ISOLATORS AND ISOLATORS THROUGH ITS PROPRIETOR MRS. SANDHYA MISHRA versus MADHYA PRADESH MADHYA KSHETRA VIDYUT VITRAN CO. LTD. AND ANR

[2023] 4 S.C.R. 445

ISOLATORS AND ISOLATORS THROUGH ITS PROPRIETORMRS. SANDHYA MISHRA

MADHYA PRADESH MADHYA KSHETRA VIDYUT VITRANCO. LTD. AND ANR.

(Civil Appeal Nos. 2890-2891 of 2023)

APRIL 18, 2023

[DINESH MAHESHWARI AND SANJAY KUMAR, JJ.]

Contract – Imposition of penalty, debarment/blacklisting ofthe appellant-firm – Requirement of specific show-cause notice –Held: Cancellation orders dtd. 19.11.19 and 21.11.19 cannot beread as show-cause notice specifically for the purpose of impositionof penalty – Finality attaching to the action of cancellation cannotbe read as due notice for imposition of penalty even if therespondents chose to employ the expression ‘cancelled with impositionof penalty’ in those orders – Thus, the action of the respondents inimposing the penalty without even putting the appellant to notice asregards this proposed action cannot be approved – Further, eventhe order debarring the appellant for period of 3 years for defaultin making the requisite supplies has its own shortcomings – Appellanthad indeed made substantial supplies against the purchase ordersin question – On 18.09.2019, the respondent No.2 dealing with theprocurement specifically informed the appellant that the supplyunder the purchase order in question was to be deferred – Aftersuch an order of deferment, there had not been any othercommunication or even indication from the respondents which wouldhave informed the appellant to resume supplies – Debarment orderwas issued against the appellant without due regard to theundeniable factual situation where the entire blame could not havebeen foisted upon or shifted towards the appellant – Impugnedorders imposing penalty and debarring the appellant are quashedand set aside.

Practice & Procedure – Maintainability of fresh appeal afterwithdrawal of the earlier one and after another round of approachto the High Court – Discussed.

CDEF

446SUPREME COURT REPORTS

AAllowing the appeals, the Court

HELD: 1.1 Imposition of penalty cannot be approved fortwo major factors: The first and foremost being that in the show-cause notice dated 26.11.2019, the appellant was put to noticeonly as regards the proposition of debarment and in the saidBnotice, nothing was indicated about the proposed imposition ofpenalty. Though in the cancellation orders dated 19.11.2019 and21.11.2019, the respondents purportedly reserved their right totake appropriate steps, those orders cannot be read as show-cause notice specifically for the purpose of imposition of penalty.The submissions on behalf of the respondents in this regard thatCthe said orders dated 19.11.2019 and 21.11.2019 have attainedfinality do not take their case any further. Finality attaching tothe action of cancellation cannot be read as due notice forimposition of penalty even if the respondents chose to employthe expression ‘cancelled with imposition of penalty’ in thoseDorders. Looking to the terms of contract, quantification of theamount of penalty (if at all the penalty is considered leviable)could not have been carried out without affording adequateopportunity of response to the appellant. That being the position,the action of the respondents in imposing the penalty withouteven putting the appellant to notice as regards this proposedEaction cannot be approved. [Paras 23][470-A-E]

UMC Technologies Private Limited v. Food Corporationof India and Anr. (2021) 2 SCC 551; A.P. State FinancialCorporation v. C.M. Ashok Raju and Ors. (1994) 5 SCC359 : [1994] 1 Suppl. SCR 474 – relied on.F

1.2 Secondly, the authority concerned has proceeded toimpose the maximum of penalty to the tune of 10% of the deficitsupply without specifying as to why the maximum of penalty wassought to be imposed. In this regard, the relevant factors asindicated by the appellant could not have been ignored altogether.GUnfortunately, the High Court has totally omitted to consider thisaspect of the grievance of the appellant. Though, ordinarily, forsuch an omission of the High Court, the course would have beento remit the issue for consideration but, no useful purpose would

v. MPMKVVCL

be served by remitting such an issue in this matter. This is forthe simple reason that imposition of penalty against the appellantcannot be approved because of the want of specific show-causenotice. Moreover, no specific quantum of loss has been specifiedby the respondents so as to justify the imposition of maximum ofpenalty. [Paras 23.1, 23.2][470-E-G]

1.3 Even the order debarring the appellant for period of 3years for default in making the requisite supplies carries its ownshortcomings. The appellant had indeed made substantial suppliesagainst the purchase orders in question. On 18.09.2019, therespondent No. 2 dealing with the procurement specificallyinformed the appellant that the supply under the purchase orderin question is to be deferred. After such an order of deferment,there had not been any other communication or even indicationfrom the respondents which would have informed the appellantto resume supplies. The written submissions on behalf of therespondents do not answer the root question in the matter as tohow the appellant could have been made solely responsible fordelay or default in supply after the communication dated18.09.2019 when the respondents themselves informed theappellant that taking of balance delivery was being deferred (untilfurther instructions). In the length and breadth of the argumentson behalf of the respondents, it has nowhere been pointed out ifsuch “further instructions” were ever issued to the appellantbefore issuance of the cancellation orders dated 19.11.2019 and21.11.2019 as also before issuance of show-cause notice dated26.11.2019. That being the position, the debarment order hadbeen issued against the appellant without due regard to theundeniable factual situation where the entire blame could not havebeen foisted upon or shifted towards the appellant. The impugnedorders dated 23.04.2021 in W.P. No. 12075 of 2020 and dated13.12.2021 in Review Petition are set aside; and the writ petitionfiled by the appellant is allowed. Impugned orders dated30.07.2020 in debarment of the appellant and dated 17.08.2020in imposition of penalty are quashed and set aside. Such debarmentis annulled for all practical purposes and the order dated30.07.2020 shall not operate against the rights and interests ofthe appellant in any future tender process. [Paras 24, 26, 26.1][470-H; 471-A-F; 472-A-C]

AGorkha Security Services v. Government (NCT of Delhi)and Ors. (2014) 9 SCC 105 : [2014] 13 SCR 617;Raghunath Thakur v. State of Bihar and Ors. (1989) 1SCC 229 : [1988] 3 Suppl. SCR 867; M/s ErusianEquipment and Chemicals Ltd. v. State of West Bengaland Anr. (1975) 1 SCC 70 : [975] 2 SCR 674 – referredBto.

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2890-D2891 of 2023.

From the Judgment and Order dated 23.04.2021 in WP No.12075of 2020 and dated 13.12.2021 in RP No.894 of 2021 of the High Courtof Madhya Pradesh Principal Seat at Jabalpur.

EVinay Navare, Sr. Adv., R. M. Sharma, Prashant R Dahat, T. R.B. Sivakumar, Advs. for the Appellant.

