Wilkin Builders Infrastructure LTD Private Limited Company vs. M.P. Rural Road Development Authority

Held

The Court held that the debarment order dated 12.02.2024, insofar as it debarred the petitioner from tendering for a period of two years, was in violation of the principles of natural justice, specifically the audi alteram partem rule. The Court noted that while the debarment was for a limited period, it carried a stigma. The Court found that the impugned order was not in consonance with the observations of the Hon'ble Apex Court in the case of Blue Dreamz Advertising Pvt Ltd. vs. Kolkata Municipal Corporation, which emphasizes that debarment as a penalty should not be resorted to in cases of ordinary breach of contract where a bona fide dispute is raised. The Court observed that the show cause notices issued to the petitioner did not specifically call upon it to explain why it should not be blacklisted. Therefore, the Court quashed the para no. 4 of the impugned order dated 12.02.2024, which debarred the petitioner from tendering for two years. The remaining part of the communication was not interfered with. The writ petition was allowed and disposed of.

Facts

The petitioner, Wilkin Builders Infrastructure Ltd Private Limited, filed a writ petition challenging an order dated 12.02.2024, by which it was debarred from tendering for a period of two years. The petitioner had entered into a contract with the M.P. Rural Road Development Authority for construction and up-gradation of rural roads. The petitioner alleged that the contract termination was wrongful and motivated, and that the delay in work was due to the respondent's inaction, such as failure to provide clear work sites and obtain necessary clearances. A dispute resolution process was initiated before the M.P. Arbitration Tribunal. The impugned debarment order was issued after the contract was terminated, and the petitioner argued that it was not given an adequate opportunity to be heard before being blacklisted.

Key Issues

1. Whether the debarment of the petitioner from tendering for two years, vide order dated 12.02.2024, is in violation of the principles of natural justice, specifically the audi alteram partem rule, considering the pending arbitration proceedings concerning the contract termination? (Question of law) 2. Whether the debarment order is beyond the terms of the contract, necessitating adherence to principles of natural justice? (Question of mixed law and fact) Petitioner's arguments: - The debarment action is not within the jurisdiction of the Arbitration Tribunal and thus requires challenge before this Court. - The contract termination itself is wrongful and motivated, with the arbitration proceedings ongoing to ascertain fault. - The petitioner was not given an opportunity of hearing before being debarred, violating principles of natural justice. - The contract does not contain a specific clause for debarment upon termination, making the debarment order beyond the contract's terms. - A specific show cause notice for debarment was not issued, violating principles of natural justice and the Apex Court's ruling in Blue Dreamz Advertising Pvt Ltd. vs. Kolkata Municipal Corporation. Respondent's arguments: - The show cause notice for termination contained grounds that also constitute cause for debarment, falling within the contractual relationship. - The petitioner cannot agitate these issues by way of a writ petition.