# CARETEL INFOTECH LTD v. HINDUSTAN PETROLEUM CORPORATION LIMITED & ORS

- **Citation:** [2019] 6 S.C.R. 950
- **Court:** Supreme Court of India
- **Decided:** 2019-04-09
- **Case number:** Civil Appeal No. 3588 of 2019
- **Bench:** S.A. Bobde, Sanjay Kishan Kaul
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/caretel-infotech-ltd-v-hindustan-petroleum-corporation-limited-ors-33944
- **Pages:** 22

## Headnote

Tender: Tender contracts - e-public tender floated by
respondent no. 1 for setting up call centres - Declaration to be
made in terms of clause 20(ii), if the bidder had been banned or
black listed or delisted or holiday listed - Issuance of show cause
notice to the appellant, one of the bidder, for blacklisting on
allegation of furnishing false information and bid documents in
respect of another tender - Notice was issued after floating of the
tender by respondent no. 1 but before submission of the bid -
Appellant declared L-1 and awarded letter of acceptance -
Respondent No.3 declared L-2 - Writ petition by Respondent No.3
challenging declaration of appellant as L-1 - Subsequently, purchase order issued in favour of appellant - However, next day itself, order passed blacklisting and debarring the appellant from
participating in any tender process for two years - Respondent
No.3 having become aware of the factum of blacklisting of the
appellant amended the petition to incorporate the said fact - Writ
Petition allowed by the High Court - Sustainability of - Held: Not
sustainable - Impugned order misread the blacklisting clause - Show
cause notice itself did not amount to the process of blacklisting
having already been initiated - Appellant would not be disentitled
to contract - As regards, the effect of the blacklisting order, the
ban would have prospective effect, for future business dealings -
It would have no application to the tender awarded - As regards,
the business continuity certificate doubted by respondent no. 3,
the High Court in the course of inquiry expressed its doubts over
the certificate - Such a course of action was not permissible -
Directions of the High Court to take appropriate decisions, really
amounts to directing respondent no.1 to breach its contract with
the appellant - No such direction ought to have been issued to
compel a breach of the contract by the appellant.
[2019] 6 S.C.R. 950
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Constitution of India: Art. 226 - Writ proceedings under -
Scrutiny of tenders - Permissibility - Held: Normally parties would
be governed by their contracts and the tender terms, and no writ
would be maintainable u/Art. 226 - In view of Government and
Public Sector Enterprises venturing into economic activities, the
Court found it appropriate to build in certain checks and balances
of fairness in procedure - This approach has given rise to scrutiny
of tenders in writ proceedings - Every small or big tender sought to
be challenged, affects the efficacy of commercial activities of the
public sectors, in competition with the private sector -
Unnecessary, close scrutiny of minute details, contrary to the view
of the tendering authority, makes awarding of contracts by
Government and Public Sectors a cumbersome exercise -
Promptness and efficiency levels in private contracts, often tend to
make tenders of public sector a non-competitive exercise.
 Deeds and documents: Tender - Interpretation of - Held:
Author of the document is the best person to understand and
appreciate its requirements - On, facts, view of respondent No.1company which floated the tender, must prevail - Respondent No.1
itself, appreciative of the wording of clause 20 and the format, took
a considered view - Respondent No.3, one of the bidder cannot
compel its own interpretation of the contract to be thrust on
respondent No.1, or ask the court to compel respondent No.1 to
accept that interpretation - It is possible that the author of the
tender may give an interpretation that is not acceptable to the court,
but that itself would not be a reason for interfering with the
interpretation given.
Allowing the appeal, the Court
HELD: 1.1 Both the aspects-the interpretation of clause
20 read with the format, as well as with the effect of the show
cause notice is concurred with. Clause 20 does provide for four
eventualities. The instant case is not one where on the date of
submission of the tender the appellant had been b

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CARETEL INFOTECH LTD.
v.
HINDUSTAN PETROLEUM CORPORATION LIMITED & ORS.
(Civil Appeal No. 3588 of 2019)
APRIL 09, 2019
[S.A. BOBDE AND SANJAY KISHAN KAUL, JJ.]
