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Representational image.

Patna HC quashes blacklisting of firm, orders fresh bidding for NMCG project

Petitioners’ counsel and former additional solicitor general SD Sanjay said that BUIDCo exercised the power of blacklisting only for the purpose of keeping the petitioner out of competition in the tender process
UPDATED ON JUL 20, 2021 03:11 PM IST

The Patna high court has come down heavily on Bihar Urban Infrastructure Development Corporation Limited (BUIDCo) for disqualifying a bidder M/S EMS Infracon Pvt. Ltd on the basis of a complaint alleging fact-fudging from an unknown source. BUIDCo had also served a show-cause notice to the company without enclosing the copy of the complaint, and directed the technical tender committee of the government to revisit the technical bid evaluation reports (TBER) for a 300 crore World Bank-funded sewage and sewerage project in Hajipur.

“The Court is of the considered opinion that BUIDCo has acted irresponsibly in passing the impugned order in casual and cavalier manner, which has serious adverse consequences not only in respect of the petitioner’s eligibility to participate in the bid with others in government contracts, but has also adversely affected the progress of the project in question,” said justice Chakradhari Sharan Singh, setting aside the blacklisting order and ordering fresh evaluation of bids by a committee under the development commissioner, not urban development secretary. The order was passed on Monday.

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“Let a fresh evaluation of the technical bid be done by a technical committee with the Development Commissioner, Bihar, as its Chairman and Executive Director, Technical, National Mission for Clean Ganga (NMCG) as one of the members. The Development Commissioner shall be at liberty to reconstitute Technical Tender Committee for the purpose of said evaluation. It will be open for the Technical Tender Committee to take into account the facts mentioned in the show cause notice and the petitioner’s reply thereto, keeping also in mind this Court’s observation, for the limited purpose of evaluation of technical bid of the work in question; if permitted under the model bid document and other arrangements under which the project is to be implemented to disqualify the petitioner. It is expected that the Chairman and other members of the Technical Tender Committee shall go into wider aspects of the matter in accordance with the mandatory requirements under World Bank’s Guidelines January, 2011. Considering the dateline for finalisation of the tender as noted in the letter of the World Bank dated June 15, 2021, the Court expects that the meeting of the Technical Tender Committee be held, if not before, by Thursday,” the court said.

Since three orders blacklisting the bidders by the same chief engineer were found illegal and quashed by the court, the bench left it to the development commissioner to consider whether he should be allowed to participate as a member of the technical tender committee for evaluation of the technical bid and whether there is any chance of his view being biased because of the facts and circumstances of this case recounted herein above.

“The impugned order of blacklisting dated March 4, 2021 is hereby set aside. It is clarified that the court is interfering with the impugned order mainly for four reasons, viz. it does not duly consider the petitioner‘s explanation submitted the in response to the show cause notice, it has referred to a new fact which was not part of the show cause notice, it has completely ignored the observations made by this court in its previous order and the most importantly, the Chief Engineer had an obligation to record a finding on the applicability of Bihar Contractor Registration Rules, which is in the nature of executive instructions for taking action in relation to the bid process in question where as tender documents is based on model tender document set by NMCG in funding arrangement from the World Bank, a plea which was specifically taken in the reply to the show cause notice. This aspect goes to the root of the matter, which has been completely ignored. The Technical Tender Committee shall be obliged to consider all communications received from NMCG in this regard. ” the court said.

“The court has not given complete clean chit to the petitioner and that BUIDCo shall be at liberty to act in accordance with law in this regard and issue to the petitioner a fresh show-cause notice, if black-listing is proposed under Bihar Contractor Registration Rules, 2007. Before issuance of such show cause notice, however, the competent authority shall be obliged to record a finding that the said executive instruction is applicable even in respect of the externally aided project in question,” it added.

Petitioners’ counsel and former additional solicitor general SD Sanjay said that BUIDCo exercised the power of blacklisting only for the purpose of keeping the petitioner out of competition in the tender process. He submitted that the chain of events show that the blacklisting order was passed hurriedly, overreaching the direction of NMCG and the World Bank on the pretext that funding share of the state government was also there to the extent of 30%. Advocate general Lalit Kishore appeared for BUIDCo and defended the decision.

The court said that the technical tender of the petitioner had been rejected on some other grounds and though by a subsequent letter dated August 14, 2020, the secretary, urban development and housing department, government of Bihar, and the programme director, SMCG, were asked to revisit the TBER with respect to M/s EMS, those points, which were the basis for rejecting the petitioner’s tender documents, were overlooked and BUIDCo put the petitioner on notice for proposed blacklisting through the show-cause notice dated October 31, 2020, on different grounds altogether.

“I must record that if the State of Bihar or any of its undertakings intend to have or adopt any document in the form of Act, rules, regulations, notifications or guidelines for the purpose of blacklisting a contractor, the same must be clear and structured in its form as half-baked arrangement of casually adopting an executive instruction issued by the Road Construction Department for all works and projects under the State Government or its undertakings, in Court’s opinion, does not go well, keeping in mind steep rise in infrastructure development projects,” the court said.

The petitioner, aggrieved by a BUIDCo order to blacklist it on March 4, 2021, that rendered it disqualified for award of any contract by BUIDCo for a term of one year, sought that Bihar Contractor Registration Rules, 2007 (Public Works Department) was ultra vires and not enforceable to the extent the same was repugnant to the provisions of Bihar Financial Rules, 1950. It challenged the legality of the TBER of the BUIDCo for a World Bank-funded Ganga River Basin Project in Hajipur, citing its representations along with the letters of the other functionaries of the government of India, government of Bihar as well as the director, NMCG, New Delhi, and team leader, World Bank, New Delhi, asserting that it was wrongly disqualified by the bid evaluation committee. The director (projects), NMCG, addressed a letter August 14, 2020 to the secretary, urban development and housing department, government of Bihar, to consider the petitioner’s bid for the project, but BUIDCo again disqualified it, which the petitioner said seemed to help other competitors.

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