Partly allowed

M/S.Edhens Constructions Pvt. Ltd., v. Kanthalloor Grama Panchayath

Kerala HC23 Sept 2020WA/1246/2020

Case brief

AI extract

What is this about?

The Court upheld the Single Judge's finding that the appellant misrepresented its business scope to obtain free tender forms as an MSE. While affirming the penalty for this dishonesty, the Court reduced the fine to Rs.25,000 due to pandemic-related financial hardships and extended the payment timeline by three weeks.

What did the court decide?

Cost reduced to Rs.25,000 with extended payment timeline of three weeks; findings of fraud affirmed.

M/S.Edhens Constructions Pvt. Ltd., Vs… — Contract and Commercial Disputes | Kerala HC (2020)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR

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THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

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WEDNESDAY, THE 23RD DAY OF SEPTEMBER 2020 / 1ST ASWINA, 1942

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WA.No.1246 OF 2020

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AGAINST THE ORDER/JUDGMENT IN WP(C) 28941/2019(P) OF HIGH COURT OF KERALA

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APPELLANT/PETITIONER:

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M/S.EDHENS CONSTRUCTIONS PVT. LTD., DOOR NO.5/69-1, ETTIL, PATHADIPPALAM, MARAYOOR, IDUKKI - 685 620, REPRESENTED BY ITS MANAGING DIRECTOR.

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BY ADV. SRI.LATHEESH SEBASTIAN

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RESPONDENTS/RESPONDENTS:

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1 KANTHALLOOR GRAMA PANCHAYATH

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KANTHALLOOR P.O., IDUKKI DISTRICT - 685 620 REPRESENTED BY ITS SECRETARY.

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2 SECRETARY, KANTHALLOOR GRAMA PANCHAYATH KANTHALLOOR P.O., IDUKKI DISTRICT - 685 620.

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3 JOSEPH PAUL MANNIKUTTIYIL, SAHAYAGIRI P.O.,MARAYOOR, IDUKKI DISTRICT - 685 620.

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4 OLOVIA HOME WORLD IRUMBUPALAM P.O., ADIMALY, IDUKKI DISTRICT - 685 561.

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SRI.P.PRIJITH FOR R1 AND R2, SRI.ARUN KRISHNAN K R FOR R4

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THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 23.09.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WA.No.1246 OF 2020

JUDGMENT

SHAJI P.CHALY,J

This appeal is preferred by the writ petitioner challenging the judgment of learned Single Judge in W.P(C) No.28941/2019 dated 22.7.2020 whereby the learned Single Judge dismissed the writ petition on merits as well as on the ground that there was suppression of material facts in order to secure orders from the court, by imposing a cost of Rs.1,00,000/- payable by the appellant to the 1^st respondent Grama Panchayat within three weeks from the date of receipt of a certified copy of the judgment, together with the amount payable by the appellant company towards cost of tender sets, GST and other statutory dues etc. Brief material facts for the disposal of the the appeal are as follows;

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Appellant is a company registered under the Companies Act, 2013 which has filed the writ petition seeking to quash Ext.P8 tender notice issued by the Kanthallur Grama Panchayat dated 3.10.2019 and Ext.P9 tender notice issued by the Secretary of the very same Grama Panchayat dated 3.10.2019 on the ground that they

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are vague for want of specifications and the details of tenders. It has also sought for an alternative relief for a writ of mandamus commanding the Grama Panchayat and its Secretary to accept the tender on the basis of Ext.P8 and consider those tenders along with that of other bidders.

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When the writ petition was posted for admission notice was issued by Special Messenger to all the respondents inclusive of the successful bidders and when the writ petition was posted on 1.11.2019 for further consideration, the writ court ordered that, if the

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tenders submitted by others have been considered, then the appellant's offer shall also be considered subject to

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further orders from the court. On 5.11.2019 it was further ordered by the writ court that the grant of

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contract, if any, by the Panchayat will be subject to further orders from the court.

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After filing of a detailed counter affidavit by the Grama Panchayat and the Secretary opposing the reliefs sought for in the writ petition, the appellant filed I.A No.1 of 2020 seeking an order to amend the writ

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petition by incorporating additional statement of facts, grounds and reliefs, which was allowed as per order dated 17.1.2020. These were the basic facts available for

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consideration before the writ court.

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It is true the appellant company is registered as

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a Micro and Small Enterprise under the provisions of the Micro, Small and Medium Enterprises Development Act, 2006, hereinafter called, Act, 2006'. As per Ext.P3 Udyog Aadhaar Memorandum of the appellant company, its major activities are delineated. Ext.P7 is a renewal certificate issued to the appellant company dated 29.8.2019 which is valid from 17.7.2019 to 16.7.2021, which contains other details except the major activities of the company. However, it is clear from Ext.P7 that the company is exempted from deposit of Earnest Money irrespective of value of monetary limit. It is also clear from Ext.P7 that the name of the appellant company has

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been registered as a 'MSE' unit eligible for participation in the Central Government Store Purchase

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Programme as per the Single Point Registration Scheme for the following item(s)/store(s)/service(s) and thereafter

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it is denoted that as per list attached (1 item only). Apart from the same, a disclaimer column is provided

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where it is stated that the purchasing agencies are

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advised to satisfy themselves with the store details in

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the certificate while doing the technical evaluation

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before placing the tender/order on the units certified by

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National Small Industries Corporation Limited.