Tender: Tender contracts - e-public tender floated by
respondent no. 1 for setting up call centres - Declaration to be
made in terms of clause 20(ii), if the bidder had been banned or
black listed or delisted or holiday listed - Issuance of show cause
notice to the appellant, one of the bidder, for blacklisting on
allegation of furnishing false information and bid documents in
respect of another tender - Notice was issued after floating of the
tender by respondent no. 1 but before submission of the bid -
Appellant declared L-1 and awarded letter of acceptance -
Respondent No.3 declared L-2 - Writ petition by Respondent No.3
challenging declaration of appellant as L-1 - Subsequently, purchase order issued in favour of appellant - However, next day itself, order passed blacklisting and debarring the appellant from
participating in any tender process for two years - Respondent
No.3 having become aware of the factum of blacklisting of the
appellant amended the petition to incorporate the said fact - Writ
Petition allowed by the High Court - Sustainability of - Held: Not
sustainable - Impugned order misread the blacklisting clause - Show
cause notice itself did not amount to the process of blacklisting
having already been initiated - Appellant would not be disentitled
to contract - As regards, the effect of the blacklisting order, the
ban would have prospective effect, for future business dealings -
It would have no application to the tender awarded - As regards,
the business continuity certificate doubted by respondent no. 3,
the High Court in the course of inquiry expressed its doubts over
the certificate - Such a course of action was not permissible -
Directions of the High Court to take appropriate decisions, really
amounts to directing respondent no.1 to breach its contract with
the appellant - No such direction ought to have been issued to
compel a breach of the contract by the appellant.
[2019] 6 S.C.R. 950
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Constitution of India: Art. 226 - Writ proceedings under -
Scrutiny of tenders - Permissibility - Held: Normally parties would
be governed by their contracts and the tender terms, and no writ
would be maintainable u/Art. 226 - In view of Government and
Public Sector Enterprises venturing into economic activities, the
Court found it appropriate to build in certain checks and balances
of fairness in procedure - This approach has given rise to scrutiny
of tenders in writ proceedings - Every small or big tender sought to
be challenged, affects the efficacy of commercial activities of the
public sectors, in competition with the private sector -
Unnecessary, close scrutiny of minute details, contrary to the view
of the tendering authority, makes awarding of contracts by
Government and Public Sectors a cumbersome exercise -
Promptness and efficiency levels in private contracts, often tend to
make tenders of public sector a non-competitive exercise.
 Deeds and documents: Tender - Interpretation of - Held:
Author of the document is the best person to understand and
appreciate its requirements - On, facts, view of respondent No.1company which floated the tender, must prevail - Respondent No.1
itself, appreciative of the wording of clause 20 and the format, took
a considered view - Respondent No.3, one of the bidder cannot
compel its own interpretation of the contract to be thrust on
respondent No.1, or ask the court to compel respondent No.1 to
accept that interpretation - It is possible that the author of the
tender may give an interpretation that is not acceptable to the court,
but that itself would not be a reason for interfering with the
interpretation given.
Allowing the appeal, the Court
HELD: 1.1 Both the aspects-the interpretation of clause
20 read with the format, as well as with the effect of the show
cause notice is concurred with. Clause 20 does provide for four
eventualities. The instant case is not one where on the date of
submission of the tender the appellant had been banned,
blacklisted or put on holiday list. The declaration to be given by
the bidder is specified in clause 20(ii), which deals with the first
three aspects. The format enclosed with the tender documents
also refers only to these three eventualities. It is not a case where
no specific format is provided, where possibly it could have been
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM
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contended that the disclosure has to be in respect of all the four
aspects. The format having been provided, if initiation of
blacklisting was to be specified, then that ought to have been
included in the format. It cannot be said that the undertaking by
the appellant made it the bounden duty of the appellant to disclose
the aspect of a show cause notice for blacklisting. It is said so as
there is a specific clause with the specific format provided for,
requiring disclosures, as per the same. [Paras 20, 21][963-G-H;
964-A-C]
1.2 It may be possible to contend that the format is not
correctly made. But then, that is the problem of the framing of
the format by respondent No.1. It appears that respondent No.1
also, faced with the factual situation, took a considered view that
since clause 20(i) provided for the four eventualities, while the
format did not provide for it, the appellant could not be penalised.
