M/S ELECON POWER INFRA LTD  Vs BSES RAJDHANI POWER LTD

W.P.(C) 1014/2021 Page 1 of 5$~28
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 28thJanuary, 2021
+ W.P.(C) 1014/2021 & CM APPLs. 2818-19/2021
M/S ELECON POWER INFRA LTD. ….. Petitioner
Through: Ms. Nandini Sen and Mr. Basab
Sengupta, Advs. (M: 9810099579 &
9990686255)
versus
BSES RAJDHANI POWER LTD. ….. Respondent
Through: Mr. Narender Hooda, Senior
Advocate with Mr. Rishab Raj Jain,
Advocate. (M: 9811079695)
CORAM:
JUSTICE PRATHIBA M. SINGH
Prathiba M. Singh, J.(Oral)
1. This hearing has been done by video conferencing.
2. The Petitioner has filed the present petition challenging the impugned
notice dated 31stOctober, 2020, by which the Petitioner has been blacklisted
by the BSES Rajdhani Power Ltd. (hereinafter as ‘BSES’ ),and debarred
from performing/participating/associating with the BSES for a period of
three years, w.e.f 1stNovember, 2020 ,citing gross breach of the Vendor
Code of Conduct of BSES.
3. The submission of Ms. Nandini Sen, ld. counsel for the Petitioner, is
that the said act of blacklisting has been done without proper notice being
given to the Petitioner. Mr. Narender Hooda, ld. Senior counsel for the
Respondent, on the other hand, submits that the Rate Contracts between the
Petitioner and the Respondent contain a clause laying down a dispute
resolution mechanism, which provides for disputes to be resolved by
arbitration and therefore, the Petitioner ought to invoke the same.
2021:DHC:328W.P.(C) 1014/2021 Page 2 of 54. A perusal of the show cause notice dated 4thMarch, 2020, shows that
after setting out the allegations against the Petitioner, the BSES has basically
stated that there maybe termination and blacklisting of the Petitioner. The
notice however gives an opportunity to the Petitioner to submit a report on
the action taken on the said allegations, which shall contain the
precautionary measures and practices adopted to avoid the occurrence of
such issues. The relevant portion of the show cause notice dated 4thMarch
2020, after mentioning the various violations by the Petitioner, concludes as
extracted below:
“You may refer to the clause no.30 TERMINATION of
the said Rate Contract & their sub Clause No. 30.7,
30.9.
You are aware that as per contract clause no.30 these
repeated cases of vigilances are not acceptable and
may lead to termination of the contract and
blacklisting from BRPL.
You are requested to submit a action taken report on
these issues which shall contain the precautionary
measures and practices adapted by your firm to void
such occurrence in future and also submit your
detailed reply why action not to be initiated against
your firm as per the contract clause no. 30.
The ATR with your reply should reach us, not later
than 15.03.2020.”
A perusal of the above shows that a threat was given that the Petitioner may
be blacklisted, but the Petitioner was asked to explain the measures taken by
it. It was not a clear notice for blacklisting.
5. The Petitioner replied to the Respondent on 14thMarch 2020. In the
reply the Petitioner gave a detailed explanation as to the action taken by it in
respect of each of the complaints raised against it. In the reply, the Petitioner
2021:DHC:328W.P.(C) 1014/2021 Page 3 of 5also assured that it will be vigilant in the future to ensure that its employees
follow proper working procedure. The reply concludes as under:
“d) We’ve replaced supervisor from time to time, &
shall improve screening & monitoring of supervisors
further.
Lastly, improvement of working procedure & keeping
vigil are two constants. Issues will come in the future,
but we can guarantee you this, that our loyalty towards
your esteemed organization & the work bestowed on us
will never fail, as it has not failed in last 19 years.
We have never been blacklisted till now & have no
intention to be so.”
