Karnataka High Court
M/S Mp24 Construction Company vs State Of Karnataka on 8 July, 2026
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WA No. 2026 of 2025
C/W WA No. 2028 of 2025
RESERVED ON 21.04.2026
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 8TH DAY OF JULY, 2026
PRESENT
THE HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
AND
THE HON'BLE MR. JUSTICE C.M. POONACHA
WRIT APPEAL NO. 2026 OF 2025 (GM-TEN)
C/W
WRIT APPEAL NO. 2028 OF 2025 (GM-TEN)
IN WA No. 2026/2025
BETWEEN:
1. M/S MP24 CONSTRUCTION COMPANY
(LEAD MEMBER OF CONSORTITUM WITH
RAMALINGAM CONSTRUCTION COMPANY PVT. LTD.)
A PROPRIETORY CONCERN
HAVING ITS HEAD OFFICE AT:
NO. 95, HADENAHALLI VILLAGE
SHRAVANABELAOAL ROAD, BARALU POST
CHANNARAYAATNA TALUK
Digitally HASSAN DISTRICT
signed by K
P SWETHA
Location: BRANCH OFFICE:
High Court
of Karnataka B2, 1201, BRAHMAGIRI
MALAGALA BDA FLATS, PHASE 2
5TH NORTH CROSS ROAD
BENGALURU - 560 072
REPRESENTED BY ITS PROPRIETOR
...APPELLANT
(BY SRI K.G. RAGHAVAN, SENIOR ADVOCATE A/W
SRI PRASHANTH MURTHY S.G., ADVOCATE)
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WA No. 2026 of 2025
C/W WA No. 2028 of 2025
AND:
1. STATE OF KARNATAKA
PUBLIC WORKS DEPARTMENT
NO. 28, VIKASA SOUDHA
BENGALURU - 560 001
REPRESENTED BY ITS
PRINCIPAL SECRETARY
2. KARNATAKA ROAD DEVELOPMENT
CORPORATION LIMITED
A COMPANY INCORPORATED UNDER
THE PROVISIONS OF COMPANIES ACT 1956
HAVING ITS REGISTERED OFFICE AT
SURVEY NO.8, "SAMPARKA SOUDHA"
BEP PREMISES, DR. RAJKUMAR ROAD
RAJAJINAGAR 1ST BLOCK
BENGALURU - 560 010
REPRERSENTED BY ITS
MANAGING DIRECTOR
3. CHIEF ENGINEER
KARNATAKA ROAD DEVELOPMENT
CORPORATION LIMITED
SURVEY NO.8, "SAMPARKA SOUDHA"
BEP PREMISES, DR. RAJKUMAR ROAD
RAJAJINAGAR FIRST BLOCK
BENGALURU - 560 010
4. STATE LEVEL DEBARMENT COMMITTEE
ROOM NO. 317, 3RD FLOOR
VIKASA SOUDHA
BENGALURU - 560 001
REPRESENTED BY ITS CHAIRMAN
5. BHARAT VANIJYA EASTERN PVT. LTD.
A COMPANY REGISTERED UNDER
THE PROVISIONS OF
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WA No. 2026 of 2025
C/W WA No. 2028 of 2025
THE COMPANIES ACT
HAVING ITS REGISTERED OFFICE AT:
126, CHITTARANJAN AVENUE
2ND FLOOR, KOLKATA - 700 073
REPRESENTED BY ITS DIRECTOR
6. VASANT VALAPPA NAIK
SON OF VALAPPA RAMAPPA NAIK
CHIEF ENGINEER
KARNATAKA ROAD
DEVELOPMENT CORPORATION LIMITED
SURVEY NO.8, SAMPARKA SOUDHA
BEP PREMISES, DR. RAJKUMAR ROAD
RAJAJINAGAR FIRST BLOCK
BENGALURU - 560 010
7. N. SUSHELAMMA
MANAGING DIRECTOR
KARNATAKA ROAD DEVELOPMENT
CORPORATION LIMITED
SURVEY NO.8, "SAMPARKA SOUDHA"
BEP PREMISES, DR. RAJKUMAR ROAD
RAJAJINAGAR FIRST BLOCK
BENGALURU - 560 010
...RESPONDENTS
(BY SRI KIRAN V. RON, AAG A/W
SMT. NAMITHA MAHESH B.G., AGA FOR C/R-1 & 4,
SRI VEERESH R. BUDIHAL, ADVOCATE FOR C/R-2 & 3,
SRI NAMAN JHABAKH, ADVOCATE FOR R-5 &
MS. JAITRA J. NARAYAN, ADVOCATE FOR R-6 & 7)
THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE
KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE
ORDER DATED 09/12/2025 PASSED BY THE LEARNED SINGLE
JUDGE IN W.P. NO.25668/2025 (GM-TEN) AND ALLOW THE SAID
WRIT PETITIONS ALONG WITH THE APPLICATIONS.
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WA No. 2026 of 2025
C/W WA No. 2028 of 2025
IN WA NO. 2028/2025
BETWEEN:
1. M/S MP 24 CONSTRUCTION COMPANY
(LEAD MEMBER OF CONSORTITUM WITH
RAMALINGAM CONSTRUCTION COMPANY PVT. LTD.)
A PROPRIETORY CONCERN
HAVING ITS HEAD OFFICE AT:
NO. 95, HADENAHALLI VILLAGE
SHRAVANABELAOAL ROAD
BARALU POST, CHANNARAYAATNA TALUK
HASSAN DISTRICT
BRANCH OFFICE: B2, 1201, BRAHMAGIRI
MALAGALA BDA FLATS, PHASE 2
5TH NORTH CROSS ROAD
BENGALURU – 560 072
REPRESENTED BY ITS PROPRIETOR
…APPELLANT(BY SRI K.G. RAGHAVAN, SENIOR ADVOCATE A/W
SRI PRASHANTH MURTHY S.G., ADVOCATE)AND:
1. STATE OF KARNATAKA
PUBLIC WORKS DEPARTMENT
NO. 28, VIKASA SOUDHA
BENGALURU – 560 001
REPRESENTED BY ITS
PRINCIPAL SECRETARY
2. KARNATAKA ROAD DEVELOPMENT
CORPORATION LIMITED
A COMPANY INCORPORATED UNDER
THE PROVISIONS OF COMPANIES ACT,1956
HAVING ITS REGISTERED OFFICE AT
SURVEY NO.8, “SAMPARKA SOUDHA”
BEP PREMISES, DR. RAJKUMAR ROAD
RAJAJINAGAR 1ST BLOCK
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C/W WA No. 2028 of 2025
BENGALURU – 560 010
REPRRESENTED BY ITS
MANAGING DIRECTOR
3. CHIEF ENGINEER
KARNATAKA ROAD DEVELOPMENT
CORPORATION LIMITED
SURVEY NO.8
SAMPARKA SOUDHA
BEP PREMISES,
DR. RAJKUMAR ROAD
RAJAJINAGAR FIRST BLOCK
BENGALURU – 560 010
4. TENDER EVALUATION COMMITTEE
KRDCL SURVEY NO.8
SAMPARKA SOUDHA
BEP PREMISES,
DR. RAJKUMAR ROAD
RAJAJINAGAR 1ST BLOCK
BENGALURU – 560 010
REPRESENTED BY ITS CHAIRMAN
5. STATE LEVEL DEBARMENT COMMITTEE
ROOM NO. 317, 3RD FLOOR
VIKASA SOUDHA, BENGALURU – 560 001
REPRESENTED BY ITS CHAIRMAN
6. BHARAT VANIJYA EASTERN PVT. LTD
A COMPANY REGISTERED UNDER
THE PROVISIONS OF THE COMPANIES ACT
HAVING ITS REGISTERED OFFICE AT
126, CHITTARANJAN AVENUE
2ND FLOOR, KOLKATA – 700 073
REPRESENTED BY ITS DIRECTOR
7. VASANT VALAPPA NAIK
SON OF VALAPPA RAMAPPA NAIK
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WA No. 2026 of 2025
C/W WA No. 2028 of 2025
CHIEF ENGINEER
KARNATAKA ROAD DEVELOPMENT
CORPORATION LIMITED
SURVEY NO.8, “SAMPARKA SOUDHA”
BEP PREMISES,
DR. RAJKUMAR ROAD
RAJAJINAGAR FIRST BLOCK
BENGALURU – 560 010
8. N. SUSHELAMMA
MANAGING DIRECTOR
KARNATAKA ROAD DEVELOPMENT
CORPORATION LIMITED
SURVEY NO.8,
“SAMPARKA SOUDHA”
BEP PREMISES
DR. RAJKUMAR ROAD
RAJAJINAGAR FIRST BLOCK
BENGALURU – 560 010
…RESPONDENTS(BY SRI KIRAN V. RON, AAG A/W
SMT. NAMITHA MAHESH B.G., AGA FOR C/R-1 & 4,
SRI VEERESH R. BUDIHAL, ADVOCATE FOR C/R-2 & 3,
SRI NAMAN JHABAKH, ADVOCATE FOR R-5 &
MS. JAITRA J. NARAYAN, ADVOCATE FOR R-6 & 7)THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE
KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE
ORDER DATED 09/12/2025 PASSED BY THE LEARNED SINGLE
JUDGE IN W.P. NO.22904/2025 (GM-TEN) AND ALLOW THE SAID
WRIT PETITIONS ALONG WITH THE APPLICATIONS.
THESE WRIT APPEALS HAVING BEEN HEARD AND
RESERVED FOR JUDGMENT, COMING ON FOR PRONOUNCEMENT
THIS DAY, JUDGMENT WAS PRONOUNCED AS UNDER:
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C/W WA No. 2028 of 2025
CORAM: HON’BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
and
HON’BLE MR. JUSTICE C.M. POONACHAC.A.V. JUDGMENT
(PER: HON’BLE MR. VIBHU BAKHRU, CHIEF JUSTICE)INDEX
I. INTRODUCTION ………………………………………………………………………………………. 8
II. PREFATORY FACTS ……………………………………………………………………………. 10
III. IMPUGNED ORDER …………………………………………………………………………….. 28
IV. SUBMISSIONS …………………………………………………………………………………….. 33
V. REASONS AND CONCLUSION………………………………………………………….. 38
RE: THE STATUTORY SCHEME FOR DEBARMENT ………………………… 38
RE: VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE………. 46
RE: THE SCOPE OF RULES 26-A, 26-B AND 26-C ……………………………. 66
RE: PROPORTIONALITY ………………………………………………………………………. 67
RE: MITIGATING CIRCUMSTANCES ………………………………………………….. 79
RE: WHETHER A FRESH DECISION BY THE STATE GOVERNMENT
WAS REQUIRED …………………………………………………………………………………….. 82
RE: AUTHORITY TO ISSUE AND AUTHENTICATE THE DEBARMENT
ORDER …………………………………………………………………………………………………….. 84
RE: CHALLENGE TO THE AWARD OF THE CONTRACT TO BVEPL 84
RE: FORFEITURE OF THE EARNEST MONEY DEPOSIT ………………… 90
CONCLUSION ……………………………………………………………………………………………. 97
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WA No. 2026 of 2025
C/W WA No. 2028 of 2025I. INTRODUCTION
1. These two intra-court appeals stem from a common order
dated 09.12.2025 [the impugned order] passed by the learned
Single Judge of this Court, whereby three writ petitions–W.P.
No.25668 of 2025 (GM-TEN), W.P. No.22904 of 2025 (GM-TEN),
and W.P. No.31906 of 2025 (GM-TEN)–were dismissed. Whereas
Writ Appeal No.2026 of 2025 (GM-TEN) arises from W.P.
No.25668 of 2025, Writ Appeal No.2028 of 2025 (GM-TEN)
challenges the impugned order insofar as it relates to W.P.
No.22904 of 2025. These two writ petitions were instituted by the
appellant.
2. The appellant in both appeals — M/s MP24 Construction
Company [MP24] — is a sole proprietary concern of Sri Kantharaju
H.M. The consortium partner of MP24, namely M/s. Ramalingam
Construction Company Pvt. Ltd. [RCCL] had separately assailed
the order debarring it in W.P. No. 24912 of 2025 (GM-RES), which
was dismissed in terms of the common order. RCCL has filed a
separate appeal, Writ Appeal No.2140 of 2025 (GM-RES).
3. The respondents in the two writ petitions are the State of
Karnataka, represented by the Principal Secretary, Public Works
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C/W WA No. 2028 of 2025Department [the State]; the Karnataka Road Development
Corporation Limited [KRDCL], a wholly owned company of the
Government of Karnataka, which acted as the procuring entity for
the tender in question; the Tender Evaluation Committee
constituted by KRDCL [the TEC]; the State Level Debarment
Committee [the SLDC], constituted under Rule 26-B of the
Karnataka Transparency in Public Procurement Rules, 2000; and
M/s. Bharat Vanijya Eastern Pvt. Ltd. [BVEPL], which the procuring
entity treats as the lowest responsive (L1) bidder, following the
disqualification of the Consortium. Two officials of KRDCL have
also been arrayed in their personal capacities.
4. The controversy has a common origin. The dispute pertains
to a Request for Proposal dated 25.02.2025 [the RFP] issued by
KRDCL for the development of road from Devanahalli-Vemagal-
Kolar (from 0.000 km to 49.284 km, of design length 48.20 km) of
State Highway-96 in the State of Karnataka, on PPP-DBFOMT-
Hybrid Annuity Mode [the project]. MP24 and RCCL formed a
consortium [the Consortium], with MP24 as the lead member, to
submit their tender pursuant to the RFP. The Consortium’s bid was
the lowest (L1), and BVEPL’s was the second-lowest (L2). The
State issued the Government Order bearing No.PWD 203 BMS
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2025 dated 13.08.2025 [the impugned debarment order] under
Section 14-A(2) of the Karnataka Transparency in Public
Procurement Act, 1999 [the KTPP Act] read with Rule 26-B of the
Karnataka Transparency in Public Procurement Rules, 2000 [the
KTPP Rules], debarring MP24 for a period of three years and
RCCL for a period of two years from all works in the State of
Karnataka, on the ground of furnishing a false and forged work
experience certificate. The State found that the members of the
Consortium had committed a fraudulent act by uploading a forged
work-experience certificate purportedly issued by the Andhra
Pradesh Water Resources Department [the APWRD] to secure the
contract. The impugned Order also directed the registration of an
FIR against MP24 and to treat RCCL as an “abettor”.
