Saarvani vs. The Union Of INDIA

HON’BLE SRI JUSTICE D.V.S.S.SOMAYAJULU

W.P.No.16594 of 2020

ORDER :

This writ petition is filed by the contractor questioning the termination of the contract alone awarded by the respondent-steel plant and debarring him from entering in the future contracts This Court has heard Sri P.Raj Kumar, learned counsel for the petitioner and Sri V.Subrahmanyam, learned standing counsel for the respondents. Learned counsel for the petitioner submits that the petitioner is a contractor, who was a successful tenderer of transportation of metallurgical waste. After the valuation of the bid, the petitioner’s quotation was found to be most competitive and work order was issued to the petitioner on 20.01.2021. They started the execution of the work from 25.02.2021. Learned counsel points out that based upon a complaint given by a third party dated 12.06.2021, a show cause notice was issued to the petitioner on 14.06.2021 alleging that he had submitted a false GST registration document which was cancelled on 20.11.2020 (8 days before the opening of the tender). Learned counsel points out that the petitioner gave a detailed reply on 28.06.2021 pointing out the various issues leading to cancellation of GST certificate. He submits that immediately after knowing the error, he took steps to rectify the situation and submitted the document. However, learned counsel submits that the respondents failed to consider the explanation in proper perspective and had terminated the contract by their letter dated 26.07.2021. Learned counsel for the petitioner points out that when the tender documents were evaluated,

2 the same was not pointed out and the petitioner was asked to execute the integrity pact also after going through the documents which are filed. Learned counsel submits that the action taken by the respondents is therefore incorrect. He points out that clause 30 of the special conditions of contract deals with false/fake/doctored documents being submitted. It is his argument that the petitioner- firm was not aware of the cancellation and that they had not violated the terms of clause 30. He also points out that the floating of a fresh tender dated 22.07.2021 for the very same work even before the letter of termination is issued to the petitioner shows that the entire action is preconceived and there is non-application of mind. With regard to the plea raised by the respondents that the writ is not maintainable, learned counsel argues that once there is non-application of mind and failure to consider the relevant documents, the writ is definitely maintainable and that as the record in this case is clear, the petition under Article 226 is definitely maintainable. Learned counsel for the respondents argues that the petitioner had submitted a GST registration certificate as if the same was in force, suppressing the fact that the same was cancelled earlier. It is his contention that the certificate cancellation only occurs when the returns are not filed. Despite being aware of the same, the petitioner submitted a false document and secured the work. He also points that the cancellation of the GST registration was on 20.11.2020 and the bid was submitted on 28.11.2020. This shows that the petitioner deliberately submitted an invalid GST certificate for securing the work. Learned counsel also argues that after show cause notice was issued to the petitioner and after inviting his objections and considering the same, the impugned order was passed. He relies upon the show cause notice dated 14.06.2021 and the reply dated

3 28.06.2021 to submit that the rules of natural justice were not flouted and the order dated 26.07.2021 which is impugned is passed after considering the submissions by the petitioner. Lastly, relying upon the judgment of learned single Judge in WP.No.15385 of 2021, wherein the respondents are also a party, learned counsel for the respondents argues that the writ is not a proper remedy and none of the exceptions which permit the Court to entertain a writ are present in this contractual dispute. He prays that the writ should be dismissed. COURT: The facts are not in dispute. That the petitioners tender was evaluated and work order was issued to him is also not in dispute. The work order was issued to the petitioner on 20.01.2021 and complaint was received on 12.06.2021 (from the Contractors Welfare Association). This is addressed to the Vigilance Department of the respondents and also Chief Vigilance Commissioner. The complainant urged that there are serious irregularities in awarding the contract to the petitioner. Thereafter, a show cause notice was issued to the petitioner on 14.06.2021 drawing his attention to the alleged irregularity and also to clause 30 of the special conditions, it was clearly mentioned. Thereafter, the petitioner submitted his reply which in the opinion of this Court assumes importance. On 28.06.2021, the petitioner gave a reply. Certain parts of these documents which have a bearing on the issue are reproduced hereunder: Clause 4 of the show cause notice is as follows:

“4. We have received a complaint dated 12/06/2021 from the Vizag Steel Contractors Welfare Association alleging that you (M/a Saarvani Marine Services) had submitted GST registration document No:

4 37ABEFM1270H1ZD which is cancelled w.e.f. 20-11-2020 and becomes L-1 agency and obtained work order for the subject tender.”

