# M/s Theme Engg. Services Pvt. Ltd v. National Highway Authority of India & Anr

- **Citation:** (2024) 10 ILRA 178
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-10-23
- **Case number:** Writ C No. 8606 of 2024
- **Bench:** Mrs. Sangeeta Chandra, Brij Raj Singh
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-theme-engg-services-pvt-ltd-v-national-highway-authority-of-india-anr-51108
- **Pages:** 18

## Headnote

(A) Contract Law - Debarment in tender
process - Request for Proposal (RFP) -
Clauses 10.4, 10.5 - Blacklisting and
debarment
-
Tender
evaluation
-
Proportionality of penalty - Debarment is
recognised and often used as an effective
method
for
disciplining
deviant
suppliers/contractors
who
may
have
committed
acts
of
omission
and
commission - It is for the State or the
appropriate authority to pass an order of
blacklisting/debarment in the facts and
circumstances of the case - Debarment is
never permanent and the period of
Debarment would invariably depend upon
the nature of the offence committed by
the contractor. (Para -38,39)

Petitioner challenged the debarment order -
Allegations - incorrect financial proposal - citing
calculation errors by the Tender Evaluation
Committee - bid was as submitted and denied
calculation errors - Petitioner requested upward
correction of its bid after being declared H1, which
was denied, citing RFP rules.(Para - 2 to 30)

HELD: - Respondents' actions were within the
scope of RFP clauses, and the petitioner was found
non-compliant. Six-month debarment was deemed
reasonable. (Para - 40,44 ,45)

Petition dismissed. (E-7)
List of Cases cited:

## Text

_Characters 0–39,991 of 61,503. This is a partial read: ask again with offset=39991 for what follows._

178 INDIAN LAW REPORTS ALLAHABAD SERIES

43. Accordingly, the present writ
petition is allowed as above. No order as to
costs.
----------
(2024) 10 ILRA 178
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 23.10.2024

BEFORE

THE HON'BLE MRS. SANGEETA CHANDRA, J.
THE HON'BLE BRIJ RAJ SINGH, J.

Writ C No. 8606 of 2024

M/s Theme Engg. Services Pvt. Ltd.
 ...Petitioner
Versus
National Highway Authority of India &
Anr. ...Respondents

Counsel for the Petitioner:
Geetika Yadav, Anshuman Singh, Ashok
Kumar Singh, Nishcay Anand

Counsel for the Respondents:
Samidha, Sarvesh Kumar Dubey

(A) Contract Law - Debarment in tender
process - Request for Proposal (RFP) -
Clauses 10.4, 10.5 - Blacklisting and
debarment
-
Tender
evaluation
-
Proportionality of penalty - Debarment is
recognised and often used as an effective
method
for
disciplining
deviant
suppliers/contractors
who
may
have
committed
acts
of
omission
and
commission - It is for the State or the
appropriate authority to pass an order of
blacklisting/debarment in the facts and
circumstances of the case - Debarment is
never permanent and the period of
Debarment would invariably depend upon
the nature of the offence committed by
the contractor. (Para -38,39)

Petitioner challenged the debarment order -
Allegations - incorrect financial proposal - citing
calculation errors by the Tender Evaluation
Committee - bid was as submitted and denied
calculation errors - Petitioner requested upward
correction of its bid after being declared H1, which
was denied, citing RFP rules.(Para - 2 to 30)

HELD: - Respondents' actions were within the
scope of RFP clauses, and the petitioner was found
non-compliant. Six-month debarment was deemed
reasonable. (Para - 40,44 ,45)

Petition dismissed. (E-7)
List of Cases cited:
1. Oryx fisheries Pvt. Ltd. Vs U.O.I., 2010 (13)
SCC 427
2. Siemens Ltd Vs St. of Maha., 2006 (12) SCC
33
3. M/S BCITS Pvt. Ltd Vs P.V.V.N.L.Ltd, Writ-C
No.15363 of 2022
4. Ramlala Vs St. of U.P, Writ-C No.31059 of
2023
5. M/S Pooja Jaiswal Vs F.C.I., Writ-C No. 1349
of 2023
6. VetIndia Pharmaceuticals Ltd. Vs St. of U.P.,
2021 (1) SCC 804
7. S.E.C. Ltd Vs S Kumar's Associates AKM (JV),
2021 (9) SCC 166.
8. UMC Technologies Pvt. Ltd Vs F.C.I. & ors.,
2021 (2) SCC 551
9. Gorkha Security Services Vs Govt. of NCT of
Delhi, 2014 (9) SCC 731
10. St. of Punj. Vs Davinder Pal Singh Bhullar,
2011 (14) SCC 770
11. St. of Odisha & ors. Vs Panda Infraproject
Ltd., 2022 (4) SCC 393
12. Erusian Equipment & Chemicals Ltd Vs St. of
W.B. & anr., 1975 (1) SCC 70
13. Grosons Pharmaceuticals Pvt Ltd Vs St. of
U.P., 2001 (8) SCC 604
10 All. M/s Theme Engg. Services Pvt. Ltd. Vs. National Highway Authority of India & Anr.
179
14. Kulja Industries Ltd. Vs C.G.M., Western
Telecom Project, BSNL & ors., 2014 (14) SCC
731
15. BTL EPC Ltd. Vs Macawber Beekay Pvt Ltd &
ors. , 2023 SCC OnLine SC 1223
16. Tata Motors Ltd. Vs Brihan Mumbai Electric
Supply & Transport (BEST) & ors., 2023 SCC
OnLine Supreme Court 671
17. Michigan Rubber (India) Ltd. Vs St. of Karn.,
2012 (8) SCC 216