May be, for future the format would require an appropriate
modification. [Para 22][964-D-E]
1.3 In the undertaking submitted by the appellant all it is
stated is that the information furnished in the bid and attachments
are true to the best of the knowledge and belief of the bidder. In
case any false or incorrect information is submitted, the bid can
be rejected. It cannot be said that there is any false information
given by the appellant as to violate the stated condition 4 of clause
20(i). Another angle of the same issue, i.e., the integrity pact
provided for in clause 20(iii) with the format thereof, a detailed
one. The integrity pack provided that the "parties shall make
certain commitments to each other in regard to ensuring
transparency and fair dealing in the procurement activities of the
Corporation." The duly signed integrity pact is an essential
condition for a valid bid. This clause, thus, deals with the
transparency and fair dealing of the activities carried out under
the tender were it to be awarded insofar as the procurement
activities are concerned. Once again, this would not have any
relevance to the stated fourth part of clause 20(i). [Para 23]
[964-E-H]
1.4 Blacklisting has very serious consequences. A show
cause notice may result in blacklisting or may not result in
blacklisting. The mere show cause notice being issued, to visit
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such a severe consequence on a bidder, may be difficult to
sustain. [Para 24][965-A-B]
1.5 The case of the appellant is further fortified by even
the language used in the show cause notice. The show cause
notice itself, in the last paragraph, calls upon the appellant to
show cause as to why suitable action for blacklisting "should not
be initiated." Pursuant to the response of the appellant, the next
stage would have been the initiation of the blacklisting process,
if the explanation was not found satisfactory. The term used in
the blacklisting clause 20(i), on the other hand, talks about a
situation where blacklisting has already been initiated. Plain
English words used must be given their ordinary grammatical
meaning. It cannot be said that the show cause notice dated
5.12.2017 itself amounted to the process of blacklisting having
already been initiated. On both these accounts it cannot be said
that the appellant would be disentitled to the contract. Insofar
as the effect of the blacklisting order dated 22.2.2018 is
concerned, in the eventuality of respondent No.1 considering it
proper to initiate certain action, that would have to be in terms
of the guidelines for blacklisting of HPCL. The guidelines itself
show that the ban would have prospective effect, for future
business dealings. Thus, the same would have no application to
the tender awarded. [Paras 25-28][965-B-F]
1.6 Clause 8, dealing with business continuity, requires the
successful bidder to submit the transition plan to migrate to new
platform and facility with zero disruption of services, with respect
to four aspects provided. In terms of clause 10(g), valid ISO
Certificate for security and for business continuity have to be
provided. It is not in question that the appellant did submit a
certificate of business continuity, as obtained from respondent
No.2. Respondent No.3 has sought to cast doubts on this
business certificates, and the Division Bench, in terms of the
impugned order, also embarked on a course of inquiry into this
certificate by calling upon parties to file their affidavits and has
thereafter taken a call to express its own doubts over the
certificate. Such a course of action was not permissible.
[Paras 29-30][964-G-H; 966-A-B]
1.7 There are serious disputes relating to the allegations
made by respondent No.3, which are rebutted by the appellant.
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM
CORPORATION LTD. & ORS.
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Opportunity had to be afforded to cross-examine the deponents
who had filed affidavits. This would really not be possible in writ
proceedings and could have only been determined in suit
proceedings. There cannot always be a shortcut, through a
process of writ proceedings under Article 226 of the
Constitution of India, when such disputes exist. [Para 31]
[966-C-D]
1.8 If respondent No.1 itself had doubts on the
certificate, that would have been another matter. This is not so
as is apparent from the affidavit filed by respondent No.1. In any
case, this aspect ought to have been left to the wisdom of
respondent No.1, rather than the Court embarking on the course
of action it followed, as if it was sitting in appeal over a decision
of respondent No.1. If respondent No.1 itself has any doubts on
these certificates, nothing prevented, nor still prevents
respondent No.1 from looking into this aspect. [Para 32]
[966-E-F]
1.9 The contention of the counsel for respondent No.3
that the interim order dated 7.1.2019 mandated respondent No.1
to enquire into all these aspects, in pursuance of the directions
contained in the impugned order cannot be accepted. All that
was observed was that respondent No.1 "may" take a decision,
but the interdict was against implementing it. Respondent No.1
in its wisdom, as submitted has chosen not to proceed further,
after issuance of notice to the appellant and has decided to await
the decision of this Court. It was not really within the domain of
the High Court to have issued the direction, as it sought to do.
The operative directions of the High Court to take appropriate
decisions, in the conspectus of the observations made, really
amounts to directing respondent No.1 to breach its contract with
the appellant. No such direction ought to have been issued to
compel a breach of the contract by the appellant. Thus, the
impugned order cannot be sustained even on this ground.
[Paras 33-35][966-G-H; 967-A-C]
1.10 Normally parties would be governed by their
contracts and the tender terms, and really no writ would be
maintainable under Article 226 of the Constitution. In view of
Government and Public Sector Enterprises venturing into
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economic activities, this Court found it appropriate to build in
certain checks and balances of fairness in procedure. It is this
approach which has given rise to scrutiny of tenders in writ
proceedings under Article 226 of the Constitution. It, however,
appears that the window has been opened too wide as almost
every small or big tender is now sought to be challenged in writ
proceedings almost as a matter of routine. This in turn, affects
the efficacy of commercial activities of the public sectors, which
may be in competition with the private sector. This could hardly
have been the objective in mind. An unnecessary, close scrutiny
of minute details, contrary to the view of the tendering authority,
makes awarding of contracts by Government and Public Sectors
a cumbersome exercise, with long drawn out litigation at the
threshold. The private sector is competing often in the same field.
