SHREE SHYAMJI TRANSPORT COMPANYversusFOOD CORPORATION OF INDIA & ORS.

                  [2014] 12 S.C.R. 179

        SHREE SHYAMJI TRANSPORT COMPANY                       A
                           v.
         FOOD CORPORATION OF INDIA & ORS.
            (Civil Appeal No. 9379 of 2014)
                   OCTOBER 9, 2014.
                                                              8
        [T.S. THAKUR AND R. BANUMATHI, JJ.)

     Tender - Non-consideration of bid of appellant-tenderer
- Invoking disqualification condition on the ground that his
Earnest Money Deposit was forfeited in an earlier tender - C
Held: Debarment of the tenderer was not justifiable on the
basis of earlier case - In that case default was not on account
of the tenderer.
    Allowing the appeals, the Court
                                                             D
    HELD: While considering the appellant's tender for
Mandi Labour Contract, the respondent-Corporation was
not justified in invoking Clause 4 (Ill) of the
Disqualification Conditions of Model Tender Form, on the
ground that the tender of the appellants pertaining to E
Road Transport Contract was earlier rejected and that
appellant's Earnest Money Deposit was forfeited. Insofar
as Road Transport Contract Hathin-Rajasthan is
concerned, the High Court had found that there was no
intentional lapse on the part of the appellant and that
delay in furnishing the security and bank guarantee was F
on account of failure of banking operation, and that order
attained finality. Therefore, the debarment of the
appellants is not justifiable. [Para 11, 12) [185-E, H; 186-
A, CJ
                                                              G
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
9379 of 2014.
     From the Judgment & Order dated 26.07.2012 of the High

                            179                               H
    180      SUPREME COURT REPORTS                [2014] 12 S.C.R.


A Court of Punjab and Haryana at Chandigarh in Civil Writ
  Petition No. 8415 of 2012.
                                 WITH
    C.A. No. 9380 of 2014.
B         Jasbir Singh Malik, S.K. Sabharwal for the Appellant.
          Ajit Pudussery, J. Pudussery, K. Vijayan, Shruti S. Hazarika
    for the Respondents.
          The Judgment of the Court was delivered by
C        R. BANUMATHI, J. 1. Leave granted. These appeals
    arise out of common order of the Punjab and Haryana High
    Court dated 26.7.2012 passed in CWP Nos. 8415/2012 &
    841612012 whereby the High Court declined to interfere with
    the action of the Food Corporation of India {FCI) rejecting
    tender of the appellants-firms.
0
        2. Brief facts leading to the filing of these appeals are as
  follows:- The appellants are partnership firms having' five
  partners. Respondent No. 2 - FCI invited tenders for Mandi
  Labour Contract {MLC) for its centres at Uchana, Sonepat,
E Narwana and Safidon and the appellants applied for the tender.
  The tender consisted of two parts - technical bid and price bid.
  As per the procedure, on successfully qualifying the technical
  bid, the price bid was to be opened. The appellants were
  eligible in technical bid theretiy making themselves qualified for.
  opening of price bid. The said price bid was opened on
F 2.3.2012. The appellants' bid was not considered by FCI, in
  view of the fact that in the earlier tender of Road Transport
  Contract {RTC) of Hathin-Rajasthan, the appellants had failed
  to deposit the security deposit and bank guarantee within the~•
  stipulated period as required and the Earnest Money Deposit
G {EMO) of the appellants had been forfeited vide Order dated
  5.11.2011 and hence, the appellants' MLC tender was rejected
  invoking sub clause {Ill) of Clause 4 of the Disqualification
  Conditions. According to the __appellants, earlier tender of the
  appellants was rejected by an Order dated 5.11.2011 invoking
H Clause 7 of the Model Tender Form (MTF). The appel!ant-Shree
. SHREE SHYAMJI TRANSPORT COMPANY v. FOOD 181
    CORPORATION OF INDIA [R. BANUMATHI, J.]
Shyamji Transport Company challenged the said Order dated          A
5.11.2011 by filing CWP No.21694/2011 which was disposed
of by Order dated 6.3.2012 in which the Court observed that
FCI had not invoked Clause 7 of the MTF to debar the
appellant-Shree Shyamji Transport Company for the contract
period and the apprehension of the appellant was ill-founded.      B
In the light, of the observations in CWP No.21694/2011,
appellants contend that the Order dated 21.3.2012 rejecting the
appellants' tender for MLC invoking Clause 4 (Ill) is
unsustainable.
     3. Challenging action of the respondents - FCI in not         C
considering their MLC tender, the appellants filed two writ
petitions bearing Nos. CWP 8415/2012 and 8416/2012 to
quash the communication dated 21.3.2012 and also prayed for
consideration of their price bid with regard to MLC tender dated
14.3.2012. The High Court dismissed the writ petitions by a        D
common Order dated 26.7.2012, interalia, on the grounds:- (i)
In the Writ Petition No.21694/2011, forfeiture of Earnest Money
Deposit (EMD) of the appellants was not set aside by the Court
and forfeiture of earnest money stood sustained justifying the
invocation of Clause 4 (Ill); (ii) appellants had also not         E
challenged the action of the respondents declaring it ·to be
disqualified under Clause 4 (Ill) of the MTF. Aagrieved
appellants are before us.