Bharat Singh, AAG, Ashish Pandey, Kshitiz Singh, Amit Pawan,Advs. for the Respondents.

The Judgment of the Court was delivered byF

DINESH MAHESHWARI, J.

Leave granted.

2. The present appeals are in challenge to the order dated23.04.2021 as passed by the High Court of Madhya Pradesh, PrincipalGSeat at Jabalpur in Writ Petition No. 12075 of 2020 whereby the HighCourt partly allowed the writ petition and while maintaining the order ofdebarment as passed against the appellant, modified its term of operationby making the same effective from 13.02.2020 for period of threeyears, instead of being effective from 30.07.2020. The appellant hasalso challenged the order dated 13.12.2021 in Review Petition No. 894H

ISOLATORS AND ISOLATORS THR. ITS PROP. MRS. SANDHYA MISHRAv. MPMKVVCL [DINESH MAHESHWARI, J.]

of 2021, whereby the High Court dismissed the review petition againstthe said order dated 23.04.2021.

3. Shorn of unnecessary details, the case of the appellant hasbeen as follows:

3.1. The appellant, being proprietorship firm, has been in thebusiness of manufacturing and repairing of transformers, having its plantat 83, Sector I, Industrial Area, Govindpura, Bhopal for past 30 years.The only customers of the appellant are the distribution companies(Discoms).

3.2. Two tenders, bearing numbers 494 and 532[1], were floated bythe respondent Madhya Pradesh Madhya Kshetra Vidyut Vitran CompanyLimited[2]. In relation to TS-494, purchase order was issued by therespondents on 30.06.2017 for the supply of 586 distribution transformers(DTR) - Level I. The period for the supply was specified as six monthsstarting from the third month of the purchase order issue date. However,the appellant received the purchase order through email on 13.09.2017and physically on 15.09.2017. The appellant made request to therespondents to modify the delivery schedule due to delay of 75 days inthe receipt of the purchase order, as also to adjust the rates as per Goodsand Services Tax (GST), which came into effect on 01.07.2017.

3.3. The appellant has averred that despite receiving no responsefrom the respondents, they had proceeded to submit drawings for approvalon 04.10.2017, with the intention of commencing production. In addition,the appellant made two separate requests, dated 13.09.2017 and18.11.2017, for modifications of the delivery schedule and adjustmentsof rates in accordance with GST. According to the appellant, on28.11.2017, the department responded only to the request for approvalof drawings and disregarded the request for rescheduling of supplies.

3.4. revised order, incorporating GST, was issued by therespondents on 02.01.2018. However, the request for rescheduling ofsupplies made by the appellant was ignored and, instead, the order statedthat the appellant was already running late in their supply schedule.Thereafter, notice dated 13.02.2018 was issued alleging that theappellant was responsible for the delay in supply. The appellant, by letter

1 Hereinafter also referred to as ‘TS-494’ and ‘TS-532’ respectively.

2 ‘MPMKVVCL’, for short.

BCD

EFG

Adated 18.02.2018, responded that there was no delay on their part whileagainseeking modification of the delivery schedule.

3.5. It has been the case of the appellant that despite making fiveseparate requests to reschedule the supply, no response was receivedfrom the respondents. The appellant submitted yet another letter datedB07.03.2018, requesting for extension of time. The appellant has statedthe grievance that despite their efforts to supply Level-I transformers,starting from 02.05.2018 and delivering 300 transformers, the respondentsdid not reschedule the supply, and instead imposed late supply penaltieson the appellant’s bills; and deducted penalties to the tune of over Rs. 11lakh from the bills of the appellant for 300 transformers.C

3.6. On the other hand, the appellant had received purchaseorder from the respondents for the supply of 593 transformers for TenderNo. TS-532, which was for the supply of 63 KVA and 25 KVA level-IItransformers. The total requirement for the respondents and two otherDiscoms was around 75,000 transformers. The purchase order was issuedDon 22.02.2018 by the respondents and was received by the appellantthrough email on 03.03.2018. According to the appellant, as for 25 KVAtransformers, they submitted the drawings for approval on 19.04.2018,which were approved by the respondents on 09.05.2018. Subsequently,the appellant began manufacturing 100 transformers of Lot-1 under theEcontract and offered the same for inspection to the respondents througha letter dated 29.05.2018. On 04.06.2018, stage inspection wasconducted, and clearance was granted on 05.06.2018.On 22.06.2018,the appellant was directed to supply the aforementioned 63 KVATransformers to West Zone Discom (Indore) through purchase order,which was executed without any breach.F

3.7. It has been the case of the appellant that on the interveningnight of 20th and 21st August 2018, an extraordinary storm accompaniedby heavy rains caused the roof of their plant to collapse. As result,most of the raw material, which was stored for the manufacture oftransformers, was destroyed. Only 50 transformers from the fourth lotGof the aforementioned purchase order were saved, as they were completein all respects and had already been packed up for delivery. These 50transformers were supplied on 01.09.2018.

4. On 18.09.2019, the respondent No. 2 Chief General Manager(Procurement), MPMKVVCLsent letter to the appellant in relation toHTS-532 that they had decided to defer the balance deliveries of 593

ISOLATORS AND ISOLATORS THR. ITS PROP. MRS. SANDHYA MISHRAv. MPMKVVCL [DINESH MAHESHWARI, J.]

Nos. of transformers under the said contract until further instructions.The relevant contents of said letter read as under: -

“No. MD/ MK /04/P-III/TS-494/2824 Bhopal, dated 18/09/2019

M/s. Isolators & Isolators,

Plot No. 83 Sector. 1,

Industrial Area, Govindpura,

Bhopal – 462023 MP

Sub- Supply of BIS Certified Level- II/0433 KVA.2s KVAConventional Distribution Transformer against Saubhagya Yojana– Deferment of Supply thereof.

Ref. This Order PO No. MD/MK/04/TS-532/P-III/2166 dated22.02.2018.

Dear Sir,

The order under reference above has been placed on youor supply of BIS Certified Level- II/0433 KVA.2s KVAConventional Distribution Transformer against Saubhagya Yojana.Against the scheduled deliveries of BIS Certified Level- II/0433KVA.2s KVA Conventional Distribution Transformer as mentionedtherein, it has been decided to defer the balance deliveries of thesame ie. 593 Nos till further instructions.

The other terms and conditions shall be remain same.”

5. However, an order dated 19.11.2019 was issued by therespondent No. 2 cancelling the supply of balance quantity of 286 Level-1 transformers under TS-494. The relevant contents of said letter arereproduced as under: -

“No. MD/MK/04/P-III/3491 Bhopal, dated: 19.11.2019

M/s Isolators & Isolators,Plot No.- 83 Sector-1,Industrial Area, Govindpura,Bhopal-462023 (M.P.).

