Non-fulfilment of a stipulated condition of grant of the contract is different from a mere contractual dispute and is ground enough for sustaining a blacklisting order

In the matter of Nisa Industrial Services Private Limited & Anr. vs. State Bank of India in Writ Petition (L) no. 12341 of 2021 decided on 22.06.2021 decided by the Bombay High Court.

Facts:
The Petitioner emerged as the successful bidder under a request for proposal for e-surveillance solutions of over 10,000 ATMs of the Respondent bank. The consequent contract clearly mentioned that if the successful bidder failed to furnish performance guarantee within the period specified in the RFP, the earnest money deposit submitted by the bidder was liable to be forfeited. Further if the earnest money deposit was forfeited for this reason, then the bank had the discretion to debar such bidder from participating in future RFPs floated by the bank. The Petitioner failed to furnish performance bank guarantee which resulted in debarment.
The Petitioner moved the Bombay High Court in the present writ petition challenging its debarment by the Respondent bank. The Petitioner contended that a banning order cannot be passed merely due to contractual disputes as it virtually leads to civil death of the person.

Held:
The Bombay High Court observed that there was nothing to indicate that the action of termination of contract and debarment of the petitioner was actuated by malafides or arbitrariness. The respondent bank had followed due process by giving show cause notice to the Petitioner and further passed a detailed reasoned order considering each submission of the petitioner. The Court also noted from the record that several opportunities were given by the respondent bank to the petitioner to furnish the requisite bank guarantee. The Court concluded that the bank did not exercise discretion in a capricious manner and the action did not attract judicial review undersection 226 of the Constitution.
The Court further discarded the claim of the petitioner that a banning order would require a better justification than mere contractual dispute. The Court further observed in this regard that in the present case, there was a specific contractual provision for banning the contractor from participating in future RFPs of the employer if Performance Bank Guarantee was not submitted after successful award of the earlier contract. Hence, the action of the respondent was based on a stipulated deficiency/ default and not on any contractual dispute.