M/s Aicons Engineering Pvt. Ltd. vs NHIDCL & Anr

Heard Mr. Rajive R. Raj, learned counsel, appearing for the petitioners in the above noted 02 (two) writ petitions. Also heard Mr. Akhrieu Chusi, learned counsel, appearing for the NHIDCL Authorities in the above noted 02 (two) writ petitions.

The above noted 02 (two) writ petitions having raised similar questions of law, based on same facts, were taken up analogously with the consent of the parties for final consideration, and are being disposed of by this common Judgment and Order.

The above noted 02 (two) writ petitions were instituted by the petitioners assailing the order dated 11.11.2025, issued by the General Manager (Technical)-II, HQ, NHIDCL, declaring the Authority Engineer M/S ARMENGE Engineering Private Limited in JV with AICON Engineering Private Limited as “Non Performer” for a period of 02 (two) years or till the rectification of deficiency whichever is later, with a further direction that upon Declaration Of Non Performer, the Authority’s Engineer, would not be able to participate in any bid for National Highway projects with the MoRT&H or any other Executing Agencies, till such time this order persist or the Authority’s Engineer is removed from the list of Non Performers.

The facts in brief requisite for adjudication of the issue arising in the present writ petitions is noticed, as under;

In the month of December 2022, the National Highways & Infrastructure Development Corporation Limited (hereinafter referred to as NHIDCL), had issued a Request For Proposal (RFP) for "CONSULTANCY SERVICES AS AUTHORITY’S ENGINEER FOR SUPERVISION OF:

Widening to 2 (Two) Lane with Hard shoulder of Akegwo-Avangkhu section of NH-202K for Package- I (Design Chainage 0+000 Km to 34+795 Km) in the State of Nagaland on EPC mode under NH (O)-ΝΕ (ii) Widening to 2 (Two) Lane with Hard shoulder of Akegwo-Avangkhu section of NH-202K for Package-II (Design Chainage 34+795 Km to 69+875 Km) in the State of Nagaland on EPC mode under NH (O)-ΝΕ (iii) Widening to 2 (Two) Lane with Hard shoulder of Akegwo-Avangkhu section of NH-202K for Package-III (Design Chainage 69+875 Km to 106+816 Km) in the State of Nagaland on EPC mode under NH (O)-NE.”

The petitioners in the above noted 02 (two) writ petitions, had entered into a Memorandum of Understanding (MoU), on 02.05.2024, to constitute a Joint Venture Firm, with the petitioner in WP(C).No.235/2025, as bidder and lead partner and the petitioner in WP(C).No.234/2025, as the Joint Venture Partner, for the purpose of submission of bids in pursuance to the said Request For Proposal (RFP). Accordingly, the petitioners in the above noted writ petitions participated in the bidding process as a Joint Venture Firm. The Bid submitted by the Joint Venture Firm of the petitioners in the above noted writ petitions, being found to be the most suitable, the said Joint Venture Firm, was awarded the contract vide a Letter of Award dated 12.09.2023. Thereafter, a Contract Agreement was signed between the Joint Venture Entity and the NHIDCL Authority’s on 22.12.2023. On the signing of the said Contract Agreement, NHIDCL Authority’s vide communication dated 29.12.2023, directed the Joint Venture Firm to commence the work so awarded to it.

