S.G.CHATTOPADHYAY,J. - (1.)By filing this writ petition, the petitioner who is a company registered under the Companies Act, 1956 has challenged:
(i) The notice dtd. 18/6/2021 (Annexure-12) issued by the Tripura State Electricity Corporation Limited (TSECL for short) whereby the contract awarded to the petitioner by Notification of Award (NOA) dtd. 11/1/2021 (Annexure-5) was terminated and the Earnest Money Deposit (EMD for short) submitted by the petitioner in the shape of bank guarantee of an amount of Rs.2,73,83,153.00 (Rupees two crores seventy three lakhs eighty three thousand one hundred fifty three only) was forfeited by TSECL.

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(ii) The memorandum dtd. 23/6/2021 (Annexure-13) whereby the petitioner was put on the blacklist and debarred from participating in any tender of TSECL for next 5 years w.e.f. the financial year 2021-22.

(2.)The factual context of the case is as under:
The petitioner submitted its bid to the tender floated by TSECL for the works and supply contract, being a turnkey project, for up-gradation of Surjamaninagar Substation of TSECL from 132 KV to 400 KV. TSECL by issuing Notification of Award (NOA) dtd. 11/1/2021 (Annexure-5) confirmed the acceptance of the bid of the petitioner and awarded the contract to him. Among the other terms and conditions, petitioner was called upon to sign a contract agreement with TSECL within 28 days from the date of issuance of the Notification of Award (NOA) and furnish performance security at the rate of 10% of the contract price in the shape of bank guarantee. The petitioner furnished the EMD in the shape of bank guarantee of Rs.2,73,83,153.00 (Rupees two crores seventy three lakhs eighty three thousand one hundred fifty three only) vide B.G. No.495801GL0006620 dtd. 22/1/2020. Subsequently, the Government of India, Ministry of Finance, Department of Expenditure by issuing office memorandum No.F.9/4/2020-PPD dtd. 12/11/2020 (Annexure-8) decided to reduce performance security from existing 5-10% to 3% of the value of the contract for all existing contracts except the contracts which were under dispute in arbitration proceedings or Court proceedings respecting such dispute already started or contemplated. After such reduction of the rate of performance security, the petitioner approached TSECL by making several communications for reducing the performance security for the said contract to 3% of the contract price. But TSECL did not reduce the amount of performance security. Rather, by the impugned notice dtd. 18/6/2021 (Annexure-12) TSECL terminated the contract and forfeited the EMD submitted by the petitioner in the shape of bank guarantee on the ground that the petitioner failed to adhere to the schedule given by TSECL and comply with the instructions issued by TSECL for completing the contractual formalities which tantamounted to loss of faith and delayed the time bound centrally sponsored project of TSECL causing immense loss of credibility to TSECL.

[3] By another memorandum dtd. 23/6/2021 (Annexure-13), TSECL blacklisted the petitioner and debarred it from participating in any tender of TSECL for next 5 years.

[4] Petitioner's case is that despite reduction of performance security from 5-10% to 3% by the Ministry of Finance, Government of India by office memorandum dtd. 12/11/2020 (Annexure-8), TSECL insisted for 10% performance security and on the ground of failure of the petitioner to deposit 10% performance security, terminated the contract and forfeited the EMD already furnished by the petitioner without issuing any show cause notice to the petitioner which is grossly illegal and liable to be quashed.

[5] As stated, petitioner has also challenged memorandum dtd. 23/6/2021 (Annexure-13) whereby he was blacklisted and debarred from participation in any tender of TSECL for the next 5 years w.e.f. the financial year 2021-22. Petitioner has claimed that the disability created by the order of blacklisting is completely illegal because the petitioner was given no opportunity to represent his case before he was put on the blacklist.

[6] Having received notice, respondents No.1,2,3 and 4 who are the principal respondents have submitted counter affidavit on 8/7/2022. It has been asserted by the respondents that despite several communications followed by reminders, the petitioner did not perform the contractual formalities like signing of the contract agreement with TSECL and furnishing of performance security in terms of the bid document namely Instruction to Bidders (ITB). The respondents pleaded that pursuant to the various communications received from the petitioner, the respondents confirmed to the petitioner that reduction of performance security from 5-10% to 3% of the contract price in view of Government of India's memorandum dtd. 12/11/2020 was under the consideration of TSECL and petitioner was asked to complete the contractual formalities pending such consideration, but the petitioner did not turn up. Even no meeting convened by the respondents to finalize the contract was attended by the petitioner. It has been averred by the respondents that non-payment of the performance security as per the terms within the stipulated time and non signing of the contract agreement are sufficient causes for annulment of the award of contract and forfeiture of the EMD. Pursuant to that, they forfeited the bank guarantee after numerous letters and Emails to the petitioner to attend the kick off meeting and complete further formalities in terms of the ITB. But, the petitioner declined to do anything on the ground that bills of huge amount of the petitioner were pending with the respondents which according to the respondents tantamounted to unwillingness of the petitioner to execute the contract. As a result of the inaction of the petitioner, respondents suffered huge loss and the centrally sponsored project was delayed. The delay in execution of such time barred project has incurred huge commercial and financial loss to the respondents. The respondents have contended that in view of such conduct of the petitioner, his contract was terminated and the EMD was forfeited in terms of the contract documents and he was put on the blacklist for 5 years. According to the respondents, the writ petition is devoid of merit and liable to be dismissed.

[7] The writ petitioner in order to impeach the stand of the respondents submitted rejoinder affidavit on 22/7/2022, which reads as under:

"3.23 It is stated that the issuance of the memorandum by the Central Government after the issuance of the NIT by the Respondent No.1 would imply that the memorandum ought to be applicable on the terms and conditions of the NIT, and more so because the memorandum was brought in with a very specific purpose which was to ameliorate the financial stress that was being faced by industries at large. Therefore, it is wholly preposterous to suggest that the Petitioner was liable to deposit the Security Deposit amount of 10% of the contract price whereas Central Government's Order directed for a much reduced amount.

3.24 In light of the above, it is humbly submitted that not only was the Respondent No.1 acting in defiance of another of the Central Government but also in blatant disregard to the principles of natural justice while blacklisting and debarring the Petitioner. Such debarment without issuing a show-cause notice and calling upon the Petitioner to provide reason is patently illegal and ought to be called back by the Respondent no.1 immediately. It has been recognized time and again by the Hon'ble Supreme Court of India that debarment, which amounts to civil death of a contractor and its business, without even affording the opportunity to show cause to such contractor is completely in violation of the principles of natural justice and therefore, the same cannot be sustained.

3.25 It is trite law that no person and/or company may be blacklisted without being accorded a right of hearing, even if such right of hearing is not provided statutorily and/or contractually. The Respondents being a governmental body is bound to act in conformity with the principles of natural justice when interacting with members of the public. An order of blacklisting creates a disability for the concerned person and operates to the prejudice of the commercial person. It is stated that not only has the Respondent No.1 illegally and arbitrarily forfeited the earnest money deposited by the Petitioner as its bid security, but also blacklisted the Petitioner.

