Supreme Court of India
CARETEL INFOTECH LTD.versusHINDUSTAN PETROLEUM CORPORATION LIMITED & ORS.
- Citation
- 2019 INSC 490
- Decided
- 9 April 2019
- Disposal
- Appeal(s) allowed
- Bench
- S A BOBDE
Holding
A show‑cause notice does not amount to initiation of black‑listing, the tender’s disclosure format required declaration only of actual black‑listing, and the black‑listing order has prospective effect, so the appellant remains entitled to the contract.
Summary
The Supreme Court examined a dispute arising from an e‑public tender floated by Hindustan Petroleum Corporation Ltd. (HPCL) for call‑centre services. Caretel Infotech Ltd. (appellant) submitted its bid, declaring it was not black‑listed, and was awarded the contract. After the award, HPCL’s competitor (respondent No.3) challenged the award, alleging that Caretel had been issued a show‑cause notice in another tender and was therefore subject to black‑listing, and also questioned the validity of its business‑continuity ISO certificates. The High Court held the appellant ineligible and directed HPCL to reconsider, but the Supreme Court reversed this, holding that a show‑cause notice does not amount to initiation of black‑listing, the tender’s disclosure format required declaration only of actual black‑listing, and the subsequent black‑listing order had only prospective effect, not affecting the already‑awarded contract. The Court also ruled that the High Court should not have interfered with HPCL’s contractual discretion or conducted an inquiry into the ISO certificate in writ proceedings. Consequently, the High Court’s order was set aside and the appeal allowed.
Issues considered
- The show‑cause notice issued to the appellant constituted initiation of black‑listing under clause 20(i) of the tender?
- Whether the appellant was required to disclose the show‑cause notice in the tender declaration format prescribed under clause 20(ii)?
- Does the black‑listing order dated 22‑Feb‑2018 have retrospective effect on the contract already awarded?
- Whether the High Court could, in writ proceedings, direct HPCL to investigate the appellant’s business‑continuity certificate and effectively compel a breach of contract?
Subjects
e‑public tenderblack‑listingshow‑cause noticecontract interpretationArticle 226public procurementintegrity pactbusiness continuity certificateISO certificationadministrative lawcontractual discretion
Judgment
950 [2019]REPORTS
SUPREME COURT 6 S.C.R. 950 [2019] 6 S.C.R.
A CARETEL INFOTECH LTD.
v.
HINDUSTAN PETROLEUM CORPORATION LIMITED & ORS.
(Civil Appeal No. 3588 of 2019)
B 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
C
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 –
D 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, pur-
chase order issued in favour of appellant – However, next day it-
self, order passed blacklisting and debarring the appellant from
participating in any tender process for two years – Respondent
E
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
F 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
G
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.
H
950
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM 951
CORPORATION LTD. & ORS.
Constitution of India: Art. 226 – Writ proceedings under – A
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
B
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 C
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 D
appreciate its requirements – On, facts, view of respondent No.1-
company 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 E
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 F
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, G
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
H
952 SUPREME COURT REPORTS [2019] 6 S.C.R.
A 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
B
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
C 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
D 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
E 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
F 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
G 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
H
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM 953
CORPORATION LTD. & ORS.
such a severe consequence on a bidder, may be difficult to A
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 B
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 C
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 D
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] E
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 F
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 G
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. H
954 SUPREME COURT REPORTS [2019] 6 S.C.R.
A 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]
B
[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
C 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]
D [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
E 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.
F 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
G 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
H Government and Public Sector Enterprises venturing into
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM 955
CORPORATION LTD. & ORS.
economic activities, this Court found it appropriate to build in A
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
B
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 C
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
D
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 E
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 F
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 G
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.
H
956 SUPREME COURT REPORTS [2019] 6 S.C.R.
A 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
B 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 –
C referred to.
Attorney General of Belize v. Belize Telecom Ltd.
(2009) 1 WLR 1988 (PC) ; Moorcock (1889) LR 14
PD 64 (CA) – referred to.
D 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
E [2013] 3 SCR 319 referred to Para 40
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3588
of 2019
F 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.
G 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.
H
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM 957
CORPORATION LTD. & ORS.
The Judgment of the Court was delivered by A
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 B
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/ C
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 holi- D
day 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.”
