LexTHE BLUE DREAMZ ADVERTISING PVT. LTD. & ANR. versus KOLKATA MUNICIPAL CORPORATION & ORS.
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[2024] 8 S.C.R. 189 : 2024 INSC 589 The Blue Dreamz Advertising Pvt. Ltd. & Anr. v. Kolkata Municipal Corporation & Ors. (Civil Appeal No. 8516 of 2024) 07 August 2024 [B.R. Gavai, Sanjay Karol and K.V. Viswanathan,* JJ.] Issue for Consideration Where the case is of an ordinary breach of contract and the explanation offered by the person concerned raises a bona fide dispute, whether blacklisting/debarment can resorted to as a penalty. Headnotes† Tender – Tender conditions – Breach of contract – Blacklisting/ debarment – Respondent no.1-Corporation invited bids for allotment of contract for display of advertisement on street hoardings (including V shaped), Bus passenger shelter and kiosks – Appellant was the successful bidder – There were issues between the appellant and the Corporation with regard to the fulfilment of the reciprocal obligations in the bid document – Following which appellant was blacklisted – By an order of 02.03.2016, the Corporation debarred the appellant from participating in any tender for a period of five years – The Single Judge of the High Court set aside the order of debarment on the ground that there was a bona fide civil dispute between the parties – However, the Division Bench of the High Court set aside the judgment of the Single Judge of the High Court – Justified or not: Held: The appellant, after the award of the tender, has admittedly paid an amount of Rs. 3,71,96,265/-, though, according to the Corporation, the outstanding amount as on the date of the debarment was Rs. 14,63,24,727/- – However, as would be clear from the facts, right from the inception there have been issues between the appellant and the Corporation with regard to the fulfilment of the reciprocal obligations in the bid document – There was exchange of correspondence between the parties with each side blaming the other for not performing the reciprocal obligations – While the appellant had a case with regard to the * Author 190 [2024] 8 S.C.R. Digital Supreme Court Reports non-issuance of work orders; non-receipt of formal format of bank guarantee; refusal of No Objection Certificate for obtaining connection from the Calcutta Electric Supply Corporation Ltd.; existence of only 200 out of 250 allotted street hoardings and so on demonstrating breach of obligations by the Corporation – The Corporation had a case that Bank Guarantee was not the mode of payment and as such there was no reason to insist on Bank Guarantee; that in the joint inspection the appellant’s men failed to cover all the areas and thereafter when appellant was asked to submit a list of allotted location, the appellant failed to furnish the same and further there was huge default on the part of the appellant – All these reasons fall far short of rendering the conduct of the appellant in the present case, so abhorrent as to justify the invocation of the drastic remedy of blacklisting/ debarment – The appellant very clearly has been subjected to a disproportionate penalty – The exchange of correspondence resulted in invocation of the arbitration and it is undisputed that by an award of 26.04.2024, the appellant has been awarded after due set off Rs. 2,23,14,565/- with 8% interest per annum under the very same dispute – It does signify is that there was a bona fide contractual dispute between the parties – The Single Judge was right in setting aside the order of debarment on the ground that there was a bona fide civil dispute between the parties – Therefore, the judgment of the Division Bench of the High Court is set aside and the judgment of the Single Judge of the High Court is restored. [Paras 28, 30, 31, 42] Case Law Cited Erusian Equipment & Chemicals Ltd. v. State of West Bengal & Anr. [1975] 2 SCR 674 : (1975) 1 SCC 70; B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd. & Ors. [2006] Supp. 8 SCR 11 : (2006) 11 SCC 548; Kulja Industries Ltd. v. Chief General Manager Western Telecom Project BSNL & Ors. [2013] 14 SCR 430 : (2014) 14 SCC 731; Patel Engineering Limited v. Union of India and Another (2012) 11 SCC 257 – relied on. List of Keywords Tender; Tender conditions; Breach of contract; Blacklisting; Debarment; Bid document; Bona fide contractual dispute; Advertisement on street hoardings; Fulfilment of the reciprocal obligations; Breach of obligations; Disproportionate penalty. [2024] 8 S.C.R. 191 The Blue Dreamz Advertising Pvt. Ltd. & Anr. v. Kolkata Municipal Corporation & Ors.
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