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Apparently as per Ext.P6 Government Order i.e. G.O.(P) No.546/2013/Fin.dated 7.11.2013 the State Government has adopted the public procurement policy of Government of India to Micro and Small Enterprises in the State of Kerala registered under the National Small Industries Corporation. As per Ext.P6, it was decided to extend various benefits of public procurement policy to the Micro and Small Enterprises in Kerala, as per which, in tender, participating Micro and Small Enterprises quoting price within the price band of L1 plus 15% shall also be allowed to supply 20% of the total tendered value. It is thus the Grama Panchayat and the Secretary have issued the tenders in question and the appellant participated in the same.

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It is pleaded by the appellant that it was issued with six tender forms with respect to item Nos.2,3,4 and

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5 in Ext.P8 tender notification and also the works mentioned in Ext.P9 tender notification. Apparently appellant has procured tender forms as per Ext.P8 against construction of cabin for Standing Committee Chairpersons, supply of casserole and flask to elderly

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people, supply of cot to patients of palliative care and construction of cabin for keeping records. So far as Ext.P9 tender notice was concerned, it was in relation to personal works and common works.

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Anyhow thereafter appellant submitted Ext.P10

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representation dated 15.10.2019 before the Secretary of the Grama Panchayat seeking cancellation of the tender process pursuant to Ext.P8 and P9 tenders on the ground that the tender conditions are very vague, without giving specifications etc. It was thereafter that the writ petition was filed by the appellant on 29.10.2019. In the counter affidavit filed by the Grama Panchayat and the Secretary, it was stated that appellant submitted the request dated 11.10.2019 before the Secretary for issuance of tender forms after granting exemption from tender fee, Earnest Money Deposit and Bid Security in respect of item Nos. 1 to 5 in Ext.P8 tender notice and item Nos. 1 & 2 in Ext.P9 tender notice on the ground

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that it is a Micro and Small Enterprise having registration with the National Small Industries Corporation Limited and it was accordingly that the tender forms were issued to the appellant.

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The tender was opened at 4 p.m, on 15.10.2019 and

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based on which the Secretary of the Grama Panchayat was

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directed to enter into agreements with the lowest tenderers. However, in paragraph 4 of the counter affidavit it was stated that though the appellant company obtained six tender forms it did not submit tender for item Nos.1 to 5 in Ext.P8 tender notice except item No.3 and item Nos.1 and 2 in Ext.P9 tender notice. Item No.3 in Ext.P8 tender notice is in respect of supply of casserole and flask for elderly people. Apart from the appellant, respondent Nos.3 & 4 have also submitted tenders in respect of item No.3. Among the tenderers the 4^th respondent quoted the lowest amount and in the remarks column as against the appellant and the 3^rd respondent it was noted that they are not actual supplier and therefore, the tender can be rejected. Needless to say, as against

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the 4^th respondent, in the remarks column it is noted that, its tender can be accepted. Later consequential decisions were taken by the Panchayat Council dated 18.10.2019 accepting the tender of the 4^th respondent and directions were issued to execute agreement. It is also undisputed that the 4^th respondent executed required agreement in respect of item No.3 in Ext.P8 tender notice.

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It is further stated in the counter affidavit

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that the appellant had no experience in the field of distribution and supply of articles mentioned in Exts.P8 and P9 tender notices. The learned Single Judge assimilating the fact situations accordingly has arrived at a conclusion that as per Ext.P3, the major activities and field of services of the appellant company is with respect to construction and civil engineering alone as per which only it is entitled for operation as an entity registered under Micro, Small and Medium Enterprises Development Act. Accordingly, learned Single Judge found that the appellant has misled the Panchayat officials by claiming benefits of Ext.P5 order issued by the Ministry of Micro, Small and Medium Enterprises, Government of India dated 14.10.2011 and procured tender forms without paying the required fee for the same and submitted tenders without depositing the Earnest Money. Though the appellant made an attempt to interpret the service and activities coming under the Act, 2006, to make it appear that once registered under that Act, the registered entity can enter into any field of services mentioned in Ext.P4 order of the Government of India dated 16.11.2007,

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it was found by the learned Single Judge that the

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appellant is a registered entity under clause 3 of Ext.P4 i.e., construction and related engineering services. It was also found that Ext.P7 renewal certificate produced along with the writ petition is incomplete and the remaining portion of Ext.P7 has been purposefully suppressed relying upon Ext.R2(g) produced by respondents 1 & 2 along with the counter affidavit, which is the full set of Ext.P7, submitted by the appellant while purchasing the tender forms. As per Ext.R2(g) the service and activities of the appellant company is construction

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of building and civil engineering works, specialised construction activities and forestry work as per the rules of the Kerala Public Works Department and Wild Life Department. Therefore, accepting the contention advanced

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by the Grama Panchayat and its Secretary the learned Single Judge has arrived at the finding that the

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appellant misrepresented the certificate and registration and obtained tender forms free of cost, without paying

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the statutory GST and other fees and therefore the

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Panchayat is entitled to recover the same from the appellant. It was also found that an attempt was made by

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the appellant to mislead the court by citing its

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registration under Act, 2006 and played fraud upon the

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court. It was accordingly that the learned Single Judge arrived at a finding that the appellant company was liable to be proceeded with for suppression of material facts and for non-production of the entire materials of Ext.P7 certificate.

