Manoj Pandey vs. Union Of INDIA Through General Manager South Eastern Railways And Ors

Held

The Court held that the respondents were justified in applying the terms and conditions of the NIT that was floated before the new policy came into force. The petitioner's failure to deposit the balance security amount within the stipulated period, as per the LOA and NIT, led to the termination of the contract and forfeiture of earnest money. However, the Court found that the order of debarment for two years was vitiated in law. This was because the debarment was passed in violation of the principles of natural justice, as the petitioner was not afforded an opportunity of hearing on the issue of debarment, even though the notices issued primarily dealt with termination and forfeiture. The Court distinguished between the termination of a contract for breach and the act of blacklisting, emphasizing that the latter requires adherence to natural justice. Therefore, the impugned order was partly allowed, with the debarment portion being quashed.

Facts

The petitioner, Manoj Pandey, was awarded a tender for managing the Cycle-Car Stand at Hatia Railway Station. The Letter of Acceptance (LOA) was issued on 11.09.2017, and the parking area was handed over. The Senior Divisional Commercial Manager (respondent No.3) issued a notice on 16.11.2017, stating that the petitioner had only paid the first installment of the license fee and GST, but the security deposit of Rs. 23,19,000/- was due. The petitioner requested the contract be signed as per a new policy issued on 10.07.2017, but this was refused as the tender was floated before the new policy. Subsequently, respondent No.3 issued a letter dated 28.11.2017 terminating the tender allotment, forfeiting the earnest money, and debarring the petitioner from participating in South Eastern Railway contracts for two years. The petitioner contended that the debarment was arbitrary and passed without a show cause notice or hearing.

Key Issues

1. Whether the termination of the tender allotment and forfeiture of earnest money by the respondent No.3 was arbitrary and illegal, considering the petitioner's contention that the contract should be governed by the new policy issued after the tender was floated but before the LOA was issued? 2. Whether the debarment of the petitioner from participating in all types of railway contracts for two years by the respondent No.3 was in violation of the principles of natural justice, specifically the requirement of a show cause notice and an opportunity of hearing? Petitioner's arguments: The debarment for two years is unjustified and illegal as no show cause notice or opportunity of hearing was provided. Even if there was a breach, the debarment is disproportionate. The new policy, issued before the LOA, should have been applied. Respondents' arguments: The tender was floated before the new policy, so the old policy applies. The petitioner failed to deposit the security money within the prescribed period despite opportunities, making him a defaulter. The action was in accordance with the NIT terms. The contract initiated under one policy cannot be substituted by another.