Promptness and efficiency levels in private contracts, thus, often
tend to make the tenders of the public sector a non-competitive
exercise. This works to a great disadvantage to the Government
and the Public Sector. [Para 36][967-D-H]
1.11 The author of the document is the best person to
understand and appreciate its requirements. In the facts of the
instant case, the view, on interpreting the tender documents, of
respondent No.1 must prevail. Respondent No.1 itself,
appreciative of the wording of clause 20 and the format, has taken
a considered view. Respondent No.3 cannot compel its own
interpretation of the contract to be thrust on respondent No.1,
or ask the Court to compel respondent No.1 to accept that
interpretation. It is possible that the author of the tender may
give an interpretation that is not acceptable to the Constitutional
Court, but that itself would not be a reason for interfering with
the interpretation given. The endeavours of courts to give their
own interpretation to contracts, more specifically tender terms,
at the behest of a third party competing for the tender, rather
than what is propounded by the party framing the tender is
emphasised. The object cannot be that in every contract, where
some parties would lose out, they should get the opportunity to
somehow pick holes, to disqualify the successful parties, on
grounds on which even the party floating the tender finds no merit.
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The observations made should be understood in the larger
context, so as to avoid situations similar to the one found in the
impugned order. [Paras 38, 42-43][968-C-E; 971-A-B]
Roshina T v. Abdul Azeez K.T. & Ors. (2019) 2 SCC
329; Afcons Infrastructure Limited v. Nagpur Metro Rail
Corporation Limited & Anr. (2016) 16 SCC 818 :
[2016] 3 SCR 551 ; Nabha Power Limited (NPL) v.
Punjab State Power Corporation Limited (PSPCL) &
Anr. (2018) 11 SCC 508; Satya Jain (Dead) Through
LRs. and Ors. v. Anis Ahmed Rushdie (Dead) Through
LRs. & Ors. (2013) 8 SCC 131 : [2013] 3 SCR 319 -
referred to.
Attorney General of Belize v. Belize Telecom Ltd.
(2009) 1 WLR 1988 (PC) ; Moorcock (1889) LR 14
PD 64 (CA) - referred to.
Case Law Reference
(2019) 2 SCC 329
 referred to
Para 31
[2016] 3 SCR 551
 referred to
Para 37
(2018) 11 SCC 508
 referred to
 Para 39
[2013] 3 SCR 319
 referred to
Para 40
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3588
of 2019
From the Judgment and Order dated 21-12-2018 of the High Court
of Judicature at Bombay in WP No. 608/2018.
Shyam Diwan, Sr. Adv., Shekhar Raj Sharma, S. Sagar, Ms. Vibha
Mahajan Seth and Jinendra Jain, Advs. for the Appellant.
K.V. Viswanathan, Sr. Adv., Aditya Kumar Choudhary, Arjun D.
Singh, Amit Kumar, R. Venkataraman, Rajesh Singh Chauhan, Parijat
Sinha, Ms. Reshmi Rea Sinha, Gaurav Ghosh, Rudra Dutta, Gopal Jain,
Sanjay Kumar Visen, Advs. for the Respondent.
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The Judgment of the Court was delivered by
SANJAY KISHAN KAUL, J.
1. Leave granted.
2. Hindustan Petroleum Corporation Limited (respondent No.1)
floated an e-public tender on 4.12.2017 for setting up call centres for
receiving, recording and replying to information enquiries and complaints
from LPG customers of IOC/HPC/BPC. The appellant participated in
the tender. Clause 20 of the tender reads as under:
"20. Black List/Ban/Holiday List
i. Bids received from parties who have been banned/blacklisted/
put on holiday list or parties in respect of whom the action for
blacklisting and holiday listing has been initiated by HPCL/any
Government/Quasi Government Agencies or PSUs, shall not be
considered for either evaluation or for award of work. Offer of
Vendor who has not submitted declaration on black listed or holiday listed shall be considered as non-responsive and offer shall
be rejected.
ii. The bidder shall give a written declaration indicating that they
are not on holiday list/banned/blacklisted as on due date of this
tender."
3. The appellant was issued a show cause notice on 5.12.2017 in
respect of another tender, i.e., after floating of the tender, but before
submitting of the bid, for blacklisting on the allegation of furnishing false
information and bid documents, submitted for providing Kisan Call Centre Services to the Department of Agriculture, Cooperation & Farmers
Welfare, Ministry of Agriculture & Farmers Welfare, Government of
India.