5. Before considering the import of the reliefs sought by MP24
in the two writ petitions and the challenge in the present appeals, it
is relevant to set out the factual context in which the controversy
arises.
II. PREFATORY FACTS
6. KRDCL is a wholly-owned company of the Government of
Karnataka, established to develop and improve road infrastructure
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in the State of Karnataka. KRDCL invited bids by Notification
No.KRDCL/IFB/2024-25/28 dated 25.02.2025, in the form of an
“International Competitive Bidding under Single Stage Bidding
Process for Development of Road from Devanahalli-Vemagal-Kolar
(from 0.000 km to 49.284 km) of SH-96, (design length 48.20 km),
in the State of Karnataka on PPP-DBFOMT-Hybrid Annuity Mode”.
The estimated project value was 762,86,00,000/- (Rupees Seven
Hundred and Sixty-Two Crores and Eighty-Six Lakhs only). The bid
was administered through the Karnataka Public Procurement Portal
[the KPP Portal]. The terms and conditions of the tender were set
out in the RFP, which formed part of the bid document.
7. It is material to note that the RFP expressly contemplated
bidding both individually and through a consortium. Section 2.1.9 of
the RFP provided that, in case the bidder is a consortium, the
members thereof shall furnish a Power of Attorney in favour of any
Member, who shall thereafter be identified as the Lead Member.
Section 2.1.15(g) of the RFP provided that the members of the
consortium shall enter into a binding Joint Bidding Agreement and
submit the same to KRDCL. Section 2.2.1(a) provided that the
bidder may be a single entity or a group of entities (the consortium)
coming together to implement the Project.
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8. Sections 2.6.2 and 2.6.3 of the RFP, which lie at the centre
of the controversy provide for the cancellation of the bid and the
forfeiture of the Earnest Money Deposit [the EMD], are set out
below:
“2.6.2 The Authority reserves the right to reject
any Bid and appropriate the Bid Security if:
(a) at any time, a material misrepresentation is
made or uncovered, or
(b) the Bidder does not provide, within the time
specified by the Authority, the supplemental
information sought by the Authority for evaluation
of the Bid.
Such misrepresentation/improper response shall
lead to the disqualification of the Bidder. If the
Bidder is a Consortium, then the entire Consortium
and each Member of the Consortium may be
disqualified/rejected. If such
disqualification/rejection occurs after the Bids have
been opened and the lowest Bidder gets
disqualified/rejected, then the Authority reserves
the right to annul the Bidding Process and invites
fresh Bids.
2.6.3 In case it is found during the evaluation or at
any time before signing of the Concession
Agreement or after its execution and during the
period of subsistence thereof, including the
concession thereby granted by the Authority, that
one or more of the eligibility and/or qualification
requirements have not been met by the Bidder, or
the Bidder has made material misrepresentation or
has given any materially incorrect or false
information, the Bidder shall be disqualified
forthwith if not yet appointed as the
Concessionaire either by issue of the LOA or
entering into of the Concession Agreement, and if
the Selected Bidder has already been issued the
LOA or the SPV has entered into the Concession
Agreement, as the case may be, the same shall,
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notwithstanding anything to the contrary contained
therein or in this RFP, be liable to be terminated,
by a communication in writing by the Authority to
the Selected Bidder or the Concessionaire, as the
case may be, without the Authority being liable in
any manner whatsoever to the Selected Bidder or
the Concessionaire. In such an event, the
Authority shall be entitled to forfeit and appropriate
the Bid Security or Performance Security, as the
case may be, as Damages, without prejudice to
any other right or remedy that may be available to
the Authority under this RFP, the Bidding
Documents, the Concession Agreement or
otherwise.”
9. Section 4.1 of the RFP, in turn, provided for the
disqualification of the bidder if it engaged in “fraud” and/or “corrupt
practices”, with the said terms separately defined. The said Section
is set out below:
“4.1 The Bidders and their respective officers,
employees, agents and advisers shall observe the
highest standard of ethics during the Bidding
Process and subsequent to the issue of the LOA
and during the subsistence of the Agreement.
Notwithstanding anything to the contrary contained
herein, or in the LOA or the Agreement, the
Authority may reject a Bid, withdraw the LOA, or
terminate the Agreement, as the case may be,
without being liable in any manner whatsoever to
the Bidder, if it determines that the Bidder, directly
or indirectly or through an agent, engaged in
corrupt practice, fraudulent practice, coercive
practice, undesirable practice or restrictive
practice in the Bidding Process. In such an event,
the Authority shall be entitled to forfeit and
appropriate the Bid Security or Performance
Security, as the case may be, as Damages,
without prejudice to any other right or remedy that
may be available to the Authority under the
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Bidding Documents and/ or the Agreement, or
otherwise.”
10. By a Memorandum of Understanding dated 02.04.2025 [the
MoU], MP24 and RCCL agreed to participate in the tender as a
consortium under the name and style of “MP24CC-RCCL”. In
furtherance of the said MoU, MP24 and RCCL executed a Joint
Bidding Agreement dated 11.04.2025 (entered into on a stamp
paper purchased on 07.04.2025) and a Power of Attorney dated
11.04.2025 (entered into on a stamp paper purchased on
07.04.2025) in favour of MP24 as the Lead Member. Clause 5 of
the Joint Bidding Agreement provided, inter alia, that the parties
undertake to be jointly and severally responsible for all obligations
and liabilities relating to the project. MP24 (as Lead Member) held
74% participation share in the consortium, and RCCL held 26%
participation share as a non-active partner.
11. In response to the bid invitation, four bidders submitted their
bids on 16.04.2025, namely (i) MP24CC-RCCL (the Consortium);
(ii) BVEPL; (iii) M/s. Dineshchandra R. Agrawal Infracon Pvt. Ltd.;
and (iv) M/s. Bhartia Infra Projects Ltd.
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12. It is material to note that at 02:37 PM on 16.04.2025 — that
is, about three hours before the time for submission of bids was to
expire — RCCL sent an e-mail with a letter bearing reference No.
RCCL/KARO/MP-24/2025-26/02 to MP24, communicating its
withdrawal from the Consortium and the Joint Bidding Agreement.
MP24 states that it responded by sending an e-mail at 04:07 PM,
rejecting the said withdrawal as unacceptable and contrary to the
binding consortium arrangement.
13. Notwithstanding the said e-mail, MP24 submitted the bid on
behalf of the Consortium on 16.04.2025. The Technical Bids of the
four bidders were opened by KRDCL on 19.04.2025 in the bidders’
presence. The bids were thereafter evaluated by the Transaction
Advisor, M/s. iDECK, as per the Eligibility and Qualification
requirements set forth in the RFP, and were placed before the TEC
at its meetings held on 12.05.2025 and 15.05.2025. As per the
proceedings of the TEC, all four bidders were declared technically
qualified.
14. In terms of the said determination, the Financial Bids were
opened on 16.05.2025 in the presence of the bidders. The
Consortium’s bid with an annuity amount of `50.50 crores
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(excluding GST) was the lowest. BVEPL’s bid of `53.25 crores was
the second lowest. According to MP24, its L1 status was reflected
in the Karnataka e-Procurement Portal screenshot, the report of
KRDCL, and the minutes of the 149th meeting of the Board of
Directors of KRDCL held on 20.06.2025.
15. By letter No. BVEPL/HO/25-26/2159, dated 19.05.2025,
addressed to KRDCL and the State Government, BVEPL made
allegations regarding the authenticity of certain documents
submitted by MP24 in the Technical Bid. BVEPL questioned the
genuineness of a work-experience certificate purportedly issued by
the APWRD in respect of a project described as “Remodeling of
HNSS canal from 45.6 km to 110 km and Distributary of P9, P10,
P11, P12, and P13 coming under HNSS Main Canal at Kadiri,
Anantha Puram District”. In the case of MP24, the said complaint
by the L2 bidder triggered the chain of events culminating in the
impugned Order.
16. By a separate letter bearing reference No.RCCL/KARO/
KRDCL/2025-26-01 dated 22.05.2025, addressed to KRDCL
(received by KRDCL through e-mail on 26.05.2025), RCCL formally
informed KRDCL that MP24 had participated in the tender using
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RCCL’s credentials illegally and without RCCL’s consent, and that
RCCL had withdrawn from the Joint Bidding Agreement by its
earlier communication dated 16.04.2025. Accordingly, RCCL
requested KRDCL to reject the tender submitted by the
Consortium.
17. Pursuant to BVEPL’s complaint, KRDCL addressed
communications to the concerned authorities of the APWRD,
seeking confirmation of the authenticity of the experience
certificate. By communication dated 28.05.2025, the Executive
Engineer, APWRD, informed the Chief Engineer, KRDCL, that the
certificate had not been issued by the said authority. By a further
communication dated 30.05.2025, the Superintending Engineer,
HNSS Circle No. 3, Madanapalle, stated that the agreement for the
work in question was not concluded by the said office. By a
communication dated 04.06.2025 from the Chief Engineer
(Projects), Water Resources Department, Ananthapuram, the
experience certificate was confirmed to be “purely bogus and
forged”.
18. While the APWRD certificate was under scrutiny, MP24 also
brought to the attention of KRDCL and the State that BVEPL had
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relied on fabricated and inadmissible documents to establish its
eligibility, namely:
(i) a work-done certificate dated 14.08.2024
purportedly issued by the National Highways
Authority of India [NHAI], which MP24 contended
had been disowned by NHAI as forged by its e-
mail dated 10.06.2025;
(ii) a certificate issued by M/s. Ashoka Buildcon
Limited, certifying that BVEPL had carried out
Operation and Maintenance (O&M), as a sub-
contractor, on the “Four laning of Arrah to Pararia
section of NH-319 (Old NH-30)” in the State of
Bihar, being the document on the strength of which
BVEPL claimed the Operation and Maintenance
(O&M) experience required of a single-entity bidder
under Clause 2.2.3 of the RFP, which MP24
contended was inadmissible — not qualifying as
O&M experience under the RFP — and which was
purportedly withdrawn such that, without it, BVEPL
would have lacked the requisite O&M experience;
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(iii) a fabricated statutory auditor’s / net-worth
certificate overstating its financial particulars; and
(iv) a non-submission of the mandatory Income
Tax Returns.
19. MP24 further placed on record that the Central Bureau of
Investigation had registered FIR No.RC2172025A0077 dated
11.07.2025 against BVEPL and certain officials of NHAI, in
connection with a project relied upon by BVEPL to establish its
eligibility in the present tender.
20. It is MP24’s case that the respondents treated MP24’s bona
fide and non-essential certificate as fraud while ignoring the
inadmissible and fabricated documents of BVEPL, and that this
constituted hostile discrimination, mala fides and a colourable
exercise of power. BVEPL, for its part, denied having submitted
any fabricated document and contended that the said CBI FIR
post-dated the bid and rested upon a motivated complaint; the
procuring entity maintained that MP24’s own bid was non est on
account of the forged certificate.
21. By letter dated 12.06.2025, KRDCL communicated its
findings regarding the APWRD certificate to MP24 and invited it to
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attend a meeting on 19.06.2025. By letter dated 18.06.2025, MP24
sought an adjournment of the meeting on the ground of its
proprietor’s ill health, supported by a certificate purportedly issued
by an Ayurvedic doctor. By a subsequent letter dated 19.06.2025,
MP24, inter alia, represented to KRDCL that, even if the disputed
APWRD certificate were disregarded, the Consortium’s technical
capacity exceeded the required threshold of `762.86 crores, with
its total claimed capacity at `776.05 crores, and that the disputed
certificate was, in any event, not essential for qualification. MP24
accordingly requested the issuance of the letter of award.
22. The 149th meeting of the Board of Directors of KRDCL was
held on 20.06.2025, during which the matter relating to the
disputed certificate was discussed. The Board resolved to grant
MP24 one further opportunity to present its case, with action
thereafter to follow as per law.
23. By letter dated 11.07.2025, KRDCL directed MP24 to attend
a hearing on 16.07.2025. The representatives of MP24 attended
the said meeting on 16.07.2025 and filed written submissions
explaining their position, the substance of which was recorded by
KRDCL as follows:
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(a) a detailed explanation had been submitted
by letter dated 30.06.2025 that an employee,
without authorisation, had obtained the certificate,
which came to light after the receipt of the KRDCL
letter dated 12.06.2025;
(b) a criminal complaint had been filed against
the said person, who had been suspended; and
(c) even without the said document, the bidder
would have qualified, the said document being
non-essential.
24. By Proceedings dated 19.07.2025 bearing reference
No.KRDCL / MD / EE-3 / D-V-K Road / 2025-26 /1415, KRDCL
forwarded to the State Government the recommendations made by
the TEC at its 137th meeting held on 18.07.2025. The TEC had
recommended that action be taken against MP24 on the ground of
fraudulent participation in the tender, and that the matter be placed
before the State Government for consideration of action under
Section 14-A of the KTPP Act and Rule 26-B of the KTPP Rules.
25. The State, by notice dated 24.07.2025 (received by MP24 by
e-mail dated 28.07.2025), called upon MP24 and RCCL to appear
before the SLDC on 01.08.2025. By e-mail dated 31.07.2025,
MP24 sought postponement of the said hearing, citing religious
commitments, and offered to appear on any date after 07.08.2025.
By a fresh notice dated 05.08.2025, MP24 was called upon to
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appear before the SLDC on 08.08.2025. According to KRDCL, the
proceedings scheduled for 08.08.2025 were adjourned due to the
absence of MP24 and the late commencement, and a further notice
was issued for 12.08.2025. By email dated 08.08.2025, MP24
sought a postponement to a date after 15.08.2025 in view of
Independence Day celebrations. By a fresh notice dated
11.08.2025, the SLDC fixed 12.08.2025 for the hearing. By letter
dated 12.08.2025, MP24 again sought an adjournment to a date
after 15.08.2025. However, the proceedings of the SLDC
commenced on 12.08.2025 at 4:00 PM and MP24 did not
participate in the meeting.