3.26 It is also settled law that principles of judicial review would apply to the exercise of contractual powers by government bodies in order to prevent arbitrariness, illegality and irrationality of decision making. It is humbly stated that this is not a case where the statute and the governing contractual documents were silent as to the manner and method, in which a company was to be sanctioned and in the extreme cases be debarred and/or blacklisted by the Respondent No.1. It is vital to note that there are governing contractual documents existing between the parties which explicitly provide for the specific manner and method in which a serious consequence like blacklisting may be allowed.

3.27 In view of the above, it is submitted that the primary documents, which govern the relationship between the parties including the manner of debarment (should such an event arise) are the Bidding Documents which include the Notice Inviting Tender, which includes the Invitation for Bids, Instructions to Bidders, Bid Data Sheet, the General Conditions of Contract, Special Conditions of Contract and Sample Forms and Procedures. The Bidding Documents have already been annexed to the writ petition and are not being reannexed to avoid prolixity.

3.28 It is stated that the Bidding Documents, more specifically Clause 36 of the Instructions to Bidders ("ITB") makes it abundantly clear that a firm and/or individual may face sanction or a period of ineligibility if they are engaged in corrupt, fraudulent, coercive, collusive, or obstructive practices. It is humbly submitted that the Petitioner was never found to be in violation of the specific requirement of and offences covered in the aforementioned Clause 36 of the ITB. No finding was ever given by the Respondent No.1 which would clearly evince that the Petitioner Company violated Clause 36 of the ITB in any manner whatsoever.

3.29 It is respectfully submitted that Clause 36 of the ITB has been put in place to curb and keep in check the transgressions and excesses of state power. The crux of Clause 36 is that a State entity, such as the Respondent No.1, should have extremely limited and minute grounds for debarring and/or blacklisting a firm or company.

3.30 However, the Respondent No.1 has indulged in grave excesses and have wholly transgressed the clear mandate of Clause 36 of the ITB, i.e. not to debar unless it is found that a Company has violated the limited grounds of Clause 36.

3.31 In addition to the transgression of the Bidding Documents, the Respondents have wholly given a go-bye to the Modifications which were brought in to ensure that if sanctions are levied against a Company, the same are done with checks and balances.

3.32 It is stated that the Modifications, which have already been set out in the captioned writ petition, clearly state that a failure to honour bids after emerging as successful "in two or more cases" may a Company be debarred. It is vital to note that the Petitioner has never failed to honour its bid, let alone to honour bids in two or more cases within the same year. In light of this, there did not exist any cogent reason as to why the Petitioner was blacklisted and such blacklisting and/or debarment is a clear transgression of the Bidding Documents and the Modifications.

3.33 In view of what has been stated herein, the Petitioner submits that the said Reply filed by the Respondents is vexatious in nature and is unsubstantiated in law, and the same may therefore not be relied upon by this Hon'ble Court. The Petitioner prays before this Hon'ble Court be pleased to not place any reliance on the said Reply, and the Respondents be directed to forthwith revoke the order of debarment and refund the Petitioner's earnest deposit money."

[8] Heard Mr. Somik Deb, learned senior advocate appearing along with Mr. S.D. Bhattacharjee and Ms. R. Chakraborty, learned advocates for the petitioner. Also heard Mr. Nepal Majumder, learned counsel appearing for the principal respondents.

[9] The basic stand of the petitioner is as under:

(i) Despite the notification dtd. 12/11/2020 of the Ministry of Finance, Government of India reducing performance security from 5-10% to 3%, TSECL was insisting for furnishing 10% performance security in violation of the decision of the Government of India which was completely illegal and contrary to law.

(ii) The petitioner claimed the benefit of the said decision dtd. 12/11/2020 of the Government of India and brought forward the hardships of the petitioner due to non-payment of its pending bills by TSECL. Inspite of that, TSECL without providing any opportunity of hearing to the petitioner terminated the contract and forfeited the EMD furnished by the petitioner which is unsustainable in law.

(iii) It is settled proposition of law that since blacklisting is a punitive measure which prevents a person from the privilege and advantage of entering into lawful relationship with the Government for the purposes of gains, the person affected must be given an opportunity to represent his case before he is put on the blacklist. Since no notice was issued to the petitioner prior to its blacklisting and no opportunity of hearing was given, the action of TSECL is completely illegal and liable to be quashed.

[10] Petitioner's counsel has relied on some decisions which will be referred to at the appropriate stage. As discussed, the present writ petition raises two issues for our consideration which are as under:

(i) Whether TSECL was justified in terminating the contract and forfeiting the EMD furnished by the petitioner in the shape of a bank guarantee by Annexure-12 on the ground that the petitioner did not pay 10% of the contract price as performance security despite Government of India's office memorandum dtd. 12/11/2020 (Annexure-8) reducing the rate of performance security from 10% to 3% for all tenders/contracts issued/concluded till 31/12/2021.

(ii) Whether the petitioner was entitled to a notice to be heard before the name of the petitioner was put on the blacklist and the petitioner was debarred from participation in any tender of TSECL for the next 5 years and whether such notice to be heard was served on the petitioner.

[11] First, we shall take up the second issue for consideration. Memorandum dtd. 23/6/2021 whereunder petitioner was blacklisted for 5 years reads as under:

"TRIPURA STATE ELECTRICITY CORPORATION LIMITED

(A Govt. of Tripura Enterprise)

No.01/DT/Corp. Office/TSECL/2021-22/17666-84 dtd. 23/6/2021

MEMORANDUM

Sub:- Debarring of M/s. Sterling and Wilson Pvt. Ltd., Mumbai 400 043, Maharashtra from participation in any Tender of TSECL for next 5(five) years.

Ref:- 1) NOA No. DGM/TD/AGT/2020-21/NOA/273, dt. 11/1/2021.

2) E-ES-19/20/35, dtd. 18/1/2021

3) F.16(99)/DGM/TD/AGT/2020-21/7064-67, dt. 8/2/2021.

4) F.16(99)/DGM/TD/AGT/2020-21/7238-40, dt. 23/2/2021.

5) F.16(99)/DGM/TD/AGT/2020-21/7462-67, dt. 16/3/2021.

6) E-ES-19/20/35, dtd. 22/3/2021

7) E-ES-19/20/35, dtd. 31/3/2021

8) F.5140/Corp. Office/TSECL/2021-22/222-27, dt. 1/4/2021.

9) F.192/Corp.Office/TSECL/2021-22/271-76, dt. 12/4/2021.

10) NEAGT/TLC/PLT-SMN/2020-21/394, dt. 28/4/2021

11) NEAGT/TLC/PLT-SMN/2020-21/410, dt. 6/5/2021

12) E-ES-19/20/35, dtd. 8/5/2021

Notification of Award (NOA) vide No. DGM/TD/AGT/2020- 21/NOA/273, dt. 11/1/2021 for the Project namely "Up-gradation of 132 KV Surjamaninagar Sub-Station of TSECL into 400 KV in Tripura" was issued by TSECL in favour of M/s. Sterling and Wilson Pvt. Ltd., Mumbai for an amount of Rs.117,00,57,532.00 inclusive of applicable GST.

