Delhi High Court M/S Avinash Em Projects Private Limited vs M/S Gail (India) Limited on 6 February, 2015 THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 06.02.2015 + W.P.(C) 2041/2014 & CM Nos. 4256/2014 & 14287/2014 M/S AVINASH EM PROJECTS PRIVATE LIMITED ..... Petitioner versus M/S GAIL (INDIA) LIMITED ..... Respondent Advocates who appeared in this case: For the Petitioner : Mr Sanjiv Kakra, Ms Vaishali Kakra , Mr Bheem Sain Jain, Mr Varun Gowda and Mr Rohit Oberoi. For the Respondents : Mr Parag Tripathi, Sr. Advocate with Mr Pragyan Sharma, Ms Kanika Tandon and Mr Nitihesh Kumar. HON'BLE MR JUSTICE VIBHU BAKHRU JUDGMENT VIBHU BAKHRU, J 1. The petitioner has filed the present petition impugning an order of the respondent dated 18.03.2014 (variously referred to as 'the blacklisting order' or 'the impugned order') whereby the respondent has banned the petitioner for an indefinite period from doing any future projects with the respondent or participating in bidding process for any of its tenders in future. The said decision is subject to review after a period of ten years. 2. The brief facts that are relevant for examining the controversy in the present petition are as under: W.P.(C) 2041/2014 Page 1 of 25 2.1 The respondent GAIL (India) Limited (hereafter also referred to as 'GAIL') is a stateowned natural gas processing and distribution company in India. The respondent invited ETender no.8000002161 for laying of pipelines of spurlines to Bhilwara and Chittorgarh and augmentation of existing Vijaipur Kota pipeline (hereafter 'ETender 2161'). The complete scope of work of the ETender 2161was divided into 5 parts (Part A, B, C, D and E). 2.2 Paragraph 4.2 of the Invitation for Bids (hereafter 'IFB') stipulated that the Indian Bidders shall have minimum working capital of `30 million for Part D and `18.5 million for Part E, i.e. an aggregate of `4.85 crores, as per their immediate preceding year's audited financial results. In the event of inadequate working capital, the bidder was required to supplement the shortfall with a letter issued by the bidder's banker (having net worth not less than `1000 million) confirming availability of a line of credit to meet the specified working capital requirement. In the event, the audited financial results for the immediate preceding financial year were not available, bidders had the option to submit the audited financial result for the year immediately prior to that year for consideration of the working capital calculation. Paragraph 9 of IFB provides that a bidder would furnish documentary evidence by way of copies of work order, completion certificate, balance sheet or audited financial statements including the profit and loss account etc. along with the bid, to establish that the qualification criteria was met. 2.3 Apart from ETender 2161, the respondent also invited ETender No.8000002119 for annual rate contract for construction of pipelines and W.P.(C) 2041/2014 Page 2 of 25 associated facilities in Northern Region for supplying gas to new/existing consumers (hereinafter 'ETender 2119') and Etender No.8000003564 for annual rate contract for construction of pipelines and associated facilities in Northern Region for supplying gas to new/existing consumers (hereinafter 'ETender 3564'). 2.4 On 06.09.2010, the petitioner submitted its bid for Parts D and E of ETender 2161 and ETender 2119. Along with its bids, the petitioner submitted an audited financial statement dated 21.08.2010, which reflected the petitioner's company's working capital as on 31.03.2010 to be `6.96 crores approximately. The respondent awarded the contract for ETender 2161 and ETender 2119 to the petitioner based on the information and documents supplied by the petitioner in its bids. 2.5 The respondent issued a Show Cause Notice dated 29.07.2013 alleging that a forged and manipulated audited financial statement dated 21.08.2010 was submitted to secure the tenders. It was pointed out that the balance sheet submitted to the Registrar of Companies, Delhi for the year 201011 reflected the working capital of the petitioner company, as on 31.03.2010, as `3.01 crores approximately. The petitioner was called upon to show cause as to why penal action of banning the petitioner from doing any business with GAIL not be initiated. 2.6 The petitioner, by its letter dated 07.08.2013, replied that at the time of submission of the bid, the balance sheet for the year 200910 was under scrutiny and was yet to be finalized a