Writ Petition No. 2752 of 2014 along with Notice of Motion 210 of 2016 and Notice of Motion (L) 117 of 2015. Case: M/s. J.K. Surface Coatings Pvt. Ltd. Vs Oil and Natural Gas Corporation & Ors.. High Court of Bombay (India)
| Case Number | Writ Petition No. 2752 of 2014 along with Notice of Motion 210 of 2016 and Notice of Motion (L) 117 of 2015 |
| Counsel | For Appellant: Mr. Raju Z. Moray a/w Mr. S.R. Nargolkar i/b Mr. Aumkar Vijaykumar Joshi, Advs. and For Respondents: Mr. Kevic Setalvad, Sr. Counsel a/w Ms. Daisy Dubhash, Mr. J.P. Kapadia, Mr. O. Mohandas, Mr. Amrit Khare i/b M/s. Little & Co., Mr. Rajiv Singh a/w Ms. Astha Tamhankar i/b M/s. Chitnis & Co. |
| Judges | S. C. Dharmadhikari & B.P. Colabawalla, JJ. |
| Issue | Companies Act, 1956; Constitution of India - Articles 226, 12, 14, 19(1)(g) |
| Judgement Date | October 27, 2016 |
| Court | High Court of Bombay (India) |
Judgment:
B. P. Colabawalla, J.
1. Rule. Respondents waive service. By consent of parties, Rule made returnable forthwith and heard finally.
2. By this Writ Petition under Article 226 of the Constitution of India, the Petitioner seeks a Writ of Certiorari or any other appropriate writ, order or direction, quashing and setting aside the office order dated 25th April, 2014 (for short "the impugned order" or "the banning order") issued by the 1st Respondent Corporation (Exh. "C" to the Petition). A Writ of Mandamus is also sought directing the Respondents to permit the Petitioner Company to obtain the documents and participate in future tenders floated by Respondent No.1.
3. The order dated 25th April, 2014 and which is impugned herein, is nothing but a banning order passed by the 1st Respondent against the Petitioner. This banning order has been passed pursuant to a Show Cause Notice ("SCN") dated 4th December, 2013 issued to the Petitioner. The grounds on which the Petitioner is sought to be banned are more particularly set out in the said banning order. In a nutshell, the said order is impugned by the Petitioner on the ground (i) that it is violative of Articles 14 & 19(1)(g) of the Constitution of India; (ii) that the SCN dated 4th December, 2013 issued to the Petitioner did not even indicate that the same was issued with a view to consider banning the Petitioner from future tenders for a particular period; (iii) that this SCN limited the scope of inquiry to the alleged "irregularities" and "discrepancies" which had been committed by the Petitioner during the period of works between February, 2009 and May, 2011 and which were in the realm of contractual disputes which could be resolved by taking recourse to different contractual and statutory provisions; (iv) that in these circumstances there was absolutely no justification in passing the banning order against the Petitioner and in any event was extremely harsh; (iv) no inquiry report, if any, had been furnished to the Petitioner and no opportunity of responding and/or challenging the same had been afforded to it before the banning order was passed; and (v) the entire action of the 1st Respondent smacks of malafides as the Petitioner has been blacklisted / banned only to ensure that a particular bidder is favoured and the Petitioner is ousted from the bidding process.
4. Brief facts give rise to the present controversy are as follows:-
(a) The Petitioner specializes in corrosion resistant coating application in India and is the only Indian Company to offer vessel based blasting and painting services for offshore industries. The Petitioner also offers under-water painting. It is the case of the Petitioner that it has carried out business of painting works with several leading companies including a company in Saudi Arabia and has been awarded good quality and safety certificate in respect of their work. The Petitioner in the past has been awarded contracts by the 1st Respondent Corporation (ONGC) for off-shore maintenance painting as well as for painting of new off-shore platforms etc. The first Respondent is ONGC and is a "State" within the meaning of Article 12 of the Constitution of India. Respondent Nos.2 and 3, are the officers/employees of ONGC and who have played a role in issuance of the impugned order dated 25th April, 2014, by virtue of which the Petitioner Company has been banned from participating in any tender floated by Respondent No.1 for a period of three years.