(Delivered by Hon'ble Mrs. Sangeeta
Chandra, J.
&
Hon'ble Brij Raj Singh, J.)

1. We have heard Sri Prashant
Chandra, learned Senior Advocate assisted
by Sri Anshuman Singh and Ms. Geetika
Yadav, Advocates, for the petitioners and
Sri
Sanjay
Bhasin,
learned
Senior
Advocate, assisted by Sri Sarvesh Kumar
Dubey, learned counsel for the respondents.

2. This Writ Petition, namely, Writ-C
No. 8606 of 2024 has been filed by the
petitioner arraying the National Highways
Authority of India through its Chairman as
the respondent No.1, and the Regional
Officer, National Highways Authority of
India, as the respondent no.2. The petitioner
has challenged its debarment order dated
26.09.2024 and prayed for a mandamus to be
issued to the respondents not to treat the
petitioner as debarred from participating in
future tenders and to allow it to participate in
forthcoming tenders ignoring the impugned
order dated 26.09.2024.

3. The brief facts of the case as
disclosed in the writ petition and as argued
by learned counsel for the petitioners are:-

A Notice Inviting e-Tender for
commissioning
of
an
Independent
Engineering Service to supervise the
operation and maintenance of 100.840 kms
of six lanning of NH-24 from Hapur
Bypass
to
Moradabad
Section
was
uploaded on the website of N.H.A.I. on
23.12.2023. The Notice Inviting Tender is
hereinafter referred to as "Request For
Proposal (RFP)". The last date for
receiving queries was 07.01.2024. A preBid meeting at a specified venue was to be
held on 27.01.2024. The N.H.A.I. was to
respond to the queries latest by 30.01.2024.
The Technical bid and the Financial bids
had to be uploaded with effect from 0000
hrs 06.02.2024 up to 1100 hrs. The opening
of the Technical Bids was to be done on
07.02.2024 at 11 AM, and 5 bidders having
highest number of technical points were to
be shortlisted for opening of Financial bids.
It is the case of the petitioner that it
downloaded the RFP and participated in the
pre bid meeting and submitted its Technical
and Financial bid before 06.02.2024 in the
format downloaded from the web portal,
omitting to notice that a corrigendum was
issued on 05.02.2024. It has been alleged
that the firms which had been provided
with the RFP were required to only fill up
specific columns containing per item rate in
Appendix-C to Section 5 of the RFP. The
final calculation was to be done by the
Tender Evaluation Committee on the basis
of information submitted by the bidder. The
Tender Evaluation Committee instead of
adding Rs.1.39 crores mentioned by the
petitioner in its financial bid against the
column of Supporting Staff, added only
Rs.7.80 lakhs which was with regard to
salary of an Office boy. In view of this
error of calculation committed by the
Tender Evaluation Committee, instead of a
total of Rs.6.08 crores, the financial bid
was calculated at Rs.4.76 crores. As a
180 INDIAN LAW REPORTS ALLAHABAD SERIES
significant
part
of
expenditure
on
supporting staff had been omitted to be
taken into consideration, the bid of Rs.4.76
crores was found to be the lowest and
without further reference to the petitioner,
the said financial proposal was forwarded
to the Competent Authority for approval
for award of tender. With the approval of
the Competent Authority, a Letter of
Acceptance was issued on 09.05.2024 by
the respondent no.2. By the said letter the
petitioner was required to confirm the
availability of all key personnel and to
accept, sign and return the duplicate Letter
of Acceptance in acknowledgment thereof
within seven days of issuance of such
letter. It was also requested to furnish an
unconditional Bank Guarantee from a
nationalized bank for an amount equivalent
to 3% of the total contract value, being
Rs.14,30,099/- within 15 days from the
date
of
issuance
of
the
Letter
of
Acceptance.