4. The show cause notice alleged that on questions being raised
about the correctness of information furnished by the appellant in the bid
documents regarding running of call centres at different locations, an
inquiry was made through officers and despite further information being
sought, the same was not forthcoming. The operative portion of the
show cause notice reads as under:
 "Accordingly, in the above circumstances a situation has,
prima facie, emerged that M/s Caretel Infotech Pvt. Ltd. has
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endeavoured to procure the above tender by providing false,
misleading and wrong information. Therefore, the Department
hereby issues notice to M/s Caretel Infotech Pvt. Ltd. to show
cause as to why suitable action for blacklisting the firm (M/s.
Caretel Infotech Pvt. Ltd.) should not be initiated. You are
requested to clarify your position within 7 (seven) days from the
date of issue of this letter. Response received after expiry of the
provided time limit will not be entertained."
 (emphasis supplied)
5. The appellant submitted the bid in respect of the e-tender on
19.12.2017. In terms of clause 20 extracted aforesaid, a format had
been provided for the declaration to be made, which is as under:
"DECLARATION NON BLACKLISTED/NON
BANNED/NON HOLIDAY LISTED PARTY
WE CONFIRM THAT WE HAVE NOT BEEN BANNED
OR BLACK LISTED OR DELISTED OR HOLIDAY
LISTED BY ANY GOVERNMENT OR QUASI
GOVERNMENT AGENCIES OR PUBLIC SECTOR
UNDERTAKINGS
Date: __________
Name of Tenderer: _____________
Place: _________
Signature & Seal
of Tenderer
 : _____________
Note: If a bidder has been banned by any Government or
Quasi
Government Agencies
or
Public Sector
Undertakings, this fact must be clearly stated with details.
If this declaration is not given along with the UNPRICED
Bid, the tender will be rejected as non-responsive."
The appellant submitted the declaration in terms aforesaid, i.e.,
stating that the appellant had not been blacklisted by any Government or
Quasi Government Agency or Public Sector Undertakings.
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6. The appellant also submitted an undertaking, once again, in the
prescribed form. The format of undertaking is as under:
"ON LETTER HEAD
Undertaking by the bidder
I/we hereby undertake that the entire information furnished/given
to you in our bid and attachments are true to the best of our knowledge
and belief and nothing therein is false.
I/We further undertake, that if it is found during the tender stage
(before accepting our bid/placement of Purchase Order by HPCL) that
any information or document furnished/submitted by us is false or
incorrect, then we agree that HPCL shall be free to reject our tender/
bid. If the same is found to be false or incorrect during any stage after
accepting of our bid/placement of Purchase Order, then HPCL shall
have the right to summarily cancel our tender and procure the balance
quantity from any alternate source. HPCL shall have the right to recover
the differential amount between the rates of our contract and the rates
at which HPCL is compelled to procure from the alternate source, if the
latter rate is higher. To this effect, the recovery can be made by HPCL
by encashing any bank guarantee that we may have submitted or from
any pending bills under this contract or any other contract with HPCL.
Further HPCL shall be at liberty to take any appropriate action as deemed
fit in such an eventuality.
I/we further undertake as and when called upon by Hindustan
Petroleum Corporation Limited, to produce, for its inspection, original(s)
of the document(s) of which copies have been annexed hereto.
Date: __________
Name of Bidder: _____________
Place: _________
Signature & Seal
of Bidder
: _____________"
7. Respondent No.1 evaluated the technical and financial bids
and declared the appellant as L-1 and respondent No.3 as L-2 on
16.1.2018. The letter of acceptance of the tender awarded to the
appellant was issued on 12.2.2018 for a value of Rs.791 lakh basic for
services to be rendered for a period of two years.
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM
CORPORATION LID. & ORS. [SANJAY KISHAN KAUL, J.]
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8. Respondent No.3 filed a writ petition in the Bombay High Court
on 17.2.2018, assailing the declaration of the appellant as L-1. The
purchase order in favour of the appellant confirming the terms of
contract and mode of payment was issued on 21.2.2018. One day later,
on 22.2.2018, the Ministry of Agriculture and Farmers Welfare passed
an order blacklisting and debarring the appellant from participating in
any tender process of the Government of India, Ministry of Agriculture
and Farmers' Welfare for two years with effect from the date of issue
of the order. This order was assailed by the appellant by filing a writ
petition before the Delhi High Court, which was pleased to issue notice
on 9.3.2018, and we are informed that subsequently, on 12.3.2019, that
petition was dismissed and a Letters Patent Appeal filed against the
same is pending.