     4. Assailing the impugned order, Mr. Jasbir Singh Malik,      F
learned counsel appearing for the appellants submitted that in
the light of the order dated 6.3.2012 passed in CWP
No.21694/2011, it was not open to the respondents to forfeit
the earnest money in respect of Hathin -Rajasthan RTC tender
by invoking Clause 7 of the MTF and the learned High Court
did not correctly interpret its earlier order passed in CWP        G
 No.21694/2011. Learned counsel further submitted that the
 High Court has committed an error in observing that the
 appellant has not challenged the action of the respondents
 declaring it to be disqualified under Clause 4 (Ill) of the MTF
                                                                   H
    182       SUPREME COURT REPORTS                  [2014] 12 S.C.R.


A whereas the appellant-firm had actually challenged the action
  of the FCI disqualifying the appellant under Clause 4 (Ill) of the
  MTF in CWP No. 8415/2012, contending that Clause 4 (Ill)
  could not have been invoked against the appellants.

        5. Refuting the above contentions, Mr. Ajit Pudussery,
8
  learned counsel appearing for the respondents, submitted that
  admittedly EMO of the appellant-firm in RTC Hathin-Rajasthan
  tender was forfeited and forfeiture of EMO was not set aside
  by the High Court in the CWP No.21694/2011 and FCI rightly
C invoked clause 4(111) of the MTF against the appellants in MLC
  Tender. It was submitted that in CWP No.21694/2011, the High
  Court has wrongly assumed that Clause 7 of the MTF was not
  being invoked, when in fact action had been taken under
  Clause 7 only and thus the presumption made by the High Court
  in CWP No.21694/2011 is contrary to the record. Learned
0 counsel further submitted that strict compliance of tender
  conditions are provided to ensure that only serious tenderers
  participate in the bids as in case after the award of contract if
  the tenderer fails to perform his due obligations, huge amount
  of public money is wasted in re-tendering and also creating a
E situation affecting the movement and distribution of food grains
  which is not in public interest and the High Court rightly
  interpreted Clause 4(111) and the impugned order warrants no
  interference.

F        6. We have considered the rival submissions made by the
  learned counsel for the parties and perused the record. The
  question falling for consideration is that in the light of the
  observations made in CWP No.21694/2011 whether the High
  Court was right in upholding the action of the respondents-FCI
G declaring the appellants-firms to be disqualified under Clause
  4 (Ill) of the MTF.

         7. Clause 4 (Ill) of the MTF stipulates that the tenderer
    whose EMO was forfeited in any other contract with FCI during
    the last five years will be ineligible to participate in the bid. For
H
SHREE SHYAMJI TRANSPORT COMPANY v. FOOD 183
  CORPORATION OF INDIA [R. BANUMATHI, J.)
better appreciation, we may refer to the relevant clause 4 (Ill)        A
and relevant pa.ras in Clause 5 of the MTF which read as
under:-

    "Clause 4. Disqualification Conditions
                                                                        B

      (Ill)   Tenderer whose Earnest Money Deposit and/or
              Security Deposit has been forfeited by Food
              Corporation of India or any Department of Central
              or State Government or any other Public Sector/           c
              Undertaking, during the last five years, will be
              ineligible.

     "Clause 5. Details of Sister Concerns.
                                                                        D

      (i)     The blacklisted parties by FCI or Govt./Quasi Govt.
              Organization will not be qualified.

      (ii)    The parties whose EMO is forfeited by FCI will not        E
              be qualified.

      (iii)   Food Corporation of India reserves the right not to
              consider parties having any dispute with Food
              Corporation of India in order to protect its interest."
                                                                        F
     8. According to the respondents, EMO of the appellant-
Shree Shyamji Transport Company was forfeited in the earlier
tender of Road Transport Contract (RTC) -Hathin-Rajasthan,
making the appellant ineligible to bid in the MLC tender and
therefore, the bid of the appellant for MLC was rightly rejected        G
by the respondents-FCI by Order dated 21.3.2012.

    9. Insofar as RTC tender for Hathin-Rajasthan is
concerned, it appears from the record and the observations of
the High Court in CWP No. 21694/2011 that there was no
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    186       SUPREME COURT REPORTS              (2014] 12 S.C.R.


A ground that the .tender of the appellants pertaining to RTC
  Hathin-Rajasthan was earlier rejected and that appellant's
  EMO was forfeited. High Court, in our view, has not properly
  appreciated its own observations in CWP No.21694/2011 that
  FCI has not invoked Clause 7 of the MTF to debar the
B appellants for the contract period.

       12. The impugned tenders pertain to Mandi Labour
  Contract (MLC) for which the appellants submitted their bid on
  2.3.2012 and the appellants have already suffered debarment
C for about three years. Considering the facts and circumstances
  of the case and in the light of High Court's observation made
  in CWP No.21694/2011, in our view, the debarment of the
  appellants is not justifiable and the impugned order of the High
  Court cannot be sustained.

D        13. In the result, the impugned order of the High Court is
    set aside and the appeals are allowed. No order as to costs.

    Kalpana K. Tripathy                             Appeals allowed.