4. It has been argued by Sri Prashant
Chandra that in view of the timelines
indicated in the Letter of Acceptance, it is
clear that submission of Bank guarantee
was to follow a formal acknowledgment by
signing of the Letter of Acceptance. This
Letter of Acceptance further stipulated that
upon submission of required performance
guarantee and finalization of interview of
key personnel by an expert committee, a
contract agreement would be required to be
signed. In case the Letter of Acceptance
was not signed and returned within seven
days, none of the conditions following the
acceptance of the LoA would be required to
be complied with by the bidder. It has been
argued that a perusal of the RFP would also
clarify that it is only after acceptance of
LoA as provided in Clause 7, that the
subsequent Clauses 8, 9 and 10 would
come into play, which provide the
procedure after acceptance of LoA and
after submission of bank guarantee and
execution of agreement. The RFP is not an
agreement between the parties; nor it is an
offer to the bidders, and as such contractual
relationship will not come into existence
between the respondent and the bidder.
Only after the acceptance of the LoA and
the execution of agreement and completion
of other formalities such as submission of
bank guarantee and interview of key
personnel could it be said that there was a
contract.

5. It has further been argued that the
petitioner upon receipt of the LoA on
09.05.2024, responded by its letter dated
17.05.2024,
indicating
that
the
rates
submitted by the petitioner as per the
format given in the downloaded file would
work out to Rs.6.08 crores and not Rs.4.76
crores which had been mentioned in the
LoA. Request was made to revise the Letter
of
Acceptance
and
incorporate
the
corrections
in
the
calculations.
The
respondent issued a Show Cause Notice on
03.06.2024, even without the LoA having
been accepted and any contract having
been signed between the parties. In such
Show Cause Notice, it was alleged that the
petitioner had not returned the LoA as
acknowledgment of the award of work
within seven days and had also failed to
furnish performance guarantee. Reference
was made to paragraph 3.1 of Section 2 of
the RFP and it was emphasized that the
proposal had to be submitted in two parts
using the format enclosed with the tender.
The petitioners Financial proposal had to
be submitted strictly in accordance with the
format attached in Section 5, and no
additional
items/quantities
should
be
proposed by the consultant and in case they
are, the same shall not be considered for
evaluation/award. The Show Cause Notice
10 All. M/s Theme Engg. Services Pvt. Ltd. Vs. National Highway Authority of India & Anr.
181
dated 03.06.2024, further stated, that the
petitioners financial proposal was duly
considered and it was found that the
petitioner
had
offered
to
work
as
independent engineering consultant for a
sum of Rs.4.76 crores and upwards revision
of financial proposal after determination of
H1 cannot be made. In case the financial
proposal of the petitioner is allowed to be
treated as Rs.6.08 crores then the petitioner
would not be adjudged as H1. The Notice
directed
the
petitioner
to
provide
performance security in terms of Clause
10.4 of the RFP and acknowledge the LoA,
failing which action was proposed to be
taken under Clause 10.5 and other relevant
provisions of the RFP. Also, the N.H.A.I.
had reserved its right to claim damages and
realise any dues/losses and take such other
remedies as were available under the
applicable laws, against the petitioner's
consultancy service.

6. It has been argued by the learned
Senior Counsel for the petitioner that a
perusal of the Show Cause Notice dated
03.06.2024 would show that the Authority
had already taken a decision that the
petitioners financial proposal was for a sum
of Rs.4.76 crores and the petitioner could
not be permitted to alter the same. It was
also clear that the Authority considered the
petitioner to have breached the conditions
of the agreement which infact had not been
entered into at all and had not been
executed between the parties till the date of
filing of the petition. The action proposed
to be taken was under Clause 10.5 of the
RFP regarding deeming of the withdrawal
of the LoA by mutual consent and for
debarring of the petitioner for a period of
up to 2 years was unwarranted.

7. It has further been argued that in
response to the Show Cause Notice, the
petitioner replied on 08.06.2024, that there
was a calculation error and an incorrect
amount of Rs.4.76 crores had been taken as
financial proposal of the petitioner instead
of Rs.6.08 crores. As such, the LoA needed
revision. It was also pointed out that
corrigenda dated 05.02.2024 was not
noticed by the petitioner and it had
uploaded
the
financial
proposal
on
06.02.2024 in accordance with the format
annexed to Section 5 of the RFP. A request
was made to withdraw the Show Cause
Notice, dated 03.06.2024. However, the
N.H.A.I. refused to respond for nearly three
weeks and a second Show Cause Notice
dated 28.06.2024 was issued. It was
reiterated that the financial proposal of the
petitioner had been found to be of Rs.4.76
crores, and it had been accepted as H1 only
on the basis of such proposal. The
petitioner was informed that it was required
by the LoA to sign and return the LoA in
duplicate within seven days and to submit
an unconditional Bank guarantee within 15
days of its issuance. Since the petitioner did
not sign and return the LoA dated
09.05.2024 within seven days and failed to
furnish performance guarantee within 15
days, action under Clause 10.5 of the RFP
and other relevant provisions of the RFP
were proposed to be taken against the
petitioner including Debarment from future
projects of the N.H.A.I., for a period of up
to 2 years. The financial proposal had been
read by the Tender Evaluation Committee
and approved by the Competent Authority
and it could not be altered as the petitioner
would not then be adjudged as H1 bidder.