9. Respondent No.3, having become aware of the factum of
blacklisting of the appellant amended the petition to incorporate the said
fact. The writ petition was allowed by the impugned order of the
Division Bench dated 21.12.2018.
10. The decision of the High Court is predicated on two facts -
firstly the non-disclosure of the factum of the show cause notice issued
to the appellant amounted to violation of the undertaking. Linked to this
issue is that clause 20(iii) of the tender provided for an integrity pact
"ensuring transparency and fair dealing" and that integrity pact had been
duly signed and submitted by the appellant. Secondly, the Division Bench
doubted the compliance, by the appellant, of clause 8 read with clause
10(g) of Section 4 of the tender. This controversy pertains to the clause
dealing with the business continuity and the requirement of submitting a
valid ISO certificate for the purpose of securing the tender. The relevant clauses read as under:
"8. Business Continuity
OMCs currently have an agreement for inbound calls with a service provider based in different Regions. The successful bidder
has to submit the transition plan to migrate to new platform and
facility with "ZERO" disruption of services with respect to following areas:
a) Toll-free services.
b) IVRS based call handling.
c) Diversion of call traffic at the successful bidder's premises.
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d) Trained Operators at the time of Go-Live date."
....
....
....
....
....
"10. Other Mandatory Requirements:
xxxx
xxxx
xxxx
xxxx
xxxx
g) Valid ISO Certification 27001 for security and ISO 2301 for
Business Continuity."
It is not disputed that the certificate of registration submitted by
the appellant was issued by Elite Certifications Pvt. Ltd., respondent
No.2. However, respondent No.3 sought to throw doubts on the
certificate and the High Court found reason to believe the same even
though in the counter affidavit filed by respondent No.1 a stand was
taken to the contrary.
11. On 7.1.2019, notice was issued on the present appeal filed
against the impugned order and an interim order was passed in the
following terms:
 "In the meantime, Respondent No.1 (HPCL) may take a
decision but not implement it. The petitioner may continue under
the contract until further orders."
The result of the same is that the appellant has continued to give
services under the contract now for almost more than thirteen (13) months
out of the contract for two years and respondent No.1, though is stated
to have issued a notice to the appellant in pursuance of the directions
contained in the impugned order, has deemed it fit not to proceed with
the inquiry and to await the verdict in the present appeal.
12. We have heard Mr. Shyam Diwan, learned senior counsel for
the appellant, Mr. K.V. Vishwanathan, learned senior counsel for
respondent No.3 and Mr. Parijat Sinha, learned counsel for respondent
No.1. The submissions on the two aspects advanced by learned
counsel for the parties and our findings are recorded hereinafter.
Blacklisting:
13. Mr. Shyam Diwan, learned senior counsel for the appellant
contends that the impugned order misreads the blacklisting clause 20.
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM
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The submission was that undoubtedly, the appellant could not have been
categorised as a party who has been banned/blacklisted/put on holiday
list. This is also in the context of the fact that such blacklisting has
severe consequences and the clause itself provided that non-submission
of declaration in the prescribed format would make the bid non-responsive and the offer would be rejected. In terms of clause 20(ii), the
written declaration had to be given as on the due date of the tender. The
format in which this declaration was to be given was specified and was
not left to the own words of the bidder. The format extracted aforesaid
clearly stated that such declaration was required to be furnished only if
the bidder had "been banned or black listed or delisted or holiday listed."
That position was not prevalent on the date of submission of the bid, on
19.12.2017 as by that date only a show cause notice had been issued, on
5.12.2017. The order of blacklisting was passed on 22.2.2018, after the
date of acceptance of the tender and placement of the purchase order
on the appellant, on 21.2.2018.
14. In the aforesaid context, it is also contended that 'Annexure
21' lays down the 'Guidelines for Holiday Listing (Banning of Business
Dealing)'. That occasion would arise if the tender awarding authority,
i.e., respondent No.1 would have initiated any process and as per clause
2.5, the banning was to be with prospective effect, i.e., for future
business dealings. The contract in question, having already been placed
on the appellant, there can be no question of retrospective blacklisting of
the appellant.
15. The second limb of the submission is based on clause 20(i) to
the extent it refers to "or parties in respect of whom the action for
blacklisting and holiday listing has been initiated by HPCL/any
Government/quasi Government agencies or PSUs." This clause, it was
submitted, had to be read with the wordings of the show cause notice.
Undisputedly, the format in which the information had to be furnished
only provided for an eventual blacklisting having taken place. The
operative portion of the show cause notice, extracted aforesaid, states
"why suitable action for blacklisting the firm (M/s. Caretel Infotech Pvt.