Sub:- Cancellation of Purchase Order No. MD/MK/04/TS-494/P-IIl/1988 dated 30.06.2017 for supply of BIS Certified,Level-l, 11/0.433 KV, 25 KVA Conventional DistributionTransformers for unsupplied quantity.

Ref:- 01. This office RCA No. MDIMK/04/TS-494/P-III/1987dated 30.06.2017

02. This office letter No. MD/MK/04/P-III/4872 dated02.11.2018.

Purchase order MD/MK/04/P-IIl/TS-494/1988 dated30.06.17 for supply of 586 nos. BIS Certified, Level-l, 11/0.433KV, 25 KVA Conventional Distribution Transformers was issuedto your firm. The delivery schedule of above Purchase Orderwas as below-

Your firm has not supplied any quantity even lapse ofschedule period of six months i.e. up to Feb-18. After repeatedtelephonic requests, letter was issued vide letter no. MD/MK/04/TS-494P-lll/6099 dated 13.02.2018. Subsequently, 300 Nos.DTRs were supplied against above purchase Order and remaining286 Nos. DTRs have not been supplied till date.

It was informed to your firm vide letter referred above fornon-supply of 25 KVA Level-l DTRs and initiating stern actionagainst the against your firm. In addition you were also informedthat the number of DTRs equivalent to unsupplied quantity will bepurchased from other firm at the risk and cost of your firm.

As per tender clause -12 delivery and supply of material ofAnnexure-II of TS -494 read with clause 28 cancellation of ratecontract of Annexure -II the competent authority has accordedapproval for cancellation of PO NO. MD/MK/04/TS-494/P-lll/1988 dated 30.06.2017 for 286 Nos. unsupplied quantity of 25KVA DTRs with imposition of penalty.

Therefore, PO NO. MD/MK/04/TS-494/P-III/1988 dated30.06.2017 for 286 Nos. of 25 KVA DTRs is hereby cancelledwith imposition of penalty on unsupplied quantity. Other punitiveaction as per terms of the tender will be initiated separately.”

ISOLATORS AND ISOLATORS THR. ITS PROP. MRS. SANDHYA MISHRAv. MPMKVVCL [DINESH MAHESHWARI, J.]

6. Subsequently, the respondent No. 2issued another order dated21.11.2019 cancelling the supply of the remaining quantity of transformersunder TS-532 too. The relevant contents of said letter are also reproducedas under: -

“No. MD/MK/04/P-III/3593

Bhopal, dated: 21.11.2019

M/s lsolators&lsolators,

Plot No. - 83 Sector-1,Industrial Area, Govindpura,Bhopal-462023 (M.P.)

Sub:- Cancellation of Purchase Order No. MD/MK/04/TS-532/P-III/2166 dated 22.02.2018 for supply of BIS Certified,EEL-II, 11/0.433 KV, 25 KVA Conventional DistributionTransformers for unsupplied quantity.

Ref:- 01. This office RCA No. MD/MK/04/TS-4532/P-III/2092dated 20.01.2018.

02. This office letter No MD/MK/04/P-III/2824 dated 18.09.2019.

**********

Purchase order MD/MK/04/P-III/TS-532/2166 dated22.02.2018 for supply of 593 nos BIS Certified, EEL-II, 11/0. 433KV. 25 KVA Conventional Distribution Transformers was issuedto your firm. The delivery schedule of above Purchase Orderwas as below-

Firm offered 100 nos. DTRs for stage inspection againstthe Purchase order. The inspection was carried out on 04.06.18and stage clearance letter was issued vide letter no. 1469 dtd05.06.18. In general procedure, after the stage clearance, firmhas to offer the material for final inspection but M/s Isolators &

AIsolators, Bhopal has never offered the DTRs for final inspectiontill date.

It was informed to your firm vide letter referred above fornon-supply of 25 KVA EEL-II DTRs and initiating stern actionagainst your firm.

As per tender clause 04 “Delivery of materiel” of Annexure-IV of TS - 532 read with clause 17 “Cancellation/Termination ofPurchase order of Annexure -III, the competent authority hasaccorded approval for cancellation of PO NO. MD/MK/04/TS-532/P-III/2166 dated 22.02.2018 for 593 Nos. unsupplied quantityCof 25 KVA DTRs with imposition of penalty.

Therefore, PO NO.MD/MK/04/TS-532/P-III/2166 dated22.02.2018 for 593 Nos. of 25 KVA DTRs is hereby cancelledwith imposition of penalty on unsupplied quantity. Other punitiveaction as per terms of the tender will be initiated separately.

Chief General Manager (Proc.)O/o MD (CZ) MPMKVVCL, Bhopal.”

7. On 26.11.2019, notice was issued by the respondent No. 2Easking the appellant to show-cause within 15 days as to why they shouldnot be debarred from participating in further tenders on account of non-supply of transformers. In the said notice dated 26.11.2019, the ChiefGeneral Manager (Procurement), after referring to the backgroundaspects relating to the purchase orders issued to the appellants; theFappellant’s failure to effect the necessary supplies within time schedule;and cancellation of the purchase orders, stated as under: -

“******

Your firm had offered 100 nos. DTRs for stage inspectionagainst the Purchase order. The inspection was carried out onG04.06.18 and stage clearance letter was issued vide letter no.1469dtd 05.06.18. In general procedure, after the stage clearance, yourfirm were required to offer the material for final inspection butthe above DTRs were not offered by your firm for final inspection.

Therefore, the PO No. MD/MK/04/P-III/TS-532/2166Hdated 22.02.18 has been cancelled vide letter no. MD/MK-04/P-

ISOLATORS AND ISOLATORS THR. ITS PROP. MRS. SANDHYA MISHRAv. MPMKVVCL [DINESH MAHESHWARI, J.]

III/3593 dated 21.11.2019 with imposition of penalty on unsuppliedquantity. With note that other punitive action as per terms of thetender will be initiated separately.

As per Tender Clause 17 of Annexure-III. General Termsand Condition:-

The Purchaser may upon written notice of default,terminate/cancel the purchase order/contract in whole or for apart quantity with recovery of liquidate damages at the rate of10% of ex-works price(s) of stores not delivered by them or liabilityon account of risk and cost, whichever is higher in thecircumstances detailed hereunder:-

17.1. If in the opinion of the Purchaser, the supplier fails to deliverthe material within the time specified or during the period for whichextension has been granted by the Purchaser.

17.4. In pursuance to clause no. 17.1, 17.2 &17.3 above, Purchasermaydebar the supplier/contractor for further business withPurchaser for declared period on breach of the Purchase Order.