8. It has been argued that a perusal of
the Show Cause Notice dated 28.06.2024
indicates that a firm decision had already
been taken by the Authority. However, the
petitioner was called upon to appear on
10.07.2024 before the respondent no.2 for
182 INDIAN LAW REPORTS ALLAHABAD SERIES
personal hearing. On 10.07.2024, the
representatives of the petitioner, during the
course of personal hearing demonstrated
that a mistake had been committed by the
Tender
Evaluation
Committee
in
calculating the rates given by the petitioner
in its financial proposal, and the petitioner
was only requesting for correction of the
error in calculation which had occurred on
the part of the Authority, and was not
requesting for a revision of rates. The
petitioner was told that in case a revision is
undertaken, the entire tender will have to
be reconsidered. It might mean that the
petitioner will not be adjudged the
successful bidder and the decision may
have to be altered. The petitioner agreed
that recalculation for the purpose of
correcting the error may be done and in the
process if the tender is to be re-evaluated,
the petitioner gave his consent. The said
consent was given in writing the very next
day on 11.07.2024. After submission of
consent for re-evaluating of the tender,
another letter was sent by the petitioner on
13.07.2024, in which it detailed as to how
the Tender Evaluation Committee had erred
in calculating the financial proposal and it
was again requested that in case any further
clarification is required, the petitioner was
ready to appear in person and explain. The
petitioner pointed out that the bidder is
required to submit its rates in Appendix C3 and thereupon Appendix C-2, summary
of costs is calculated automatically by the
portal and thereafter evaluated by the
Tender Evaluation Committee. The error in
calculation was on the part of the Tender
Evaluation Committee. However, a third
Show Cause Notice was issued to the
petitioner on 26.07.2024 rejecting the
request of the petitioner to correct the
financial proposal from Rs.4.76 crores to
Rs.6.08 crores. It was reiterated that the
Authority had not committed any error in
its calculation, which was in accordance
with the format which was uploaded in
corrigendum.

9. It has been argued that it is apparent
even from the earlier Show Cause Notices
dated 03.06.2024 and 28.06.2024, that a
firm decision had already been taken and
the Show Cause Notice dated 26.07.2024,
reiterated such decision. Moreover, a fresh
ground was taken that all other bidders had
submitted their financial proposal in the
excel sheet provided through corrigendum
uploaded on 05.02.2024 on the portal and
that the petitioner had chosen to offer the
financial proposal amounting to Rs.4.76
crores only to win the contract as H1
Bidder. The request of the petitioner by its
letter dated 13.07.2024 for a personal
hearing to explain the error in calculation
was also granted and it was called for
personal hearing on 31.07.2024. The notice
dated 26.07.2024 did not indicate that the
petitioner could be debarred or blacklisted.
The Show Cause Notice dated 26.07.2024,
only stated that action was proposed
"without prejudice to the Authority to
claim damages and/or realise any dues,
losses or damages, or to exercise any other
remedy from successful bidders, jointly and
severally, which are available under RFP
and the applicable laws."

10. It has further been argued by the
counsel for the petitioner that during the
course of personal hearing on 31.07.2024,
it was impressed upon the petitioner's
representative that since the rates of the
petitioner were calculated by the Tender
Evaluation Committee and Rs.4.76 crores
had been submitted before the Competent
Authority and had also been approved, the
officers involved in miscalculation would
be
embarrassed.
The
petitioner's
representatives were requested to agree to
10 All. M/s Theme Engg. Services Pvt. Ltd. Vs. National Highway Authority of India & Anr.
183
execute the work at the price calculated by
the Tender Evaluation Committee. In view
of the long-standing relationship of the
petitioner
with
the
respondents,
the
petitioner even at the cost of suffering
losses in order to retain goodwill it had
earned over the years, agreed to execute the
works at a loss, and within a week
thereafter
submitted
a
performance
guarantee of Rs.14.30 lakhs and accepted
the LoA on 05.08.2024. The petitioner
requested for fixing a date for signing of
the agreement which request has not been
considered and instead a debarment order
has been issued after about two months of
the issuance of the third Show Cause
Notice dated 26.07.2024, and despite the
petitioner
having
submitted
the
performance guarantee on 05.08.2024. The
impugned order dated 26.09.2024 has been
issued debarring the petitioner for a period
of six months. It has been argued that
before doing so, the petitioner was not put
to notice and no opportunity of hearing was
afforded. It has been argued that reliance
was placed on earlier Show Cause Notices
which had passed into oblivion and which
had recorded that the petitioner had failed
to submit the performance security in the
form of bank guarantee, but thereafter the
performance guarantee was submitted on
05.08.2024, and was accepted and retained
by the respondents.

