G.S. Express PVT. LTD. Lko. Thru. Its Director Sandeep Anand vs. State Of U.P. Thru. Prin. Secy. P.W.D. U.P. Lucknow And Others

Held

The Court held that there was a clear misrepresentation of facts by the petitioner regarding its average annual turnover. The petitioner's financial statements showed contractual receipts of Rs. 106.86 crores, Rs. 84.03 crores, and Rs. 143.09 crores for the financial years 2018-19, 2019-20, and 2020-21 respectively, with an average of Rs. 111.33 crores. This did not match the Rs. 113.01 crores stated in the proforma T.1 certified by the Chartered Accountant, which was a discrepancy. The Court found that the petitioner had concealed ongoing works/commitments, violating the affidavit in Form-G and Article 2 of the Integrity Pact. The Court rejected the plea that no opportunity of hearing was given, stating that the misrepresentation was apparent and not subject to two views, thus natural justice principles did not require further hearing in this factual context. The Court also rejected the argument regarding investment in raw materials, finding no evidence that the respondents had asked the petitioner to commence work before formal contract execution. The Court declined to exercise its discretionary jurisdiction under Article 226 of the Constitution based on the petitioner's plea under Section 5 of the Indian Contract Act, given the glaring misrepresentation. The petition was dismissed.

Facts

The petitioner, G.S. Express Pvt. Ltd., challenged an order dated 03.06.2022 by the Superintending Engineer (Building Cell), Public Works Department, Lucknow, which withdrew a letter of acceptance dated 25.05.2022 for the construction of a new medical college at Amethi. This withdrawal was based on an Office Order dated 03.06.2022 by the Chief Engineer. The petitioner also challenged a subsequent order dated 21.06.2022 cancelling the tender. The petitioner sought a writ of mandamus to allow it to perform the work and prevent a fresh tender. The tender process began with a notice on 05.05.2021. The petitioner was found technically qualified and submitted the lowest financial bid. Following a request for a revised bid, the petitioner submitted a revised bid of Rs. 248.05 crores, which was accepted on 25.05.2022. The petitioner submitted the Performance Security on the same day. A complaint was lodged on 30.05.2022 by Universal Contractors and Engineers Pvt. Ltd. alleging misrepresentation of average annual turnover and non-disclosure of ongoing projects by the petitioner. This led to a high-level inquiry ordered by the P.W.D. Minister.

Key Issues

1. Whether the withdrawal of the letter of acceptance and cancellation of the tender were arbitrary and violative of principles of natural justice, particularly in light of the petitioner's claim that no opportunity of hearing was provided before the impugned orders were passed, and whether the petitioner's alleged misrepresentation regarding its average annual turnover was a valid ground for such action? (Section 2.5 of ITB, Article 2 of Integrity Pact). 2. Whether the petitioner's investment in raw materials after receiving the letter of acceptance, without formal contract execution, creates a liability for the State respondents? (Section 5 of the Indian Contract Act, 1872). Petitioner's arguments: - The impugned orders were passed hurriedly without waiting for the inquiry report ordered by the Minister. - No opportunity of hearing was given before passing the 'stigmatic' orders. - The withdrawal of the letter of acceptance after acknowledgment was impermissible under Section 5 of the Indian Contract Act, 1872. - Reliance was placed on various Supreme Court judgments including ABL International Ltd. vs. Export Credit Guarantee Corporation of India Ltd., UNITECH Limited & Ors. vs. Telangana State Industrial Infrastructure Corporation (TSIIC) & Ors., and Mahabir Auto Stores & Ors. vs. Indian Oil Corporation & Ors. Respondent's arguments: - The inquiry ordered by the Minister was departmental against officials involved in the tender process, not against the petitioner. - The petitioner made a glaring misrepresentation of facts regarding its average annual turnover, which was a crucial qualifying criterion. - The contract was an EPC contract, and the petitioner could not have purchased raw materials before the design phase was complete. - The petitioner's alleged expenses on raw materials were not directed by the respondents and therefore not their liability.