E
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 Cen-
tre Services to the Department of Agriculture, Cooperation & Farmers
F
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 G
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
H
958 SUPREME COURT REPORTS [2019] 6 S.C.R.
A 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
B
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
C 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
D OR BLACK LISTED OR DELISTED OR HOLIDAY
LISTED BY ANY GOVERNMENT OR QUASI
GOVERNMENT AGENCIES OR PUBLIC SECTOR
UNDERTAKINGS
E
Date: __________ Name of Tenderer: _____________
Place: _________ Signature & Seal
of Tenderer : _____________
F
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.
G 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.
H
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM 959
CORPORATION LID. & ORS. [SANJAY KISHAN KAUL, J.]
6. The appellant also submitted an undertaking, once again, in the A
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 B
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 C
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 D
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 E
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: _____________ F
Place: _________ Signature & Seal
of Bidder : _____________”
7. Respondent No.1 evaluated the technical and financial bids G
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.
H
960 SUPREME COURT REPORTS [2019] 6 S.C.R.
A 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
B
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
C 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
D 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
E “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 rel-
F evant clauses read as under:
“8. Business Continuity
OMCs currently have an agreement for inbound calls with a ser-
vice provider based in different Regions. The successful bidder
G has to submit the transition plan to migrate to new platform and
facility with “ZERO” disruption of services with respect to fol-
lowing areas:
a) Toll-free services.
b) IVRS based call handling.
c) Diversion of call traffic at the successful bidder’s premises.
H
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM 961
CORPORATION LID. & ORS. [SANJAY KISHAN KAUL, J.]
d) Trained Operators at the time of Go-Live date.” A
.... .... .... ....
....
“10. Other Mandatory Requirements:
xxxx xxxx xxxx xxxx B
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 C
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 D
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.” E
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 F
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 G
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.
H
962 SUPREME COURT REPORTS [2019] 6 S.C.R.
A 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-respon-
sive and the offer would be rejected. In terms of clause 20(ii), the
B
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.”
C 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.
D 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
E 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
F 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
G “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
H
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM 963
CORPORATION LID. & ORS. [SANJAY KISHAN KAUL, J.]
to show cause as to why proceedings should not be initiated, i.e., a prior A
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 B
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 C
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 D
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 E
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 F
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 G
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
H
964 SUPREME COURT REPORTS [2019] 6 S.C.R.
A 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
B
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
C 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
D 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!
E
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
F 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
G 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).
H
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM 965
CORPORATION LID. & ORS. [SANJAY KISHAN KAUL, J.]
24. We may also look at this aspect from another perspective. A
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 B
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 C
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 D
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.
E
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. F
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
G
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
H
966 SUPREME COURT REPORTS [2019] 6 S.C.R.
A 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
B 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
C 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. &
D 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
E 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
F 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
G 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
2
H (2019) 2 SCC 329
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM 967
CORPORATION LID. & ORS. [SANJAY KISHAN KAUL, J.]
counsel for respondent No.1, has chosen not to proceed further, after A
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 B
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.
C
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 D
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 E
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 F
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. G
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.
H
968 SUPREME COURT REPORTS [2019] 6 S.C.R.
A 37. In Afcons Infrastructure Limited v. Nagpur Metro Rail
Corporation Limited & Anr.3, this Court has expounded further on this
aspect, while observing that the decision making process in accepting or
rejecting the bid should not be interfered with. Interference is
permissible only if the decision making process is arbitrary or irrational
to an extent that no responsible authority, acting reasonably and in
B
accordance with law, could have reached such a decision. It has been
cautioned that Constitutional Courts are expected to exercise restraint
in interfering with the administrative decision and ought not to substitute
their view for that of the administrative authority. Mere disagreement
with the decision making process would not suffice.
C 38. Another aspect emphasised is that the author of the document
is the best person to understand and appreciate its requirements. In the
facts of the present 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
D 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. In fact,
the Court went on to observe in the aforesaid judgment that 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
E reason for interfering with the interpretation given. We reproduce the
observations in this behalf as under:
“15. We may add that the owner or the employer of a project,
having authored the tender documents, is the best person to
understand and appreciate its requirements and interpret its
F documents. The constitutional courts must defer to this under-
standing and appreciation of the tender documents, unless there
is mala fide or perversity in the understanding or appreciation or
in the application of the terms of the tender conditions. It is
possible that the owner or employer of a project may give an
G interpretation to the tender documents that is not acceptable to
the constitutional courts but that by itself is not a reason for
interfering with the interpretation given.”
3
(2016) 16 SCC 818
H
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM 969
CORPORATION LID. & ORS. [SANJAY KISHAN KAUL, J.]