11. It has been argued that the order
dated 26.09.2024 is unsustainable as it in
the teeth of provisions of Clauses 10.4 and
10.5 of the RFP, which provisions can be
invoked in case of breach of an agreement
and such agreement did not exist as there
was no concluded contract between the
respondents
and
the
petitioner.
The
impugned order dated 26.09.2024 has its
genesis in the breach of terms of the RFP,
which is merely an invitation to apply/bid
for tender and not a work order, and in any
case as per Clause 1.3 of the RFP, it is not
an agreement nor an offer by the authority
to the prospective applicants or to any other
person. The learned counsel for the
petitioner has read out Clause 1.3 of the
RFP, which provides as under: -

Clause 1.3:-"The purpose of the
RFP is to provide interested parties with
information that may be useful to them in
the formation of their proposal pursuant to
the RFP. The RFP includes statements and
assumptions
which
reflect
various
assessments arrived at by the Authority in
relation
to
the
consultancy.
Such
assessments and statements do not purport
to contain all the information that each
applicant may require. The information
contained in this RFP may not be complete,
accurate, adequate or correct. Each
applicant should therefore conduct its own
investigation about the assignment and the
local conditions before submitting the
proposal by paying a visit to the client and
the project site, sending written queries to
the client, before the date and time
specified in the date sheet."

12. It has also been argued that the
Show Cause Notices dated 03.06.2024 and
28.06.2024 are premeditated in as much as
a decision had already been taken and
recorded in the said Show Cause Notices
that the petitioner was at fault by not
accepting the LoA and submitting a
performance
guarantee
within
time
prescribed. The issue regarding there being
a calculation error in the bid amount has
been cursorily rejected without examining
it as requested by the petitioner. The
counsel for the petitioner has placed
reliance upon Oryx fisheries Private
Limited versus Union of India, 2010 (13)
SCC 427; Siemens Ltd versus State of
184 INDIAN LAW REPORTS ALLAHABAD SERIES
Maharashtra, 2006 (12) SCC 33; and
judgement rendered by this Court in Writ-C
No.15363 of 2022: M/S BCITS Private Ltd
versus Purvanchal Vidyut Vitaran Nigam
Ltd; and in Writ-C No.31059 of 2023:
Ramlala versus State of U.P.; to argue that
a Show Cause Notice recording a definite
conclusion of guilt is premeditated and
vitiated on account of unfairness and bias.

13. It has also been argued that the
third Show Cause Notice issued on
26.07.2024 overrides the earlier Show
Cause Notices dated 03.06.2024, and
28.06.2024, and a fresh ground has been
taken in it that the petitioner had not
submitted the bid in the prescribed format,
which had led to the calculation error. This
finding regarding petitioner being at fault
has been recorded without giving any
reasons and without putting the petitioner
to notice.

14. Also, it has been argued that the
impugned order dated 26.09.2024 has been
issued following the Show Cause Notice
dated 26.07.2024, which did not propose
that the petitioner would be debarred or
blacklisted. It has also been argued that
since the order of debarment dated
26.09.2024 has been passed on grounds in
excess of the Show Cause Notice, it is
unsustainable.

15. It has also been argued that the
impugned order of debarment is in blatant
violation of the principles of natural justice
in as much as no opportunity of hearing
was ever provided to the petitioner before
the Competent Authority, i.e. the Chairman
who is the authority to approve an order of
Debarment. The Respondent no.2 alone
gave an opportunity of personal hearing.
Had the petitioner been given opportunity
to place its case before the Competent
Authority, it may have been able to
convince it that the calculation error was on
the
part
of
the
Tender
Evaluation
Committee and the petitioner was not
asking for a revision of rates, but was only
praying that the calculation error be
corrected.

16. It has been argued by the learned
counsel for the petitioner that even
otherwise
the
impugned order
dated
26.09.2024, debarring the petitioner for a
period
of
six
months
is
highly
disproportionate to the alleged breach of
the RFP guidelines. Any decision to
blacklist/ debar, a person should be strictly
within the parameters of law and has to
comply
with
the
principles
of
proportionality. The petitioner has been
subjected to a disproportionate penalty.

It has also been argued that there
is an apparent malice in law in the
debarring the petitioner as the Respondents
even during the pendency of the writ
petition have finalized other Tenders in
which the petitioner had participated and in
which it was found technically qualified
and was seemingly also the lowest bidder.
The petitioner has been declared as nonresponsive in such Tenders during the
pendency of the petition.

17. The learned Senior Counsel for the
petitioner has placed reliance upon a
judgement rendered by this Court in Writ-C
No. 1349 of 2023: M/S Pooja Jaiswal
versus Food Corporation of India, decided
on 20.02.2023, to argue that the order of
blacklisting is disproportionate and in
violation of the principles of rationality as
well as natural justice.

