M/S Green Valley Model Structure Private Limited And Anr. vs. Union Territory Of J And K And Ors. (Skims)

Held

The Court allowed the petition in part. Regarding the forfeiture of the CDR, the Court noted that the respondents agreed to release the amount in favour of the petitioner, notwithstanding their initial stance in the reply. The primary issue adjudicated was the debarment of the petitioner for two years. The Court found that while notices were issued to the petitioner to commence work, these notices did not explicitly state that debarment for two years would be the consequence of non-compliance. The Court relied on the Supreme Court's decision in UMC Technologies Private Limited vs. Food Corporation of India, emphasizing the crucial need for a valid, particularized, and unambiguous show cause notice before blacklisting due to its severe consequences. The Court held that the petitioner was condemned unheard as no show cause notice for blacklisting was issued. Therefore, the impugned order dated October 25, 2022, to the extent of debarring the petitioner for two years, was quashed. The respondents were directed to release the CDR without interest. The Court did not expressly leave any issue undecided.

Facts

The petitioner company, M/s Green Valley Model Structure Pvt. Ltd., was the successful bidder for providing sanitation services at SKIMS Medical College-Hospital, Bemina, Srinagar, for a period of one year from September 7, 2022, to September 6, 2023. The allotment order was issued on August 22, 2022. However, before a formal agreement was executed, the petitioner requested cancellation, citing that their quoted rates were below minimum wages and excluded GST, PF, ESIC, and other charges. Subsequently, on October 25, 2022, the respondents cancelled the contract, forfeited the petitioner's CDR of Rs. 2 lacs, and debarred them from tendering at SKIMS, Bemina for two years. The petitioner sought to quash the allotment order and the cancellation order, specifically the forfeiture and debarment.

Key Issues

1. Whether the respondents were justified in cancelling the contract, forfeiting the CDR, and debarring the petitioner for two years, given that the petitioner's bid allegedly did not comply with Clause (8) of the e-NIT requiring rates to include GST, wages, and other statutory charges, and was below minimum wage norms? The petitioner argued that their bid should have been disqualified from the outset as it was contrary to Clause (8) of the e-NIT and that the forfeiture and debarment were imposed without a show cause notice, violating principles of natural justice. They contended that the penalty clause did not provide for blacklisting. The respondents argued that the petitioner could not resile from their quoted rates, which failed to meet the e-NIT's requirement of including all labour law obligations. They asserted that the petitioner was afforded an opportunity to represent and that no show cause notice was required for debarment due to the violation of tender conditions. The respondents also stated that the petitioner failed to commence work despite notices. The respondents later agreed to release the CDR.