M/S Anand Transport Corporation vs Union Of India

The instant petition has been preferred being aggrieved by the order dated 8.6.2021 (Annexure P1) passed by Respondent 4, whereby Respondent 4 terminated the contract and tank trucks are blacklisted on industry basis for 2 years and forfeited EMD amount and security deposit of Rs.50,000.

Facts of the case, in brief, are that on 21.9.2018 Respondent 4 issued a letter of acceptance in favour of the Petitioner for transportation of the bulk POL by road Ex-Raipur between the period from 1.10.2018 till 30.9.2023. On 20.10.2020 the Petitioner submitted a request vide Annexure P3 before Respondent 4 and requested that he is not able to operate the tank trucks due to bad financial condition and ongoing Covid-19 situation. On 28.11.2020 Respondent 4 issued a show cause notice vide Annexure P4 to the Petitioner wherein he called upon the Petitioner to show cause within 15 days from the date of receipt as to why action including blacklisting of all 3 non-reporting tank trucks and forfeiture of EMD and security deposit of Rs.50,000 should not be initiated against the Petitioner for violation of terms and conditions of LOA. On 22.2.2021 the Petitioner submitted an affidavit/Annexure P5 via E-mail to Respondent 4 and thereafter again on 22.3.2021 Respondent 4 issued and show cause notice to the Petitioner vide Annexure P6. Thereafter on 8.6.2021, vide the impugned order (Annexure P1), Respondent 4 terminated the contract and imposed penalty of blacklisting of the 3 tank trucks and forfeited EMD amount and security deposit of the Petitioner. Hence, this petition.

Learned Counsel appearing for the Petitioner submitted that the order dated 8.6.2021 is bad in law and perverse of the agreement of the Contract Discipline Guidelines and general terms and conditions of the tender. The penalty imposed by Respondent 4 is not in accordance with Clause 17(k) of the tender agreement. Respondent 4 over looked Clause 17(iv) of general terms and conditions of the tender and forfeited the security deposit without assessing the loss of the company for non-operating the tank trucks by the Petitioner. Respondent 4 wrongly imposed the penalty of blacklisting as per Clause 8.2.2.2(d) of Transport Discipline Guidelines (TDG). It was further submitted that in reply by way of affidavit dated 22.2.2021 the Petitioner already stated that since March 2020 due to global pandemic Covid-19 and consequent nationwide lock down in the country the Petitioner was unable to get their vehicles driven to the depot and due to that circumstances he was unable to pay installments of the loan of the vehicles to the bank also. As a consequence of which, his loan for the tank trucks was declared as NPA (Non-Performing Asset) due to which the Petitioner could not play his tank trucks on the road and ultimately he had to withdraw his vehicles from the contract agreement. The Petitioner had also no business due to lock down situation. His tank trucks became non-operational without any payment as there was no transport during the lock down period. The personal staff such as driver, cleaner and conductor also were not reporting to play the tank trucks due to pandemic Covid-19. In the show cause notice (Annexure P6), Respondent 4 admitted the fact that after the end of the Covid-19 lock down again their business increased. Meaning thereby that they had also no business during the entire lock down period. Ignoring all the above facts, the impugned order has been passed which is not sustainable. It was further submitted that as per Clause 4(e) of the tender agreement (Annexure P7), Respondents 2 to 4 had the sole discretion to terminate the contract in case of withdrawal of tank trucks. Vide letter dated 19.10.2020 (Annexure P3) the Petitioner requested for termination of contract. In spite of termination of contract Respondent 4 passed the impugned order whereby he blacklisted tank trucks of the Petitioner and EMD and security deposit have been forfeited.

