decision of the respondent-Corporation to cancel the contract/blacklist the petitioner amounts to such action where they have acted in a manner in which no responsible authority acting reasonably and in accordance with the relevant law would have acted.

8. The contention of the learned Counsel for the respondents that in contract matters, a Writ Petition is not maintainable, in the facts and circumstances of the present case, is not only misconceived, but also misdirected as well. This is so because it is settled legal position that if an authority acts in an arbitrary matter even in a matter of contract, an aggrieved party can approach the Court by way of Writ under Article 226 of the Constitution and that the Court, depending on the facts of the said case, is empowered to grant the relief. Although, ordinarily, a superior Court, in exercise of its writ jurisdiction, would not entertain a petition involving contractual obligations between the parties, it is trite that when an action of an authority is arbitrary or discriminatory and, thus, violative of Article 14 of the Constitution of India, a Writ Petition would be maintainable. There cannot be any doubt whatsoever that a ‘Writ of Mandamus’ can be issued only when there exists a legal right in the Writ Petition and a corresponding legal duty on the part of the authority, but then if any action on the part of the authority is wholly unfair or arbitrary, the superior Courts are not powerless. This view is fortified by the law laid down by Hon’ble the Supreme Court in case titled Karnataka State Forest Industries Corporation v. Indian Rocks, IV (2016) SLT 432=AIR 2009 SC 684.

9. Again, the Apex Court of the country, while dealing with a similar issue, in case titled Zonal Manager, Central Bank of India v. Devi Ispat Ltd. & Ors., V (2010) SLT 596=III (2010) CLT 159 (SC)=(2010) 11 SCC 186 has, at Paragraph No. 25, provided as under:


It is clear from the above observations of this Court in the said case, though a writ was not issued on the facts on that case, this Court has held that on a given set of facts if a State acts in an arbitrary manner even in a matter of contract, an aggrieved party can approach the Court by way of writ under Article 226 of the Constitution and the Court depending on facts of the said case is empowered to grant the relief. This judgment in K.N. Guruswamy v. State of Mysore, AIR 1954 SC 592, was followed subsequently by this Court in DFO v. Ram Sanehi Singh, 1970 (SLT Soft) 140=(1971) 3 SCC 864, wherein this Court held:

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/> “4. By that order he has deprived the respondent of a valuable right. We are unable to hold that merely because the course of the right which the respondent claims was initially in a contract, for obtaining relief against any arbitrary and unlawful action on the part of a public authority he must resort to a suit and not to a petition by way of writ. In view of the judgment of this Court in K.N. Gueruswamy case there can be no doubt that the petition was maintainable, even if the right to relief arose out of an alleged breach of contract, where the action challenged was of a public authority invested with statutory power.” 10. For the foregoing reasons, coupled with the enunciation of law discussed hereinabove, the impugned communication dated 8th of February, 2021 as well as impugned Order dated 6th of April, 2021; whereby the contract in favour of the petitioner has been cancelled and petitioner has been blacklisted by the respondent-Corporation, cannot withstand the test of judicial scrutiny. That being so, this Writ Petition is allowed and the impugned communication dated 8th of February, 2021 as well as impugned Order dated 6th of April, 2021 are hereby quashed. 11. Writ Petition disposed of on the above terms. Pending applications, if any, shall also stand disposed of, accordingly. Writ Petition disposed of.