As per terms and conditions laid down in the NOA, the firm was required to furnish Performance Securities and enter into Contract Agreement with TSECL within 28 (twenty eight) days from the date of issue of NOA.

M/s. Sterling and Wilson Pvt. Ltd., has not complied with the contractual formalities despite several correspondences made by TSECL in this regard. Further the firm has requested TSECL for cancellation of NOA dtd. 11/1/2021.

The above act of M/s. Sterling and Wilson Pvt. Ltd. has tantamount to loss of faith and has led to inordinate delay into the time-bound centrally sponsored Project of TSECL and has also caused immense loss of credibility to TSECL.

Consequently, Notification of Award (NOA) vide No.DGM/TD/AGT/2020-21/NOA/273, dt. 11/1/2021 has been terminated by TSECL vide No. F.1699/DGM/TD/AGT/2021-22/831- 38, dtd. 18/6/2021.

In view of all above, TSECL hereby decides for debarring of M/s. Sterling and Wilson Pvt. Ltd. from participation in any Tender of TSECL for next 5(five) years w.e.f. FY: 2021-22.

This is issued without prejudice to any other rights and remedies available to TSECL.

Sd/- (Debashis Sarkar) Director (Technical) Bidyut Bhavan, TSECL, Agartala.

To

M/s. Sterling and Wilson Pvt. Ltd.,

Universal Majestic, 9th Floor, P.L. Lokhande Marg,

Chembur (West),

Mumbai 400 043, Maharashtra"

[12] Mr. Somik Deb, learned senior advocate appearing for the petitioner has challenged the said memorandum mainly on the grounds that petitioner was entitled to a notice to be heard before the name of the petitioner was put on the blacklist. Counsel contends that no such notice was issued to the petitioner and moreover, the petitioner was blacklisted for a period of 5 years whereas the documents provide for debarment for a maximum period of 3 years and that too in exceptional cases. Counsel contends that since the cardinal principles of natural justice is not followed in the case, memorandum dtd. 23/6/2021 issued by TSECL whereby the petitioner was blacklisted is liable to be quashed. To nourish his contention, counsel has relied on the decision of the Apex Court in the case of M/s. Erusian Equipment and Chemicals Ltd. v. State Of West Bengal and Another reported in 1975 1 SCC 70 wherein the Apex Court has held that the order of blacklisting has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is unable to enter into advantageous relations with the Government because of the order of blacklisting. A person who has been dealing with the Government in the matter of sale and purchase of materials has a legitimate interest or expectation. When the State acts to the prejudice of a person it has to be supported by legality. The Hon'ble Apex Court has also held that since blacklisting tarnishes one's reputation, the State must act without discrimination and without unfair procedure. In paragraph 20 of the judgment, the Hon'ble Apex Court has held that person concerned should be given an opportunity to represent his case before he is put on the blacklist. Observation of the Apex Court is as under:

"20. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the blacklist."

[13] Counsel has also relied on the judgment of the Supreme Court in the case of Joseph Vilangandan v. The Executive Engineer, (PWD), Ernakulam and Ors. reported in 1978 3 SCC 36 wherein the Apex Court has reiterated that a notice giving clear intimation to the person concerned that it was proposed to debar him from taking any contract in future under the department is one of the fundamentals of fair play. Observation of the Apex Court is reproduced hereunder:

"17. The majority judgment of the Kerala High Court, inasmuch as it holds that a person is not entitled to a hearing, before he is blacklisted, must be deemed to have been overruled by the decision of this Court in Erusian Equipments (ibid) wherein it was held that:

Fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the black-list.

Controversy in the instant case, therefore, narrows down into the issue, whether such an opportunity was given to the appellant. Answer to this question will turn on an interpretation of the notice, dated April 17, 1968 (Ex. P-8) given by the Executive Engineer to the appellant. This notice has been extracted in a foregoing part of this judgment. The material sentence therein is :

You are therefore requested to show cause ... why the work may not be arranged otherwise at your risk and loss, through other agencies after debarring you as a defaulter........

The crucial words are those that have been underlined. They take their colour from the context. Construed along with the links of the sentence which precede and succeed them, the words "debarring you as a defaulter", could be understood as conveying no more than that an action with reference to the contract in question, only, was under contemplation. There are no words in the notice which could give a clear intimation to the addressee that it was proposed to debar him from taking any contract, whatever, in future under the Department. A perusal of the appellant's reply (Ex. P-7), dated May 20, 1968, sent to the Executive Engineer, also appears to show that by the word "debarring" mentioned in the Executive Engineer's letter dated April 17, 1968 (Ex. P-6), he understood as debarring him from executing the contract in question after declaring him as a defaulter, and then getting the same work done by other agencies, at his risk and loss. All that has been said in Ex. P-7 by the appellant is directed to justify that the non-execution of the contract was not due to his fault, but due to the delay on the part of the Department in handing over the building to him for starting the work within the time specified in the agreement, and consequently, if any loss would be incurred by the Department in getting the work done through any other agency, he would not be liable to make good the same. In short, the letter ( Ex.P-6) dated April 17, 1968 from the Executive Engineer, did not give any clear notice to the appellant that action to debar him from taking in future any contract, whatever, under the Department or its Ernakulam Division was in contemplation. The appellant was thus not afforded adequate opportunity to represent against the impugned action."

[14] Learned counsel of the petitioner further argued that order relating to blacklisting without complying with the fundamental principle of natural justice is completely illegal. Counsel has relied on the decision of the Apex Court in the case of Raghunath Thakur v. State of Bihar and Ors. reported in 1989 1 SCC 229 wherein the Apex Court has succinctly held that even if the rules do not express so, it is an elementary principle of natural justice that parties affected by any order should have right of being heard and making representations against the order (Para 4).

[15] Learned counsel has further relied on the decision of the Apex Court in the case of Southern Painters v. Fertilizers and Chemicals Travancore Ltd. and Anr. reported in 1994 Supp (2) SCC 699 wherein the Apex Court has taken similar view as in the case of M/s. Erusian Equipment and Chemicals Ltd. (Supra) and held that the fundamentals of fair play require that the person concerned should be given an opportunity of hearing before he is put on the blacklist.

[16] Learned counsel of the petitioner has vehemently argued that blacklisting or debarring a person from taking a contract in the department which is a state within the meaning of Article 12 of the Constitution is an administrative act and audi alteram pertam which is one of the cardinal principle of natural justice is a mandatory requirement before taking an action of blacklisting. Counsel has relied on the decision of the Supreme Court in the case of Gorkha Security Services v. Government (NCT of Delhi) and Ors. reported in 2014 9 SCC 105 wherein the Apex Court having followed the leading judgment in M/s. Erusian Equipment and Chemicals Ltd. (Supra) as well as the decision in the case of Raghunath Thakur (Supra) and held as under:

"16. It is a common case of the parties that the blacklisting has to be preceded by a show-cause notice. Law in this regard is firmly grounded and does not even demand much amplification. The necessity of compliance with the principles of natural justice by giving the opportunity to the person against whom action of blacklisting is sought to be taken has a valid and solid rationale behind it. With blacklisting, many civil and/ or evil consequences follow. It is described as "civil death" of a person who is foisted with the order of blacklisting. Such an order is stigmatic in nature and debars such a person from participating in government tenders which means precluding him from the award of government contracts.

