Varun vs Food Corporation Of India & Ors.

Suvir Sehgal, J.

Petitioner has approached this Court, inter alia, for issuance of a writ of certiorari for setting aside order dated 18.12.2024, Annexure P11, whereby contract allotted to petitioner has been terminated and he has been debarred for a period of two years from participating in any future tender process initiated by the Food Corporation of India (hereinafter referred to as “FCI”). Petitioner has also assailed order dated 31.01.2025, Annexure P13, whereby an appeal, preferred by him, before the Grievance Redressal Committee (GRC) has been rejected.

Upon being successful, petitioner was allotted a regular Road Transport Contract (RTC) from Samalkha (Haryana) to Baghpat (Uttar Pradesh) vide letter dated 14.03.2024, Annexure P2, by the FCI. There was an error in the letter, which was corrected by the FCI vide corrigendum dated 16.03.2024, Annexure P3. Letter, Annexure P2, required the petitioner to deposit security deposit of Rs. 2.50 lakhs and furnish a bank guarantee of Rs. 7.50 lakhs. The security deposit had to be given within a period of 15 days, i.e., by 03.04.2024. Due to a technical glitch, petitioner could not furnish the security deposit and by letter dated 03.04.2024, Annexure P4, requested for extension of time. Petitioner furnished the requisite deposit on 04.04.2024, however, bank guarantee was furnished by petitioner within the extended period. A show cause notice dated 12.06.2024, Annexure P7, was issued to petitioner to which he gave a reply, but vide impugned order dated 18.12.2024, Annexure P11, tender allotted to petitioner was terminated and the security deposit was forfeited. Petitioner was also debarred from participating in the future tenders of FCI for a period of 2 years. Appeal preferred by petitioner, before the GRC was dismissed vide order dated 31.01.2025, Annexure P13.

Mr. Alok Mittal, counsel for the petitioner has contended that the non-furnishing of the security deposit within time was beyond the control of petitioner as there was a fault in the computer system. By making a reference to communication, Annexure P5, addressed by the ICICI Bank to FCI, he asserts that the banking transaction was completed by petitioner on 03.04.2024, but due to technical reasons, the account was settled on 04.04.2024. He submits that the delay of one day in the furnishing of the security deposit is not such a serious matter as to entail the harsh measures adopted by the FCI. Reliance has also been placed by him upon the minutes of meetings, Annexure P14 and P15, to submit that in a similar situation, a sympathetic view was taken by FCI in the case of M/s Vinayak Trading Company. It is also his argument that the period of fifteen working days has been counted from 16.03.2024 when the corrigendum was issued by FCI after making the correction in the allotment letter.

Per contra, Mr. K.K. Gupta, Advocate, while making a reference to the written statement filed on behalf of FCI, urges that as there was a delay in the furnishing of the security deposit, action was taken against the petitioner as contemplated under Clause 7 (iv) of Model Tender Form (MTF). He submits that delay on the part of petitioner has caused a financial loss to FCI, who had to engage another contractor to complete the work. It is also his argument that petitioner has been provided with sufficient opportunity to explain its stand, which was duly considered before passing the impugned orders. Reliance has been placed for him upon the judgment of a Division Bench of this Court in M/s Shree Shyamji Transport Co. Versus Food Corporation of India and another (CWP-21694-2011, decided on 06.03.2012) and M/s Balaji Transport Versus Food Corporation of India and others (Writ Petition (M/S) No.2507 of 2011, decided on 14.12.2011).

We have heard concern for the parties and considered their rival arguments, besides examining the documents referred to by them.

In M/s Blue Dreamz Advertising Private Limited and another Versus Kolkata Municipal Corporation and others, (2024) 15 SCC 264, Supreme Court has held that penalty of blacklisting may be imposed when it is necessary to safeguard public interest from irresponsible or dishonest contractors. In case, there exists a genuine dispute between the parties based on the terms of the contract, blacklisting or debarment as a penalty cannot be imposed. When such an order is passed by a Government authority or Corporation, a much higher responsibility vest on it to be extra cautious. In M/s Techno Prints versus Chhattisgarh Textbook Corporation and another, 2025 (3) SCR 208, Apex Court had observed that although there is an inherent power in an authority to blacklist a contractor, but there must be a reasonable ground for exercise of such a harsh power as an order of blacklisting, if passed, would bring the business of the person concerned to an end. An authority must have a strong, independent and overwhelming material to resort to this power given the drastic consequences that an order of blacklisting has on a contractor.

Impugned action has to be tested in the light of the above settled legal position. An analysis of the factual position shows that petitioner had been given a stipulated timeline to furnish bank guarantee as well as make a security deposit through electronic means. Concededly, petitioner has furnished the bank guarantee of Rs.7.50 lakhs within the extended period. Insofar as security deposit is concerned, petitioner initiated the electronic transfer on 03.04.2025, that is, the last day of the stipulated period, however, it was reflected in the accounts of FCI on 04.04.2025. It, therefore, cannot be said that there was any delay on the part of petitioner or that he had deliberately not initiated any step to comply with the terms of the allotment letter. In this background, this Court is of the view that the resorting to the draconian step of debarring the petitioner was not warranted on the facts of the present case. As this Court has come to the conclusion that the delay for furnishing security was beyond the control of petitioner, the forfeiture of the security deposit is also not justified.

Petitioner has also assailed the termination of the contract by virtue of the impugned order, Annexure P10. This Court is of the view that insofar as the contract is concerned, it was allotted to petitioner in the month of March, 2025. The contract was for a period of two years for lifting of foodgrain from Samalkha to Baghpat. Substantial part of the contract period has already expired and the FCI has taken a specific stand that it has engaged another contractor to execute the work. Due to the efflux of time, this Court is of the view that the termination of the contract cannot be set aside and the contract cannot be revived.

For the aforegoing reasons, writ petition is partly allowed. Impugned action of debarring the petitioner as well as forfeiting the security deposit is set aside. FCI is directed to refund the forfeited security amount along with interest @ 6% per annum from the date of deposit till refund, within a period of one month from the date of communication of a copy of this order. Insofar as the termination of the contract is concerned, the same is confirmed.

Pending miscellaneous application(s), is any, is disposed of.