Genius Presentation PVT LTD vs. Union Of INDIA And Ors

Held

The Court held that the Petitioner had not been kept in the dark about the possibility of being debarred. Numerous cautionary letters were issued, including a Show-Cause notice on October 25, 2021, to which the Petitioner did not respond by commencing or completing the work. The forfeiture of the PBG was found to be strictly in terms of Clause 5 of the GCC. The Court agreed with the respondents' contention that a defaulter should not be permitted to tender for the very work they failed to perform, and that non-performance should not be rewarded with a premium for fresh participation. The Court noted that while the respondents had threatened general debarment (blacklisting) in a letter dated September 25, 2021, the impugned letter dated November 16, 2021, only debarred the Petitioner from participating in the tender for the completion of the contracted work. As no equities were found in favour of the Petitioner, the petition was dismissed.

Facts

M/s. Genius Presentation Pvt. Ltd. (Petitioner) was awarded a tender by the Central Public Works Department (CPWD) on June 22, 2021, for supplying, installing, testing, and commissioning video wall and other equipment at an estimated cost of Rs. 3,33,80,966/-. The accepted tender amount was Rs. 1,50,04,744/-, with a three-month execution period. The Petitioner furnished a Performance Bank Guarantee (PBG) of Rs. 4,50,142/- on June 28, 2021. The Petitioner alleged harassment by the respondents for demanding GST invoices/import bills to determine "Make in India" content, arguing that self-certification was sufficient and any grievance should be referred to the Standardization Testing and Quality Certification Directorate. The Petitioner invoked arbitration on August 11, 2021, but the respondents, on November 16, 2021, issued a letter forfeiting the PBG and debarring the Petitioner from further tendering for this work, while also initiating fresh tenders. The Petitioner filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking to restrain the encashment of the PBG and debarment.

Key Issues

1. Whether the respondents were justified in demanding GST invoices/import bills for verifying the "Make in India" content, despite the Petitioner's self-certification and the guidelines suggesting referral to the Standardization Testing and Quality Certification Directorate for verification? (Question of law). 2. Whether the forfeiture of the Performance Bank Guarantee and debarment of the Petitioner from further tendering for the work were in accordance with the General Conditions of Contract (GCC) and principles of natural justice, particularly in light of the Petitioner's request for arbitration? Petitioner's arguments: The Petitioner contended that the respondents had no authority to demand GST invoices/import bills as self-certification was sufficient for "Make in India" content. They argued that any verification should have been referred to the Standardization Testing and Quality Certification Directorate. The Petitioner also relied on the Supreme Court judgment in Gorkha Security Services v. Govt. (NCT of Delhi) & Ors., (2014) 9 SCC 105, to argue that debarment/blacklisting requires a Show-Cause Notice. They further argued that debarment prevented them from participating in other tenders. Respondents' arguments: The Respondents argued that they acted strictly in accordance with the GCC. They submitted that while self-certification was for participation, the agency was entitled to verify documents thereafter. Clarifications were sought due to inconsistencies in the Petitioner's information regarding local content. The Respondents stated that the Petitioner had not commenced work despite numerous communications and that the forfeiture of the PBG and debarment were in accordance with Clause 5 of the GCC. They clarified that the debarment was only for this specific work and not a general blacklisting.