17. Way back in the year 1975, this Court in Erusian Equipment and Chemicals Ltd. v. State of W. B. [1975 1 SCC 70], highlighted the necessity of giving an opportunity to such a person by serving a show-cause notice thereby giving him opportunity to meet the allegations which were in the mind of the authority contemplating blacklisting of such a person. This is clear from the reading of Paras 12 and 20 of the said judgment. Necessitating this requirement, the court observed thus:

"12. Under Article 298 of the Constitution the executive power of the Union and the State shall extend to the carrying on of any trade and to the acquisition, holding and disposal of property and the making of contracts for any purpose. The State can carry on executive function by making a law or without making a law. The exercise of such powers and functions in trade by the State is subject to Part III of the Constitution. Article 14 speaks of equality before the law and equal protection of the laws. Equality of opportunity should apply to matters of public contracts. The State has the right to trade. The State has there the duty to observe equality. An ordinary individual can choose not to deal with any person. The Government cannot choose to exclude persons by discrimination. The order of blacklisting has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is unable to enter into advantageous relations with the Government because of the order of blacklisting. A person who has been dealing with the Government in the matter of sale and purchase of materials has a legitimate interest or expectation. When the State acts to the prejudice of a person it has to be supported by legality.

* * *

20. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the blacklist".

18. Again, in Raghunath Thakur v. State of Bihar [1989 1 SCC 229] the aforesaid principle was reiterated in the following manner:-

"4. Indisputably, no notice had been given to the appellant of the proposal of blacklisting the appellant. It was contended on behalf of the State Government that there was no requirement in the rule of giving any prior notice before blacklisting any person. Insofar as the contention that there is no requirement specifically of giving any notice is concerned, the respondent is right. But it is an implied principle of the rule of law that any order having civil consequence should be passed only after following the principles of natural justice. It has to be realised that blacklisting any person in respect of business ventures has civil consequence for the future business of the person concerned in any event. Even if the rules do not express so, it is an elementary principle of natural justice that parties affected by any order should have right of being heard and making representations against the order. In that view of the matter, the last portion of the order insofar as it directs blacklisting of the appellant in respect of future contracts, cannot be sustained in law. In the premises, that portion of the order directing that the appellant be placed in the blacklist in respect of future contracts under the Collector is set aside. So far as the cancellation of the bid of the appellant is concerned, that is not affected. This order will, however, not prevent the State Government or the appropriate authorities from taking any future steps for blacklisting the appellant if the Government is so entitled to do in accordance with law i.e. after giving the appellant due notice and an opportunity of making representation. After hearing the appellant, the State Government will be at liberty to pass any order in accordance with law indicating the reasons therefor. We, however, make it quite clear that we are not expressing any opinion on the correctness of otherwise of the allegations made against the appellant. The appeal is thus disposed of."

[17] In the case of Kulja Industries Limited v. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Limited and Ors. reported in 2014 14 SCC 731, the Apex Court held that fair hearing to the party being blacklisted is an essential pre-condition for a proper exercise of the power and a valid order of blacklisting made pursuant thereto. The decision of M/s. Erusian Equipment and Chemicals Ltd. (Supra) was followed and the following observation was made by the Hon'ble Apex Court:

"17. That apart, the power to blacklist a contractor whether the contract be for supply of material or equipment or for the execution of any other work whatsoever is in our opinion inherent in the party allotting the contract. There is no need for any such power being specifically conferred by statute or reserved by contractor. That is because "blacklisting" simply signifies a business decision by which the party affected by the breach decides not to enter into any contractual relationship with the party committing the breach. Between two private parties the right to take any such decision is absolute and untrammelled by any constraints whatsoever. The freedom to contract or not to contract is unqualified in the case of private parties. But any such decision is subject to judicial review when the same is taken by the State or any of its instrumentalities. This implies that any such decision will be open to scrutiny not only on the touchstone of the principles of natural justice but also on the doctrine of proportionality. A fair hearing to the party being blacklisted thus becomes an essential pre-condition for a proper exercise of the power and a valid order of blacklisting made pursuant thereto. The order itself being reasonable, fair and proportionate to the gravity of the offence is similarly examinable by a writ court.

18. The legal position on the subject is settled by a long line of decisions rendered by this Court starting with Erusian Equipment and Chemicals Ltd. vs. State of W.B. [1975 1 SCC 70] where this Court declared that blacklisting has the effect of preventing a person from entering into lawful relationship with the Government for purposes of gains and that the Authority passing any such order was required to give a fair hearing before passing an order blacklisting a certain entity. This Court observed:

"20. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the blacklist."

Subsequent decisions of this Court in Southern Painters vs. Fertilizers and Chemicals Travancore Ltd. [1994 Supp (2) SCC 699]; Patel Engg. Ltd vs. Union of India [2012 11 SCC 257: 2013 1 SCC (Civ) 445]; B.S.N. Joshi and Sons Ltd. vs. Nair Coal Services Ltd. [2006 11 SCC 548]; Joseph Vilangandan vs. Executive Engineer (PWD) [1978 3 SCC 36] among others have followed the ratio of that decision and applied the principle of audi alteram partem to the process that may eventually culminate in the blacklisting of a contractor."

[18] Mr. Deb, learned senior advocate has also placed reliance on the decision of the Apex Court in the case of Vetindia Pharmaceuticals Limited vs. State of Uttar Pradesh and Anr. reported in 2021 1 SCC 804 and contended that again in the said decision, the Hon'ble Apex Court has reiterated the law laid down in the earlier decisions and held that show cause notice is mandatory for blacklisting or debarment of a contractor and the show cause notice must contain the specific proposal of blacklisting in clear terms. Counsel has referred to paragraph 10 of the judgment wherein the Apex Court having followed its earlier decision in the case of Gorkha Security Services (Supra) and has held as under:

"10. The question whether a show-cause notice prior to blacklisting mandates express communication why blacklisting be not ordered or was in contemplation of the authorities, this Court in Gorkha Security Services [Gorkha Security Services vs. State (NCT of Delhi), 2014 9 SCC 105] held as follows:-

"27. We are, therefore, of the opinion that it was incumbent on the part of the Department to state in the show-cause notice that the competent authority intended to impose such a penalty of blacklisting, so as to provide adequate and meaningful opportunity to the appellant to show cause against the same. However, we may also add that even if it is not mentioned specifically but from the reading of the show-cause notice, it can be clearly inferred that such an action was proposed, that would fulfil this requirement. In the present case, however, reading of the show-cause notice does not suggest that noticee could find out that such an action could also be taken. We say so for the reasons that are recorded hereinafter.

