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Both the actual and potential harm caused by the wrong doing must be considered while blacklisting the offender: High Court of Delhi

When blacklisting an offender, it is vital that the authority considers both the actual and potential harm which could have arisen and according give out a reasonable penalty in proportion to the offence. This was held by a single member bench of the High Court of Delhi consisting of Justice Sanjeev Sachdeva in the case of M/s Bhushan Pharmaceuticals Pvt. Ltd v New Delhi Municipal Council [W.P. (C) 3977/2021] on 16th August 2021.

On 23rd November 2017, the respondent New Delhi Municipal Council invited bids through a tender for ayurvedic potions and medicines. In order to test its medicines, the petitioner M/s Bhushan Pharmaceuticals engaged ITL Labs Pvt. Ltd a laboratory accredited by the Government. According to the petitioner, the test reports from the ITL Lab was handed over to their employee Rahul Mishra for the purpose of submission along with the bid. The petitioner claims that their employee Rahul Mishra informed them that the original test reports from ITL Labs Pvt. Ltd were not furnished along with the bid document and instead reports from one Devansh Testing Laboratory had been filed. Following this, the petitioner approached the respondent and informed them about the actions of Rahul Mishra, furnished the original test reports issued by ITL Labs Pvt Ltd. and also filed a criminal complaint against Rahul Mishra.

However the petitioner was still issued a letter of blacklisting on the 3rd of April 2018 whereby they were debarred from participating in the procurement of ayurvedic medicines of NDMC and their money deposit was forfeited. The present petition was filed by the petitioner impugning the order of blacklisting and seeking a direction to the respondent to refund the money deposit or to reduce the period of blacklisting. The petitioner’s main contention is that they had no motive or reason to submit a false or fabricated test report when they had a genuine report from a government accredited lab and furthermore that a disgruntled employee had filed the fabricated report to sabotage the petitioner. The petitioner’s counsel cited the case of Kulja Industries Ltd v Western Telecom Project BSNL & Ors. [(2014) 14 SC 731], where it was held by the Supreme Court of India that “the factors that may influence the debarring officer’s decision, inter-alia, include the actual or potential harm or impact that results or may result from the wrong doing, frequency of incidence and duration of wrong doing and whether the contractor has accepted the responsibility for the wrong doing and recognized the seriousness of misconduct”.

Justice Sanjeev Sachdeva came to the conclusion “In the facts of the case, petitioner cannot be completely absolved of the misdeeds of its employee. However, in view of the explanations given, I am of the view that in the facts of the present case, the period two years is disproportionate to the conduct of the petitioner. This is coupled with the fact that petitioner did not participate in any tender process with the respondents, after the first order of debarment i.e. after 28.03.2018. In effect petitioner has not participated in of the tenders of the respondent for nearly a period of three years and five months” accordingly the period of debarment was shortened and would commence on 16th August 2021.

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