Since MPMKVVCL was in urgent need of 25 KVA DTRsfor completion of urgent works under Government Schemes butyour firm hadnot complied with the provisions of tender thereforeboth the purchase orders MD/MK-04/P-III/TS-494/1988 dated30.06.17 and TS-532/2166 dated 22.02.18 have been cancelled.

In view of above default on your part, this office is sendingthis notice asking you to clarify as to why strict action as pertender terms should not be taken against you for blatant violationof Purchase Order andfor the large insensitivity shown by you toa number of government development schemes which wereseverely hit due to non-executing of Purchase Order issued uponyour firm. Also intimate that why your firm should not be debarredas per Tender Provisions stated above. You have also been givensufficient time to supply the material but you have ignoredthe settimeliness persistently and knowingly.Please submit your reply within 15 days and in case youwant personal hearing then intimate to this office within 07 daysfrom issue Of this letter, failing which, it will be presumed thatyou have no plausible explanation to offer in your defense and

456SUPREME COURT REPORTS

Athen this office would be constrained to take action towardsdebarment of your firm for non-performance in material supply.Hence kindly take due cognizance andsend your reply within timegiven.”

8. The appellant responded to the aforementioned notice onB30.11.2019, setting out the circumstances for which, theyhad been unableto undertake the supply against the purchase orders. However, therespondent issued an order dated 13.02.2020 debarring the appellantfrom participating in future tenders for period of three years. Arepresentation was made by the appellant on 27.02.2020 requesting therespondents to reconsider and recall the order dated 13.02.2020 but inCvain. In the said order dated 13.02.2020, the Chief General Manager(Procurement), after recounting the background aspects including thesaid show-cause notice dated 26.11.2019, stated and ordered as under:-

DIn view of above default on your part, this office had sent anotice ofdebarring for violation of PO Terms & Conditions, askingyou to clarify as towhy strict action as per tender terms shouldnot be taken against you forblatant violation of Purchase Orderand for the large insensitivity shown byyou to number ofGovernment Development Schemes. You were alsointimated thatEwhy your firm should not be debarred as per TenderProvisionsstated above. You were also given 15 day’s time tofurnish reply of notice ofdebarring to this office personal hearing.

Your firm vide letter no.I&I/BPL/19-20/Reply/1025 dated30.11.2019 has submitted reply to debarring notice and your firmFcould not produce anydocument/statement which restrains the firmfrom debarring. Your firm hasviolated Tender conditions asstipulated in TS-494 and TS-532.

Therefore, after given full opportunity and due consideration,thecompetent authority has accorded approval to recover penaltyGon rejectedand unsupplied DTRs from the firm. Further.M/s Isolators, Bhopal and itsCompany/Firms should be debarredfor future business for the period of 3(Three) years.

Accordingly, your firm M/s Isolators & Isolators. Bhopalhavingregistered office at Plot No.-83 Sector-I, Industrial Area.HGovindpura. Bhopal-462023 (M.P.) is hereby debarred for

ISOLATORS AND ISOLATORS THR. ITS PROP. MRS. SANDHYA MISHRAv. MPMKVVCL [DINESH MAHESHWARI, J.]

participating in tenders of MPMKVVCLfor period of 3(Three)years from the date of issuance of this letter. All ofyour associatedconcerns and their Business dealings with this companyhave alsobeen banned for the same period.”

9. In the given circumstances, the appellant approached theMadhya Pradesh High Court, Principal Seat at Jabalpur by way of WPNo. 7579 of 2020 challenging the aforesaid order dated 13.02.2020. TheHigh Court, by its order dated 08.07.2020, set aside the order dated13.02.2020 and permitted the respondents to pass fresh order within15 days after affording an opportunity of hearing to the appellant.

10. Thereafter,by notice dated 16.07.2020, the appellant wascalled for hearing through video-conferencing on 20.07.2020. Duringthisvideo-conferencing, three representatives of the appellant including itsproprietor were afforded the opportunity of hearing and thereafter, theChief General Manager (Procurement)-respondent No. 2 proceeded topassa detailed order on 30.07.2020, while point-by-point dealing with allthe relevant submissions, as made by the appellant through the lettersdated 27.02.2020 and 18.07.2020 as also by the three representatives.Ultimately, the orders were maintained to the effect that penalty onrejected and unsupplied transformers shall be recovered from theappellant firm; and the appellant firm and its subsidiary/affiliated company/firms shall stand debarred from participating in tenders of MPMKVVCLfor period of three years from date of issuance of that order.Therespondent No. 2 finally ordered as under: -

“*********

Therefore, after given full opportunity and due consideration, thecompetent authority has accorded approval to recover penaltyon rejected and unsupplied DTRs from the firm. Further,M/s. Isolators & Isolators, Bhopal and its subsidiary/affiliated Company/[Firms should be debarred for futurebusiness for the period of 3 (Three) years.

Accordingly, your firm M/s Isolators & Isolators, Bhopalhaving registered office at Plot No.- 83 Sector-I, IndustrialArea, Govindpura, Bhopal-462023 (M.P.) is herebydebarred for participating in tenders of MPMKVVCL for aperiod of years from the date of issuance of this letter. Allof your associated concerns and their Business dealingswith this Company have also been the same period (sic).”

11. Later, the respondent No. 2 also issued another order dated17.08.2020, imposing penalty on the appellantto the tune of Rs.27,98,960/- in relation to TS-532, being 10% of the ex-works price of the quantitynot deliveredtogether with GST @ 18%.Therelevantcontents of thesaid order dated 17.08.2020 read as under:-

B“******

Purchase order MD/MK/04/P-III/TS-532/2166 dated22.02.2018 for supply of 593 nos BIS Certified, Level-II, 11/0.433 KV. 25 KVA Conventional Distribution Transformers wasissued to your firm. For not making complete supply as per theconditions of tender no. 532 and for violating the terms andconditions of the tender, this office vide letter no. MD/MK/P –III/3593 dated 21/11/2019 had imposed penalty for non-supply of593 items and cancelled your order. As per letter no. 3593 dated21/11/2019 your firm is liable to pay the penalty amount as under

G(Total penalty amount Rs. Twenty Seven lakh Ninety EightThousand Nine Hundred Sixty only )

Therefore, you are requested to kindly deposit the penaltyamount of Rs. 27,98,960/- (Rs. Twenty Seven lakh Ninety EightThousand Nine Hundred Sixty only) vide demand draft in theaccount of the company within 15 days failing which appropriateaction against your form shall be taken.”

12. Being aggrieved of the aforesaid orders dated 30.07.2020 and17.08.2020, the appellant preferred another writ petition in the High Court,being W.P. No. 12075 of 2020 that has been considered and disposed ofby the impugned order dated 23.04.2021.