Ltd.) should not be initiated."1 The requirement of clause 20(i) was
the actual initiation. Thus, it was pleaded that blacklisting had not been
"initiated" by mere issuing of the show cause notice, as the notice was
1 Emphasis supplied
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to show cause as to why proceedings should not be initiated, i.e., a prior
stage.
16. On the other hand, Mr. Vishwanathan, learned senior counsel
for respondent No.3, contended that the format was prescribed in the
context of clause 20(ii), which was a case where blacklisting had
already taken place, as on the due date of the tender. However, as per
clause 20(i) there were four eventualities: (a) banned; (b) blacklisted;
(c) put on holiday list; or (d) action for blacklisting or holiday listing had
been initiated. It was his submission that the present case was one
where blacklisting had been, at least, initiated and, therefore, the
appellant was duty bound to make a disclosure of this fact along with his
tender, not as per the format, but in terms of the undertaking to be given
by the bidder, which required full disclosure. That undertaking, it was
submitted, was breached, as held by the impugned order.
17. Learned counsel further contended that the plea sought to be
raised by the appellant, on the interpretation of clause 20(i), was not
even the case pleaded by the appellant in their challenge to the
blacklisting order, in their writ petition, but what was pleaded there was
only the absence of an opportunity of hearing.
18. In the alternative, learned counsel also sought to contend that
respondent No.1 had not complied with the interim directions, at the
stage of issuing notice on 7.1.2019, and ought to have implemented the
impugned order and held an inquiry and that inquiry report ought to have
been placed before the Court.
19. On the other hand, learned counsel for respondent No.1
submitted that respondent No.1 had, in its wisdom, stayed its hand after
issuance of notice in pursuance to the impugned order and preferred to
await the decision of this Court.
20. On careful consideration of the rival submissions, we are of
the view that there is force in the contention of learned counsel for the
appellant. We are, in fact, in agreement with both the aspects, i.e., the
interpretation of clause 20 read with the format, as well as with the
effect of the show cause notice.
21. It is no doubt true that clause 20 does provide for four
eventualities, as submitted by learned counsel for respondent No.3. The
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present case is not one where on the date of submission of the tender
the appellant had been banned, blacklisted or put on holiday list. The
question before us, thus, would be the effect of an action for blacklisting
and holiday listing being initiated. The declaration to be given by the
bidder is specified in clause 20(ii), which deals with the first three
aspects. The format enclosed with the tender documents also refers
only to these three eventualities. It is not a case where no specific
format is provided, where possibly it could have been contended that the
disclosure has to be in respect of all the four aspects. The format
having been provided, if initiation of blacklisting was to be specified,
then that ought to have been included in the format. It cannot be said
that the undertaking by the appellant made it the bounden duty of the
appellant to disclose the aspect of a show cause notice for blacklisting.
We say so as there is a specific clause with the specific format provided
for, requiring disclosures, as per the same.
22. It may be possible to contend that the format is not correctly
made. But then, that is the problem of the framing of the format by
respondent No.1. It appears that respondent No.1 also, faced with the
factual situation, took a considered view that since clause 20(i) provided
for the four eventualities, while the format did not provide for it, the
appellant could not be penalised. May be, for future the format would
require an appropriate modification!
23. If we refer to the undertaking submitted by the appellant all
that it states is that the information furnished in the bid and attachments
are true to the best of the knowledge and belief of the bidder. In case
any false or incorrect information is submitted, the bid can be rejected.
It cannot be said that there is any false information given by the
appellant as to violate the stated condition 4 of clause 20(i). We may
look at another angle of the same issue, i.e., the integrity pact provided
for in clause 20(iii) with the format thereof, a detailed one. The integrity
pack provided that the "parties shall make certain commitments to each
other in regard to ensuring transparency and fair dealing in the
procurement activities of the Corporation." The duly signed integrity
pact is an essential condition for a valid bid. This clause, thus, deals with
the transparency and fair dealing of the activities carried out under the
tender were it to be awarded insofar as the procurement activities are
concerned. Once again, this would not have any relevance to the stated
fourth part of clause 20(i).
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24. We may also look at this aspect from another perspective.
Blacklisting has very serious consequences. A show cause notice may
result in blacklisting or may not result in blacklisting. The mere show
cause notice being issued, to visit such a severe consequence on a
bidder, may be difficult to sustain.
25. The case of the appellant is further fortified by even the
language used in the show cause notice. The show cause notice itself,
in the last paragraph, calls upon the appellant to show cause as to why
suitable action for blacklisting "should not be initiated." Pursuant to the
response of the appellant, the next stage would have been the initiation
of the blacklisting process, if the explanation was not found satisfactory.