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In order to consider the said issue the entire gamut of Act, 2006 was discussed and has found that the whole issues have taken place due to the malafide conduct of the appellant and it was accordingly that relying upon various judgments of the Apex Court and the principles set forth in R v. Kensington Income Tax Commissioners [(1917)1 KB 486] that the appellant who had approached the court suppressing or concealing material facts is to be dealt with appropriately.

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Anyhow it was also found that the action of the Panchayat and the Secretary in rejecting the tender submitted by the appellant company cannot be said to be either arbitrary or illegal and therefore, no interference was warranted to the tender process pursuant to Exts.P8 and P9 tender notices.

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We have heard learned counsel for the appellant

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Sri.Latheesh Sebastian and Adv.Sri.Prijith, who has appeared for the Panchayat and the Secretary at length

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and perused the materials on record.

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Going by the pleadings and the facts and

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circumstances available from the records produced by the respective parties we are of the considered opinion that the appellant was not entitled to participate in the tender so far as item No.3 of Ext.P8 tender notice regarding purchase and supply of casserole and flask because the registration secured by the appellant was in respect of the construction activities as is specified above and was not entitled to participate in the said tender. It is also clear that Ext.P7 produced by the appellant was only a part of the renewal certificate clear and evident from the contents of the certificate itself, which is also proved by Ext.R2(g) entire set of Ext.P7. If the appellant had produced the 3^rd page of

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Ext.P7 it would have been clear that the

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service/activities of the appellant was only construction of buildings, civil engineering works, specialised construction activities and forestry works as per Kerala PWD and Wild Life Department Rules. We are also of the view that the learned Single Judge has passed interim orders as specified above relying upon Ext.P7 certificate produced by the appellant. It is also undisputed that the

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appellant has secured certain benefits available to the Small and Medium Enterprises as per the provisions of Act, 2016 by not depositing Earnest Money, GST and other financial implications. The learned Single Judge has also relied upon the principles of law laid down by the Apex Court in Prestige Lights Limited v. State Bank of India [(2007)8 SCC 449], K.D.Sharma v. Steel Authority of India Limited [(2008) 12 SCC 481] and Usha Nanthini v. Regional Transport Authority, Palakkad and another [2018(2) KHC 89] in order to arrive at findings on the substantial issue of suppression of material facts in order to secure orders.

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Basically in the above referred judgments, Apex Court has laid down the law that a person who approaches a writ court with unclean hands and suppressing material facts are to be dealt with seriously and further that, in such circumstances a writ court need not consider the issues on merits. It is also clear from the said judgments that such a course is to be adopted by the writ court in larger public interest to deter unscrupulous litigants from abusing the process of court by deceiving it since the very basis of the writ jurisdiction rests in disclosure of complete true and correct facts.

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Going through the judgment of the learned Single Judge and the principles of law deducible from the judgments of the Apex Court, we fully agree with the findings of the learned Single Judge in respect of the suppression of material facts. Therefore, we do not find any reason to interfere with the judgment of the learned Single Judge in that regard. However, learned counsel for appellant submitted that the value of contract so far as item No.3 of Ext.P8 tender notice was concerned, was only Rs.4,50,000/- and that due to the present situation due to the pandemic COVID-19 and the adverse financial and economic situations prevailing in the community a lenient view may be taken in respect of the fine of Rs.1,00,000/imposed by the learned Single Judge.

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We have heard respective counsel on that issue and we are of the opinion that since the suppressions were material in nature in the matter of adjudication of the issues raised by the appellant it can only be viewed as a serious one to be dealt with appropriately and therefore, we are of the opinion that the imposition of cost by the learned Single Judge cannot be said to be faulty or excessive of the jurisdiction conferred under Article 226 of the Constitution of India to be interfered

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in an appeal filed under section 5 of the High Court Act.

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However, taking into account the present adverse situations prevailing in the community due to the pandemic COVID-19 and the consequential adverse situations, we are of the opinion that the cost imposed can be reduced and accordingly we alter the cost imposed by the learned Single Judge to Rs.25,000/-. We make it

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clear that in all other respects the findings and the directions contained in the judgment would remain intact except that the time period for paying the fine amount and discharging other financial commitments would stand extended by a period of three weeks from today.

Sd/-

S.MANIKUMAR

CHIEF JUSTICE

Sd/-

SHAJI P.CHALY

JUDGE