13. In its order dated 23.04.2021, the High Court took note of therival submissions where on one hand, the appellant contended that theimpugned orders were suffering from violation of principles of naturaljustice; that there was no reason recorded in the orders impugned by therespondents for taking the extreme and extraordinary measure ofdebarringthe appellant; that after substantial supply of transformers againstpurchase order No. 586, cancelling the order for supply of remainingtransformers was suffering from malice in law; and that the respondentshad deliberately not considered the factors regarding extraordinary rainfalland storm between 20.08.2018 and 21.08.2018, resulting in damage tothe plant and loss of raw material. On the other hand, it was contendedon behalf of the respondents that blacklisting or debarring wasorderedafter giving full opportunity to the contractor, who was at fault innot supplying the material as per the terms of the contract;that therewas nothing illegal or arbitrary in exercise of powers when therespondents took recourse to the relevant clauses of the purchase order;and that reliance of the appellant on force majeure clause was alsomisplaced, for no suchinformation was furnished within 15 days, asrequired by the terms of the contract.

14. Having taken note of the rival submissions, respectively inparagraphs 5 and 6 of the order impugned, in the next paragraph, theHigh Court proceeded to state its opinion that the order of blacklistingcontained justified and plausible reasons and no case for exercisingextraordinary powers under Article 226 of the Constitution of India wasmade out. The High Court observed that the appellant failed to substantiatethe lapsesin not supplying the required transformers as per contract.Thereafter, the High Court merely observed that the second order ofdebarment was passed on 30.07.2020 but factually, the appellant-firmwas debarred by the order dated 13.02.2020 and therefore, provided aslight modification in the manner that the period of 3 years’ debarmentwould be reckoned w.e.f.13.02.2020. With these observations andmodifications, the High Court proceeded to dispose of the writ petitionfiled by the appellant.The relevant passages in the order so passed bythe High Court read as under: -

A“7. Considering the rival contention of the parties and perusal ofrecord, we are also of the opinion that so far as the orderofblacklisting is concerned, it contains the reason and in no way wefind those reasons unjustified. Considering the existing fact situationof the case, we find that the assigned reason appear to be prima-facie, plausible and are sufficient to maintain the order ofBblacklisting. In the circumstances, as have been set forth beforeus, exercising extraordinary power under Article 226 of theConstitution of India, interference in decision making process isnot permissible when the orders have been passed after followingthe principle of natural justice and are supported by plausibleCreasons. Indubitably the petitioner’s firm failed to substantiate thelapses on their part for not supplying the required transformers asper the contract. We do not find any such reason available in thecase holding the orders passed by the respondents illgal andarbitrary. Therefore, interference in the matter under Article 226of the Constitution of India is not warranted. However, we haveDnoticed that the order of debarment has been passed on 30.07.2020restraining the petitioner from participating in further tenderproceedings of respondents, but, factually the petitioner firm wasdebarred vide order dated 13.02.2020, the first order, which wasset aside by this Court. Accordingly, the period of three yearsEdebarring the petitioner be considered to be reckoned w.e.f.13.02.2020 and would be ended accordingly after completion ofthree years from the said date.

8. Accordingly, the petition is partly allowed modifying the orderof debarment making the same effective w.e.f. 13.02.2020 till theFperiod of three years.”

15. At this juncture, we may also take note of the fact that asagainst the aforesaid order dated 23.04.2021 passed in W.P. No. 12075of 2020, the appellant had earlier approached this Court by way of SLP(C)No. 13571 of 2021 but then, sought permission to withdraw with libertyGto take recourse to other appropriate remedy in accordance with law.By the order dated 24.09.2021, the said SLP(C) No. 13571 of 2021 was,accordingly, dismissed as withdrawn with liberty as prayed. Thereafter,the appellant filed review petition in the High Court that came to besummarily rejected by the High Court with short order dated 13.12.2021that reads as under:-H

“On hearing learned counsels, we do not find any errorapparent on the face of the record that calls for any interference.

In the absence of any error on the face of the record, thisreview petition is dismissed.”

16. Assailing the orders so passed by the High Court, learnedsenior counsel for the appellant has essentially put forward two principalcontentions. In the first place, it has been argued that the show-causenotice dated 26.11.2019was only about debarment but then, therespondents proceeded to pass the orders debarring the appellant for 3years as also imposing penalty. Even in regard to the question of penalty,according to the learned counsel, as per Clause 4 of the contract, thequantum of penalty could have been from ½% to 10% for delay in deliverybut the respondents have chosen to impose the maximum thereof withoutassigning any reason as to why the highest of such quantum was chosen.In the second place, learned counsel has contended that the orderdebarring the appellant and the order imposing penalty both werechallenged in the writ petition but the High Court chose to consider onlythe challenge with respect to the order of the debarment and nothingwas considered about the order imposing penalty.16.1. With reference to the facts of the case, learned senior counselhas submitted that the appellant is manufacturer of transformers and bythe very nature of its product, the distribution company like the respondentsare the only purchasers and that way, the present one is case of singlepurchase market. The appellant had been supplying transformers to therespondents since the year 1989 without any default or difficulties and inthe totality of circumstances, delay in execution of the present purchaseorders,that had occurred because of the reasons and circumstancesexplained by the appellant, debarment for maximum period of 3 yearsand imposition of maximum penalty had been highly disproportionateand too harsh. Learned counsel has particularly referred to the fact thatas regards TS-494, the appellant had supplied 300 out of 586 transformersand as regards TS-532, the appellant had supplied all the 63 KVAtransformers. The want of supply of other transformers had been forthe reasons explained by the appellant and entire fault could not havebeen attributed to the appellant alone. In this regard, learned counsel hasparticularly underscored the submissions that by the letter dated18.09.2019,the respondents deferred the delivery and thereafter,therewas no communicationfor withdrawing deferment. In this background,

Athe order cancelling contract on 21.11.2019 for want of supply couldhave only been considered as arbitrary and unreasonable.

16.2. The learned counsel has also relied upon the decisions ofthis Court in Gorkha Security Services v. Government (NCT of Delhi)and Ors.: (2014) 9 SCC 105 and UMC Technologies Private LimitedBv. Food Corporation of India and Anr.: (2021) 2 SCC 551 to submitthat show-cause notice must indicate the proposed action and in theshow-cause notice in question, there being no indication of the proposedaction of imposing penalty, the order imposing penalty remains patentlyillegal and deserves to be set aside.