28. In the instant case, no doubt the show-cause notice dtd. 6/2/2013 was served upon the appellant. Relevant portion thereof has already been extracted above (see para 5). This show-cause notice is conspicuously silent about the blacklisting action. On the contrary, after stating in detail the nature of alleged defaults and breaches of the agreement committed by the appellant the notice specifically mentions that because of the said defaults the appellant was "as such liable to be levied the cost accordingly". It further says "why the action as mentioned above may not be taken against the firm, besides other action as deemed fit by the competent authority". It follows from the above that main action which the respondents wanted to take was to levy the cost. No doubt, the notice further mentions that the competent authority could take other actions as deemed fit. However, that may not fulfil the requirement of putting the defaulter to the notice that action of blacklisting was also in the mind of the competent authority. Mere existence of Clause 27 in the agreement entered into between the parties, would not suffice the aforesaid mandatory requirement by vaguely mentioning other "actions as deemed fit". As already pointed out above insofar as penalty of blacklisting and forfeiture of earnest money/security deposit is concerned it can be imposed only, "if so warranted". Therefore, without any specific stipulation in this behalf, the respondent could not have imposed the penalty of blacklisting.

* * *

33. When we apply the ratio of the aforesaid judgment to the facts of the present case, it becomes difficult to accept the argument of the learned Additional Solicitor General. In the first instance, we may point out that no such case was set up by the respondents that by omitting to state the proposed action of blacklisting the appellant in the show-cause notice, has not caused any prejudice to the appellant. Moreover, had the action of blacklisting being specifically proposed in the show-cause notice, the appellant could have mentioned as to why such extreme penalty is not justified. It could have come out with extenuating circumstances defending such an action even if the defaults were there and the Department was not satisfied with the explanation qua the defaults. It could have even pleaded with the Department not to blacklist the appellant or do it for a lesser period in case the Department still wanted to blacklist the appellant. Therefore, it is not at all acceptable that non-mentioning of proposed blacklisting in the show-cause notice has not caused any prejudice to the appellant. This apart, the extreme nature of such a harsh penalty like blacklisting with severe consequences, would itself amount to causing prejudice to the appellant."

[19] In respect of blacklisting, the principal respondents in their affidavit dtd. 8/7/2022 has asserted as under:

"12........The act of failure of M/s STERLING and WILSON PRIVATE LTD. in complying with the requisite commitments despite TSECL's repeated correspondences has tantamount to loss of faith and has led to inordinate delay into the time-bound centrally sponsored Project of TSECL and has also caused immense loss of credibility to TSECL. In view of the same, TSECL after obtaining approval of the Board of Directors of TSECL, has debarred the firm M/s STERLING and WILSON PRIVATE LTD., from participation in any tender of TSECL for next 5(five) years."

[20] In order to controvert the plea of the petitioner that no notice of hearing was issued to the petitioner before the order of blacklisting for 5 years was issued, the answering principal respondents in paragraph 30 of their counter affidavit has averred as under:

"30. That, in reply to the averments made in paragraph-2.26 the answering respondents submits that, TSECL has complied with all the formalities as per norms before debarring the firm M/s Sterling and Wilson Private Limited, from participation in any tender of TSECL for next 5(five) years vide Memorandum No. 01/DT/Corp. Office/ TSECL/ 2021-22/17666-84, dtd.: 23/6/2021."

[21] Even though the respondents annexed several written communications made between the respondents and the petitioner, they could not produce any document to show that notice of hearing was given to the petitioner before the name of the petitioner was put on blacklist.

[22] This apart, the Works and Procurement Policy and Procedure of Power Grid Corporation of India Ltd. (Annexure-6) under Clause C.3.11 on the subject of Black-listing of Firms/Banning of Business has specified the grounds on which a firm can be blacklisted or banned. The said Clause C.3.11.1 reads as under:

"C.3.11.1 Notwithstanding any other provision of this document, POWERGRID may decide to black-list firms or ban business with them, for specified time or indefinitely, based on facts and circumstances of the particular case generally on the following grounds:

(i) Corrupt or Fraudulent practices resorted to by Contractor including mis-representation of facts.

(ii) Wilful indulgence by the Contractor in supplying substandard material irrespective of whether pre-despatch inspection conducted by POWERGRID or not.

(iii) Repeated use of delaying tactic in fulfilling contractual obligations wilfully.

(iv) Established litigant nature of the contractor to derive undue benefit.

(v) Continued poor performance in several contracts."

[23] Clause C.3.11.3.1 of the said document contemplates that in the first stage show cause notice shall be issued to the contractor to be replied by the contractor within 30 days. It would be appropriate to reproduce Clause C.3.11.3.1 of the document which reads as under:

"C.3.11.3.1 In the first stage the approval for issuing show cause noticed (to be replied within one month by the contractor) shall be sought. On receipt of such approval, P&S group of Corporate Contracts shall issue the "So Cause" notice to be replied by the contractor within 30 days."

[24] We have scrutinized the documents annexed to the counter affidavit of the principal respondents received under the seal of the Registry of this Court on 8/7/2022 which are Annexure 1 to Annexure 16. By letter dtd. 1/4/2021 which is Annexure 8 of the respondents, petitioner was further asked to comply with all contractual formalities like deposit of performance securities and signing of contract agreement with TSECL and he was also asked to attend the kick off meeting scheduled on 7/4/2021 failing which, petitioner was told, necessary action would be taken as per Clauses of the bid document. Similar notice was issued to the petitioner on 12/4/2021 (Annexure-10 of the respondents) asking him to comply with the contractual formalities failing which necessary legal actions would be initiated. Some other communications to the petitioner from the respondents followed. Thereafter, the contract was terminated and the EMD furnished by the petitioner was forfeited and the petitioner was blacklisted and debarred for next 5 years from participation in any tender of TSECL under Annexure 16 of the respondents. Annexure 16 does not refer to any notice of hearing to the petitioner. Moreover, the documents furnished by the respondents under Annexure 1 to Annexure 16 along with their counter affidavit do not contain any notice to the petitioner containing a specific proposal of putting him on the blacklist. The Hon'ble Supreme Court in the judgments cited to supra has consistently viewed that show cause notice to the contractor with a specific proposal of blacklisting to provide him an opportunity of hearing before his name is put on the blacklist is one of the fundamentals of fair play and thus mandatory.

[25] Having applied the ratio decided by the Hon'ble Apex Court in the judgments aforesaid, we hold that the order of blacklisting dtd. 23/6/2021 under Annexure 13 to the petition stands vitiated from the very inception on the grounds aforesaid. Thus, the order of blacklisting merits interference. Resultantly, the same is set aside.