39. We may also refer to the judgment of this Court in Nabha A
Power Limited (NPL) v. Punjab State Power Corporation Limited
(PSPCL) & Anr.,4 authored by one of us (Sanjay Kishan Kaul, J.). The
legal principles for interpretation of commercial contracts have been
discussed. In the said judgment, a reference was made to the
observations of the Privy Council in Attorney General of Belize v. Belize
B
Telecom Ltd.5 as under:
“16. Before discussing in greater detail the reasoning of the Court
of Appeal, the Board will make some general observations about
the process of implication. The court has no power to improve
upon the instrument which it is called upon to construe, whether it
be a contract, a statute or articles of association. It cannot C
introduce terms to make it fairer or more reasonable. It is concerned
only to discover what the instrument means. However, that
meaning is not necessarily or always what the authors or parties
to the document would have intended…”
.... .... .... .... .... D
“19. .....In Trollope & Colls Ltd. v. North West Metropolitan
Regional Hospital Board [1973] 1 WLR 601, 609 Lord Pearson,
with whom Lord Guest and Lord Diplock agreed, said:
“the court does not make a contract for the parties. The court E
will not even improve the contract which the parties have made
for themselves, however desirable the improvement might be.
The court’s function is to interpret and apply the contract which
the parties have made for themselves. If the express terms
are perfectly clear and free from ambiguity, there is no choice
to be made between different possible meanings: the clear F
terms must be applied even if the court thinks some other terms
would have been more suitable. An unexpressed term can be
implied if and only if the court finds that the parties must have
intended that term to form part of their contract: it is not enough
for the court to find that such a term would have been adopted G
by the parties as reasonable men if it had been suggested to
them: it must have been a term that went without saying, a
term necessary to give business efficacy to the contract, a
4
(2018) 11 SCC 508
5
(2009) 1 WLR 1988 (PC) H
970 SUPREME COURT REPORTS [2019] 6 S.C.R.
A term which, though tacit, formed part of the contract which
the parties made for themselves.”
40. Nabha Power Limited (NPL)6 also took note of the earlier
judgment of this court in Satya Jain (Dead) Through LRs. and Ors.
vs. Anis Ahmed Rushdie (Dead) Through LRs. and Ors.7, which
B discussed the principle of business efficacy as proposed by Bowen, L.J.
in the Moorcock8. It has been elucidated that this test requires that
terms can be implied only if it is necessary to give business efficacy to
the contract to avoid failure of the contract and only the bare minimum
of implication is to be there to achieve this goal. Thus, if the contract
makes business sense without the implication of terms, the courts will
C not imply the same.
41. The judgment in Nabha Power Limited (NPL)9 concluded
with the following observations in para 72:
“72. We may, however, in the end, extend a word of caution. It
D should certainly not be an endeavour of commercial courts to
look to implied terms of contract. In the current day and age,
making of contracts is a matter of high technical expertise with
legal brains from all sides involved in the process of drafting a
contract. It is even preceded by opportunities of seeking
clarifications and doubts so that the parties know what they are
E getting into. Thus, normally a contract should be read as it reads,
as per its express terms. The implied terms is a concept, which is
necessitated only when the Penta-test referred to aforesaid comes
into play. There has to be a strict necessity for it. In the present
case, we have really only read the contract in the manner it reads.
F We have not really read into it any ‘implied term’ but from the
collection of clauses, come to a conclusion as to what the
contract says. The formula for energy charges, to our mind, was
quite clear. We have only expounded it in accordance to its
natural grammatical contour, keeping in mind the nature of the
contract.”
G
6
(supra)
7
(2013) 8 SCC 131
8
(1889) LR 14 PD 64 (CA)
9
(supra)
H
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM 971
CORPORATION LID. & ORS. [SANJAY KISHAN KAUL, J.]
42. We have considered it appropriate to, once again, emphasise A
the aforesaid aspects, especially in the context of 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. The object cannot
be that in every contract, where some parties would lose out, they should
B
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.
43. The observations made aforesaid should be understood in the
larger context, so as to avoid situations similar to the one we find in the
impugned order. C
Conclusion:
44. The result of the aforesaid discussion is that the impugned
order is set aside and the writ petition filed by respondent No.3 is
accordingly dismissed. D
45. The appeal is accordingly allowed, leaving the parties to bear
their own costs.
Nidhi Jain Appeal allowed.
E
F
G
H
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