C17. In the present case, while preliminarily entertaining thepetitionsseeking leave to appeal, this Court had taken note of the facts regardingearlier filing of the petition, being SLP(C) No. 13571 of 2021 against theorder dated 23.04.2021 passed in W.P. No. 12075 of 2020; and theappellant having withdrawn on 24.09.2021 with liberty to take recourseto other appropriate remedy in accordance with law. As noticed,thereafter,Dthe appellant filed review petition in the High Court that came to besummarily rejected by the High Court after finding no error apparent onthe face of the record. In this backdrop, this Court had left the questionof maintainability of the petitions, particularly in challenge to the originalorder dated 23.04.2021 open.E

17.1. In regard to the above question, learned senior counsel hasreferred to decision of this Court in the case ofA.P. State FinancialCorporation v. C.M. Ashok Raju and Ors.: (1994) 5 SCC 359 tosubmit that the first order of the High Court dated 23.04.2021 cannot besaid to have attained finality. He would also submit that the order datedF23.04.2021 suffered from several errors apparent on the face of record,including that the challenge to the order imposing penalty was not evengone into but, the High Court rejected the review petition without evenexamining the record.

18. Per contra, learned counsel for the respondents has dulyGsupported the orders impugned with particular reference to Clauses 13,14 and 15 of the conditions of purchase order No. TS-494 and Clauses8,10 and 17 of TS-532. The learned counsel would submit that since theappellant did not comply with the terms and conditions of the contract, anotice was issued on 13.02.2018 which was followed by thecommunications dated 02.05.2018, 12.06.2018, 16.08.2018 andH

ISOLATORS AND ISOLATORS THR. ITS PROP. MRS. SANDHYA MISHRAv. MPMKVVCL [DINESH MAHESHWARI, J.]

01.09.2018 about dispatch instructions for supply of transformers Level-I. According to the learned counsel, the appellant having failed to fulfilthe terms and conditions of TS-494, by the order dated 19.11.2019, therespondents rightly cancelled the said purchase order with imposition ofpenalty for non-supply of 286 transformers. It has been argued that thesaid termination order had never been challenged by the appellant andthe same has attained finality. As regards the supply of 593 DTRs Level-II, the appellant was informed by the communication dated 22.02.2018that the respondents had reserved the right to defer, reduce or reschedulethe supply as per the requirement. According to the learned counsel, theappellant having failed to make the requisite supplies despite variousrequests, by the communication dated 18.09.2019, the appellant wasinformed about deferment of supply until further instructions.

19. As noticed, the aforesaid communication of deferment dated18.09.2019 has been strongly relied upon by the learned counsel for theappellant to submit that after such communication, the respondents neverissued instructions for supply or for withdrawal of such deferment and,therefore, the blame could have been shifted on the appellant.During thecourse of submissions, in regard to the aforesaid line of arguments, weposed pointed query to the learned counsel for the respondents andafforded him an opportunity on 28.02.2023 to take all instructions whileposting the matter for further hearing. Learned counsel for therespondents has endeavoured to submit that the said communicationdated 18.09.2019 is of no adverse impact on the validity of the orderspassed against the appellant. As regards the said communication dated18.09.2019 and the contentions of the appellant on that basis, the learnedcounsel for the respondents has further submitted the additional writtensubmissions and having regard to the questions involved, we deem itappropriate to reproduce the relevant passages of such writtensubmissions as follows: -

“4. That submission on behalf of petitioner has been made beforethis Hon’ble Court that vide letter dated 18.09.2019 (Page 148Of SLP), the respondent/Electricity Company himself has deferredthe supply of 593 transformers of Level-II and as such, there isno fault on the part of the petitioner-firm in supplying 593transformers. In this respect, it is most humbly submitted that thesaid submission on behalf of Petitioner is only to cover-up itsdefaults in not supplying the 593 transformers as per time schedule

prescribed. The petitioner herein has not produced any documentwhich can be treated as against the answering respondents andas such, an adverse inference cannot be drawn against theanswering respondents. The submissions made by the petitionerare contrary to the material evidence available on records, thus,same are liable to be rejected. The petitioner herein was awardedthe contract on 22.02.2018 for supply of 593 transformers of level-II and in that regard purchase order was issued along with termsand conditions of said Contract to the petitioner. It is submittedthat as per terms and conditions and also admitted position is thatthe said supply of 593 transformers had to be made within 6 monthsfrom the date of award of said Contract/Purchase order. ThePetitioner herein has not produced single document before theforums below nor before this Hon’ble Court that he was alwaysready to supply the 593 transformers but the respondents refusedto either accept or defer the said supply. Even after 18.09.2019,the petitioner has not produced single evidence on record toshow that he was ready to supply the said transformer which hadto be supplied within 6 months from the date of purchase orderi.e. on or before 22 August, 2019. After considering the grossviolations of terms and conditions of supply of said transformers,virtually after an expiry of more than one year, when it was foundthat petitioner is not at all interested in supply the said 593transformers, the answering respondent had no option but toterminate the said purchase order vide order dated 21.11.2019which has never been challenged before any competent forum.

5. That it is further most respectfully submitted that even if itassumed for the sake of argument, though it is not admitted, thatthe answering respondents himself have deferred the supply ofsaid 593 transformers, still the adverse inference cannot be drawnagainst the answering respondents on the ground that it is for thepetitioner-firm who has to prove on record that the 593transformers have always been ready for supply to the answeringrespondents. It is further most respectfully submitted that onus isupon the petitioner to prove that petitioner was always ready tosupply the said 593 transformers but the answering respondentshave refused the same or deferred the same.

ISOLATORS AND ISOLATORS THR. ITS PROP. MRS. SANDHYA MISHRAv. MPMKVVCL [DINESH MAHESHWARI, J.]

6. It is further most respectfully submitted that the letter dated18.09.2019 of answering respondents cannot be taken intoconsideration against the answering respondents in view of thefact that despite various opportunities and communications madeto the petitioner by the answering respondents for supply of said593 Transformers, the petitioner has not even pay any heed onthat and finally has chosen not to supply the said transformers onone pretext or other. The answering respondents most humblysubmit that this Hon’ble Court may kindly see the reasons givenin detail while cancelling the said Purchase order vide order dated21.11.2019 and also while declaring the petitioner blacklisted videorder dated 30.07.2020.”

19.1. The learned counsel has submitted that keeping in view thepast conduct of the appellant and violation of the terms and conditions ofcontract and purchase order, they had rightly cancelled the same andimposed penalty on unsupplied quantity by another detailed order dated21.11.2019. It is submitted that even the said order dated 21.11.2019 hasnever been challenged in any forum and has attained finality. Accordingto the learned counsel, imposition of penalty has been consequential tothe aforesaid order dated 21.11.2019 and the same had been as per theterms and conditions of the rate/contract/purchase order.19.2. With reference to the show-cause notice dated 26.11.2019and the reply dated 30.11.2019, it has been argued that the order dated13.02.2020 was passed after extending full opportunity of hearing to theappellant and when the said order was challenged in the High Court inWrit Petition No. 7579 of 2020 and the High Court directed therespondents to pass fresh order after affording opportunity of hearingto the appellant, the authority concerned passed detailed speaking orderdated 30.07.2020 after giving full opportunity of hearing to the appellantand after duly considering the financial loss suffered by the respondentsdue to non-supply of transformers.