[26] Now, we shall deal with the issue as to whether the decision of the principal respondents terminating the contract and forfeiting the EMD of the petitioner under Annexure 12 to the writ petition is legally sustainable. The order dtd. 18/6/2021 (Annexure 12 to the writ petition) whereunder the contract was terminated and the EMD was forfeited reads as under:

"TRIPURA STATE ELECTRICITY CORPORATION LIMITED

(A Govt. of Tripura Enterprise)

No.F.1699/DGM/TD/AGT/2021-22/891-38 dt.18/06/2021

To

M/s. Sterling and Wilson Pvt. Ltd.,

Universal Majestic, 9th Floor, P.L. Lokhande Marg,

Chembur (West),

Mumbai 400813,

Maharashtra

Kind Attn: Mr. Rajib Dutta, Regional Head East (Substation) T&D Division.

Subject: Notice of Termination under Sec. -II Instruction to Bidders (ITB) Clause 35.2 against Notification of Award (NOA) No. DGM/TD/AGT/2020-21/NOA/273, dt, 11/1/2021 for the Power Project of TSECL namely "Up-gradation of 132 KV Surjamaninagar Substation of TSECL into KV in Tripura".

Ref:1) NOANo.DGM/TD/AGT/2020-21/NOA/273, dt.11/1/2021

2) E-ES-19/20/35, dtd. 18/1/2021

3) F.16(99)/DGM/TD/AGT/2020-21/7064-67, dt.8/2/2021.

4) F.16(99)/DGM/TD/AGT/2020-21/7238-40,dt. 23/2/2021.

5) F.16(99)/DGM/TD/AGT/2020-21/7462-67,dt. 16/3/2021.

6) E-ES-19/20/35, dtd. 22/3/2021

7) E-ES-19/20/35, dtd. 31/3/2021

8) F.5140/Corp.Office/TSECL/2021-22/222-27, dt.1/4/2021.

9) F.192/Corp.Office/TSECL/2021-22/271-76, dt.12/4/2021.

10) NEAGT/TLC/PLT-SMN/2020-21/394, dt.28/4/2021.

11) NEAGT/TLC/PLT-SMN/2020-21/410, dt.6/5/2021.

12) E-ES-19/20/35, dtd. 8/5/2021

Dear Sir,

1.0 This has reference to the subject Project awarded by Tripura State Electricity Corporation Limited (TSECL) on M/s. Sterling and Wilson Pvt. Ltd. and the correspondences including the e-mail communications from time to time.

2.0 As per terms and conditions laid down in the Notification of Award (NOA) vide NOA No. NOANo.DGM/TD/AGT/2020-21/NOA/273, dtd. 11/1/2021, and in line with Bid Clause Under Sec. -II Instruction to Bidders (ITB) Clause No.34 (Signing the Contract Agreement) and Clause No.35(Performance Security), the scheduled period to furnish Performance Securities and enter into Contract Agreement with TSECL was within 28(twenty eight) days from the date of issue of NOA. However, despite of repeated reminders and correspondences, you have not complied with the same.

3.0 Please note that you have failed to adhere to the schedule given by TSECL and moreover you have not complied with any instructions or requests issued by TSECL for completing the contractual formalities.

4.0 It may be mentioned that the above act of M/s. Sterling and Wilson Pvt. Ltd. has tantamount to loss of faith and has led to inordinate delay into the time bound centrally sponsored Project of TSECL and has also cause immense loss of credibility to TSECL.

5.0 In view of the above, and your failure in meeting commitments by you despite TSECL's repeated correspondences, the subject Notification of Award (NOA) vide No.DGM/TD/AGT/2020- 21/NOA/273, dtd. 11/1/2021 is hereby terminated in line with Bid Clause under Sec. -II Instruction to Bidders (ITB) Clause No.35.2 [Failure of the successful Bidder to comply with the requirements of ITB Clause No.34 ((Signing the Contract Agreement) and Clause No.35 (Performance Security)]. Upon termination and in the line with ITB Clause No.35.2, the Bid Security (EMD amount) submitted in the shape of Bank Guarantee of Rs.2,73,83,153.00 (Rupees two crore seventy three lac eighty three thousand one hundred and fifty three only) (B.G.No.495801GL0006620, Dt- 22/1/2020. Claim period valid up to 31/3/2022) will be forfeited by TSECL.

6.0 This is without prejudice of TSECL's other rights available under the terms and condition of the NOA.

Yours faithfully

For and on behalf of Tripura State Electricity Corporation Limited

Deputy General Manager

Transmission Division

TSECL, 79 Tilla, Agartala."

[27] Main ground of challenge to the said order is that Ministry of Finance, Government of India by order dtd. 12/11/2020 under Annexure 8 decided to reduce performance security from 5-10% to 3% of the value of the contract which was made applicable to all tenders/contracts issued/concluded till 31/12/2021. Learned counsel of the petitioner contended that the case of the petitioner was squarely covered under the said office memorandum (Annexure 8) because the contract was awarded to the petitioner by issuing NOA dtd. 11/1/2021 (Annexure 5). Counsel argued that despite the said memorandum issued by the Government of India reducing the performance security to 3%, the respondents were insisting upon the petitioner to furnish 10% performance security which was issued to give relief to the contractors in view of the slowdown in economy and financial crunch suffered by them due to Covid pandemic. Counsel contends that the respondents being state within the meaning of Article 12 of the Constitution should have acted in furtherance of the said decision of the Government of India. In contrary, they created pressure on the petitioner to furnish 10% performance guarantee and ultimately terminated his contract and forfeited the performance guarantee furnished in violation of the said decision of the Government of India which is grossly illegal and unsustainable in law.

[28] Counsel has also contended that huge amount of bills of the petitioner were pending with the respondents for clearance. Petitioner made written communications with the respondents to appreciate the hardships faced by the petitioner and consider for reducing the performance security to the extent of 3% in terms of Government of India's decision. The respondents paid no heed to the request of the petitioner and terminated the contract and forfeited the EMD. Counsel, therefore, argued for setting aside the termination order dtd. 18/6/2021 (Annexure-12 to the writ petition). Counsel has also contended that before the termination and forfeiture order was issued, petitioner was not put on notice of such action and thus no opportunity was given to him to explain the facts and circumstances on his defence. Relying on the decision of the Apex Court in the case of S.L. Kapoor v. Jagmohan and Ors. reported in 1980 4 SCC 379 , counsel contends that non-observance of principles of natural justice is itself a prejudice to any man for which no separate proof of prejudice is necessary. In this regard, the Apex Court in paragraph 24 of the judgment has observed as under:

"24..........................................................................................

In our view the principles of natural justice know of no exclusionary rule dependent on whether it would have made any difference if natural justice had been observed. The nonobservance of natural justice is itself prejudice to any man and proof of prejudice independently of proof of denial of natural justice is unnecessary. It will comes from a person who has denied justice that the person who has been denied justice is not prejudiced. As we said earlier where on the admitted or indisputable facts only one conclusion is possible and under the law only one penalty is permissible, the Court may not issue its writ to compel the observance of natural justice, not because it is not necessary to observe natural justice but because Courts do not issue futile writs. We do not agree with the contrary view taken by the Delhi High Court in the judgment under appeal."