(b) In the year 2008, Respondent No.1 invited bids for maintenance painting of its platforms of Mumbai offshore (Mumbai High, Neelam, Heera, Bassein and Satellite) for which the Petitioner had put in its bid. The bid of the Petitioner was accepted by Respondent No.1 and pursuant to a Notification of Award dated 2nd February, 2009, a contract dated 8th May, 2009 was executed between the Petitioner and Respondent No.1. The said contract set out scope of work including the total area which was proposed to be painted, as well as different paint coating systems that were to be employed in respect thereof. It is not in dispute that the said contract was for a period of three years and was completed on 31st May, 2011.
(c) It is the case of the Petitioner that it successfully completed the work under this contract and under clause 18.1 thereof, the contract was successfully terminated on expiry of the contract period. There was no delay in performance of the said contract and the same was completed in time. In fact, a Completion Certificate was also issued by the 1st Respondent on 19th September, 2011. Thereafter, final payments towards performance of the said contract were also received by the Petitioner on 18th October, 2011.
(d) It is the case of the Petitioner that after completion of the contract, a survey was carried out in respect thereof and the work completed by the Petitioner was found to be satisfactory. After that a second survey was carried out in terms of the contract and a Joint Survey Report was signed on 6th October, 2012 in respect of one of the facilities (Neelam) and on 7th October, 2012 in respect of other facility (Heera). Since, there was no dispute about the work completed by the Petitioner, there was no deduction made in the R.A. bill submitted by the Petitioner.
(e) Thereafter, a fresh tender No. Y-15 MC 11001 for maintenance painting for another off-shore platform was issued by Respondent No.1. The Petitioner even participated in this tender. The technical bids for this fresh tender were opened on 11th October, 2012 and the price bids were opened on 29th May, 2013. Out of five bidders that participated in the said bidding process, three bidders qualified in the technical bid including the Petitioner. Accordingly, the price bid of all these bidders were opened and the Petitioner was the lowest bidder (L- 1) and Saraf Hospitality Services Pvt. Ltd. (another bidder) was the second lowest (L-2) and its bid was 63% higher than that of the Petitioner.
(f) In the interregnum, the Petitioner was served with the letter dated 16th May, 2012, alleging "discrepancies" and "inconsistencies" in the area painted and the quality of paint used in respect of the earlier contract, that was duly completed on 31st May, 2011. The said letter claimed a refund of an amount of approx Rs.57 Lacs on account of invoice Nos.34 and 43. Despite the fact that both these invoices were earlier certified by Respondent No.1 as well as a Third Party Inspection Agency ("TPI"), the Petitioner offered its co-operation and requested for resolving of the issue and submitted a clarification/ explanation in the prescribed format on 9th August, 2012.
(g) It is the case of the Petitioner that thereafter a Committee was constituted to inquire into whether there was any excess payment in respect of said two invoices (Nos.34 and 43) and whether any claim was maintainable against the Petitioner Company. This Committee, (which comprised of the representatives of Respondent No.1, the Petitioner as well as the TPI), after reconciliation of the said invoices, gave a report dated 13th March, 2013 which was in favour of the Petitioner. This report inter alia concluded that the said invoice Nos.34 and 43 were different and some work under these invoices had been carried out by the Petitioner simultaneously. The report, therefore, concluded that the Petitioner was eligible for payment in respect of the work done for both these invoices. It is the Petitioner's case that despite this, the Respondents, unilaterally and without any justification invoked two Bank Guarantees amounting to Rs.29.86 Lacs and Rs.25.56 Lacs (aggregating to Rs.55.42 Lacs) and appropriated the said amount towards their alleged claims. This invocation was done on 30th September, 2013. In view of this wrongful invocation, the Petitioner from time to time issued letters seeking refund of the said amounts, but without any success.
(h) However, it did not stop here. It is the case of the Petitioner that thereafter a SCN was issued by the Investigation Officer (Respondent No.2) dated 4th December, 2013. This SCN called upon the Petitioner to submit an explanation / clarification no later than 11th December, 2013. This SCN called upon the Petitioner to explain the alleged "irregularities" and "discrepencies" that were committed by the Petitioner in respect of the contract dated 8th May, 2009. The SCN alleged basically three irregularities against the Petitioner. The first alleged irregularity was that the required quantity of paint, corresponding to the area of painting claimed for payment, was not supplied by the Petitioner. The second was that the Petitioner Company had submitted documents containing incorrect information with respect to the required manpower deployment. The third alleged irreularity was that the Petitioner had failed to maintain and furnish to the 1st Respondent, the necessary documents / record books / registers pertaining to quality of work and measurement, for payment.
(i) The Petitioner replied to the said SCN and...
To continue reading
Request your trial