26. In the meanwhile, by letter dated 11.08.2025 bearing
reference No.KRDCL/CE/EE-3/D-K Road Tender/2025-26/727
(communicated to MP24 by e-mail on 12.08.2025), the Chief
Engineer, KRDCL, invoking Clauses 2.6.2 and 2.6.3 of the RFP,
communicated to MP24 the cancellation of its bid and the forfeiture
of the EMD in the sum of `7,63,00,000/- (Rupees Seven Crore
Sixty-Three Lakhs only). It is relevant to note that the said EMD
comprised a bank guarantee of `7.62 crores and an e-payment of
`1,00,000/- (Rupees One Lakh only). MP24 had additionally paid
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`10,00,000/- (Rupees Ten Lakh only) towards the non-refundable
bid-document fee.
27. Aggrieved by the said sequence of events, MP24 filed a
petition, W.P.No.22904 of 2025, before this Court, inter alia,
impugning (i) the proceedings dated 19.07.2025; (ii) the letter dated
24.07.2025 issued by the State to KRDCL;(iii) the letter dated
25.07.2025 issued by KRDCL; and (iv) the letter dated 11.08.2025
invoking the EMD. MP24 also sought a direction to KRDCL to issue
the letter of award to MP24 in pursuance of the RFP.
28. On 13.08.2025, the learned Single Judge passed an interim
order in W.P.No.22904 of 2025 [the first interim order], whereby
the respondents were, inter alia, restrained from invoking the EMD
and awarding the contract to the L2 bidder. The respondents were
also directed to make their stand clear in light of the policy relied
upon by MP24, namely the Government Circular dated 11.05.2022.
29. On the very same day, that is, on 13.08.2025, the State
issued the impugned debarment order bearing No.PWD 203 BMS
2025, debarring MP24 for a period of three years and RCCL for a
period of two years from all works in the State of Karnataka, and
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directing the registration of an FIR against MP24 within 24 hours.
The operative part of the said Order is reproduced below:1
“(i) M/s MP24 Construction Company and
Respondent 1 herein is debarred from all works in the
state of Karnataka for 3 years from this date. The order
to be uploaded on E-procurement immediately.
(ii) Complaint and FIR against Respondent 1, MP
24 Company to be filed in jurisdictional police station in
24 hours by EE, KRDCL on charges of forgery,
cheating and fraud for gain and submitting false
document and false evidence to a public servant and
violation of KTPP Act and Rules. As Respondent 2
failed to make any report against his partner till
complaint, he should be treated as abettor in the FIR.
(iii) Respondent 2 for deliberate connivance is
debarred for 2 years from all PWD works in Karnataka
state, from this date.
Further action to be taken as per 26(C) of the
KTPP Rules, 2000.”
30. In the meantime, on 14.08.2025, pursuant to the directions
issued by the impugned Order, an FIR came to be registered by
the Subramanyanagar Police Station, Bengaluru, in Crime No.106
of 2025 against MP24, on charges of offences punishable under
Sections 318(4), 336(2), 336(3) and 340(2) of the Bharatiya Nyaya
Sanhita, 2023.
1
In the impugned debarment order, the expression “Respondent 1” denotes MP24 and the
expression “Respondent 2” denotes RCCL, in accordance with the array of parties before the
State Level Debarment Committee.
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31. Thereafter, MP24 instituted W.P.No.25668 of 2025 before
this Court, inter alia, impugning the impugned debarment order
dated 13.08.2025. The said petition was heard along with
W.P.No.22904 of 2025. By an order dated 25.09.2025 [the second
interim order], the learned Single Judge, in W.P.No.25668 of 2025
and connected matters, permitted MP24 to participate in the tender
floated by M/s. Cauvery Niravari Nigam Limited [CNNL] –a wholly
owned undertaking of the State of Karnataka — subject to the
outcome of the writ petitions, with a clarification that MP24 would
not claim any equities or any advantage under the said interim
order except to the extent that it removed the disability flowing from
the impugned Order.
32. The State, being aggrieved by the second interim order
dated 25.09.2025, filed an appeal, Writ Appeal No.1729 of 2025,
before this Court. By judgment dated 03.11.2025, a Division Bench
of this Court disposed of the said writ appeal, declining to interfere
with the interim arrangement. This Court, while doing so, observed
that the question whether the contract was required to be awarded
to the L2 bidder or whether fresh tenders were required to be
invited would necessarily have to be subject to the orders to be
passed in the writ petitions, and that, if MP24 were to succeed in
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the writ petitions and the impugned debarment order was set aside,
MP24 could not be visited with any disadvantages on the ground of
having been excluded during the interim period. This Court further
reserved liberty to the State to apply afresh in the event of delay in
disposal of the writ petitions.
33. In the meantime, MP24 instituted W.P.No.31906 of 2025
(GM-TEN), contending that the State had failed to restore access
to the Karnataka e-Procurement Portal, thereby depriving MP24 of
the benefit of the said interim arrangement. MP24 sought a writ of
mandamus directing the restoration of access to the said portal in
compliance with the interim order dated 25.09.2025.
34. The three writ petitions, namely W.P.No.25668 of 2025,
W.P.No.22904 of 2025 and W.P.No.31906 of 2025, were thereafter
heard together by the learned Single Judge and, by the impugned
common order dated 09.12.2025, came to be dismissed.
35. It is also relevant to note that, on or about 10.12.2025 — that
is, the day after the dismissal of the writ petitions — KRDCL
invoked the bank guarantees furnished by MP24 by way of the
EMD.
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36. In the aforesaid context, the reliefs sought by MP24 in the
two writ petitions out of which the present appeals arise may now
be noted.
37. In W.P.No.25668 of 2025 (out of which Writ Appeal No.2026
of 2025 arises), MP24 sought the quashing of the impugned Order
bearing No.PWD 203 BMS 2025 dated 13.08.2025 issued by the
State.
38. In W.P.No.22904 of 2025 (out of which Writ Appeal No.2028
of 2025 arises), MP24 sought2 the following reliefs:
(a) quashing of the proceedings dated
19.07.2025 bearing reference No.KRDCL/MD/EE-
3/D-V-K Road/2025-26/1415;
(b) quashing of the letter dated
25.07.2025 bearing reference
No.KRDCL/MD/Ka.Aa-3/HAM/2025-26/498;
(c) quashing of the letter dated
24.07.2025 bearing No.PWD 203 BMS 2025;
(d) a direction to KRDCL and its Chief Engineer
to issue the letter of award in pursuance of the
RFP;
(e) quashing of the letter dated
11.08.2025 bearing reference No.KRDCL/CE/EE-
3/D-K Road Tender/2025-26/727, and a
consequential direction to refund a sum of
`7,36,00,000/- ; and
2
By way of its amended petition filed pursuant to the order dated 05.11.2025
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(f) quashing of the letter dated
24.07.2025 bearing No.PWD 797 EAP 2025
addressed by the State to KRDCL.
III. IMPUGNED ORDER
39. The learned Single Judge, by the impugned common order
dated 09.12.2025, dismissed W.P.No.25668 of 2025,
W.P.No.22904 of 2025 and W.P.No.31906 of 2025. The learned
Single Judge framed three points for consideration:
“(i) whether MP24 had made out a case for
interference;
(ii) whether MP24 was justified in stating that
principles of natural justice were curtailed; and
(iii) whether the impugned Order dated
13.08.2025 was arbitrary and required
interference under Article 226 of the
Constitution.”
40. The learned Single Judge examined the relevant clauses of
the RFP, including Sections 2.1.9, 2.1.15, 2.2.1, 2.6.2, 2.11.2,
2.11.5, 3.2.1(e) and 4.1, and observed that, where a Bidder is a
Consortium and indulges in misrepresentation, the said
misrepresentation shall lead to disqualification of the Bidder, with
the result that “each member of the consortium, irrespective of their
active / non-active / limited/lead bidder/advisory or any of incidental
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nature of participation in the tender process would suffer penalty of
disqualification, being a member of the consortium”.
41. On the central factual question, the learned Single Judge
observed that the Consortium consisting of MP24 and RCCL had
uploaded a fabricated work-experience certificate purportedly
issued by the APWRD, which fact was not disputed; that RCCL, by
its e-mail dated 16.04.2025, had communicated its withdrawal from
the Consortium to MP24, but did not mark a copy of the said e-mail
to KRDCL; that MP24, having received the said e-mail before the
opening of the Technical Bid on 19.04.2025, did not disclose either
the fact of the e-mail or the alleged unauthorised conduct of its
employee to KRDCL; that the conduct of MP24 in suppressing the
said facts till the conclusion of the Technical Bid was deserving of
deprecation; and that MP24 had not approached the Court with
clean hands and was not entitled to equitable relief under Article
226 of the Constitution.
42. The learned Single Judge further observed that MP24, in its
letter dated 30.06.2025, admitted that an employee had uploaded
the disputed certificate; that the FIR registered by MP24 against its
employee indicated vicarious liability of MP24 for the fraudulent
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practice committed by its employee; and that this admission,
coupled with the violation of Section 4 of the RFP, rendered MP24
liable to be disqualified.
43. On the question of natural justice, the learned Single Judge
referred to the judgment of the High Court of Delhi in CCS
Computers Private Ltd. v. New Delhi Municipal Council3 and
held that where a forged document has been uploaded by an
authorised employee, the bidder cannot avoid vicarious liability.
The learned Single Judge further held that the doctrine of “useless
formality”, as enunciated by the Supreme Court in Aligarh Muslim
University v. Mansoor Ali Khan4, would apply, since the end
result would have been the same — namely, the disqualification of
MP24 — even if a personal hearing had been afforded.
44. The learned Single Judge further observed that the
Tendering Authority is empowered, under Section 14 of the KTPP
Act, to reject all tenders before taking a final decision; that the
tender process had not been finalised by KRDCL upon completion
of the Financial Bid; that the question of awarding the contract to
3
2025 SCC OnLine Del 5354
4
(2000) 7 SCC 529
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the L2 bidder or calling for fresh tenders lay within the Tendering
Authority’s domain; and that the Court would not interfere with the
tender process at that stage. As regards the Government Circulars
dated 03.12.2002, 11.05.2022 and 16.01.2025 — relied upon by
MP24 to contend that fresh tenders were mandatorily required and
that no negotiation could take place with the L2 bidder — the
learned Single Judge observed that, since the tender process was
not yet concluded, it was for KRDCL to take a decision in
accordance with the tender documents, and that any observation
by the Court at that stage on the said circulars would be premature.
45. On the question of the alleged disobedience of the interim
orders by the State, the learned Single Judge observed that, since
MP24 had approached the Court with unclean hands, the said
contention could not be accepted. The learned Single Judge further
took note of the Division Bench’s order dated 03.11.2025 in Writ
Appeal No.1729 of 2025, the operative paragraphs whereof were
extracted in the impugned common order.
46. On the relationship between MP24 and RCCL, the learned
Single Judge observed that the e-mail dated 16.04.2025 from
RCCL to MP24 — withdrawing from the Consortium just before the
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close of bidding — was not communicated to KRDCL by either of
the Consortium’s constituents until RCCL’s letter dated 22.05.2025;
that this omission, by itself, demonstrated that MP24 was not
entitled to equitable relief; and that, since RCCL’s communication
dated 22.05.2025 was made after the opening of the Technical Bid,
the conduct of MP24 in suppressing material facts vitiated its offer
at the threshold.
47. In the aforesaid premises, the learned Single Judge
concluded that MP24 had failed to establish that the principles of
natural justice were not complied with; that MP24 had uploaded a
forged document; and that MP24 had approached the Court with
unclean hands. Accordingly, the learned Single Judge held that
W.P.No.22904 of 2025 and W.P.No.25668 of 2025 deserved to be
dismissed as devoid of merit, and that, in light of the said dismissal,
the prayer made in W.P.No.31906 of 2025 did not survive for
consideration. All three writ petitions were dismissed along with the
pending applications.
48. Thereafter, on 12.12.2025, MP24 filed the Writ Appeal
No.2026 of 2025 (assailing the dismissal in W.P.No.25668 of 2025)
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and Writ Appeal No.2028 of 2025 (assailing the dismissal in
W.P.No.22904 of 2025).
IV. SUBMISSIONS
49. It would be apposite at this stage to briefly note the principal
submissions urged on behalf of the parties.
50. The learned Senior Counsel appearing for MP24 had
assailed the debarment order on several fronts.
51. First, it was contended that no valid show-cause notice was
issued by SLDC; therefore, the debarment order is contrary to the
principles of natural justice. It was contended that SLDC had
issued emails, notices, and communications inviting MP24 to
meetings; however, the said notices neither specified any charge of
fraud or misconduct nor proposed any penalty such as blacklisting.
The notices did not inform MP24 of the consequences that it could
face at the culmination of the proceedings. It is submitted that in
the absence of any such information, the debarment order violated
the principles of natural justice and is thus liable to be set aside.
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52. Second, it was submitted that the State Government issued
the debarment order without any specific recommendation under
Rule 26-B(5) of the KTPP Rules.
53. Third, it is submitted that the State Government is required to
take a conscious decision after considering the recommendations
made by SLDC under Rule 26-B(5) of KTPP Rules. Further, the
principles of natural justice also require that MP24 be given an
opportunity to make a representation and be afforded a hearing at
that stage. However, the State Government did not follow any such
procedure prior to issuing the debarment order. Thus, the
debarment order is liable to be set aside as it was passed
mechanically and without following due process.
54. Fourth, it was contended that the debarment order does not
consider any of the mitigating factors, such as absence of mens
rea; that the document in question was unauthorizedly uploaded by
an employee; and MP24 had taken immediate remedial action and
had lodged an FIR against the concerned employee.
55. Fifth, it is submitted that the debarment order is excessively
harsh, and there are other measures that could be imposed that
are less harsh.
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56. Sixth, it was submitted that the decision to debar was taken
by the Principal Secretary, Public Works Department (PWD), in his
capacity as chairman of the SLDC and head of the department,
and was subsequently issued as a Government Order No. PWD
203 BMS 2025, Bengaluru, dated: 13.08.2025, authenticated by
the Under Secretary to the Government, Public Works Department
(Buildings) in the name of the Governor. It is contended that the
concerned officials were not authorised to take this decision. It was
contended that under the Karnataka Government (Transaction of
Business) Rules, 1977, the Minister in-charge is primarily
responsible for disposal of the business pertaining to his
department, and the records do not indicate that the Minister had
approved the said decision.