18. The learned Senior Counsel for the
petitioner has also placed reliance upon a
10 All. M/s Theme Engg. Services Pvt. Ltd. Vs. National Highway Authority of India & Anr.
185
judgement rendered by the Supreme Court
in the case of Blue Dreamz Advertising
Private Limited versus Kolkata Municipal
Corporation reported in 2024 SCC OnLine
Supreme Court 1896; to argue that
blacklisting of a firm without reasons
specified amounts to civil death; debarment
is a drastic measure and should not be
invoked for ordinary breaches of contract
and that too without proper intimation. The
counsel for the petitioner has also placed
reliance upon VetIndia Pharmaceuticals
Limited versus State of U.P., 2021 (1) SCC
804; and South Eastern Coalfields Ltd
versus S Kumar's Associates AKM (JV),
reported in 2021 (9) SCC 166.

19. It has also been argued that the
Show Cause Notice must specify the
intention to blacklist and reliance has been
placed upon judgement rendered in UMC
Technologies Private Ltd versus Food
Corporation of India and others, 2021 (2)
SCC 551; and Gorkha Security Services
Vs. Government of NCT of Delhi, 2014 (9)
SCC 731.

20. The learned counsel for the
Respondent, on the other hand, has argued
that after the Letter of Acceptance was
issued on 09.05.2024, requesting the
petitioner to sign and return its duplicate
within
seven
days
and
to
furnish
unconditional bank guarantee of Rs.14.30
lakhs towards performance security within
15 days, the petitioner however wrote to
the authority on 17.05.2024 that it had
quoted Rs.6.08 crores and not Rs.4.76
crores and requested to revise the Letter of
Acceptance accordingly. The respondent
no.2 rejected such request by its letter dated
03.06.2024 and intimated that financial
proposal was submitted in electronic form
as per Clause 3.1 of Section 2 of the RFP
and it had been duly considered, and it was
found that the petitioner had categorically
quoted a sum of Rs.4.76 crores as per
Appendix C1 under Section 5 of the RFP.
Therefore, revision of financial proposal
was not possible and a request was made to
acknowledge
the
LoA
and
submit
performance security in terms of clause
10.4 of the RFP failing which action may
be initiated as per clause 10.5 of the RFP
and other relevant provisions of the RFP. In
response to the said letter, the petitioner
wrote again on 08.06.2024, repeating the
same request for modification of LoA. The
respondent no.2 issued another Show
Cause Notice on 28.06.2024 as it was
entitled to proceed with the actions as
envisaged in the RFP. However, before
taking any action in order to comply with
the principles of natural justice, the
authority issued Show Cause Notice
requiring it to Show Cause as to why action
of debarment of the petitioner (both firms),
from participation in future Tenders for a
period of upto 2 years should not be taken.
The petitioner was given opportunity to
submit its written explanation within 15
days of receipt of Show Cause Notice. The
petitioner desired for an opportunity of
personal hearing and the same was also
given on 10.07.2024, and in case the
petitioner failed to reply to the Show Cause
Notice within the said period of 15 days it
would be presumed that it had nothing to
say in the matter, and the N.H.A.I. would
be entitled to move ahead in terms of
clause 10.5 of the RFP for debarment of the
petitioner (both firms), namely Theme
Engineering Services Private Ltd and M/s
Ishita Infosolutions Private Ltd, for future
projects for a period of up to two years.

21. It has been argued on behalf of the
respondents that after personal hearing was
given to the petitioner on 10.07.2024, the
petitioner again wrote on 11.07.2024 and
186 INDIAN LAW REPORTS ALLAHABAD SERIES
13.07.2024, repeating the same request for
upward revision of the LoA, and it also
sought another personal hearing to explain
the matter. The Respondent No.2 issued
issued another Show Cause Notice on
26.07.2024, indicating that the submissions
made by the petitioner in its letters dated
11.07.2024, and 13.07.2024 were mere
repetition of its previous submissions,
which had already been replied to after due
examination. However, the petitioner was
asked to appear for personal hearing again
on 31.07.2024. It has been argued that
since the Letter of Acceptance was issued
on 09.05.2024, the last date for submission
of performance security was 24.05.2024.
As per Clause 10.4 of the RFP, there was a
provision for extension of the period for
another 15 days i.e. upto 08.06.2024, for
submission of performance security. Also,
damages to be levied on the petitioner for
delay
in
submission
of
performance
security were calculated at Rs.7,15,050/-.
The petitioner did not respond for almost
two months. After two months of expiry of
the permissible period, the petitioner wrote
a
letter
on
05.08.2024,
submitting
performance security in the form of Bank
guarantee amounting to Rs.14,30,099/-
only and returned the signed LoA in
duplicate and took the plea that due to
some unavoidable circumstances, there was
a delay in submission of Bank guarantee
for performance security and requested that
the delay be condoned.