[29] Counsel has further contended that the defendants have taken the plea that despite repeated requests and demands made by them, the petitioner failed to comply with the contractual liabilities by paying the performance security and signing the contract for which the contract was terminated and EMD was forfeited. According to learned counsel of the petitioner, the contract was rescinded by the respondents without issuing any notice to the petitioner. Therefore, the respondents are liable to refund the EMD to the plaintiff. Counsel submits that the unilateral rescission of the contract by the respondents being arbitrary and unreasonable is not binding on the petitioner. Therefore, he is entitled to the refund of the EMD. In support of his contention, counsel has relied on the decision of the Apex Court in the case of Ramachandra Narayan Nayak v. Karnataka Neeravari Nigam Limited and Ors. reported in 2013 15 SCC 140 wherein the Apex Court in paragraph 51 of the judgment has held as under:

"51. Defendant 3 passed the order of rescinding the contract without issuing any show-cause notice or holding an enquiry, as required under Clause 3(d) of the contract and therefore the learned trial judge has rightly recorded the findings on the aforesaid contentious issues in favour of the plaintiff and rightly held that the rescinding of the contract was not justified. The unilateral rescission of the contract with the plaintiff by Defendant 3 is arbitrary and unreasonable. The action of Defendant 3 in rescinding the contract has resulted in serious civil consequences of imposition of penalty and forfeiture of the earnest money deposit amount, security deposit and withholding the bill amount in relation to the execution of the work by the plaintiff. Therefore, Defendant 3 before rescinding the contract, by invoking his power under Clause 3(d) of the agreement, should have complied with the conditions mentioned in the said clause as the same are mandatory."

[30] Relying on the decision of the Apex Court in the case of Managing Director, Haryana State Industrial Development Corporation and Ors. v. Hari Om Enterprises and Anr. reported in 2009 16 SCC 208, counsel of the petitioner has stated that the Apex Court in this judgment has succinctly held that the drastic power of forfeiture ordinarily should be undertaken as a last resort for which sound reasons have to be assigned. Counsel contends that in the given case, TSECL committed mistake by not providing the benefit of the decision of the Government of India by reducing the rate of performance security from 10% to 3%. TSECL taking advantage of its own wrong held the petitioner guilty of delaying the execution of the projects and forfeited the EMD after termination of contract which is not permissible. Counsel has referred to paragraph 27 of the judgment which reads as under:

"27. The jurisdiction of "State" to resort to the drastic power of resumption and forfeiture ordinarily should be undertaken as a last resort. Keeping in view the fact that the Corporation was obligated to comply with the principles of natural justice and, particularly, in view of the fact that was required to be determined was the capacity as also bona fides of an entrepreneur to start an industrial undertaking on the plots, the Corporation was required to assign some reasons as to why the plot in question had to be resumed. While doing so, it evidently was required to take into consideration its own conduct. A party cannot take advantage of its own wrong. While State takes penal action against the allottee, its bona fides would be one of the relevant factors before an order of resumption and forfeiture of the amount deposited is passed."

[31] Counsel contends that even though principal respondents made communications with the petitioner asking him to comply with the contractual liabilities by paying 10% performance security and signing the contract, no notice was issued to the petitioner conveying the proposed action of termination of contract and forfeiture of EMD in specific terms. Counsel, therefore, urges the Court to issue direction to the respondents for refund of EMD to the petitioner by setting aside Annexure 12.

[32] Respondent's counsel on the other hand has referred to the bid documents and contended that the Instructions to Bidders (for short ITB) in Sec. II under Clause 35.2 contains as under:

"35. Performance Security

* * * *

35.2 Failure of the successful Bidder to comply with the requirements of ITB Clause 34 or Clause 35 shall constitute sufficient grounds for the annulment of the award and forfeiture of the bid security, in which event the Employer may make the award to the next lowest evaluated Bidder or call for new bids."

[33] Counsel has also referred to Clause 34 of the said document which reads as under:

"34. Signing the Contract Agreement

34.1 At the same time as the Employer notified the successful Bidder, that its bid has been accepted, the Employer in consultation with the Bidder will prepare the Contract Agreement provided in the Bidding Documents, incorporating all agreements between the parties.

34.2 The Contract Agreement shall be prepared within twenty-eight 28 days of the Notification of Award and the successful Bidder and the Employer shall sign and date the Contract Agreement immediately thereafter."

[34] Mr. Nepal Majumder, learned counsel of TSECL has vehemently argued that despite several communications made on behalf of the principal respondents, the petitioner did not sign the contract agreement within the stipulated time after the Notification of Award (NOA) was issued to the petitioner as a successful bidder. Mr. Majumder, learned counsel has referred to the said communications which are at Annexure 1 to Annexure 16 of the respondents.

[35] Counsel contends that under Annexure 1 dtd. 11/1/2021, the acceptance of the bid of the petitioner was communicated to him and the petitioner was informed that the Notification of Award (NOA) constituted formation of the contract which came into force with immediate effect and petitioner was asked to enter into contract agreement by signing the document within 28 days from the date of NOA. Under Annexure 2 dtd. 18/1/2021, the petitioner acknowledged the receipt of the NOA and referred to Government of India's decision to reduce the rate of performance security from 10% to 3% of the contract value. Under Annexure 3 dtd. 8/2/2021, respondents informed the petitioner that performance security will remain the same i.e. 10% of the contract value as per NOA and the petitioner requested to submit the performance security as per NOA. Annexure 4 of the respondents indicate that under Annexure 4 dtd. 23/2/2021, petitioner was again requested to submit the performance security as per NOA and attend the kick off meeting so that the project could be started as soon as possible. Under Annexure 5 dtd. 16/3/2021, petitioner was again requested to deposit performance security in terms of the NOA. Petitioner was requested to attend the kick off meeting scheduled on 24/3/2021 and comply with the contractual formalities like furnishing of performance security and signing of contract agreement in terms of the bid document.

[36] In response to Annexure 5 dtd. 16/3/2021, petitioner by its letter dtd. 22/3/2021 under Annexure 6 informed the respondents that petitioner was under tremendous pressure due to closure of financial year and requested the respondents to postpone the kick off meeting to the 1st week of April, 2021. By a letter dtd. 31/3/2021, under Annexure 7, the petitioner informed the principal respondents with reference to the NOA that huge amount of bill of the petitioner (Rs.5,29,27,133.00) was pending with the respondents. Petitioner stated that as an EPC contractor, it was very difficult to sustain during the pandemic situation if such huge amount was outstanding with the respondents. The petitioner company informed the respondent that the SWPL Board of the company refused permission to execute the present contract. Petitioner, therefore, requested the respondents for cancellation of the NOA and refund the EMD. It would be appropriate to reproduce the said letter (Annexure 7) dtd. 31/3/2021 of the petitioner which is as under:

"STERLING and WILSON

Our Ref: E-ES-19/20/35 Date: 31/3/2021

The Dy. General Manager

Transmission Division

Tripura State Electricity Corporation Ltd.