57. Seventh, that the forfeiture of the EMD was illegal. It was
contended that EMD could be forfeited only as damages, and MP
24 had not suffered any loss on account of the alleged
misrepresentation. The learned counsel relied on the decision of
the Supreme Court in Kailash Nath Associates (supra) and on the
strength of the said decision contended that no damages could be
recovered without proving the same.
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58. Eighth, it was contended that respondents applied different
yardsticks by treating MP24’s bona fide and non-essential
certificate as fraud, while ignoring the fabricated and inadmissible
documents of BVEPL including the NHAI work-done certificate
dated 14.08.2024 and the Ashoka Buildcon O&M certificate.
59. Lastly, it was contended that in terms of the Government
Circulars dated 11.05.2022 and 16.01.2025, KRDCL could not
award the contract to any person other than the Consortium, which
was declared as L1. It was contended that said circulars mandated
that where the contract is not awarded to the L1 bidder for any
reason, fresh tenders must be invited.
60. The learned counsel appearing on behalf of the State and
KRDCL submitted that MP24, being an unregistered proprietary
concern, had uploaded a fabricated work-experience certificate to
hold itself out as eligible; that fraud vitiated the entire transaction
and a bidder guilty of fraud is not entitled to equitable relief under
Article 226; that, the since the Consortium had uploaded a forged
document, each member was liable to be disqualified irrespective
of the nature of its participation; that MP24 had suppressed
RCCL’s withdrawal e-mail dated 16.04.2025 until after the opening
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of the bids; and that, since the tender process had not been
finalised and no letter of award had been issued, it remained within
the domain of the Tendering Authority to decide whether to award
the contract to the L2 bidder or to call for fresh tenders.
61. In regard to the Government Circulars, the State and KRDCL
submitted that the said circulars had no application. The
Consortium’s bid was non est, and the evaluation has not
culminated in a binding determination or the issuance of a letter of
award. Thus, the Consortium could not be considered as the L1.
On its disqualification, BVEPL became the L1 bidder.
62. It was also contended that MP24 had no locus to insist upon
a re-tender; and that the question was, at best, discretionary and
one for the Government to decide.
63. The learned counsel appearing for BVEPL submitted that it
had produced no fabricated document and that the certificate
issued by NHAI was withdrawn prior to the opening of the bids;
thus, the same could not have been considered.
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V. REASONS AND CONCLUSION
64. The subject matter of the present appeals is confined to
three main challenges; first, the challenge to the order of
debarment dated 13.08.2025 passed by the State Government,
debarring MP24 from participation in any procurement activity
within the State of Karnataka; second, the challenge to the award
of contract to BVEPL; and third, the forfeiture of the EMD.
RE: THE STATUTORY SCHEME FOR DEBARMENT
65. Before proceeding to address the issues raised, we consider
it relevant to refer to the statutory provisions governing the
blacklisting of any person.
66. Section 14A of the KTPP Act, 1999, contains the provisions
regarding debarment of tenderers, contractors or suppliers. Section
14A of the KTPP Act is reproduced below:
“14A. Debarment of Tenderers.–(1) The
Procurement Entity may debar tenderers, for a
period not exceeding three years, from
participation in its tenders, following such
procedure as may be prescribed on the ground
that tenderer is engaged in corrupt or fraudulent
practices in competing or executing the contract
including misleading the procuring entity at any
stage of Procurement Activity with a fraudulent
intention:
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Provided that, no tenderer shall be debarred
without giving opportunity of being heard.
(2) The State Government may debar
tenderers for a period not exceeding three years,
from participating in any procurement activity
within the State, following such procedure as may
be prescribed, on grounds of, but not restricted to,
criminal offence, corruption, integrity, honesty and
work ethics: Provided that no tenderer shall be
debarred without giving opportunity of being heard.
(3) The State Government shall publish the
list of so debarred tenderers under sub-section (2)
from participating in any procurement activity on
the Karnataka Public Procurement portal.
(4) The tenderer so debarred under sub
section (2) shall not be entitled to apply to
participate in tenders called by any procurement
entity under this Act during the period so
debarred.”
67. A plain reading of Section 14A(1) of the KTPP Act indicates
that a tenderer can be debarred for a period not exceeding three
years after following the procedure as may be prescribed. The
State Government can take such action on the grounds that the
tenderer is engaged in corrupt or fraudulent practices in competing
for the procurement or in executing the contract. This would include
misleading the procuring entity at any stage of the procurement
process with a fraudulent intent. However, no adverse action could
be imposed without affording the tenderer an opportunity to be
heard.
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68. Rules 26-A and 26-B of the KTPP Rules prescribe the
procedure for debarment of a tenderer, contractor or supplier. The
said Rules are set out below.
“26-A. Debarment of Tenderers by
Procurement Entity.- (1) The Procurement Entity
may proceed with debarring such tenderer or
contractor or supplier or any of the successor of
the tenderer or contractor or supplier who has
engaged directly or through an agent in a corrupt
or fraudulent practices in participating or
competing or executing the contract including
misleading the Procurement Entity at any stage of
procurement and executing activity.
(2) The Procurement Entity may, by order,
appoint a Committee consisting of such officers
not below the rank of Tender Inviting Authority to
be the Debarment Committee to consider the
proposals for debarring bidder or contractor or
supplier and to take a decision thereof.
(3) On the receipt of information,
Debarment Committee shall provide a reasonable
opportunity, including an oral hearing, to the
concerned for making representations before
taking a decision.
(4) For consideration of debarment, Tender
Inviting Authority or any other officer authorized by
Tender Accepting Authority shall furnish the details
of such bidders or contractors or suppliers who
have engaged in corrupt practice and fraudulent
practices to the Debarment Committee constituted
under sub-rule (2) above.
(5) The Debarment Committee may make
recommendations with reasoning in writing, within
thirty days from date of receipt of information.
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Provided that, the said period may be
extended by another fifteen days by Procurement
Entity for the reasons to be recorded in writing.
(6) On the recommendations of the
Debarment Committee, the Procurement Entity
shall by notification debar any of tenderer or
contractor or supplier and publish the same on its
website and Karnataka Public Procurement Portal
and also maintain the list of such tenderer or
contractor or the supplier or any of its successors.
(7) The order of debarment shall be
deemed to have been automatically revoked on
the expiry of the period specified in the debarment
order.
26-B. Debarment by the Government.- (1)
The Government may debar a tenderer or
contractor or supplier, in the public interest and on
the grounds specified in the Act.
(2) There shall be a State Level Debarment
Committee consisting of such Officers as may be
notified by the State Government to consider the
proposals for debarring bidder or contractor or
supplier and to take a decision thereof.
(3) On the receipt of the information, the
State Level Debarment Committee shall provide a
reasonable opportunity, including an oral hearing,
to the concerned for making representations
before taking a decision on the debarment.
(4) For consideration of debarment of the
bidders or contractors or suppliers, the officer
authorized by the Procurement Entity shall furnish
the details of such bidders or contractors or
suppliers to the State Level Debarment Committee
constituted under sub rule (2) above;
(5) The State Level Debarment Committee
may make recommendation to the State
Government to such an effect, within thirty days,
from the date of receipt of the information:
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Provided that, the said period may be
extended by another fifteen days for the reasons to
be recorded in writing by the Debarment
Committee.
(6) On the recommendation of the State
Level Debarment Committee, the Government
shall debar by notification such tenderer or
contractor or supplier and publish the same on the
Department website as well as Karnataka Public
Procurement Portal and shall maintain the list of
such bidder or contractor or the supplier or any of
its successor.
(7) The debarred tenderer or contractor or
supplier shall be removed from the list of
registered contractors or vendors.
(8) The order of debarment shall be
deemed to have been automatically revoked on
the expiry of the specified period in the debarment
order.”
69. As is apparent from the above, Rule 26-A contemplates
debarment by a Procurement Entity. Sub-rule (2) of 26-A provides
that an action of debarment shall be taken by the debarment
committee constituted by the Procurement Entity, which shall not
be below the rank of the tender inviting authority. Sub-rule (5) of
Rule 26-A provides that the debarment committee is required to
make a recommendation in writing. Sub-rule (6) of Rule 26-A
provides that the Procurement Entity shall debar a tenderer on the
recommendation of the debarment committee by issuing a
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notification and publishing the same on the Karnataka Public
Procurement Portal.
70. Rule 26-B of the KTPP Rules provides that the State
Government may debar a tenderer, contractor or a supplier in
public interest on the grounds specified in the Act.
71. As noted earlier, Section 14A of the KTPP Act sets out the
grounds on which a tenderer, contractor or supplier may be
debarred or blacklisted. Sub-rule (2) of Rule 26-B of the KTPP
Rules provides for the constitution of a State Level Debarment
Committee [SLDC] comprising officers as may be notified by the
State Government. SLDC is required to consider proposals for
debarring a bidder, contractor or supplier and “to take a decision” in
this regard.
72. Under sub-rule (3), the SLDC (State Level Debarment
Committee) is required to provide a reasonable opportunity to the
tenderer, contractor or supplier to make a representation, including
an oral hearing, before taking a decision on debarment.
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73. Sub-rule (6) of Rule 26-B provides that the Government shall
debar a tenderer by a notification on the recommendation of the
SLDC.
74. We may also refer to Rule 26-C of the KTPP Rules, which
sets out the measures that the Procurement Entity may take after
the debarment of the tenderer, contractor, or supplier, as the case
may be. The said rule is set out below.
“26-C. Measures to be taken after Debarment.-
The Procurement Entity may take appropriate
measures in respect of debarred tenderer or
contractor or supplier including one or more of the
following, namely:-
(i) reject the bid and forfeit or encash
EMD or Bid Security;
(ii) terminate the contract; forfeit or
encash the performance guarantee; recover
the compensation of loss incurred by
Procurement Entity;
(iii) forfeit or encash any other security or
guarantee or bond provided by such tenderer
or contractor or supplier in relation to the such
procurement; and
(iv) recover payments including advance
payments, if any, made by the Procurement
Entity along with the interest thereon at the
prevailing rate of Nationalized Bank.”
75. As is apparent from the scheme of Rule 26-A and 26-B of the
KTPP Rules, a tenderer, contractor or supplier may be debarred
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either by the Procurement Entity or by the State Government. In
either event, the grounds of debarment are identical. Sub-rule (1) of
Rule 26-A of the KTPP Rules provides that a tenderer, contractor,
or supplier who is directly or indirectly engaged in corrupt or
fraudulent practices in participating in, competing for, or executing
the contract -including misleading the Procurement Entity -may be
debarred. These grounds are materially similar to those set out in
Section 14A of the KTPP Act.. The grounds on which the State
Government may take action under Rule 26-B(1) of the KTPP
Rules are the same.
76. Although the State Government has enacted the KTPP Act
and KTPP Rules for the debarment of a tenderer, contractor, or
supplier that has engaged, directly or indirectly, in fraudulent or
corrupt practices at any stage of procurement or execution of the
contract, such power is also inherent in the State. In Patel
Engineering Ltd. v. Union of India and another5 the Supreme Court
had observed as under:
“The State can decline to enter into a
contractual relationship with a person or class of
persons for legitimate purpose. The authority of
the State of blacklist a person is necessary
concomitant to the executive power of the State to
5
(2012) 11 SCC 257
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carry on the trade or the business and making of
contracts for any purpose etc. There need not be
any statutory grant of such power. The only legal
limitation upon the exercise of such an authority is
that the State is to act fairly and rationally without
in any way being arbitrary – thereby such a
decision can be taking for some legitimate
purpose.”
77. It is necessary to bear the aforesaid in mind while
considering the challenge to the debarment order. The
proceedings before the SLDC are not quasi-judicial or judicial
proceedings. Thus, a debarment order is not required to be tested
against the parameters of a judicial or quasi-judicial decision. It is
by its very nature an administrative order, and thus its validity must
be tested on the anvil of administrative law.
78. It is a trite principle of law that the Courts will not interfere
with administrative action unless it is found to infringe any
constitutional or statutory rights.
RE: VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE
79. We will now proceed to address the first question, whether
the debarment order is liable to be set aside on the ground that it
violates the principles of natural justice.
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80. MP24 argues that the communications issued by the State
Government merely called the tenderer to a hearing without
specifying the proposed action or the grounds on which it was
proposed. There is no cavil that MP24 was required to be afforded
a reasonable opportunity to be heard.
81. The question whether MP24 was afforded sufficient
opportunity to respond to the allegation of using fraudulent means
is required to be answered by examining the correspondence
between MP24 and KRDCL, as well as the correspondence with
the State. KRDCL, being the procurement entity, had issued a
letter dated 12.06.2025. A plain reading of the said letter indicates
that MP24 was informed that KRDCL had sought confirmation from
the issuing authority – the APWRD – regarding the authenticity of
the certificate furnished by MP24 for the project of “Remodelling of
HNSS main canal from 45.6 KM to 110 KM and Distributary of P-9,
P-10, P-11, P-12, and P-13 coming under HNSS main canal at
Kadiri, Ananthapuram District”. The APWRD confirmed that the
experience certificate furnished by MP24 had not been issued by
its office and that is the certificate was “bogus and forged”. MP24
was informed that, given the serious nature of the observations, it
should come for a meeting at the office on 19.06.2025 at 11.00 AM
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“along with a detailed written explanation and other supporting
documents”.
82. MP24 was also informed that in case of failure to attend the
meeting along with the requisite documents/information, KRDCL
would be constrained to disqualify MP24 and take further
necessary action as per the tender conditions and applicable laws.
83. MP24 responded to the said letter by stating that its
proprietor Mr. Kantharaju H.M. is unable to attend the said meeting
on account of illness. The said reply letter dated 18.06.2025 with
the subject – “Inability to Attend Meeting Scheduled on 19.06.2025
— Due to Unforeseen Medical Emergency”, was also accompanied
by a handwritten medical certificate dated 10.06.2025 issued by the
Principal & Chief Medical Officer of the Rajeev Institute of
Ayurvedic Medical Science and Research Centre. The said
certificate states that it is certified that Sri Kantharaju H.M. was
suffering from sciatica and he had been advised medication along
with complete bed rest for a period of three weeks.