In reply to clause 4, the petitioner states the following:

“3. We submit that Point No.4 mentioned in the show cause Notice is not aware by us till date of receipt of this notice. We are shocked by seeing this notice. We never received any letter from the concerned department regarding cancellation of GST to our firm. That is why we submitted our GST number to the Hon'ble Authority but there is no malafide intention in submitting the said GST but by ignorance only.”

In this paragraph, the petitioner clearly states that they are not aware of the cancellation of the GST till the date of receipt of notice. This is reiterated in para 4 of the reply dated 28.06.2021 also, wherein they states that after getting knowledge of the above issue, they submitted the required documents. However, in the reply affidavit filed, the petitioner has taken a stand as follows:

“5. I respectfully submit that it is also admitted fact that the 4th Respondent having satisfied that all the documents have been submitted as per clause 13 of LOA, issued a Memo on 27.05.2021 to Works Contract Department recommending that the Contractor may be allowed to sign the agreement. Thereafter, the Petitioner was asked to submit Rs.100/- Bond Paper and Demand Draft for Rs. 1,53,999/- being the 2% of the work order towards Initial Security Deposit. Accordingly, we have submitted the above required documents on 27.05.2021 and acknowledged by the Respondents on 28.05.2021. 6. I respectfully submit that before submitting required documents for entering in to the agreement as

5 required, we have approached the GST Council for submitting GST retums, but, however, we were informed that the GSTIN Certificate has been cancelled Suo Moto for non filing of GST returns, When we tried to renew it, the same could not be renewed-since we have to apply afresh as per the procedure. Immediately, we have approached our auditor and, on his verification, also, the GST status is showing cancelled Suo Moto for non filing of GST returns. I further submit that immediately we got filed GST returns and renewed the GST certificate and generated the GST registration certificate on 05.05.2021 in the name 221 of the Petitioner firm valid from 13.04.2021. copy of the renewed GST certificate is filed in the main Writ Petition as material paper.

In these paragraphs, the petitioner is dealing with the events between 27.05.2021 and 28.05.2021. It is mentioned that before submitting the required documents, on 27.05.2021, the petitioner approached the GST counsel for submitting the returns, but they were informed that the GSTIN certificate was cancelled suo motu. When they tried to renew it, the same could not be done. Thereafter, they approached the auditor who filed their returns and renewed the

6 GST certificate on 05.05.2021. In para 7, it is clearly mentioned that after the GST certificate is renewed, they submitted the renewal certificate along with bond paper to the demand draft towards security deposit etc., on 28.05.2021. A reading of this rejoinder/reply affidavit shows that by 27.05.2021/28.05.2021 itself the petitioner is aware of the cancellation of the GST certificate. In the reply to the show cause notice he submits that they were not aware till the date of receipt of notice. Thus, it is clear that there is a clear variation between the two documents. The petitioner

therefore is in the opinion of the Court liable for the consequences of submitting a document which to their knowledge is false. Clause 30 of SSC deals with two situations. (a) up to the date of awarding of the contract, (b) after the conclusion of the contract also. Therefore, in terms of clause 30, the respondents can take action at any stage, if it comes to their knowledge that any of the certificates, documents etc., submitted by the petitioner are false. The mere fact that the work order was issued/contract was concluded etc., will not come to the aid of the petitioner. This Court holds that in this case, the petitioner’s conduct deprives from seeking a relief from this Court. The respondents have followed the procedure stipulated by giving to a notice, considering the same, and passing an order. The judgment cited by the learned counsel for the respondent in W.P.No.15385 of 2021 also dealt with clause 30 of SCC. The learned single Judge held that only under certain limited circumstances,

7 namely, when the action is patently arbitrary, suffers from mala fides etc., involves public interest, the writ Court can interfere. These contingencies are absent in the present case. This Court, therefore, holds that it does not find any reason to interfere in the matter. The writ petition is therefore dismissed. These are only issues raised and argued. Therefore, they alone are considered and order is passed accordingly. It is open that the petitioner can make a claim for the work done etc., if he is so advised in the appropriate forum. All the issues other than what is raised in the writ petition are left open. No order as to costs. As a sequel, the miscellaneous petitions, pending if any, shall stand closed. ________________________ D.V.S.S.SOMAYAJULU,J

Date : 19.04.2022 KLP