The term used in the blacklisting clause 20(i), on the other hand, talks
about a situation where blacklisting has already been initiated. Plain
English words used must be given their ordinary grammatical meaning,
an aspect discussed in a little more detail hereinafter.
26. Thus, it is difficult to accept the submission of learned
counsel for respondent No.3 that the show cause notice dated 5.12.2017
itself amounted to the process of blacklisting having already been
initiated.
27. On both these accounts it cannot be said that the appellant
would be disentitled to the contract.
28. Insofar as the effect of the blacklisting order dated 22.2.2018
is concerned, in the eventuality of respondent No.1 considering it proper
to initiate certain action, that would have to be in terms of the guidelines
for blacklisting of HPCL. The guidelines itself show that the ban would
have prospective effect, for future business dealings. Thus, the same
would have no application to the tender awarded.
Business Continuity Certificate:
29. The second reason which found favour with the High Court
was the doubts created by respondent No.3 over the Business
Continuity Certificate filed by the appellant. Clause 8, dealing with
business continuity, requires the successful bidder to submit the
transition plan to migrate to new platform and facility with zero
disruption of services, with respect to four aspects provided
hereinbefore. In terms of clause 10(g), valid ISO Certificate 27001 for
security and ISO 2301 for business continuity have to be provided. It is
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not in question that the appellant did submit a certificate of business
continuity, as obtained from respondent No.2.
30. Respondent No.3 has sought to cast doubts on this business
certificates, and the Division Bench, in terms of the impugned order, has
also embarked on a course of inquiry into this certificate by calling upon
parties to file their affidavits and has thereafter taken a call to express
its own doubts over the certificate. In our view, such a course of action
was not permissible.
31. There are serious disputes relating to the allegations made by
respondent No.3, which are rebutted by the appellant. Opportunity had
to be afforded to cross-examine the deponents who had filed affidavits.
This would really not be possible in writ proceedings and could have
only been determined in suit proceedings. There cannot always be a
shortcut, through a process of writ proceedings under Article 226 of the
Constitution of India, when such disputes exist. We may usefully refer
to the observations of this Court in Roshina T v. Abdul Azeez K.T. &
Ors.,2 opining that the writ jurisdiction under Article 226 of the
Constitution of India is not intended to replace ordinary remedies by
way of a civil suit, and this jurisdiction should not be exercised casually
or lightly on mere asking by the litigant.
32. We may notice another important aspect also, i.e., reluctance
of respondent No.1 to accept the allegations of respondent No.3. If
respondent No.1 itself had doubts on the certificate, that would have
been another matter. This is not so as is apparent from the affidavit filed
by respondent No.1. In any case, at best, this aspect ought to have been
left to the wisdom of respondent No.1, rather than the Court embarking
on the course of action it followed, as if it was sitting in appeal over a
decision of respondent No.1. We may add that if respondent No.1 itself
has any doubts on these certificates, nothing prevented, nor still
prevents respondent No.1 from looking into this aspect.
33. We do not agree with the contention of learned senior counsel
for respondent No.3 that the interim order dated 7.1.2019 mandated
respondent No.1 to enquire into all these aspects, in pursuance of the
directions contained in the impugned order. All that was observed was
that respondent No.1 "may" take a decision, but the interdict was against
implementing it. Respondent No.1 in its wisdom, as submitted by learned
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counsel for respondent No.1, has chosen not to proceed further, after
issuance of notice to the appellant and has decided to await the decision
of this Court. We have already come to the conclusion that it was not
really within the domain of the High Court to have issued the direction,
as it sought to do.
34. The operative directions of the High Court, as contained in
para 47 of the judgment, to take appropriate decisions, in the conspectus
of the observations made, really amounts to directing respondent No.1
to breach its contract with the appellant. We are of the view that, thus,
no such direction ought to have been issued to compel a breach of the
contract by the appellant.
35. We, thus, are unable to sustain the impugned order even on
this ground.
Epilogue:
36. We consider it appropriate to make certain observations in the
context of the nature of dispute which is before us. Normally parties
would be governed by their contracts and the tender terms, and really no
writ would be maintainable under Article 226 of the Constitution of
India. In view of Government and Public Sector Enterprises venturing
into economic activities, this Court found it appropriate to build in certain
checks and balances of fairness in procedure. It is this approach which
has given rise to scrutiny of tenders in writ proceedings under Article
226 of the Constitution of India. It, however, appears that the window
has been opened too wide as almost every small or big tender is now
sought to be challenged in writ proceedings almost as a matter of
routine. This in turn, affects the efficacy of commercial activities of the
public sectors, which may be in competition with the private sector. This
could hardly have been the objective in mind.