84. MP24 sent another letter the very next day – that is, on
19.06.2025 -confirming its willingness to execute the work as per
the RFP and all technical eligibility criteria. It also stated that it had
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proactively mobilised key machinery resources and initiated
preparatory arrangements required for the commencement of the
project activities.
85. The inconsistency in the communication is ex facie evident.
On the one hand, MP24 sent a letter on 18.06.2025 stating that it is
unable to attend the meeting scheduled for 19.06.2025 due to the
ill health of its proprietor. However, the very next day, it sent a letter
stating that it had already made preparatory arrangements and was
ready to start work immediately.
86. KRDCL sent another letter dated 11.07.2025, in continuation
of its earlier letter dated 12.06.2025, once again requesting MP24
to attend a meeting scheduled for 16.07.2025, along with a detailed
written explanation and supporting documents. MP24 responded to
the said letter stating that it had already provided “detailed
explanation and clarification” regarding the information in its letter
dated 30.06.2025. Relevant extracts of the said letter read as
under:
“6. In relation to A.P certificate is concerned, we
would like to bring to your kind attention that one
employee of MP24 without authorization and
knowledge of the Management has obtained the
certificate. It was only after teg receipt we initiated
an internal inquire and found the said employee
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had obtained the said certificate even though the
same was not required for qualification of the
award of the subject tender proceeding. In fact, we
have suspended the said employee and initiated a
criminal complaint before the jurisdictional police
station.
7. At this juncture we would like to bring to your
notice the law laid down by the Hon’ble Supreme
Court of India in tender matters with respect to the
essential and non-essential documents. The
Hon’ble Supreme Court of India has categorically
held that non-essential documents are those that,
while potentially helpful in demonstrating bidder’s
capabilities, are not strictly required for eligibility.
In this regard, Banshidhar Construction (P) Ltd. v.
Bharat Coking Coal Ltd., (2024) 10 SCC 273 is
relied upon; wherein the Hon’ble Supreme Court
has held that rejection of a bid on such grounds is
unjustified.
8. MP24 having been technically qualified, the
work done certificate mistakenly submitted by our
employee is at best a non-essential document for
the purposes of considering the MP24’s tender.
Even as highlighted in our letter dated 19.06.2025,
MP24 has produced such other work done
certificates of seven high value projects with a
cumulative capacity of Rs.776.05- Crores. Hence,
the A.P certificatÄ— need not be considered for the
purposes of award of contract to MP24.
9. Pertinently, the law recognizes the distinction
between fraud and mistake. Even though, the
terms fraud and mistake are used
interchangeably, the have distinct meanings and
implications in law. ‘Mistake’ refers to an error or
misunderstanding which is bona fide in nature.
While on the other hand, fraud involves intentional
deception. These aspects are clearly delineated
under the provisions of Contract Act, 1872.
Secondly, Section 4 of the RFP which deals with
‘fraud and corruption practices’ to disqualify a
bidder from the subject tender proceedings. The
said provision also defines corrupt practice,
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fraudulent practice and coercive practice. The fact
that Section 4 of the RFP does not include within
its ambit a “mistake” to disqualify a bidder is only
demonstrative that the mistakes are condonable
and are non-essential. Thirdly and similarly, the
Karnataka Transparency in Public Procurement
Rules 2000 also debars a tender of corrupt and
fraudulent practices but not a bona fide mistake.
10. The enquiry that has been commenced
against MP24 by way of letter dated 12.06.2025
will have far reaching adverse implications in all
our pending contracts, future projects and financial
arrangements. Infact, our JV Partner RCCL also
addressed a letter to KRDCL showing reluctance
to participate in the subject tender proceeding.
Even today, RCCL has communicated to us that it
will go ahead with the project if KRDCL is kind
enough to withdraw or close the enquiry
proceeding initiated under letter dated
12.06.2025.”
87. MP24 was clearly aware of the inquiry being conducted and
the allegation that it had indulged in fraud and corrupt practices.
This is clear from its response, which states that the certificate was
mistakenly submitted and a mistake could not be considered as
fraud and/or corrupt practices as set out in section 4 of the RFP.
MP24 explained that the forged certificate was furnished by one of
its employees. It also contended that the said certificate was not
essential, as, according to MP24, it qualified the technical eligibility
criteria without any credit in respect of the works covered under the
forged certificate.
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88. MP24 was fully aware of the implications of the inquiry. In
paragraph 10 of its letter, it clearly stated that the inquiry, which
had commenced with a letter dated 12.06.2025, has “far-reaching
adverse implications in all the pending contracts, future projects
and financial arrangements”.
89. MP24 participated in the meeting held on 16.07.2025 and
tendered its written submissions. It was at this meeting that the
discrepancy between the net worth certified by MP24’s Chartered
Accountant and the information stated to have been obtained from
the Income Tax Department was put to MP24 for the first time.
Thereafter, by its letter dated 22.07.2025, it raised issues relating
to TEC’s proceedings. MP24 also raised a grievance that, since the
allegation cast a stigma, a fair opportunity ought to have been
granted before it was placed before the TEC. The grievance was
made in the context of a clarification sought by KRDCL regarding
RCCL’s withdrawal from the consortium and the tender.
90. Proceedings of the TEC meeting held on 18.07.2025 are
placed on record. The same indicates that TEC rejected MP24’s
contention that the fabricated work experience certificate is a non-
essential document. It also rejected the contention that the
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furnishing of the said document was a mistake. It was noted that
the authorised signatory of MP24 had certified that all information
provided in the Bid documents and in Annexures I to IV was true
and correct. It further affirmed that nothing has been omitted, which
renders such information misleading, and all documents
accompanying such Bid are true copies of their respective
originals.
91. After considering the response furnished by MP24, the TEC
made recommendations. The relevant extract of the proceedings
setting out the recommendations made is set out below:
“f) Based on the above discussions and
deliberations, the Tender Evaluation Committee
recommended the following;
a. The claim made by the L1 Bidder
regarding the work experience certificate as
a mistake in the technical proposal is not
valid and hence cannot be considered as
per the provisions of the RFP.
b. The withdrawal letter submitted by the JV
member of the legally formed consortium
cannot be accepted. Further as per Clause
8 of the Joint Bidding agreement executed
among the Parties, the, JVr agreement
stands terminated only in case the bidder is
not qualified for the Project.
c. The details regarding the financial
documents of L1 bidder shared by the L2
Bidder and the details obtained from the
Income Tax Department are matching.
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d. As per the directions of the 149th Board
Meeting, the Tender Evaluation Committee
has reviewed the documents furnished by
the L1 Bidder and based on the same, the
Committee is of the opinion that the
documents submitted by the L1 Bidder are
not sufficient to justify their claim and
tantamount to misrepresentation of the
information as per the provisions of the
RFP
e. Therefore, the Committee proposes to
proceed as per the direction of the Board to
take action as per RFP on the grounds of
fraudulent participation in the tender and to
submit a letter to Government requesting to
place the subject in the State Level
Debarment Committee.
f. The above facts may be submitted to
Govt. for further action.”
92. A plain reading of the recommendations indicates that the
TEC proposed placing the matter before the State or the SLDC.
93. MP24’s letter dated 22.07.2025 reflects that MP24 was
aware that the matter stood referred to the TEC for consideration
and that MP24 was aware of the TEC’s meeting held on
18.07.2025, albeit belatedly.
94. On 28.07.2025, the State (Under Secretary to the
Government) sent an email regarding the subject, which read as
“Notice regarding submitting fake documents in the Devanahalli-
Kolara Highway Development work Tender”. The said email
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enclosed an attachment of a soft .pdf file named “debarment.pdf”.
The body of the email read as under:
“Please find the attachment and request that you
attend the meeting with the supporting
documents.”
95. The email’s subject line and the file name, “Debarment”,
clearly indicated the purpose of the meeting. The translated copy of
the “meeting notice letter” attached with the notice dated
24.07.2025 reads as under:
“GOVERNMENT OF KARNATAKA
No: PWD 203 BMS 2025
Karnataka Government Secretariat,
Vikasa Soudha,
Bengaluru, Date: 24.07.2025MEETING NOTICE LETTER
Regarding the tender for developing the road from
Devanahalli-Vemagal-Kolar State Highway-96
(Chainage 0.00 km to 49.284 km) under the PPP-
DBFOMT Hybrid Annuity Model; whereas it has
been alleged that the Consortium of M/s MP24
Construction Company and M/s Ramalingam
Construction Company Pvt. Limited created and
submitted fake documents to obtain the work in
the said tender; a meeting of the State Level
Debarment Committee, under the chairmanship of
the Principal Secretary to the Government, Public
Works Department, has been scheduled on Date:
01.08.2025 at 4:00 PM at Room No. 317, 3rd Floor,
Vikasa Soudha, Bengaluru to conduct an inquiry
regarding this matter. You are requested to attend
the said committee meeting.
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Agenda details will be sent subsequently.
(Signed)
(Rajashekhar M.G.)
Under Secretary to Government,
Public Works Department (Buildings).”
96. The said notice was addressed to various officials and the
proprietor of MP24. A note which reads as “sent to you, requesting
you to appear for the inquiry on the above-mentioned date and
provide your explanation” was recorded against the name of the
proprietor of MP24. A plain reading of the notice indicates that it
was regarding the submission of a fake document by the
consortium of MP24 and RCCL to secure the contract for the
project. The MP24 was informed that a meeting of the SLDC has
been scheduled in this regard. As observed above, the notice
clearly asked MP24 to submit its explanation. It is clear from the
above that MP24 was aware that SLDC would take up the matter
regarding the issuance of a fake certificate at its meeting scheduled
on 01.08.2025.
97. MP24 sent an email dated 31.07.2025 at 10:29 PM stating
that he was outstation “due to religious commitment personal
reason and requested that the meeting be postponed.” Sri
Kantharaju acknowledged that he was fully aware of the relevance
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of the said meeting, as is evident from the following statement
made in his email:
“I understand the importance of the Debarment
Committee meeting scheduled on 01.08.2025, and
as this matter requires my personal presence and
explanation I am unable to authorize any
representative at this stage.”
He also assured his full cooperation, and he undertook to
appear at the meeting on the rescheduled date without fail.
98. The SLDC deferred the meeting and rescheduled it for
08.08.2025. A notice dated 05.08.2025 for the said meeting was
issued in similar terms as the earlier notice dated 24.07.2025.
There is controversy over whether MP24 attended the meeting in
question. According to MP24, its proprietor, Sri Kantharaju, was
present at the venue at 4 PM. He claims that he was informed that
the meeting was cancelled. However, the State submitted that
there was some delay in commencing the meeting, and the
members convened around 4.45 PM. However, Sri Kantharaju had
left without signing the register.
99. Sri Kantharaju sent an email on the very same day, i.e.
08.08.2025 at 9.25PM, inter alia, requesting that the meeting now
be scheduled after 15.08.2025 in view of the national festival
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(Independence Day). He stated that his organisation manages
educational institutions, and he has planned certain events in
advance.
100. SLDC did not accede to the request to reschedule the
meeting after 15.08.2025; instead, it scheduled it for 12.08.2025 at
4 PM. Accordingly, it sent a letter dated 11.08.2025 by post and
email, stating that RCCL had already attended the meeting held on
01.08.2025 and had furnished its written statement. The meeting
was deferred to accommodate MP24, and it appeared that MP24’s
request for deferment was to “avoid the inquiry”.
101. MP24 responded to the email again, requesting a deferral of
the hearing scheduled for 12.08.2025. Sri Kanthraju stated that
since he had to personally oversee and organise arrangements for
the upcoming Independence Day celebrations, it was difficult for
him to attend the meeting. He also made a grievance that the
meeting was being held on an emergency basis.
102. The communications referred to above between MP24 and
SLDC clearly indicate that MP24 was aware that the meeting was
held to conduct an inquiry regarding the furnishing of a forged
certificate. He unequivocally stated that he would personally attend
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the meeting and provide information regarding the inquiry being
conducted.
103. MP24’s contention that the debarment order had been
passed without following the principles of natural justice has to be
viewed in the context of the aforesaid communications.
104. It was argued on behalf of MP24 that, since the notice did not
specifically state that it proposed to debar MP24 from participating
in contracts, the debarment order is vitiated. The learned senior
Counsel appearing for MP24 also relied on the decisions of the
Supreme Court in Gorkha Security Services vs Govt. of (NCT of
Delhi)6 and Vetindia Pharmaceuticals Ltd. vs State of UP7. It is
relevant to refer to the following extract of the decision of Supreme
Court in Gorkha Security Services (supra):
“27. We are, therefore, of the opinion that it was
incumbent on the part of the Department to state
in the show-cause notice that the competent
authority intended to impose such a penalty of
blacklisting, so as to provide adequate and
meaningful opportunity to the appellant to show
cause against the same. However, we may also
add that even if it is not mentioned specifically but
from the reading of the show-cause notice, it can
be clearly inferred that such an action was
proposed, that would fulfil this requirement. In the
6
(2014) 9 SCC 105
7
(2021) 1 SCC 804
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present case, however, reading of the show-cause
notice does not suggest that noticee could find out
that such an action could also be taken. We say
so for the reasons that are recorded hereinafter.”
105. A plain reading of the aforesaid passage indicates that the
rationale for ensuring that the show-cause notice discloses the
intention to impose a penalty of backlisting is to provide an
adequate and meaningful opportunity for the concerned party to
show cause against the same. There is no cavil that a person who
is proposed to be blacklisted – a measure which has severe
consequences and is also described as a civil death8 – must be
afforded a fair opportunity to meet the allegations on which such
action is proposed and respond as to why such action should not
be taken. The Supreme Court also clarified that if the proposed
action of blacklisting could be inferred from the show-cause notice,
the said requirement would be satisfied. In Vetindia
Pharmaceuticals (supra) the Supreme Court referred to the earlier
decision in Gorkha Securities (supra) and held as under:
“8. There is no dispute that the injection was
not supplied to the respondents by the appellant.
