Case: M/S Patel Enginnering Ltd Vs. Union Of India

loss to NHAI.” 20. The learned counsel for the petitioner argued that Clause 4 of the bid document stipulates blacklisting to be one of the actions that can be taken against a bidder or contractor, if the 2nd respondent comes to the conclusion that such a person is guilty of any one of the unacceptable practices, referred to earlier. Imposing the same penalty on a person, who is not guilty of any one of the unacceptable practices, though such a person is guilty of dereliction of some legal obligation, would amount to imposition of a punishment, which is disproportionate to the dereliction. In support of the submission, the learned counsel relied upon the Judgment of this Court in Teri Oat Estates (P) Ltd. v. U.T.Chandigarh and others, (2004) 2 SCC 130. 21. It was a case, where allotment of a piece of land, made under the Capital of Punjab (Development and Regulation) Act, 1952 and the Rules made thereunder, was cancelled on the ground that the allottee did not make the payment of the requisite instalments agreed upon. One of the submissions made by the allottee (appellant before this Court) was that the action of the Chandigarh administration, seeking to evict the appellant and resume the land, lacked proportionality in the background of the specific facts of that case. This Court explained the doctrine of proportionality at paras 45 and 46, as follows: “45. The said doctrine originated as far back as in the 19th century in Russia and was later adopted by Germany, France and other European countries as has been noticed by this Court in Om Kumar v. Union of India.46. By proportionality, it is meant that the question whether while regulating exercise of fundamental rights, the appropriate or least restrictive choice of measures has been made by the legislature or the administrator so as to achieve the object of the legislation or the purpose of the administrative order, as the case may be. Under the principle, the court will see that the legislature and the administrative authority “maintain a proper balance between the adverse effects which the legislation or the administrative order may have on the rights, liberties or interests of persons keeping in mind the purpose which they were intended to serve”. 22. Tested in the light of the abovementioned principle, we are required to examine; (1) the purpose sought to be achieved by the impugned decision of the 2nd respondent to blacklist the petitioner; and (2) the adverse effects, the impugned action may have on the rights of the petitioner. 23. From the impugned order it appears that the 2nd respondent came to the conclusion that; (1) the petitioner is not reliable and trustworthy in the context of a commercial transaction; (2) by virtue of the dereliction of the petitioner, the 2nd respondent suffered a huge financial loss; and (3) the dereliction on the part of the petitioner warrants exemplary action to “curb any practice of ‘pooling’ and ‘mala fide’ in future”. 24. We do not find any illegality or irrationality in the conclusion reached by the 2nd respondent that the petitioner is not (commercially) reliable and trustworthy in the light of its conduct in the context of the transaction in question. We cannot find fault with the 2nd respondent’s conclusion because the petitioner chose to go back on its offer of paying a premium of Rs.190.53 crores per annum, after realizing that the next bidder quoted a much lower amount. Whether the decision of the petitioner is bona fide or mala fide, requires a further probe into the matter, but, the explanation offered by the petitioner does not appear to be a rational explanation. The 2nd respondent in the impugned order, while rejecting the explanation offered by the petitioner, recorded as follows: “Further the fact remains that clarification / amendments communicated by NHAI were ‘minor’ and cannot be attributed as a cause for occurrence of an ‘error’ of ‘major’ nature and magnitude. With project facilities clearly spelt out in the RFP document, the project cost gets frozen well in advance and similarly traffic assessment & projections, which largely impact the financial assessment, are also not expected to be left for last few days of bid submission. Therefore stating that an ‘error’ of this nature and magnitude occurred is neither correct nor justified……… “(Emphasis supplied) 25. We cannot say the reasoning adopted by the 2nd respondent either irrational or perverse. The dereliction, such as the one indulged in by the petitioner, if not handled firmly, is likely to result in recurrence of such activity not only on the part of the petitioner, but others also, who deal with public bodies, such as the 2nd respondent giving scope for unwholesome practices. No doubt, the fact that the petitioner is blacklisted (for some period) by the 2nd respondent is likely to have some adverse effect on its business prospects, but, as pointed out by this Court in Jagdish Mandal v. State of Orissa and others, (2007) 14 SCC 517: “Power of judicial review will not be invoked to protect private interest at the cost of public interest, or to decide contractual disputes.” The prejudice to the commercial interests of the petitioner, as pointed out by the High Court, is brought about by his own making. Therefore, it cannot be said that the impugned decision of R-2 lacks proportionality.26. Coming to the submission that R-2 ought to have given an oral hearing before the impugned order was taken, we agree with the conclusion of the High Court that there is no inviolable rule that a personal hearing of the affected party must precede every decision of the State. This Court in Union of Indian and another v. Jesus Sales Corporation, (1996) 4 SCC 69 , held so even in the context of a quasi-judicial decision. We cannot, therefore, take a different opinion in the context of a commercial decision of State. The petitioner was given a reasonable opportunity to explain its case before the impugned decision was taken.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]24. We do not find any illegality or irrationality in the conclusion reached by the 2nd respondent that the petitioner is not (commercially) reliable and trustworthy in the light of its conduct in the context of the transaction in question. We cannot find fault with the 2ndconclusion because the petitioner chose to go back on its offer of paying a premium of Rs.190.53 crores per annum, after realizing that the next bidder quoted a much lower amount. Whether the decision of the petitioner is bona fide or mala fide, requires a further probe into the matter, but, the explanation offered by the petitioner does not appear to be a rational explanation. The 2nd respondent in the impugned order, while rejecting the explanation offered by the petitioner, recorded asthe fact remains that clarification / amendments communicated by NHAI wereand cannot be attributed as a cause for occurrence of annature and magnitude. With project facilities clearly spelt out in the RFP document, the project cost gets frozen well in advance and similarly traffic assessment & projections, which largely impact the financial assessment, are also not expected to be left for last few days of bid submission. Therefore stating that anof this nature and magnitude occurred is neither correct nor justified………. We cannot say the reasoning adopted by the 2nd respondent either irrational or perverse. The dereliction, such as the one indulged in by the petitioner, if not handled firmly, is likely to result in recurrence of such activity not only on the part of the petitioner, but others also, who deal with public bodies, such as the 2nd respondent giving scope for unwholesome practices. No doubt, the fact that the petitioner is blacklisted (for some period) by the 2nd respondent is likely to have some adverse effect on its business prospects, but, as pointed out by this Court in Jagdish Mandal v. State of Orissa and others, (2007) 14 SCCof judicial review will not be invoked to protect private interest at the cost of public interest, or to decide contractualprejudice to the commercial interests of the petitioner, as pointed out by the High Court, is brought about by his own making. Therefore, it cannot be said that the impugned decision oflacks proportionality.26. Coming to the submission thatought to have given an oral hearing before the impugned order was taken, we agree with the conclusion of the High Court that there is no inviolable rule that a personal hearing of the affected party must precede every decision of the State. This Court in Union of Indian and another v. Jesus Sales Corporation, (1996) 4 SCC 69 , held so even in the context of adecision. We cannot, therefore, take a different opinion in the context of a commercial decision of State. The petitioner was given a reasonable opportunity to explain its case before the impugned decision was taken.