22. It has been argued that since the
Letter of Acceptance was issued on
09.05.2024, the petitioner had to submit
performance
guarantee
latest
by
24.05.2024, which could have been further
extended up to 08.06.2024 on request and
on willingness to pay damages, however,
the petitioner submitted the performance
security on 05.08.2024 with the delay of 58
days and without any prior permission for
extension of time as per Clause 10.4 of the
RFP. As per Clauses 10.4 and 10.5 of the
RFP, if the bidder fails to submit
performance
security
within
extended
period of submission, the agreement shall
be deemed to be terminated on expiry of
the additional 15 days time period and the
Authority may take action to debar such
firm for future projects for a period of one
to two years. In case of the petitioner, a
lenient view has been taken and the
petitioner has been debarred only for a
period of six months. The petitioner had
been given Show Cause Notices on
03.06.2024, 28.06.2024 and again on
26.07.2024. Personal hearing was also
given to the petitioner on 10.07.2024 and
again on 31.07.2024.

23.
The
Debarment
order
has
thereafter been passed only on 26.09.2024
taking into account clauses 10.4 and 10.5 of
the RFP. It is settled law that till such time
that the contract/agreement is signed
between the parties, the RFP would hold
the field and as such in the absence of
Contract, once the entire procedure of
allotting the Tender was done in pursuance
of the RFP, the proposed action of
Debarment has also been passed in terms of
the relevant clauses of the RFP. It has also
been argued that the petitioner had chosen
to quote only Rs.4.76 crores in its financial
proposal to win the bid. After it was
declared
H1
bidder
and
Letter
of
Acceptance was issued on 09.05.2024, the
petitioner chose to escalate the financial
proposal and prayed for a revision which
was impermissible. Moreover, based on the
technical proposal and financial proposal of
five shortlisted firms, the petitioners rate
being the lowest he was declared H1 bidder
if
upward
revision
was
allowed
as
10 All. M/s Theme Engg. Services Pvt. Ltd. Vs. National Highway Authority of India & Anr.
187
requested by the petitioner it would no
longer be adjudged the H1 bidder.

24. It has further been argued that the
petitioner's claim that the component of
supporting staff was not added by the
Tender Evaluation Committee is wrong.
The
petitioner
itself
had
submitted
Appendix C1 showing Rs.4.76 crores.
There is no provision to edit or change the
financial proposal once submitted. The
letter dated 03.06.2024, informed the
petitioner that correction is not permissible.
The bidder is required to submit the
proposal in two parts using the formats
enclosed with the RFP. The financial
proposal had to be submitted only in
electronic
format,
no
additional
items/quantities other than those specified
in the format could be proposed by the
consultants, and in case they were so
proposed they would not be considered for
evaluation/award. Since the petitioner had
offered Rs.4.76 crores its bid had been
evaluated for award as per Clauses 5.8 and
5.9 of Section 2 of the RFP. It was
adjudged H1 bidder based on such financial
proposal. It has also been argued that a
successful bidder is required to submit
performance security in terms of Clauses
10.1
and
10.4
of
the
RFP
after
acknowledging the LoA however, the
petitioner repeatedly requested upward
revision of its financial proposal and did
not seek any extension of time in terms of
Clause 10.4 of the RFP for submission of
performance security.

25. In response to the argument made
by the learned counsel for the respondent
that the petitioner has not challenged the
Show Cause Notices dated 03.06.2024,
28.06.2024, and 26.07.2024, the counsel
for the petitioner has argued that the
petitioner is not aggrieved by the Show
Cause Notices, the petitioner is aggrieved
only by the debarment order dated
26.09.2024. The Show Cause Notices have
merged in the debarment order. The
debarment order is based on the Show
Cause Notices, which are themselves
defective, and it has also been argued on
the basis of judgement rendered in the case
of State of Punjab versus Davinder Pal
Singh Bhullar, 2011 (14) SCC 770, that if
the Show Cause Notice is defective then all
subsequent proceedings would fail relying
upon the Latin maxim "sublato fundamento
cadit opus".

26. Having heard the learned counsel
for the parties at length, we had initially
passed an order on 30.09.2024, which is
being quoted here in below: -

1. Heard Sri Prashant Chandra,
learned Senior Advocate assisted by Sri
Anshuman Singh, learned counsel for the
petitioner and Sri Sarvesh Kumar Dubey,
learned
counsel
appearing
for
the
respondent.

2. This writ petition has been
filed with the following main prayers:

"(a) issue a writ of certiorari or a
writ, order or direction in the nature of
certiorari quashing the impugned order
dated
26.09.2024
passed
by
the
Respondents contained in Annexure No. 1
to this writ petition.

(b) issue a writ of mandamus or a
writ, order or direction in the nature of
mandamus commanding the Respondents
not to give effect to the order dated
26.09.2024 passed by the Respondents
contained in Annexure No.1 to this writ
petition and not to treat the petitioner as
debarred from participating in future
tenders and to allow the petitioner to
participate in all forthcoming tenders
188 INDIAN LAW REPORTS ALLAHABAD SERIES
ignoring
the
impugned
order
dated
26.09.2024."