Yet the show-cause notice dated 21-10-2008
referred to further action in terms of the tender for
supplying misbranded medicine to the appellant.
Furthermore, the show-cause notice did not state8
Erusian Equipment & Chemicals Ltd. v. State of West Bengal, (1975) 1 SCC 70
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that action by blacklisting was to be taken, or was
under contemplation. It only mentioned
appropriate action in accordance with the rules of
the tender. The fact that the terms of the tender
may have provided for blacklisting is irrelevant in
the facts of the case. In the absence of any supply
by the appellant, the order of blacklisting dated 8-
9-2009 invoking Clauses 8.12 and 8.23 of the
tender is a fundamental flaw, vitiating the
impugned order on the face of it reflecting non-
application of mind to the issues involved. Even
after the appellant brought this fact to the attention
of the respondents, they refused to pay any heed
to it. Further, it specifies no duration for the same.
9.Erusian Equipment & Chemicals Ltd. v. State
of W.B. [Erusian Equipment & Chemicals
Ltd. v. State of W.B., (1975) 1 SCC 70] , held that
there could not be arbitrary blacklisting and that
too in violation of the principles of natural justice.
In Joseph Vilangandan v. Executive Engineer
(PWD) [Joseph Vilangandan v. Executive
Engineer (PWD), (1978) 3 SCC 36] , this Court
was considering a show-cause notice as follows :
(Joseph Vilangandan case[Joseph
Vilangandan v. Executive Engineer (PWD), (1978)
3 SCC 36] , SCC pp. 41-42, para 17)
“17. … ‘You are therefore requested to
show cause … why the work may not be
arranged otherwise at your risk and loss,
through other agencies after debarring you as
a defaulter …’The crucial words are those that have been
underlined [Ed. : Herein italicised.] . They take
their colour from the context. Construed along
with the links of the sentence which precede
and succeed them, the words “debarring you
as a defaulter”, could be understood as
conveying no more than that an action with
reference to the contract in question, only, was
under contemplation. There are no words in
the notice which could give a clear intimation to
the addressee that it was proposed to debar
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him from taking any contract, whatever, in
future under the Department.”
** ** **
11. If the respondents had expressed their
mind in the show-cause notice to blacklist, the
appellant could have filed an appropriate response
to the same. The insistence of the respondents to
support the impugned order [Vetindia
Pharmaceuticals Ltd. v. State of U.P., 2019 SCC
OnLine All 6734] by reference to the terms of the
tender cannot cure the illegality in the absence of
the appellant being a successful tenderer and
supplier. We therefore hold that the order of
blacklisting dated 8-9-2009 stands vitiated from
the very inception on more than one ground and
merits interference.”
106. It is clear from the above that the rationale of ensuring that
the show cause notice sets out the proposed adverse action is to
put the concerned party on notice of the same so as to enable it to
respond to the said allegation. In both the cases referred to by the
learned counsel for MP24 – Gorka Securities and Vetindia
Pharmaceuticals – the authority could take a myriad of punitive
actions, including blacklisting of the tenderer. In such
circumstances, the show-cause notice, which did not refer to the
adverse action proposed, was vulnerable on the ground that it was
insufficient in as much as it did not put the concerned party on
notice regarding the adverse action and therefore disabled it from
responding to it.
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107. However, in the given facts of this case, the SLDC could not
take any other punitive measure except to debar the tenderer,
contractor, or supplier, as the case may be. SLDC could either
issue a debarment order or close the proceedings. It was not open
for SLDC to impose any other penalty or take any other action.
Therefore, the fact that the notice had been issued with regard to
the inquiry being conducted by SLDC is self-indicative of the fact
that the inquiry was to determine whether the order debarring
MP24 and RCCL should be issued. MP24 could have no doubt as
to the nature and possible outcome of the proceedings before the
SLDC. The subject matter of the notice clearly indicated that SLDC
would examine the allegation that the notices, MP24 and RCCL,
had indulged in a fraudulent practice by submitting a fake certificate
in an attempt to procure the contract.
108. Rule 26-B of the KTPP Rules also clearly indicates the scope
of proceedings before SLDC is whether the tenderer, contractor or
supplier is required to be debarred in the public interest and on the
grounds as set out under the KTPP Act. Sub-rule (3) of Rule 26-B
expressly provides that the SLDC may afford a reasonable
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opportunity to the concerned person/entity to make a
representation before taking a decision on debarment.
109. In the given facts, it is clear that such an opportunity was
provided to MP24. Meetings had been convened at least twice, and
MP24 was called upon to submit its explanation. On the first
occasion (meeting scheduled on 01.08.2025), the proprietor of
MP24 declined to participate on the grounds that he is travelling for
religious purposes for personal reasons. On the second occasion
(hearing scheduled on 12.8.2025), he declined to participate on the
grounds that he was involved in organising Independence Day
celebrations. Thus, undeniably, a reasonable opportunity was
granted to MP24. The fact that it declined to avail itself of the same
does not entitle it to now claim the opportunity was not provided.
MP24’s grievance in this regard is completely unjustified. We are
inclined to accept that MP24 deliberately refrained from
participating in the proceedings before the SLDC, as is contended
on behalf of the State.
110. There is no straitjacket formula for applying the principles of
natural justice. The question of whether principles of natural justice
have been followed must be viewed in the factual context of each
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case. It would be apposite to remind us of the following observation
made by the Supreme Court in Board of Mining Examination vs.
Ramjee9:
“13. … Natural justice is no unruly horse, no
lurking landmine, nor a judicial cure-all. If fairness
is shown by the decision-maker to the man
proceeded against, the form, features and the
fundamentals of such essential processual
propriety being conditioned by the facts and
circumstances of each situation, no breach of
natural justice can be complained of. Unnatural
expansion of natural justice, without reference to
the administrative realities and other factors of a
given case, can be exasperating. We can neither
be finical nor fanatical but should be flexible yet
firm in this jurisdiction. No man shall be hit below
the belt–that is the conscience of the matter.”
111. It is necessary for us to ask whether,
(a) MP24 knew that the inquiry was being
conducted for the purpose of considering its
debarment;
(b) it had notice of such inquiry;
(c) it had the opportunity to furnish its explanation /
representation; and
(d) had an opportunity to be heard.
9
(1977) 2 SCC 256
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In our view all of these aforesaid questions must be
answered in affirmative in the given facts.
112. In this view, we reject the contention that the impugned
debarment order is liable to be set aside as having been passed
without following the principles of natural justice.
RE: THE SCOPE OF RULES 26-A, 26-B AND 26-C
113. Having rejected the challenge founded on the principles of
natural justice, we turn to the scope of Rules 26-A, 26-B and 26-C
of the KTPP Rules, which is material to the further contentions
raised.
114. It is material to note the scheme of Rule 26-A, 26-B and 26-C
of the KTPP Rules. Rule 26-A refers to the debarment of the
tenderers by the procurement entity. The procurement entity can
debar a tenderer, a contractor, or a supplier if it is found to be
engaged in fraudulent practices. Rule 26-B refers to such
measures as may be taken by SLDC.
115. Rule 26-C of the KTPP Rules provides for further measures
can be taken by the procurement entity after a debarment order
has been passed.
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116. The scope of proceedings under Rule 26-A and 26-B are
confined to debarment of the tenderer, contractor or supplier, as
the case may be. Thereafter, the procurement entity can also take
certain other measures as provided under Rule 26-C. However,
there is no provision for the State government to take any further
action; its jurisdiction is thus confined to considering whether the
concerned tenderer, contractor or supplier is required to be
debarred.
RE: PROPORTIONALITY
117. Next, it is necessary to examine whether the debarment
order imposes excessive and disproportionate punishment?
118. An administrative action can be amenable to judicial review
on the ground of irrationality or unreasonableness and is applicable
only if the action fails the test of reasonableness on the anvil of
Wednesbury principle.
119. The Supreme Court in Om Kumar v. Union of India10
referred to the opinion of Lord Diplock in Council of Civil Service
10
(2001) 2 SCC 386
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Unions v. Minister for the Civil Service11, wherein Lord Diplock
had held that a judicial review of an administrative action is
permissible on the grounds of illegality, procedural irregularity and
irrationality. The Supreme Court also took note of Lord Diplock’s
view that in addition to the said grounds of judicial review, the
ground of ‘proportionality’ was a ‘future possibility’. In this regard,
the Supreme Court explained the principle of proportionality as
under:
“27. The principle originated in Prussia in the
nineteenth century and has since been adopted in
Germany, France and other European countries.
The European Court of Justice at Luxembourg and
the European Court of Human Rights at
Strasbourg have applied the principle while
judging the validity of administrative action. But
even long before that, the Indian Supreme Court
has applied the principle of “proportionality” to
legislative action since 1950, as stated in detail
below.
28. By “proportionality”, we mean 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”.
The legislature and the administrative authority
11
[1984] 3 All ER 935
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are, however, given an area of discretion or a
range of choices but as to whether the choice
made infringes the rights excessively or not is for
the Court. That is what is meant by
proportionality.”
120. In R. (Daly) v. Secretary of State for the Home
Department12, the House of Lords observed that the ground of
proportionality was more precise and sophisticated than any other
grounds of judicial review. The court mentioned the differences
between the test of proportionality and other grounds as under:
“(1) Proportionality may require the reviewing court
to assess the balance which the decision-maker
has struck, not merely whether it is within the
range of rational or reasonable decisions.
(2) Proportionality test may go further than the
traditional grounds of review inasmuch as it may
require attention to be directed to the relative
weight accorded to interests and considerations.
(3) Even the heightened scrutiny test is not
necessarily appropriate to the protection of human
rights.”
121. In a later decision, the Supreme Court in State of U.P. v.
Sheo Shanker Lal Srivastava13, referred to the decision of House
of Lords in R. (Daly) (supra) and observed as under:
12
(2001) UKHL 26
13
(2006) 3 SCC 276
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“24. While saying so, we are not oblivious of the
fact that the doctrine of unreasonableness is
giving way to the doctrine of proportionality.
25. It is interesting to note that the Wednesbury
principles may not now be held to be applicable in
view of the development in constitutional law in
this behalf. See, for example, Huang v.Secy. of
State for the Home Deptt. 2006 QB 1 wherein
referring to R. (Daly) v. Secy. of State for the
Home Deptt. (2001) 2 AC 532 it was held that in
certain cases, the adjudicator may require to
conduct a judicial exercise which is not merely
more intrusive than Wednesbury, but involves a
full-blown merit judgment, which is yet more than
R. (Daly) [(2001) 2 AC 532, requires on a judicial
review where the court has to decide
aproportionality issue.”
122. It is also relevant to refer to the decision of the Supreme
Court in All India Railway Recruitment Board v. K. Shyam
Kumar14. In this decision, the court referred to various earlier
decisions and observed as under:
“36. Wednesbury applies to a decision which is so
reprehensible in its defiance of logic or of
accepted moral or ethical standards that no
sensible person who had applied his mind to the
issue to be decided could have arrived at it.
Proportionality as a legal test is capable of being
more precise and fastidious than a
reasonableness test as well as requiring a more
intrusive review of a decision made by a public
authority which requires the courts to “assess the
balance or equation” struck by the decision-maker.
Proportionality test in some jurisdictions is also
described as the “least injurious means” or
“minimal impairment” test so as to safeguard the
14
(2010) 6 SCC 614
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fundamental rights of citizens and to ensure a fair
balance between individual rights and public
interest. Suffice it to say that there has been an
overlapping of all these tests in its content and
structure, it is difficult to compartmentalise or lay
down a straitjacket formula and to say that
Wednesbury has met with its death knell is too tall
a statement. Let us, however, recognise the fact
that the current trend seems to favour
proportionality test but Wednesbury has not met
with its judicial burial and a State burial, with full
honours is surely not to happen in the near future.
37. Proportionality requires the court to judge
whether action taken was really needed as well as
whether it was within the range of courses of
action which could reasonably be followed.
Proportionality is more concerned with the aims
and intention of the decisionmaker and whether
the decision-maker has achieved more or less the
correct balance or equilibrium. The court entrusted
with the task of judicial review has to examine
whether decision taken by the authority is
proportionate i.e. well balanced and harmonious,
to this extent the court may indulge in a merit
review and if the court finds that the decision is
proportionate, it seldom interferes with the
decision taken and if it finds that the decision is
disproportionate i.e. if the court feels that it is not
well balanced or harmonious and does not stand
to reason it may tend to interfere.”
*** *** *** ***
“39. The courts have to develop an indefeasible
and principled approach to proportionality, till that
is done there will always be an overlapping
between the traditional grounds of review and the
principle of proportionality and the cases would
continue to be decided in the same manner
whoever principle is adopted. Proportionality as
the word indicates has reference to variables or
comparison, it enables the court to apply the
principle with various degrees of intensity and
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offers a potentially deeper inquiry into the reasons,
projected by the decision-maker.”
123. In Ranjit Thakur v. Union of India15, the Supreme Court
observed as under:
“25. Judicial review generally speaking, is not
directed against a decision, but is directed against
the “decision-making process”. The question of the
choice and quantum of punishment is within the
jurisdiction and discretion of the court-martial. But
the sentence has to suit the offence and the
offender. It should not be vindictive or unduly
harsh. It should not be so disproportionate to the
offence as to shock the conscience and amount in
itself to conclusive evidence of bias. The doctrine
of proportionality, as part of the concept of judicial
review, would ensure that even on an aspect
which is, otherwise, within the exclusive province
of the court-martial, if the decision of the court
even as to sentence is an outrageous defiance of
logic, then the sentence would not be immune
from correction. Irrationality and perversity are
recognised grounds of judicial review. In Council of
Civil Service Unions v. Minister for the Civil
Service [(1984) 3 WLR 1174 (HL) : (1984) 3 All ER
935, 950] Lord Diplock said:
“Judicial review has I think developed to a stage
today when, without reiterating any analysis of the
steps by which the development has come about,
one can conveniently classify under three heads
the grounds on which administrative action is
subject to control by judicial review. The first
ground I would call ‘illegality’, the second
‘irrationality’ and the third ‘procedural impropriety’.
