Kedarnath Mining PVT. LTD. Kolkata vs. Steel Authority Of INDIA, New Delhi

Heard Mr. S.K. Dash, learned counsel for the petitioner and Mr. G. Mishra, learned Sr. Advocate appearing along with Mr. J.R.Deo, learned counsel for opposite party nos. 2 to 4. 3. The petitioner has filed this writ petition seeking to quash the order under Annexure-22, by which the petitioner has been intimated that based on the terms and conditions of the Online Forward Auction for Sale, his Sale Order No. 54047724 is cancelled and the security Deposit amount along with applicable GST will be forfeited. It has also been indicated that the performance guarantee will also be forfeited and the petitioner’s firm is debarred from participating in any online Forward Auction conducted by RSP for a period of six (6) months, i.e. from 27.06.2023 to 26.12.2023. 4. Mr. S.K. Das, learned counsel appearing for the petitioner vehemently contended that at the time of execution of the agreement with the petitioner, the opposite parties have never disclosed about the underground High Tension Cable embedded under the dump site and also the High Tension Lines above the dump and pinnacle of BOF slag waste. In view of such unworkable condition, the entire work came to standstill. Therefore, the question of forfeiture of Security Deposit along with applicable GST as well as Performance Guarantee cannot be sustained in the eye of law. Furthermore the debarment of the petitioner from participating in any Auction and forfeiture of the Security Deposit and Performance Guarantee has been done without following the principle of natural justice.

Mr. G. Mishra, learned Senior Advocate appearing for the opposite parties 2 to 4 contended that if the order impugned has been passed without following the principle natural justice, the petitioner should have approached the authority concerned, so that necessary step can be taken for passing appropriate order in compliance of the principle of natural justice.

Having heard learned counsel for the parties and without expressing any opinion on the merits of the case, this Court finds that the black listing period has already been over, but there is forfeiture of Security Deposit as well as Performance Guarantee made by the petitioner, which has been done without complying the principle of natural justice. Therefore, the same cannot be sustained in the eye of law.

In Kulja Industries Limited v. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Limited and others, (2014) 14 SCC 731, the apex Court held, if State or its instrumentality takes decision on blacklisting then such decision is subject to judicial review on grounds of principles of natural justice, doctrine of proportionality, arbitrariness and discrimination under Article 14 of the Constitution of India.

In Nova Steel (India) Ltd v. M.C.D. And Ors, AIR 1995 SC 1057 the apex Court held that the question of blacklisting of the contracts have been considered by the Courts time and again and it has categorically been held that such order cannot be passed without giving opportunity of hearing to the party.

In TELSA Transformers Limited v. Odisha Power Transmission Corporation Limited, 2016 (II) ILR CUT-37, this Court also taking into consideration the ratio of Gorkha Security Services v. Government (NCT of Delhi), AIR 2014 SC 3371 held that merely because clause in notice inviting tender empowers the department to impose such penalty that does not mean that such penalty can be imposed without putting defaulting contractor to notice to this effect.

In view of the aforesaid facts and circumstances of the case vis-à-vis the law decided by the apex Court, this Court is of the opinion that the order dated 26.06.2023 under Annexure-22 cannot be sustained in the eye of law and is liable to be quashed and is hereby quashed. As a consequence thereof, the matter is remitted back to opposite party no.4 to pass appropriate order in accordance with law in due compliance of the principle of natural justice within a period of four months from the date of communication of the order.

The writ petition is accordingly disposed of.