It is projected by the petitioners in the above noted writ petitions that since the initiation of the works, in question, the Joint Venture Firm was facing hardship in engaging Key Personnel on account of the location involved, being so located at a remote place and also having extreme conditions. It is projected that the 02 (two) Key Personnel recommended for the project having refused to joined at the site, the petitioners were permitted to replace the said 02 (two) key personnel, by the NHIDCL Authorities. However, for such replacement effected, certain deductions came to be made, in terms of the general conditions of contract incorporated in the Contract Agreement. Although the NHIDCL Authority was aware of the difficulties faced by the Joint Venture Firm, in engaging Key Personnel and Key Personnel engaged, on joining, having left the site, the NHIDCL Authority’s vide a notice dated 03.05.2024, proceeded to require the Joint Venture Entity, to submit a reply within 15 (fifteen) days from the date of issuance of the said notice as to why the Joint Venture Entity, should not be declared as a Non-Performer, in terms of the Circular dated 07.10.2021. In the said notice the said Entity was held to have caused a breach of the provisions of Clause 1 (c) of the MoRT&H Circular dated 07.10.2021. The Joint Venture Entity on receipt of the said notice dated 03.05.2024, submitted its detailed reply in the matter on 18.05.2024, and prayed that in view of the issues faced by the Entity in respect of appointment and retention of Key Personnel, the show-cause notice be withdrawn. Thereafter, the NHIDCL Authorities, proceeded to issue a further notice to the Joint Venture Entity on 19.11.2024, on the ground of failure to provide stable manpower. In the said notice, it was provided that appropriate actions against the Joint Venture Entity in terms of the Consultancy Contract Agreement, would be taken in the matter. The petitioner in WP(C).No.235/2025, being the lead partner submitted its reply to the said notice dated 19.11.2024, and therein, in details explained the reasons as to why the Key Personnel at the site could not be either appointed and/or retained after such appointment being effected. The said notice dated 19.11.2024, was followed by a notice in the similar lines on 16.01.2025. Thereafter, again on 04.03.2025, the NHIDCL Authorities issued a further notice to the petitioner on the ground of lack of supervision of the project work and inadequate deployment of Key Personnel as well as sub professional staff. Thereafter, vide a notice dated 20.03.2025, the NHIDCL Authorities, required the Joint Venture Firm, to submit an explanation, with regard to non-adherence of the contractual obligations under the Contract Agreement, so executed. The petitioners have again projected that the key personnel for the project were to be hired only from the list of experts who are enlisted in INFRACON i.e. a portal of the Respondent No.2. By highlighting the procedure involved for appointment of Key Personnel, it was projected that the Key Personnel were neither the employees of the Consultant nor were under the control of the Consultant i.e. the Joint Venture Entity and they were also independent Consultants. It was projected that on a Key Personnel not joining the engagement, the procedure involved was required to be repeated for a replacement. Accordingly, it was projected that non-deployment of Key Personnel at the site could not have been the sole responsibility of the petitioners and was also of the NHIDCL Authorities. It was further projected that the consultancy fees of the petitioners were not being cleared by the NHIDCL Authorities.

The petitioner projects that it is in the above background that the impugned order dated 11.11.2025, came to be issued to it i.e. after around 18 (eighteen) months from the date of the show-cause so issued in the matter. Given the effect, the impugned order dated 11.11.2025 had, on the business of the petitioners, the petitioners have instituted the above noted writ petitions.

Mr. Rajive R. Raj, learned counsel for the petitioners, after reiterating the facts, noticed, hereinabove, has submitted that the allegation leveled in the show-cause notice dated 03.05.2024, is entirely different from the allegation of deficiency/breach, as projected in the impugned order dated 11.11.2025. He submits that in the show-cause notice, the allegation was only with regard to delay or submission of MPRs, improper review of methodologies, temporary works, Quality Assessment plan/manual O&M plan/manual etc. He submits that in terms of the MoRT&H Circular dated 07.10.2021, the only punishment contemplated in this connection is for the “first 03 (three) instances is to be kept on watch list”. Mr. Raj, by referring to the order dated 11.11.2025, has submitted that although in the show-cause notice dated 03.05.2024, the allegation was of violation of the provisions of Clause 1(c) of the said Circular dated 07.10.2021, in the impugned order dated 11.11.2025, the Respondent Authorities had also alleged violation of Clause 3.3 of the said Circular dated 07.10.2021. Mr. Raj, submits that with regard to the violation of the provisions of Clause 3.3 of the said Circular dated 07.10.2021, no notice was issued to the petitioners in the above noted 02 (two) writ petitions. Mr. Raj, further submits that unless a allegation is so levelled in the show-cause notice so issued, it was not permissible for the authorities to impose a penalty basing on such allegation. Mr. Raj, in support of his such submissions had placed reliance upon the decisions of the Hon’ble Supreme Court in the case of Gorkha Security Services Vs. Government (NCT of Delhi) & Ors., reported as (2014) 9 SCC 105 and UMC Technologies Pvt. Ltd. Vs. Food Corporation of India & Anr., reported as (2021) 2 SCC 551.

Mr. Raj, without prejudice to the above submissions made by him, has further submitted that the NHIDCL Authorities, in imposing the penalties as imposed vide the order dated 11.11.2025, had exceeded its jurisdiction, inasmuch as, in terms of the provisions of Clause 3.1, of the MoRT&H Circular dated 07.10.2021, for the first 03 (three) instances, the consultant is to be kept on a “watch list” and secondly the maximum period for which as entity can be declared a Non-Performer can be only for a period not more than 01 (one) year or till rectification of the deficiencies whichever is earlier. He submits that the impugned order having declared the petitioner to be Non-Performer for a period of 02 (two) years, the same is not maintainable and would require to be interfered with.