19.3. It has been argued that the writ petition was duly defendedwith reference to Clause 14 of purchase order and the High Court hasrightly rejected the principal contention of the appellant even while givinga partial relief of making the order of debarment effective from13.02.2020. Thus, according to the learned counsel, no case forinterference is made out. The decisions of this Court in the case ofRaghunath Thakur v. State of Bihar and Ors.: (1989) 1 SCC 229;M/

As Erusian Equipment and Chemicals Ltd. v. State of West Bengaland Anr.: (1975) 1 SCC 70;and an order dated 13.12.2019 passed inCivil Appeal No. 9417 of 2019- M/s Daffodills PharmaceuticalsLtd. and Anr. v. State of U.P. and Anr.have been relied upon.

20. Having given thoughtful consideration to the rival submissionsBand having examined the record, we are clearly of the view that theimpugned order as passed by the High Court in practically denying theprincipal relief claimed by the appellant cannot be approved and the writpetition filed by the appellant deserves to be allowed to the extent ofannulling the effect of debarment and quashing the imposition of penalty.

C21. As regards the principles of law applicable to the case, weneed not elaborate on various decisions cited at the Bar. Suffice it wouldbe to take note of the decision in UMC Technologies Private Limited(supra) wherein, the substance of the other relevant decisions has alsobeen duly noticed by this Court while explaining the principles governingsuch actions of debarment/blacklisting. Therein, this Court, inter alia,Dunderscored the requirement of specific show-cause notice and referredto the settled principles in the following terms: -

“13. At the outset, it must be noted that it is the first principleof civilised jurisprudence that person against whom any actionis sought to be taken or whose right or interests are being affectedEshould be given reasonable opportunity to defend himself. Thebasic principle of natural justice is that before adjudication starts,the authority concerned should give to the affected party noticeof the case against him so that he can defend himself. Such noticeshould be adequate and the grounds necessitating action and theFpenalty/action proposed should be mentioned specifically andunambiguously. An order travelling beyond the bounds of notice isimpermissible and without jurisdiction to that extent. This Courtin Nasir Ahmad v. Custodian General, Evacuee Property,(1980) 3 SCC 1 has held that it is essential for the notice to specifythe particular grounds on the basis of which an action is proposedGto be taken so as to enable the noticee to answer the case againsthim. If these conditions are not satisfied, the person cannot besaid to have been granted any reasonable opportunity of beingheard.

14. Specifically, in the context of blacklisting of person orHan entity by the State or State Corporation, the requirement of

ISOLATORS AND ISOLATORS THR. ITS PROP. MRS. SANDHYA MISHRAv. MPMKVVCL [DINESH MAHESHWARI, J.]

valid, particularised and unambiguous show-cause notice isparticularly crucial due to the severe consequences of blacklistingand the stigmatisation that accrues to the person/entity beingblacklisted. Here, it may be gainful to describe the concept ofblacklisting and the graveness of the consequences occasionedby it. Blacklisting has the effect of denying person or an entitythe privileged opportunity of entering into government contracts.This privilege arises because it is the State who is the counterpartyin government contracts and as such, every eligible person is tobe afforded an equal opportunity to participate in such contracts,without arbitrariness and discrimination. Not only does blacklistingtake away this privilege, it also tarnishes the blacklisted person’sreputation and brings the person’s character into question.Blacklisting also has long-lasting civil consequences for the futurebusiness prospects of the blacklisted person.

16. The severity of the effects of blacklisting and theresultant need for strict observance of the principles of naturaljustice before passing an order of blacklisting were highlighted bythis Court in Erusian Equipment & Chemicals Ltd. v. State ofW.B., (1975) 1 SCC 70 in the following terms: (SCC pp. 74-75,paras 12, 15 & 20)

“12. … The order of blacklisting has the effect of depriving aperson of equality of opportunity in the matter of public contract.A person who is on the approved list is unable to enter intoadvantageous relations with the Government because of theorder of blacklisting. person who has been dealing with theGovernment in the matter of sale and purchase of materialshas legitimate interest or expectation. When the State actsto the prejudice of person it has to be supported by legality.

15.…The blacklisting order involves civil consequences. It castsa slur. It creates barrier between the persons blacklisted andthe Government in the matter of transactions. The blacklistsare “instruments of coercion”.

20. Blacklisting has the effect of preventing person from theprivilege and advantage of entering into lawful relationship withthe Government for purposes of gains. The fact that disabilityis created by the order of blacklisting indicates that the relevantauthority is to have an objective satisfaction. Fundamentals offair play require that the person concerned should be given anopportunity to represent his case before he is put on theblacklist.”

17. Similarly, this Court in Raghunath Thakur v. State ofBihar, (1989) 1 SCC 229 struck down an order of blacklisting forfuture contracts on the ground of non-observance of the principlesof natural justice. The relevant extract of the judgment in thatcase is as follows: (SCC p. 230, para 4)

“4. … [I]t is an implied principle of the rule of law that anyorder having civil consequences should be passed only afterfollowing the principles of natural justice. It has to be realisedthat blacklisting any person in respect of business ventureshas civil consequence for the future business of the personconcerned in any event. Even if the rules do not express so, itis an elementary principle of natural justice that parties affectedby any order should have right of being heard and makingrepresentations against the order.”

18. This Court in Gorkha Security Services v. State (NCTof Delhi), (2014) 9 SCC 105 has described blacklisting as beingequivalent to the civil death of person because blacklisting isstigmatic in nature and debars person from participating ingovernment tenders thereby precluding him from the award ofgovernment contracts. It has been held thus: (SCC p. 115, para16)

“16. It is common case of the parties that the blacklistinghas to be preceded by show-cause notice. Law in this regardis firmly grounded and does not even demand muchamplification. The necessity of compliance with the principlesof natural justice by giving the opportunity to the person againstwhom action of blacklisting is sought to be taken has validand solid rationale behind it. With blacklisting, many civil and/or evil consequences follow. It is described as “civil death” of

ISOLATORS AND ISOLATORS THR. ITS PROP. MRS. SANDHYA MISHRAv. MPMKVVCL [DINESH MAHESHWARI, J.]

person who is foisted with the order of blacklisting. Such anorder is stigmatic in nature and debars such person fromparticipating in government tenders which means precludinghim from the award of government contracts.”

19. In light of the above decisions, it is clear that prior show-cause notice granting reasonable opportunity of being heard isan essential element of all administrative decision-making andparticularly so in decisions pertaining to blacklisting which entailgrave consequences for the entity being blacklisted. In these cases,furnishing of valid show-cause notice is critical and failure todo so would be fatal to any order of blacklisting pursuant thereto.”