6. No further communication was exchanged between the parties. After
almost seven months, the Respondent straightaway issued the impugned
order dated 31stOctober 2020, thus, blacklisting/debarring the Petitioner for
a period of three years, and simultaneously terminating the Rate Contract,
w.e.f. 30thNovember 2020. The said communications are under challenge in
the present writ petition.
7. The Petitioner submitted a letter dated 3rdDecember, 2020, through
its counsel, explaining its position and also highlighting the fact that no
hearing was given prior to passing the blacklisting order. In the said letter,
the Petitioner also gave the background and history of the relationship
between the parties. The Respondent was called upon to withdraw the
blacklisting order. The Respondent however refused to withdraw the same
leading to the filing of the present writ petition.
8. The law relating to blacklisting/debarring and the importance of
serving of proper notice prior to blacklisting is quite well settled. In Civil
Appeals Nos. 7167-68/2014 titled Gorkha Security Services v. Government
(NCT of Delhi) and Ors., dated 4thAugust, 2014 ,the Supreme Court
2021:DHC:328W.P.(C) 1014/2021 Page 4 of 5observed as under:
“21. The Central issue, however, pertains to the
requirement of stating the action which is proposed to
be taken. The fundamental purpose behind the serving
of show-cause notice is to make the noticee understand
the precise case set up against him which he has to
meet. This would require the statement of imputations
detailing out the alleged breaches and defaults he has
committed, so that he gets an opportunity to rebut the
same. Another requirement, according to us, is the
nature of action which is proposed to be taken for such
a breach. That should also be stated so that the noticee
is able to point out that proposed action is not
warranted in the given case, even if the defaults/
breaches complained of are not satisfactorily
explained. When it comes to black listing, this
requirement becomes all the more imperative, having
regard to the fact that it is harshest possible action.”
9. Recently in Civil Appeal No. 3687 of 2020 titled UMC Technologies
Private Limited v. Food Corporation of India & Anr. ,dated 16th
November, 2020, the Supreme Court, while discussing the criteria to be
fulfilled for a show cause notice to constitute a valid blacklisting order, has
observed as under:
“21. Thus, from the above discussion, a clear legal
position emerges that for a show cause notice to
constitute the valid basis of a blacklisting order, such
notice must spell out clearly, or its contents be such
that it can be clearly inferred therefrom, that there is
intention on the part of the issuer of the notice to
blacklist the noticee. Such a clear notice is essential for
ensuring that the person against whom the penalty of
blacklisting is intended to be imposed, has an
adequate, informed and meaningful opportunity to
show cause against his possible blacklisting.”
2021:DHC:328W.P.(C) 1014/2021 Page 5 of 510. In the opinion of this Court, the show cause notice dated 4thMarch,
2020, does not satisfy the ingredients to constitute a valid order of
blacklisting. From a reading of the notice as a whole, the clear impression
one gets is that the Petitioner was called upon to take remedial actions with
respect to the allegations raised against the Petitioner in the said show cause
notice, and if the Respondent is not satisfied with the action taken, then the
Respondent may resort to blacklisting. Considering the fact that the
Petitioner has been a company which has been dealing with the Respondents
for more than 19 years, and has more than 150 employees along with
enormous investment, it deserved a proper opportunity to explain and take
remedial measures before being debarred or blacklisted. The Petitioner was
not even given a hearing prior to blacklisting.
11. Ld. Senior counsel Mr. Hooda, appearing for the Respondent, submits
that the BSES is willing to withdraw the blacklisting order and serve a fresh
show cause notice to the Petitioner.
12. Accordingly, the blacklisting order dated 31stOctober, 2020 is set
aside. Insofar as the termination of the contract is concerned, the Petitioner
is permitted to avail of its remedies, in accordance with law.
13. With these observations the present petition, along with all pending
applications, is disposed of.
PRATHIBA M. SINGH
JUDGE
JANUARY 28, 2021
Dj/Ap
(corrected & released on 2ndFebruary, 2021)
2021:DHC:328