Mr. Rajive R. Raj, accordingly, submits that the impugned order is also disproportionate to the allegations initially levelled against the petitioners. Mr. Raj, with regard to the allegations, that the petitioners had failed to deploy adequate manpower and had demonstrated a lackadaisical approach towards supervision and other contractual breach, submits that it is an admitted position of fact that the petitioners have limited role in appointment of manpower (more particularly Key Personnel). Petitioners have no power whatsoever for appointment, removal, replacement of Key Personnel, given the procedure mandated to be followed. It is submitted that non-deployment of key personnel cannot be soley attributable to petitioners. Mr. Raj, further submitted that the petitioners in reply to the show-cause notice, has explained in detail, inter alia, the difficulties faced by the petitioners in executing the contract due to remote location, limited connectivity, infrastructural challenges, insufficient medical facilities and retention difficulties.

In the above premises Mr. Raj submits that the impugned order dated 11.11.2025, would mandate an interference from this Court

Per contra, Mr. Akhrieu Chusi, learned counsel, appearing for the NHIDCL Authorities, submits that the issuance of the order dated 11.11.2025, declaring the petitioners in the above noted writ petitions, who had submitted its bid in terms of the RFP, in question, as a Joint Venture Entity, as Non-Performer was on account of serious breach of the conditions of the contract and the terms of reference of the Consultancy Service Agreement. He submits that the declaration of the Joint Venture Entity as a Non- Performer for 02 (two) years, was done strictly in accordance with the MoRT&H Circular dated 07.10.2021, amended Circular dated 04.01.2022, and the NHIDCL Office Order dated 23.05.2022. He submits that the order dated 11.11.2025, was so issued after show-cause notices in the matter was issued to the Joint Venture Entity and its replies received in the matter. It is projected that the replies submitted by the petitioners being not found to be satisfactory, the competent authority had proceeded to issue the order dated 11.11.2025, declaring the Joint Venture Entity, as a Non-Performer with further consequential penalties of debarment.

I have heard the learned counsel for the parties and also perused the materials available on record.

The rival contentions of the learned counsel for the parties have brought on record an issue as to whether the grounds assigned by the NHIDCL authorities for declaring the Authority Engineer i.e. the Joint Venture Firm of the petitioners in the above noted 02 (two) writ petitions, as Non-Performer was so done after the grounds raised were made so known to the petitioners, herein. The order dated 11.11.2025, was so issued in pursuance to a show-cause notice dated 03.05.2024. In the said show-cause notice dated 03.05.2024, the allegations levelled against the petitioners being relevant, is extracted, hereinbelow;

A perusal of the allegations levelled against the petitioners in the said show-cause notice dated 03.05.2024, would go to reveal that the same pertains to commission of a breach of the provisions of Clause 1 (c) of the MoRT&H Circular dated 07.10.2021. Having noticed the allegation levelled against the petitioner in the said show-cause notice dated 03.05.2024, this Court would now examine the grounds on which the impugned order dated 11.11.2025, was so issued. For the purpose of examining the said order, the operative portion, thereof, containing the grounds and the penalty as imposed being relevant is extracted hereinbelow;

A perusal of the ground of the allegations as considered in the order dated 11.11.2025, would go to reveal that in addition to the allegations levelled against the petitioners of breach of the provisions of Clause 1 (c) of the said Circular dated 07.10.2021, a further breach of the provisions of Clause 3 (3) of the said Circular dated 07.10.2021, was also alleged. The allegation with Clause 3 (3) in the considered view of this Court, is not found to have been put to the petitioners in the show-cause notices issued to it in the matter including the show-cause notice dated 03.05.2024.

It is a settled position of law that before resorting to any debarment/blacklisting action, the employer is required to adhere to a due procedural process.

The Hon’ble Supreme Court in the case of Gorkha Security Services (supra) had in this connection held as follows;

The said view was further reiterated by the Hon’ble Supreme Court, in the case of UMC Technologies Private Limited Vs. Food Corporation of India & Anr., reported in (2021) 2SCC 551;

On a further consideration of the said decision of the Hon’ble Supreme Court, it is apparent that the debarment/blacklisting constitutes a civil death and has extremely grave consequences, and accordingly, any order of debarment/blacklisting ought to be so initiated and concluded by strictly adhering to the principles of natural justice. The allegations forming the basis of the said order is mandated to be so communicated to the entity, who is now being sought to be debarred/blacklisted.

Accordingly, in view of the above discussion, in the light of the decisions of the Hon’ble Supreme Court, noticed, hereinabove, this Court having found that the grounds of allegations as considered in the order dated 11.11.2025, more particularly the allegations with regard to the breach of the provisions of Clause 3 (3) of the Circular dated 07.10.2021, not having been put to the petitioners, the impugned order dated 11.11.2025, in respect of the petitioners in the above noted 02 (two) writ petitions, cannot be sustained and accordingly, the same is interfered with.

This Court having being interfered with the order dated 11.11.2025, basing on the above reasons, the other grounds urged by the petitioners, in the above noted 02 (two) writ petitions, is not being examined.

With the above observations and directions, the above noted 02 (two) writ petitions stands disposed of.