79-Tilla, Agartala- 799006

West Tripura

Dear Sir,

Ref: 1) UP-GRADATION OF 132 KV SURJAMANINAGAR SUBSTATION OF TSECL INTO 400 KV IN TRIPURA (NIT No. DGM/TD/AGT/2019-20/16)

2) NOA No.: DGM/TD/AGT/2020-21/NOA/273 dtd: 11/1/2021

3) LOA Ref. No: AGM/TC/2016-17/47 dtd: 28/2/2017 for Renovation and Up-Gradation of Protection System in the Substations in the State of Tripura

Sub: Issues related to the Outstanding Amount as on date from M/s. TSECL

This has reference to the LOA Ref. No: AGM/TC/2016-17/47 dtd.: 28/2/2017 for Renovation and Up -Gradation of Protection System in the Substations in the State of Tripura.

As you aware that we are yet to receive payment of Rs.5.30 Cr. from M/s. TSECL on account of RA Bill. Kindly refer the below table wherein the outstanding amount is clearly shown.

From the above, you can understand that such a huge amount is pending from TSECL end for approx. 2 year. As an EPC contractor it is very difficult to sustain during this pandemic situation by carrying this huge amount of outstanding.

Moreover, we have already paid to our vendors and contractors for the job executed against RA bills. Hence, we are hugely cash negative from last 1 year and facing various challenges due to non-payment by TSECL.

With reference to the Clause No.32.3 of NIT regarding Due Dates for Payments, M/s. TSECL is bound to make progressive payment as and when the payment is due as per the terms of payment set forth as herein after. Hence nonpayment to SWPL from last 2 years is clearly a contractual violation and would request you to release the outstanding payment with immediate effect.

Also to note that, in the above payment scenario it would be very difficult for us to execute recent placed NOA No.: DGM/TD/AGT/2020- 21/NOA/273 dtd: 11/1/2021 for UP-Gradation Of 132 kv Surjamaninagar Substation of TSECL Into 400 kV in Tripura against Our quotation ref: E-ES-19/20/35 dtd: 5/3/2020.

As such, SWPL Board has refused permission to us to execute this contract. Therefore, we hereby request you for cancelation the NOA of Surjamaninagar Substation and release our EMD BG per return.

Thanking you and assuring you of our best service at all times.

Yours faithfully,

For STERLING AND WILSON PRIVATE LIMITED.

Sd/-

RAJIB DUTTA

(REGIONAL HEAD EAST (SUBSTATION) T and D)"

[37] Under Annexure 8 dtd. 1/4/2021, TSECL informed the petitioner that until and unless the balance works are complete and completion certificate is sent by TSECL to National Load Despatch Centre (NLDC), final instalment of fund would not be released by NLDC in favour of TSECL to enable TSECL to make payment against the dues claimed by the petitioner. Petitioner was again requested to comply with the contractual formalities and execute the work in terms of NOA and attend the kick off meeting scheduled on 7/4/2021 failing which, it was stated that actions would be taken as per the bid document. Under Annexure 9, mail was sent to the petitioner inviting him to the kick off meeting scheduled on 7/4/2021 at 03.30 pm in Kolkata. Under Annexure 10 dtd. 12/4/2021, TSECL informed the petitioner that the proposal for reduction of performance security from 10% to 3% was under the consideration of TSECL. Petitioner was informed that despite repeated requests, he did not attend the meeting on 7/4/2021 which showed unwillingness of the petitioner to execute the project which was a priority project of the State Government. Petitioner was asked to respond in writing and comply with the contractual formalities failing which necessary legal actions would be taken against the petitioner. By another letter dtd. 28/4/2021 under Annexure 11, TSECL asked the petitioner to convey its action plan regarding commencement of the work because no man and material was yet mobilized by the petitioner to the work site and despite repeated communication, petitioner did not attend any kick off meeting for commencement of works. By a letter dtd. 6/5/2021 under Annexure 12, TSECL again wanted the petitioner to communicate its action plan regarding commencement of the work to TSECL. In response, petitioner by a letter dtd. 8/5/2021 under Annexure 13 claimed that the bid was valid till 31/1/2021. Petitioner claimed refund of the EMD since validity of the bid expired and the parties could not settle the issue of performance security.

[38] In view of the response received from the petitioner, the respondent terminated the contract and forfeited the EMD under communication dtd. 18/6/2021 (Annexure 14 of the respondents). Under communication dtd. 19/6/2021 (Annexure 15 of the respondents), the respondents requested the Manager (Forex), Union Bank of India, Industrial Finance Branch, Mumbai to credit the performance security furnished in the shape of bank guarantee into the account of the respondents and under memorandum dtd. 23/6/2021 (Annexure 16 of the respondents) petitioner was blacklisted and debarred from participation in any tender of TSECL for the next 5 years.

[39] It would clearly emerge from the communication of the petitioner dtd. 31/3/2021 (Annexure 7 of the respondents) and the communication dtd. 8/5/2021 (Annexure 13 of the respondents) that despite repeated requests of the respondents, the petitioner declined to perform his contractual liabilities and execute the work. Several kick off meetings were organized by the respondents for commencement of the work. But the petitioner did not attend any of those meetings. Under communication dtd. 12/4/2021 (Annexure 10 of the respondents), the respondent categorically stated that the proposal for reduction of the performance security from 10% to 3% was under the consideration of TSECL. When the petitioner raised the plea of pendency of outstanding bills, respondents replied that unless completion certificate of the present work was despatched to the Nodal agency of TSECL called NLDC, final instalment of fund would not be released. Petitioner was, therefore, requested by the respondents to execute the work so that such completion certificate could be sent to NLDC. Despite the repeated requests of the respondents, petitioner did not mobilize his men and materials to the work site. There is no doubt that as a result of inaction of the petitioner, the priority project of TSECL was delayed causing huge loss to them. TSECL in their communication made to the petitioner referred to the Clauses of the bid document and proposed that appropriate action in terms of those Clauses would be taken against the petitioner in the event of failure to execute the work. In these circumstances, the plea of the petitioner that appropriate notice was not served on him before termination of contract and forfeiture of EMD is not acceptable. Moreover, petitioner company itself by letter dtd. 31/3/2021 (Annexure 7 of the respondents) wanted cancellation of the award of contract. Also by letter dtd. 8/5/2021 (Annexure 13 of the respondents), petitioner claimed refund of the EMD without taking any action towards execution of the work.

[40] For the reasons stated above, we decline to interfere with the notice dtd. 18/6/2021 (Annexure 12 to the writ petition) whereby the contract was terminated and petitioner's EMD was forfeited by TSECL (respondent). However, for the reasons stated in the preceding paragraphs, the memorandum dtd. 23/6/2021 (Annexure 13 to the writ petition) whereunder the petitioner was put on the blacklist and debarred from participating in any tender of TSECL for the next 5 years stands quashed and set aside.

[41] In terms of the above, the writ petition is disposed of. Pending application(s), if any, shall also stand disposed of.

;