That is not to say that further development on a
case by case basis may not in course of time add
further grounds. I have in mind particularly the
possible adoption in the future of the principle of
‘proportionality’ which is recognised in the
15
(1987) 4 SCC 611
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administrative law of several of our fellow
members of the European Economic
Community;….”
124. In Dev Singh v. Punjab Tourism Development
Corporation Ltd., and another16, the Supreme Court referred to
the earlier decision in Ranjit Thakur (supra) and observed as
under:
“6. A perusal of the above judgments clearly
shows that a court sitting in appeal against a
punishment imposed in the disciplinary
proceedings will not normally substitute its own
conclusion on penalty, however, if the
punishment imposed by the disciplinary
authority or the appellate authority shocks the
conscience of the court, then the court would
appropriately mould the relief either by
directing the disciplinary/appropriate authority
to reconsider the penalty imposed or to
shorten the litigation it may make an exception
in rare cases and impose appropriate
punishment with cogent reasons in support
thereof. It is also clear from the abovenoted
judgments of this Court, if the punishment
imposed by the disciplinary authority is totally
disproportionate to the misconduct proved
against the delinquent officer, then the court
would interfere in such a case.”
16
(2003) 8 SCC 9
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The aforesaid principle also resonates in later decisions of the
Supreme Court, including in Union of India v. G. Ganayutham17;
and Ex-Naik Sardar Singh v. Union of India18.
125. In Management of Coimbatore District Central Co-
operative Bank v. Secretary, Coimbatore District Central Co-
operative Bank Employees Association19, the Supreme Court
examined the question of Doctrine of Proportionality in the context
of imposing punishment on workmen who had gone on a strike
from work. In the said context, the court observed as under:
“17. So far as the doctrine of proportionality is
concerned, there is no gainsaying that the said
doctrine has not only arrived in our legal
system but has come to stay. With the rapid
growth of administrative law and the need and
necessity to control possible abuse of
discretionary powers by various administrative
authorities, certain principles have been
evolved by courts. If an action taken by any
authority is contrary to law, improper, irrational
or otherwise unreasonable, a court of law can
interfere with such action by exercising power
of judicial review. One of such modes of
exercising power, known to law is the “doctrine
of proportionality”.
18. “Proportionality” is a principle where the
court is concerned with the process, method or
manner in which the decision-maker has
17
(1997) 7 SCC 463
18
(1991) 3 SCC 213
19
(2007) 4 SCC 669
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ordered his priorities, reached a conclusion or
arrived at a decision. The very essence of
decision-making consists in the attribution of
relative importance to the factors and
considerations in the case. The doctrine of
proportionality thus steps in focus true nature
of exercise–the elaboration of a rule of
permissible priorities.
** ** **
21. The doctrine has its genesis in the field of
administrative law. The Government and its
departments, in administering the affairs of the
country, are expected to honour their
statements of policy or intention and treat the
citizens with full personal consideration without
abuse of discretion. There can be no “pick and
choose”, selective applicability of the
government norms or unfairness, arbitrariness
or unreasonableness. It is not permissible to
use a “sledgehammer to crack a nut”. As has
been said many a time; “where paring knife
suffices, battle axe is precluded”.
*** *** *** ***
24. So far as our legal system is concerned,
the doctrine is well settled. Even prior
to CCSU [1985 AC 374 : (1984) 3 WLR 1174 :
(1984) 3 All ER 935 (HL)] , this Court has held
that if punishment imposed on an employee by
an employer is grossly excessive,
disproportionately high or unduly harsh, it
cannot claim immunity from judicial scrutiny,
and it is always open to a court to interfere with
such penalty in appropriate cases.”
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126. We are also guided by the principles set out in Kulja
Industries Ltd. v. Chief General Manager, BSNL20. The
Supreme Court had observed that blacklisting a contractor for an
indefinite period was impermissible. In this context, we consider it
apposite to refer to the following observations made by the court:
“24. Suffice it to say that ‘debarment’ is
recognised and often used as an effective
method for disciplining deviant
suppliers/contractors who may have committed
acts of omission and commission or frauds
including misrepresentations, falsification of
records and other breaches of the regulations
under which such contracts were allotted.
What is notable is that the ‘debarment’ is never
permanent and the period of debarment would
invariably depend upon the nature of the
offence committed by the erring contractor.”
127. As observed by the Supreme Court, the period of debarment
would invariably depend upon the nature of the offence committed
by the erring contractor.
128. It would be apposite to refer to a recent decision of the
Supreme Court in Punjab and Sind Bank v. Sh. Raj Kumar21, in
which the doctrine of proportionality was considered. After an
exhaustive survey of the precedents — including several of the
20
(2014) 14 SCC 731
21
2026 INSC 313
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decisions already adverted to hereinabove — the Supreme Court
restated the position of law. The Supreme Court held as under:
“9. What follows from the precedents noted above
is that courts should exercise restraint while
interdicting orders of punishment. Normally, no
court in exercise of its power of judicial review
should interfere with an order of punishment
imposed on a delinquent as a measure of
disciplinary action by the competent authority and
substitute its own judgment for that of the former.
This is premised on the reason that the
disciplinary authority is the best judge of the
situation, and the requirements of maintaining
discipline within the work force. While it is not the
law that the courts should invariably stay at a
distance when legality and/or propriety of a
particular punishment is questioned, judicial
scrutiny of the disciplinary action by way of
punishment could arise only if the circumstances
are such that no reasonable person would impose
the punishment which is questioned and/or such
punishment has the effect of shocking the
conscience of the court. To put in simpler words,
interference could be warranted if it appeals to the
court that the disciplinary authority has ‘used a
sledgehammer for cracking a nut’. A punishment,
which is strikingly or shockingly disproportionate
and is not commensurate with the gravity of
misconduct, proved to have been committed in
course of inquiry or otherwise, would border on
arbitrariness and offend Article 14 of the
Constitution.
10. Where a court, upon due consideration, arrives
at the conclusion that the punishment imposed is
disproportionate, its intervention is circumscribed
in nature. Judicial scrutiny and interference, if at
all, has to be based on reasons in support of the
court’s ultimate satisfaction that the disciplinary
authority has faltered in the exercise of his
discretion. In such a situation, the court may adopt
one of two courses: it may remit the matter to the
competent authority for reconsideration of the
punishment; or, in the rarest of cases, it may
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substitute the punishment while supporting such a
course with cogent reasons.”
129. We may note that insofar as administrative action is
concerned, the Doctrine of Proportionality is applicable only in a
limited measure. It does not require the court, as the first appellate
court, to examine the administrative action to decide whether it is
excessively disproportionate, thereby rendering the decision
vulnerable on the grounds of arbitrariness and perversity. The court
must find that there is no reasonable relationship between the
import of the action and its objective; it is malicious or capricious, or
it shocks the conscience of the court.
130. It was argued that the court must explore the least harsh
measure that ought to have been imposed on account of the
offending act of furnishing a wrong certificate. However, we find no
merit in the said contention. The doctrine of proportionality, which
requires the Court to set aside a harsh measure when a lesser
alternative would suffice, is typically applied in cases involving the
infringement of human rights.
131. In the present case, we are unable to accept that the
debarment order is excessively disproportionate. The KTPP Act
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has confined the period of term of debarment to a maximum of
three years in case of fraudulent or corrupt practices.
132. As noted at the outset, the State cannot be compelled to
enter into a transaction or contract with a party, which it finds has
engaged in fraudulent or corrupt practices.
133. Plainly, the debarment of a contractor for a period of three
years cannot be considered excessive where it is found that the
contractor has engaged in fraudulent and corrupt practices and has
sought to gain an advantage in a bidding process by submitting a
false experience certificate.
134. In view of the above, we find no merit in the contention that
the debarment order is liable to be interfered with on the ground of
punitive measure being excessively harsh or onerous. Accordingly,
we reject this contention.
RE: MITIGATING CIRCUMSTANCES
135. The contention that the SLDC had failed to consider the
mitigating circumstances is also unpersuasive. MP24 is a sole
proprietorship concern. It is also undisputed that the tender in
question is a valuable contract, and it is difficult for us to accept
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that the tender was submitted without the full knowledge of MP24’s
proprietor. It is not MP24’s case that its sole proprietor (Mr
Kantharaju H.M) is not fully engaged in the business operations.
Thus, in any event, we are unable to accept that MP24 could be
absolved of its responsibility of furnishing a false certificate by
attributing the filing of that certificate to an unauthorised action of
his employee.
136. The contention that the false certificate from APWRD was of
no significance is also seriously contested. The learned counsel for
the KRDCL contended that, leaving aside the work covered by the
false certificate in question, the consortium would not qualify the
tender. The learned counsel has furnished a tabular statement
which indicates that previous eligibility would have been considered
as per the Experience Score. As per the tabular statement, the
Experience Score of the consortium was computed at `758.93
crores, which was short of the threshold technical Experience
Score of `762.86 crores. The learned counsel appearing for MP24
disputes the same.
137. The controversy in this regard relates to the work of the
Electrical Distribution Network, 11 KV and LT cable (BDA), which is
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stated to have been completed by RCCL at a project cost of
`232.50 crores. However, the KRDCL has excluded this project
from the Experience Score calculation on the grounds that the
project was electrical work and did not fall under any category in
the RFP. According to MP24 the works in question fell within the
definition of works of the core sector.
138. We are unable to accept that the false experience certificate
furnished along with bid in order to establish the technical
qualifications could be considered as insignificant or of no
relevance. If the contention of KRDCL is accepted, the MP24 and
RCCL would not qualify the technical criteria on account of their
Experience Score falling below the threshold limit. However, even if
MP24’s contention is accepted, that the Experience Score of
consortium would exceed the threshold by including the electrical
work project executed by RCCL, the filing of false experience
certificate could not be ignored. It is difficult to accept that the false
certificate was introduced casually without any reason to rely on it.
It is clear that the certificate in question was filed to hold out that
the consortium had technical experience of a certain value, which it
did not.
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139. We reject the contention that the debarment order is vitiated
as having been passed without taking into account relevant
considerations.
RE: WHETHER A FRESH DECISION BY THE STATE
GOVERNMENT WAS REQUIRED
140. The next question to be examined is whether the State
Government was required to take a fresh decision to issue the
debarment order after receiving the recommendations of SLDC. As
noted above, MP24 had argued that SLDC was only required to
give a recommendation, and the State Government was required to
examine the same and take a fresh decision after affording MP24
an opportunity to be heard.
141. We find no merit in the said contention.
142. Section 14-A(2) of the KTPP Act empowers the State
Government to debar tenderers for a period not exceeding three
years, from participating in any procurement activity within the
State, following the procedure as may be prescribed.
143. Rule 26-B of the KTPP Rules, prescribes the procedure to be
followed. Sub-rule (2) of Rule 26-B expressly provides for
constitution of the SLDC (State Level Debarment Committee) to
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consider the proposals for debarring a bidder or contractor or
supplier and “to take a decision thereof”. The language of Sub-rule
(2) of Rule 26-B makes it amply clear that the decision to debar a
bidder, contractor or supplier is to be taken by SLDC. Under Sub-
Rule (3) of Rule 26-B, the SLDC is required to provide a
reasonable opportunity, including an oral hearing to the concerned
for making representations before taking a decision on the
debarment. This also plainly indicates that it is SLDC’s decision to
be taken following the principles of natural justice.
144. Sub-Rule (6) of Rule 26-B of the KTPP Rules mandates that
the Government shall debar such tenderer, contractor or supplier
on the recommendation of SLDC. The use of the word ‘shall’ clearly
indicates that the Government is required to implement the
recommendations to give effect to the decision of SLDC by issuing
a notification and publishing the same on the Department website,
as well as the Karnataka Public Procurement Portal.
145. The contention that the word ‘shall’ as used in
Sub-Rule (6) of Rule 26-B of the KTPP Rules should be read as
‘may’ is unpersuasive as there is no ground to infer the same.
Given the procedural scheme of Rule 26-B of the KTPP Rules, the
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contention that a fresh consideration is required by the State
Government is not in conformity with the procedure set out therein.
146. In view of the above, we reject the contention that the
debarment order is vitiated on account of any procedural
irregularity. We also find no merit in the contention that the Under
Secretary to the Government is not authorised to issue the
debarment order setting out the decision of the State Government.
RE: AUTHORITY TO ISSUE AND AUTHENTICATE THE
DEBARMENT ORDER
147. Rule 19 of the Karnataka Government (Transaction of
Business) Rules, 1977, expressly provides that the orders and
instruments made and executed in the name of Governor of
Karnataka shall be authenticated by the signature of an Additional
Chief Secretary, Principal Secretary, a Secretary, a Special
Secretary, an Additional Secretary, a Joint Secretary, a Deputy
Secretary, an Under Secretary, a Desk Officer or any other officer
holding these posts on ex-officio basis.
RE: CHALLENGE TO THE AWARD OF THE CONTRACT TO
BVEPL
148. We may now address MP24’s challenge to the award of the
contract in favour of BVEPL, which MP24 seeks to challenge on
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two fronts. First, that BVEPL had also furnished certificates which
were forged and fabricated and therefore, BVEPL was also
required to be debarred for the same reasons as MP24. Second, it
is submitted that in the event the contract was not awarded to L1
bidder, in terms of the circular dated 11.05.2022 and 16.01.2025
issued by the Government of Karnataka, KRDCL was required to
invite fresh tenders.
149. According to MP24, the BVEPL has furnished two false
certificates. The first, is a certificate dated 14.08.2024 purportedly
issued by National Highway Authority of India, in regard to the
following works.
“Four laning of NH-39 (Old NH-75) from design
KM 147+540 (existing KM 148+020) (Bhogu
Village) to design KM 196+870 (existing KM
197+420) (Sankha, Gorhwa Road) in the State of
Jharkhand on Hybrid Annuity Mode.”
150. The second certificate is issued by Ashoka Buildcon Limited
for the execution of the project.
“Four laning of Arrah to Pararia section of NH-319
(Old NH-30) from KM 0+000 to KM 54+530
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(Design Chainage) in the State of Bihar under
Bharatmala Pariyojana Phase – 1 on EPC Mode
(Package-1).”