3. It has been submitted by
learned counsel for the petitioner that the
petitioner is aggrieved by its blacklisting
because when there was a disagreement
with regard to the price quoted by the
petitioner in its financial bid and the
respondents
were
insisting
that
the
petitioner had quoted only Rupees 4.76
Crores whereas the petitioner was insisting
that there is a calculation error and Rupees
6.08 Crores were quoted by it. The
petitioner had agreed to work on lessor
price on Rupees 4.76 Crores only to
continue to do the work of NHAI amicably
for other contracts as well. However, the
petitioner
submitted
a
performance
guarantee they did not correspond for a
period of two months and later on issued a
debarment
order
straightway
to
the
petitioner without issuing the show cause
notice and also rejected the proposal of the
petitioner to carry out the work contract
even for a lessor price of Rupees 4.76
Crores.

4. Learned counsel for the
petitioner has also pointed out that the
bank guarantee is still with the NHAI,
which has not been returned, which was
submitted after the petitioner agreed to
work on a lessor price.

5. Learned counsel for the
petitioner has also placed reliance upon an
order passed by this Court in Writ-C No.
1349 of 2023, 'M/S Pooja Jaiswal A
Proprietorship
Form
Lko.
Vs.
Food
Corporation of India, New Delhi' and
paragraph 26 onwards where this Court
had
dealt
with
the
doctrine
of
proportionality.

6. Sri Sarvesh Kumar Dubey,
learned counsel for the respondent on the
basis of pleadings on record says that at
page 85 which is an order dated
03.06.2024 and at page 89 which is an
order dated 08.06.2024 which have not
been challenged by the petitioner.

7. Learned counsel for the
petitioner says that both such letters are
only show cause notices. The petitioner was
given a personal hearing and the petitioner
has availed the opportunity on 10.07.2024
and 31.07.2024 and it was orally agreed
upon by the parties including the petitioner
that he will take into account the
calculation even if made wrongly by the
respondents and is ready to work for that
particular tender for Rupees 4.76 Crores as
calculated by the respondents.

8. Learned counsel for the
respondents shall seek specific instructions
from the respondents with regard to
petitioner's contention that he is willing to
work even at a lessor price of Rupees 4.76
Crores in case he is allowed to continue to
work as contractor and not debarred as it
would effect it financially in other contracts
as well.

9. Put up this case tomorrow i.e.
on 01.10.2024, as fresh.

27. When the matter was taken up on
01.10.2024, the learned counsel for the
respondents appeared and informed this
court that the respondents have declined to
allow the petitioner to work, emphasising
that the petitioner had committed default by
not submitting the performance guarantee
in time. The counsel for the Respondent
also took time to file a counter affidavit
within 24 hours and the learned counsel for
petitioner also prayed for time for filing
rejoinder affidavit to the same and the
matter was posted on 03.10.2024 by the
Court (as 02.10.2024 was a National
holiday for Gandhi Jayanti). In the
meantime, two tenders of the respondents
were opened and the petitioner was
10 All. M/s Theme Engg. Services Pvt. Ltd. Vs. National Highway Authority of India & Anr.
189
declared as non-responsive in view of the
debarment order dated 26.10.2024.

28. It has been argued by the Senior
Counsel appearing for the petitioner that
the respondent no.2 was interested in
ousting the petitioner for the purpose of
awarding pending tenders to parties of their
choice. It has further been argued by the
learned counsel for the petitioner that
against the statements made by the
Respondent no.2 in the Show Cause Notice
dated 26.07.2024, the counter affidavit
falsely claimed that the petitioner had filed
a financial proposal on the basis of
corrigendum issued by the respondents on
05.02.2024. Also, the learned counsel for
the Respondent had pointed out that no
prayer was made in the writ petition to
allow the petitioner to work on the reduced
price for which bank guarantee had already
been given, ignoring the pleadings on
record in Para 31 & 32 of the writ petition.

29. On conclusion of arguments we
had reserved the judgement on 03.10.2024,
and granted an interim stay of operation of
the debarment order dated 26.09.2024 till
delivery of judgement. On careful perusal
of the record, we have found several
discrepancies in the case set up by the
learned counsel for the petitioner. M/s
Theme Engineering services Private Ltd
had applied for the tender in association
with M/s Ishita Info Solutions Services
Private Ltd. The writ petition has been filed
on behalf of the two firms by their
authorised
representative,
Mr
Sumeet
Asthana. The entire pleadings on record
and the arguments made by the learned
Senior Counsel appearing on behalf of the
petitioner is with respect to filling up of the
Financial Proposal on the electronic format
as per clause 3.1 given in Appendix C-2
and C -3 of Section 2 of the RFP on the
basis of which the Tender Evaluation
Committee had to calculate the actual costs
of supervision and monitoring by the
consultant and determine the final financial
proposal of a Bidder on its own in
Appendix C-1 of such format.

30. However, while going through the
contents of the initial Show Cause Notice
dated 03.06.2024, we have found in
paragraph 8 thereof a reference having
been made to a copy of the financial
proposal made by the petitioner, Appendix
C-1 being enclosed to such notice.