In WRIT PETITION NO.3639 OF 2021-BOM HC- Suppression of relevant facts having material bearing upon litigant’s position in contractual relationship, is sufficient for dismissal of Petition: Bombay HC Justices Sunil B. Shukre & M.S. Jawalkar[17-06-2022]

Read Order: M/s Bhagwati Builders v. Maharashtra State Warehousing and ors 

LE Correspondent

Mumbai, June 21, 2022: While observing that the petitioner indulged in a prohibited act which was already reinstated as a prior warning in one of the conditions of the tender document, the Bombay High Court has dismissed the petition instituted by the petitioner assailing the action of the respondent of blacklisting the petitioner from further executing the contractual work in the instant matter. 

The Division Bench of Justice Sunil B. Shukre and Justice M.S. Jawalkar said, “We are of the view that the Petitioner, which has suppressed from this Court the relevant fact having a material bearing upon the position of the Petitioner in the contractual relationship, has approached this Court with begrimed hands and as such is not entitled for any equitable and discretionary relief from this Court.” 

The first respondent through a tender notice invited bids for execution of the construction work at Amgaon, District Gondia. In pursuance of the same, the contract was awarded to the petitioner. Later on, the Petitioner deposited the security performance amount and gave an explanation by its letter that since it had already purchased requisite material, quality of work will not be affected, despite the lower cost. Thereafter, the first respondent informed the petitioner that the explanation given by the petitioner and the rate analysis submitted by it were vague and unsatisfactory and thus the petitioner was requested to submit proper rate analysis.  The petitioner also requested the respondent to allow it to execute the work at the escalated price and to execute the agreement at a higher rate. 

When the petitioner applied for a fresh tender, its bid was rejected on the ground that the petitioner was blacklisted.Thereafter,it was brought to the Petitioner’s notice that as it expressed its inability to execute the work at the rate quoted by it, the petitioner was blacklisted for a period of one year and its earnest money deposit of Rs.1.50 Lakh was forfeited. This action of the respondent was called into question by the petitioner as being arbitrary. Thus, this petition was filed.

Considering that the first respondent did not take any action although it could have blacklisted the petitioner in view of condition no.xviii of clause A of the tender document, the Court was of the view that through the letter dated June 15, 2021 the petitioner had unilaterally withdrawn its bid and simply asked for refund of earnest money and security performance amount. 

The Court further noted that the petitioner deliberately suppressed the aforesaid letter containing an important fact having a material bearing upon the fate of the Petitioner in the present contract and thus it could be said that the Petitioner had not approached this Court with clean hands. In furtherance of the same, the Court noted that by suppressing the material fact from the Court, the petitioner succeeded in obtaining interim relief from this Court which was in the nature of interim stay to the order of blacklisting.  The Bench also placed reliance on the judgments in Prestige Lights Ltd. Vs. State Bank of India & K.D. Sharma Vs. Steel Authority of India Ltd. & Others.

On the issue of blacklisting of a contractor by the State or its instrumentality, the Bench referred to the judgments in Court M/s. Erusian Equipment & Chemicals Limited Vs. State of West Bengal & Another, Raghunath Thakur Vs. State of Bihar, Patel Engineering Limited Vs. Union of India & Another , Gorkha Security Services Vs. Government (NCT of Delhi) & Others and Vetindia Pharmaceuticals Limited Vs. State of Uttar Pradesh & Another

It was also noted by this Court that the petitioner submitted a fresh bid with respect to the e- tender notice, which was an indication that the petitioner accepted the termination of the contractual relationship. The Petitioner was already put on notice of the prohibited act and already had the opportunity of knowing the case which would be set up against it. The Court concluded the matter by saying that  present case was of such nature wherein the principle of fair play was already incorporated in the tender document given the nature of condition no.xviii of Clause A and this condition fulfilled substantially the requirements of principles of natural justice. Thus in light of the aforesaid observations, the Court dismissed the petition.