151. In respect to the certificate issued by NHAI, the respondent
submitted that actually the said certificate was withdrawn by letter
dated 17.04.2025, which was prior to opening of the technical bids.
It was argued by the KRDCL that the said certificate was not
included as a part of the evaluation. BVEPL has produced a copy
of the letter dated 17.04.2025, which is duly acknowledged by
KRDCL. In this view, we are unable to find fault with the KRDCL’s
view not to take further action on the basis of the said certificate,
which was voluntarily withdrawn by the BVEPL prior to the
evaluation process.
152. Insofar as the certificate issued by Ashoka Buildcon Limited
is concerned, BVEPL stoutly disputes that the certificate is forged
or fabricated as contended. It is stated that the project in question
was executed under the defect liability period. In view of the
pleadings, we are unable to accept that the certificate issued by
Ashoka Buildcon Limited was forged or fabricated. However, since
an allegation to that effect has been made, we consider that it
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would be necessary for KRDCL to examine the genuineness of the
said certificate.
153. With regard to the contention that KRDCL was precluded, in
view of the circulars issued by the Government of Karnataka, from
awarding the tender to BVEPL – which had submitted the second
lowest bid – is also unmerited. The Government of Karnataka had
issued a circular dated 03.12.2002 [PWD 1359 SO/FC 2001 (P-2)].
A plain reading of the said circular indicates that it was found that
the tender accepting authorities were sometimes negotiating with
the lowest tenderer before accepting the same. In this regard, the
Government had issued guidelines highlighting that negotiations
even with the lowest tenderer defeats the ethics of competitive
bidding. Thus, it should be resorted to only in exceptional
circumstances. The circular specified that negotiations would be
appropriate only in circumstances such as lack of competition,
single bid, suspected collusion or where the lowest evaluated
accepted bid was substantially above the estimated cost. It is
stated that even in such cases, the first choice should be to reject
the tender. A plain reading of the said circular does not support the
contention that tenders of the lowest responsive bid should be
rejected.
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154. Since the consortium was disqualified and its bid had to be
rejected as not responsive, as it was not in conformity with the
tender conditions, it would follow that the BVEPL’s bid would be the
lowest responsive bid, notwithstanding that the consortium’s bid
was lower in value.
155. The circular dated 11.05.2022 is also issued, inter alia, in
reference to the earlier circular dated 25.10.2002. Para 5 of the
said circular is set out below:
“5. As per Section (6) of the Karnataka
Transparency in Public Procurements Act, 1999,
all tender processes must be conducted strictly in
accordance with the procedures prescribed in the
Act and Rules. Similarly, in the Karnataka
Transparency in Public Procurements Rules, 2000
Rule 21, the criteria prescribed in the tender
documents must be applied mandatorily to
conduct the tender evaluation, identify the bidder
with the Lowest Evaluated Price (LI) as per Rule
(25), and award the contract. In the Circular at
reference (2),22 it is informed to explain this
matter comprehensively and award the contract to
the technically and commercially responsive L1
bidder. Reiterating this again, it is informed to
strictly undertake the tender process by applying
the opportunities under the KTPP Act and Rules
and award the contract only to the L1 bidder.
There is no provision in the KTPP Act and Rules
to negotiate with the L1 bidder to reduce the price
or to allow awarding the contract to others
excluding the L1 bidder. If for any reason the L1
contractor does not agree to enter into an
22
PWD 1359 So /FC/2001 (P-2) Dated 25.10.2002,
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agreement or does not come forward to execute
the contract, or is disqualified for any reason, the
EMD amount of such bidder shall be forfeited as
per rules, and action shall be taken to call for a
mandatory re-tender.”
156. It is clear from the above that the guidelines to not award
tender to any person other than the L1 bidder was stipulated in the
context of the practice of the tendering authorities negotiating with
the bidders post-submission of tenders. In this regard, the L1
tender bidder does not agree to enter into an agreement or execute
the contract. The EMD of such bidder should be forfeited and
action should be taken for re-tender.
157. KRDCL has proceeded on the basis that since the
consortium’s tender was rejected as non responsive, BVEPL’s
tender would be the lowest. We are unable to accept that the said
view militates against the circular dated 11.05.2022.
158. The Circular dated 16.01.2025 refers to circular dated
11.05.2022 and highlights other cases where L1 tenderers had
been excluded or the work is split by awarding work orders to more
than one contractors; Calling for tenders for indefinite periods
without mentioning the contract duration; On issuing LoI via
letters/offline outside the software and cases for preparing an
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empanelment list. The said circular would have little application in
the facts of this case.
RE: FORFEITURE OF THE EARNEST MONEY DEPOSIT
159. The last question to be addressed is regarding forfeiture of
the EMD. It was contended on behalf of MP24 that EMD could not
be forfeited, as KRDCL had not suffered any damages.
160. The learned counsel refers to Section 20.20.6 and 2.20.7 of
the RFP (which provides for forfeiture of the Bid Security as
Damages) and submitted that the tender conditions provided
forfeiture as damages. The learned counsel relied on the decision
of the Supreme Court in Kailash Nath Associates v. Delhi
Development Authority23 in support of his contention. It is
contended that the KRDCL was entitled to claim only reasonable
damages, subject to the same being proved under Section 74 of
the Contract Act.
161. The aforesaid contention is unmerited. In Kailash Nath’s
case (supra), the Supreme Court had expressly clarified that
Section 74 will not apply to cases of forfeiture of earnest money,
23
(2015) 4 SCC 136
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where the same is in accordance with the terms and conditions of a
public auction before agreement is reached. Para 43.7 of the said
decision is set out below:
“43.7. Section 74 will apply to cases of forfeiture of
earnest money under a contract. Where, however,
forfeiture takes place under the terms and
conditions of a public auction before agreement is
reached, Section 74 would have no application. ”
162. Section 74 of the Contract Act is attracted only where
forfeiture of earnest money takes place under a concluded
contract; it does not apply where forfeiture takes place under the
terms and conditions of the tender before any agreement is
reached. In Kailash Nath Associates (supra) the forfeiture was at
a post-agreement stage. The plot in question had been re-
auctioned by the Delhi Development Authority at a higher price,
and no loss whatsoever had resulted; it was in that context that the
Supreme Court held the forfeiture to be unjustified.
163. The legal foundation of this position is also found in National
Highways Authority of India v. Ganga Enterprises24. In this
decision, the Supreme court had observed as under:
“By invoking the bank guarantee and/or enforcing
the bid security, there is no statutory right,
24
(2003) 7 SCC 410
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exercise of which was being fettered. There is no
term in the contract which is contrary to the
provisions of the Indian Contract Act. The Indian
Contract Act merely provides that a person can
withdraw his offer before its acceptance. But
withdrawal of an offer, before it is accepted, is a
completely different aspect from forfeiture of
earnest/security money which has been given for
a particular purpose. A person may have a right to
withdraw his offer but if he has made his offer on a
condition that some earnest money will be
forfeited for not entering into contract or if some
act is not performed, then even though he may
have a right to withdraw his offer, he has no right
to claim that the earnest/security be returned to
him. Forfeiture of such earnest/security, in no way,
affects any statutory right under the Indian
Contract Act. Such earnest/security is given and
taken to ensure that a contract comes into
existence. It would be an anomalous situation that
a person who, by his own conduct, precludes the
coming into existence of the contract is then given
advantage or benefit of his own wrong by not
allowing forfeiture. It must be remembered that,
particularly in government contracts, such a term
is always included in order to ensure that only a
genuine party makes a bid. If such a term was not
there even a person who does not have the
capacity or a person who has no intention of
entering into the contract will make a bid. The
whole purpose of such a clause i.e. to see that
only genuine bids are received would be lost if
forfeiture was not permitted.”
164. It is thus well settled that the forfeiture of earnest or bid
security does not affect any statutory right under the Contract Act;
such security is taken in government contracts to ensure that only a
genuine party makes a bid, and a person who, by his own conduct,
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precludes the coming into existence of the contract cannot be
permitted to take advantage of his own wrong.
165. In M/s Simplex Infrastructures Ltd. v. National Highways
Authority of India25. The Delhi High Court considered a case
where the bidder’s bid security of `8.14 crores was forfeited as the
bidder had filed a false ‘NIL’ declaration concealing a subsisting
order of debarment. In the said context the Court held as follows:
“26. The Supreme Court in Satish Batra (supra),
held that only the earnest money paid as pledge
for due performance of the contract can be
forfeited on account of buyer’s default and in the
same vein, earnest money can be doubled and
paid back to the buyer if the contract falls through
due to seller’s default. An amount which is the
nature of an advance cannot be forfeited unless it
is a guarantee for due performance of the
contract. It was further held that to justify forfeiture
of advance money being part of earnest money,
terms of the contract should be clear and explicit.
… It is thus clear that the Bid Security was a real
earnest for entering into the agreement and was
not an advance for future performance of the
contract. Clauses 2.20.4 and 2.20.5 evidence that
Bid Security was a genuine pre-estimate of
damages likely to be suffered by NHAI, more
particularly, when conditions of RFP were violated
or the conduct of the bidder was found to be
fraudulent. Therefore, being in the nature of an
earnest money, the Bid Security was liable to be
forfeited if the circumstances so required and
beyond a doubt the terms of RFP were explicit in
this regard.
25
CS(COMM) 16/2016, decided on 13.10.2025
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29. The only other argument of the Plaintiff is that
sans any proof of loss, it was not open to NHAI to
forfeit and appropriate the Bid Security/earnest
money. … As noted above the Bid Security in the
present case is in the nature of earnest money
and was liable to be forfeited on
misrepresentation/concealment of material facts.
In such an event, the forfeiture did not infringe any
statutory right under the Contract Act and did not
require proof of loss from NHAI.”
166. The Court distinguished an earlier decision between the
same parties, in which forfeiture had been struck down, on the
ground that the bidder there was unaware of the disqualifying fact,
observing:
“35. … the said judgment is distinguishable on a
very important fact … that Petitioner was not
aware of the order of debarment when the
technical bid was submitted … In this context, it
was held that the forfeiture of the entire Bid
Security was penal in nature and unreasonable. In
the present case, Plaintiff was well aware of the
debarment orders on the Bid Due Date as also at
the time of bidding. …”
and concluded:
“37. Therefore, in light of the specific clauses of
RFP providing for submission of the Bid Security
as also its forfeiture in circumstances enumerated
therein, the contention of the Plaintiff that the Bid
Security was in the nature of a penalty and/or the
same could not be forfeited in the absence of
proof of loss by NHAI, is rejected being bereft of
merit.”
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167. We may also refer to the decision of the High Court of
Madras in M/s P.S.T. Engineering Construction v. HSCC (India)
Ltd.26, where the EMD was forfeited at the pre-award stage for
suppression of pending litigation. In the said context, the Court held
as follows:
“10.16. Thus, upon considering the overview of the
above rulings of the Hon’ble Supreme Court of
India, it can be seen that: (a) the forfeiture of the
EMD applies and relates only to the performance
of the contract; (b) In cases of public auction
where the terms are clear and explicit, it may be
resorted to; (c) Section 74 of the Indian Contract
Act, 1872 does not apply to such cases where the
contract is not concluded, more so in public
auction/tenders and shall apply if only the
damages claimed is penal in nature whereby the
reasonable quantum has to be determined; (d)
Whether the forfeiture is penal in nature must be
determined by considering the nature of the
contract and the consequences envisaged by it,
based on the facts and circumstances of each
case; (e) The clauses regarding disclosure are
designed to identify only genuine parties with the
capacity to place a bid and these disclosure
clauses also serve to ensure performance … and
in such cases, the terms of the contract being
clear and explicit, the forfeiture must be deemed
justified.
10.17. Therefore, I hold that this is not a case
where Section 74 would apply, and the entire EMD
amount, as agreed upon by the parties, has to be
forfeited. HSCC is entitled to this, as the clause is
solely for ensuring the performance of the
contract, meaning that only genuine parties bid in
the tender.
26
2025:MHC:981, decided on 16.04.2025
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10.18. Aside from this, in this case, even
assuming that the forfeiture in the current contract
serves two purposes — one for the performance
of the contract and the other as a penalty for
concealing material facts — reasonable
compensation, according to the principles in
Section 73, can still be allowed, regardless of the
stipulation in the contract subject to the maximum
stipulated. … the forfeited sum is minimal and
entirely reasonable.”
168. We may also refer to the decision in Diwan Chand Goyal v.
National Capital Region Transport Corporation27, where a
forged experience certificate was submitted with the bid. Upholding
the forfeiture of the bid security, the High Court of Delhi held as
under:
“36. … The Court has to, under such
circumstances, only to go by the record which
shows the fact that this certificate was submitted
with the bid and the same turned out to be forged.
Whether the Petitioner gained an advantage by
submission of this certificate is irrelevant. In any
bidding process, every bidder is expected to
submit genuine and correct documents. There can
be no justification whatsoever for the submission
of any misrepresentative facts or
fabricated/manipulated documents. To that extent
there can be no doubt that the Petitioner has
indulged in wrong doing. The definition of
fraudulent practice [in the bid document] would
clearly cover submission of a forged certificate as
such submission would be a misrepresentation to
influence bid/procurement process.
47. In the present case, the bidder/Petitioner was
to establish that it had experience in executing the
27
2020:DHC:2685, decided on 02.09.2020
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similar works. … the submission of certificate
dated 20th September, 2019 was neither
superfluous nor an innocent act. It was a
conscious and deliberate act on behalf of the
bidder. The said certificate has later turned out to
be forged. Submission of such certificate would
clearly, in the opinion of this Court, constitute a
fraudulent practice, which was meant to affect the
bidding/procurement process.”
169. In view of the above, we are unable to accept that the
forfeiture of the EMD under the RFP is vitiated by any illegality.
CONCLUSION
170. KRDCL is directed to re-examine the genuineness of the
certificates (other than the certificate withdrawn prior to opening of
the bids) furnished by BVEPL. Needless to state that if any
certificate is found to be false, KRDCL shall take the necessary
steps in accordance with law.
171. The appeals are dismissed with the aforesaid directions.
Sd/-
(VIBHU BAKHRU)
CHIEF JUSTICE
Sd/-
(C.M. POONACHA)
JUDGE
SD/KPS/KMV
