Basant Goel vs. Union Of INDIA And Ors

Held

The Court held that the Appellant had indeed misrepresented facts to the Respondents. The Gift Deed dated 31st July, 2020, transferred the proprietorship of M/s Goel Medicos from Ms. Usha Goel to the Appellant. Consequently, any action by Ms. Usha Goel after this date, such as issuing the PoA on 18th August, 2020, lacked legal validity. Mr. Akash Jain, acting under this invalid PoA, lacked the authority to sign the Agreement on behalf of M/s Goel Medicos. The Court found that M/s Goel Medicos had a duty to provide accurate information, which it failed to do by creating an impression of continued association with Ms. Usha Goel. While the mistake might have been inadvertent, it constituted a misrepresentation of facts. This misrepresentation was a fundamental flaw in the Agreement's formation, making it voidable at the Respondents' instance. The Court agreed with the Learned Single Judge that the termination and forfeiture were lawful. The Court also found that the penalty of termination and forfeiture, though harsh, was proportionate to the seriousness of the misrepresentation, upholding the integrity of the tendering process. The appeal was dismissed.

Facts

The Appellant, proprietor of M/s Goel Medicos, entered into a contract with Respondent No. 3 for supplying medicines to a CGHS wellness centre. The contract was terminated, and the performance security was forfeited due to alleged corrupt and fraudulent practices. M/s Goel Medicos was also debarred for two years. The Appellant challenged this in a writ petition. The Learned Single Judge set aside the debarment order but upheld the termination and forfeiture of Performance Bank Security (PBS). The Appellant filed the present appeal against the rejection of his prayer concerning PBS forfeiture. The dispute arose from an employee obtaining a Power of Attorney from the previous proprietor (Ms. Usha Goel) after the proprietorship had been transferred to the Appellant via a Gift Deed.

Key Issues

1. Whether the termination of the Agreement dated 19th August, 2020, and the forfeiture of the Performance Bank Security (PBS) by Respondent No. 3 were lawful, considering the Appellant's alleged misrepresentation of facts in the tender process. Petitioner's Arguments: - The Appellant contended that the Power of Attorney (PoA) and the Agreement were inadvertently obtained by his employee, Mr. Akash Jain, under an honest belief of authority, and there was no intention to commit fraud or misrepresent. - The Appellant argued that the execution of the Agreement was not affected by the issuance of the PoA as the Respondents continued to deal with M/s Goel Medicos without objections. Revenue/State's Arguments: - The Respondents argued that the Appellant misrepresented facts by failing to disclose the Gift Deed dated 31st July, 2020, which transferred proprietorship from Ms. Usha Goel to the Appellant. - The Respondents asserted that Ms. Usha Goel, having ceased to be the proprietor, could not have authorized Mr. Akash Jain to sign the tender documents, rendering the Agreement voidable and justifying termination and forfeiture under the Tender Document clauses.