M/S Sudarshan Facilities PVT LTD vs. Pgimer Post Graduate Institute Of Medical Education Research,Chandigarh And Others

Facts

The petitioner, M/s Sudarshan Facilities Pvt. Ltd., challenges an order dated 12.07.2025 by PGIMER, Chandigarh, debarring them from participating in any procurement process for two years. The petitioner had provided security services to PGIMER from 01.07.2017 to 31.07.2020, receiving a satisfactory completion certificate on 06.03.2020. Over four years later, on 27.05.2024, PGIMER issued a show cause notice alleging violation of clause 12(k) of the contract for non-deposit of applicable Goods and Services Tax (GST). The petitioner had stated in a letter dated 18.03.2020 that they had neither charged nor deposited GST. Despite the petitioner's reply, PGIMER issued the debarment order.

Held

The Court held that the impugned order dated 12.07.2025, debarring the petitioner, was bereft of any reasoning. The Court noted that while the petitioner had filed a detailed reply to the show cause notice, PGIMER's order simply stated that no merit was found in the response without considering or returning any findings on the specific grounds raised by the petitioner. The Court emphasized that debarment or blacklisting is a severe penalty with significant adverse impacts on an entrepreneur's reputation and future business prospects. Therefore, such a penalty must be imposed through a reasoned order, allowing the affected party to understand the basis of the imposition. Consequently, the Court set aside the impugned order and remitted the matter back to PGIMER for fresh consideration in accordance with the law.

Key Issues

1. Whether the debarment order dated 12.07.2025, passed by PGIMER, is a reasoned order as required by law, considering the petitioner's detailed reply to the show cause notice dated 27.05.2024. Petitioner's arguments: The petitioner argued that their bid price was exclusive of GST as per clause 8.3.2 of the tender conditions, and they had not charged or received GST from PGIMER. Therefore, they cannot be held responsible for depositing GST which was not part of the bid price or received by them. They contended that PGIMER, as the principal employer, was responsible for the GST on the services availed. They also cited M/s Sri Sai Krishna Construction Vs. State of Jharkhand and others and argued that PGIMER's actions were arbitrary and illegal. Revenue/State's arguments: The judgment does not record specific arguments from the respondents (PGIMER) beyond what is reflected in the show cause notice and the impugned order. The core of PGIMER's action was based on the petitioner's alleged violation of clause 12(k) of the contract, which required full compliance with tax laws and indemnification against tax liabilities.