Learned Counsel appearing for Respondent 1 and Respondents 2 to 4 jointly opposed the arguments advanced on behalf of the Petitioner and submitted that the Petitioner’s tank trucks were not reporting since September, 2020 without informing the location. To inquire about the placement of tank trucks, letter dated 6.10.2020 was issued to the Petitioner. Vide his reply dated 19.10.2020 (Annexure P3) the Petitioner himself requested for issuance of NOC as he had no longer wish to operate his tank trucks due to bad financial condition. As a reason of which two show cause notices were issued to him and the Petitioner could not justify his conduct that why Respondent 4 passed the impugned order terminating the contract and blacklisting the tank trucks. Respondent 4 rightly blacklisted the tank trucks as provided in ITDG as the Petitioner had not reported the tank trucks and himself wrote that he will not be able to do so because of his bad financial condition. It was further submitted that the Petitioner has also alternative remedy of invoking arbitration clause provided in Clause 18 of the contract.

I have heard Learned Counsel appearing for the parties and perused the entire documents annexed with the petition.

The impugned order dated 8.6.2021 has been passed by Respondent 4 mainly on the provisions of Clause 14(d) of the terms and conditions of the tender, Clause 17(k) of the Transport Agreement and Clause 8.2.2.2(d) of the Transport Discipline Guidelines (TDG). Before dealing with the issue, it would be appropriate to reproduce the above clauses, which read thus:

“Clause 14(d) of the General Terms and Conditions of Tender:

“EMD is liable to be forfeited, if the tenderer modifies/ withdraws the offer/refuses to participate in e-reverse auction/and or refuses to accept LOA/Work Order after acceptance of Oil Company’s offer within the prescribed validity of tender, or if the tenderer does not furnish the required Security Deposit, or if the tenderer is unable to position any or all offered tank truck/s within the stipulated time after the award of the contract.”

Clause 17(k) of the transport agreement:

“In the case of withdrawal of any of the contracted TTs or foreclosure of contract security deposit equivalent to 1 TT or the entire security deposit, whichever is applicable, shall be forfeited.”

Clause No.8.2.2.2(d) of Transport Discipline Guidelines (TDG) :

“Irregular reporting of TT at loading location without permission of the location, TT shall be suspended for 3 months or TT shall be blacklisted, as per instance.”

At this juncture, it would be appropriate to refer to Clause 4(e) of the tender agreement which reads as under:

“4. xxxxx xxxxx xxxxx

(e) In case the transporter withdraws any tank truck without informing the location in charge for a continuous period of 15 days, Corporation at its sole discretion may terminate the contract.”

Undisputedly, the Petitioner’s tank trucks were operated till September, 2020 as mentioned in the impugned order. Vide Annexure P3 dated 19.10.2020, the Petitioner requested Respondent 4 that due to pandemic Covid-19 his financial condition is very poor and therefore he is unable to play his tank trucks and he further requested for NOC from Respondent 4. After receiving of the first show cause notice, i.e., Annexure P4, the Petitioner submitted his reply/affidavit vide Annexure P5 wherein again he mentioned the fact that since March 2020 due to pandemic there was a lock down and he was unable to play his tank trucks and he was also unable to make payment of the loan installments of the tank trucks in the bank and, therefore, his loan was declared as NPA. Looking to the above, it is clear that before passing the impugned order, this fact was known to Respondent 4 that the Petitioner had already requested that due to pandemic Covid-19 he was unable to play/run his tank trucks, his financial condition is very poor and he is also unable to pay the installments of the loan and his loan was declared as NPA. Respondent 4 itself admitted the fact in show cause notice (Annexure P6) that at the time of lock down the business of Respondent 4 also decreased. According to Clause 4(e) of the tender agreement, Respondent 4 had the sole discretion to terminate the contract in case of withdrawal of tank trucks. From perusal of the Clause 8.2.2.2(d) of the Transport Discipline Guidelines (TDG), it is also clear that it provides for suspension of tank trucks for a minor period of three months in the first instance of irregularity and on second instance tank trucks shall be blacklisted, but in the case in hand Respondent 4 in the first instance itself blacklisted the tank trucks of the Petitioner imposing the second penalty without issuing any notice in this regard.

Taking into consideration the entire facts and circumstances of the case and the arguments raised on behalf of the parties, in my considered view, ends of justice would be served if blacklisting part of the impugned order dated 8.6.2021 is quashed. Ordered accordingly.

Resultantly, the instant writ petition is disposed of in the aforesaid terms.