22. As regards maintainability of these appeals, learned counselfor the appellant has rightly referred to the decision in A.P. StateFinancial Corporation (supra) wherein, while dealing with an akinquestion about maintainability of fresh appeal, after withdrawal of theearlier one and after another round of approach to the High Court,thisCourt, inter alia, observed as under: -

“6. Learned counsel for the contesting respondents havestrenuously contended that the special leave petitions against thejudgment of the Division Bench of the High Court in writ appeals,having been rejected by this Court, the High Court judgment hasachieved finality and, as such, these appeals are liable to bedismissed on that short ground. We do not agree with the learnedcounsel. This Court while rejecting the petitions as withdrawn,granted liberty to the petitioner to approach the High Court andpoint out the case which was sought to be pleaded before thisCourt. In other words, this Court prima facie found the contentionsof the petitioner to be plausible and, as such, granted liberty toraise the same before the High Court. The High Court heard theparties at length and passed reasoned order running into 16pages. In the facts and circumstances of this case, we are notinclined to agree with the learned counsel that the judgment of theHigh Court in writ appeals has achieved finality.”

22.1. Having regard to the above, and overall circumstances ofthe case we find no reason to treat the impugned order dated 23.04.2021as final and deem it appropriate to examine the challenge on merits.

A23. As regards the question of penalty, we find force and substancein the contentions urged on behalf of the appellant that such an impositioncannot be approved for two major factors: The first and foremost beingthat in the show-cause notice dated 26.11.2019, the appellant was put tonotice only as regards the proposition of debarment and in the said notice,nothing was indicated about the proposed imposition of penalty. ThoughBin the cancellation orders dated 19.11.2019 and 21.11.2019,therespondents purportedly reserved their right to take appropriate steps,those orders cannot be read as show-cause notice specifically for thepurpose of imposition of penalty. The submissions on behalf of therespondents in this regard that the said orders dated 19.11.2019 andC21.11.2019 have attained finality do not take their case any further. Finalityattaching to the action of cancellation cannot be read as due notice forimposition of penalty even if the respondents chose to employ theexpression ‘cancelled with imposition of penalty’ in those orders.Looking to the terms of contract, quantification of the amount of penalty(if at all the penalty is considered leviable) could not have been carriedDout without affording adequate opportunity of response to the appellant.That being the position, the action of the respondents in imposing thepenalty without even putting the appellant to notice as regards thisproposed action cannot be approved.

23.1. Secondly, the authority concerned has proceeded to imposeEthe maximum of penalty to the tune of 10% of the deficit supply withoutspecifying as to why the maximum of penalty was sought to be imposed.In this regard, the relevant factors as indicated by the appellant couldnot have been ignored altogether. Unfortunately, the High Court hastotally omitted to consider this aspect of the grievance of the appellant.F

23.2. Though, ordinarily, for such an omission of the High Court,the course would have been to remit the issue for consideration but, weare of the view that no useful purpose would be served by remittingsuch an issue in this matter. This is for the simple reason that impositionof penalty against the appellant cannot be approved because of the wantGof specific show-cause notice. Moreover, no specific quantum of losshas been specified by the respondents so as to justify the imposition ofmaximum of penalty. Viewed from any angle, the impugned order dated17.08.2020 is required to be set aside.24. Even the order debarring the appellant for period of 3 yearsHfor default in making the requisite supplies carries its own shortcomings.As noticed, the appellant had indeed made substantial supplies againstthe purchase orders in question. Fact of the matter further remains thaton 18.09.2019, the respondent No. 2 dealing with the procurementspecifically informed the appellant that the supply under the purchaseorder in question is to be deferred. It has rightly been argued on behalfof the appellant that after such an order of deferment, there had notbeen any other communication or even indication from the respondentswhich would have informed the appellant to resume supplies. We havereproduced hereinabove all the relevant passages in the additional writtensubmissions on behalf of the respondents, made in an effort to meet withthe arguments concerning the effect and impact of the said communicationdated 18.09.2019. It is at once apparent that the respondents have notbeen able to rebut the contention urged in this regard on behalf of theappellant. The written submissions on behalf of the respondents do notanswer the root question in the matter as to how the appellant couldhave been made solely responsible for delay or default in supply afterthe communication dated 18.09.2019 when the respondents themselvesinformed the appellant that taking of balance delivery was being deferred(until further instructions). In the length and breadth of the arguments onbehalf of the respondents, it has nowhere been pointed out if such “furtherinstructions” were ever issued to the appellant before issuance of thecancellation orders dated 19.11.2019and 21.11.2019 as also beforeissuance of show-cause notice dated 26.11.2019. That being the position,we are clearly of the view that the debarment order had been issuedagainst the appellant without due regard to the undeniable factual situationwhere the entire blame could not have been foisted upon or shiftedtowards the appellant. Hence, the impugned order dated 30.07.2020debarring the appellant is also required to be set aside.

25. Before concluding, we are impelled to observe that, in fact,the High Court had had the opportunity to correct the obvious errors inits order dated 23.04.2021, particularly when the review petition wasplaced before it for consideration because one part of the matter(concerning penalty) was not even considered and as regards other parttoo, the pertinent contentions of the appellant did not acquire the requisiteattention of the High Court. Unfortunately, the High Court chose todismiss the review petition without even looking into the relevant factors,including the oneconcerning the impact of the communication dated18.09.2019. The High Court having not dealt with the matter in the correct

Aperspective whether in disposal of the writ petition or in disposal of thereview petition, both the impugned orders could only be disapproved.

26. Accordingly, and in view of the above, these appeals succeedand are allowed. The impugned orders dated 23.04.2021 in W.P. No.12075 of 2020 and dated 13.12.2021 in Review Petition No. 894 of 2021Bare set aside; and the writ petition filed by the appellant is allowed. Theimpugned orders dated 30.07.2020 in debarment of the appellant anddated 17.08.2020 in imposition of penalty are quashed and set aside.

26.1. Having regard to the period of debarment in terms of theimpugned order dated 30.07.2020, we deem it appropriate to provideCthat such debarment is annulled for all practical purposes and the saidorder dated 30.07.2020 shall not operate against the rights and interestsof the appellant in any future tender process. The order dated 17.08.2020imposing penalty having also been set aside, no recovery shall be madefrom the appellant thereunder and if any amount has been recovered,the same shall be refunded to the appellant within month from today orDelse, it shall carry simple interest at the rate of 9% per annum from thedate of recovery and until the date of repayment.The parties shall beartheir own costs.

Divya Pandey

E(Assisted by : Shevali Monga, LCRA)

Appeals allowed.