2016 (3) TMI 927 - HC - Indian Laws

Validity of auction - forgeg Vat clearance certificate submitted - forfeiture of earnest money by invoking the bank guarantee and to debar the petitioner firm from participating in future for a period of 3 years - suppression of material facts - Held that - The petitioner has not only suppressed the material facts in the petition, but has also not come with clean hands. Though the petitioner knew that the impugned action of invoking the Bank guarantee submitted by him was taken by the respondents as the petitioner was found to have submitted forged Vat clearance certificates, the said fact was not disclosed in the petition. It was only when the respondents filed the reply to the effect that such false affidavits and the false certificates were produced by the petitioner before the respondent-authority in order to procure the tender in question, the petitioner has filed the rejoinder stating that the same was done by his Advocate without his knowledge. The said contention is not believable inasmuch as the petitioner himself had filed the affidavit dated 18.10.2014 (Annexure-3), stating interalia that the Commercial Tax certificates issued by the Dy. Commissioner on 21.08.2014 and 14.10.2014 submitted by him were correct and genuine. When the said two certificates submitted by the petitioner raised suspicion about their genuineness, the respondents had inquired from the concerned authority, who vide the letter dated 14.11.2014 (Annexure-R/5) intimated that no such certificates were issued by him. The respondents thereafter had taken the decision to invoke the bank guarantee furnished by the petitioner towards the bid security. In that view of the matter, the Court is of the opinion that the petitioner being guilty of suppression of material facts and having not come with clean hands, the petition is liable to be dismissed, and is accordingly dismissed with cost of ₹ 50,000/- (rupees fifty thousand), which will be paid by the petitioner to the respondent-Authority within one week. By this order, the stay application and other pending application if any, also stand dismissed.

Summary

Issues:
1. Consideration of application seeking vacation of ex parte interim order.
2. Allegations of submission of forged documents to procure tender.
3. Failure to exhaust alternative statutory remedy before filing the petition.
4. Suppression of material facts by the petitioner.
5. Decision to invoke bank guarantee due to submission of forged certificates.
6. Legal principles regarding invocation of bank guarantee in commercial dealings.

Issue 1: Consideration of application seeking vacation of ex parte interim order
The judgment addresses the application filed by the respondents seeking vacation of the ex parte interim order passed by the Court. The order stayed the operation of the order sheet dated 03.06.2015 and the impugned order dated 08.06.2015. The matter was heard finally at the admission stage with the consent of the counsels for both parties.

Issue 2: Allegations of submission of forged documents to procure tender
The petitioner-firm had submitted a tender for a development project, and allegations were made that forged documents, specifically VAT clearance certificates, were submitted to secure the tender. The respondent authority contended that the petitioner submitted false documents to obtain the tender, leading to the decision to forfeit the earnest money and debar the petitioner from future participation.

Issue 3: Failure to exhaust alternative statutory remedy before filing the petition
The respondents raised preliminary objections, arguing that the petition was filed without exhausting the alternative statutory remedy of filing a first appeal under the Rajasthan Transparency in Public Procurement Act, 2012. This contention was a crucial aspect of the case, highlighting the necessity of following proper legal procedures before approaching the Court.

Issue 4: Suppression of material facts by the petitioner
The Court found that the petitioner had suppressed material facts and did not come with clean hands. The petitioner failed to disclose crucial information regarding the submission of forged documents, only revealing it after the respondent's reply. This suppression of facts was deemed misleading and an attempt to obtain an ex parte order in the petitioner's favor.

Issue 5: Decision to invoke bank guarantee due to submission of forged certificates
The decision to invoke the bank guarantee was based on the submission of forged VAT clearance certificates by the petitioner. The Court noted discrepancies in the certificates submitted and emphasized that the petitioner's actions, including submitting forged documents, led to the invocation of the bank guarantee.

Issue 6: Legal principles regarding invocation of bank guarantee in commercial dealings
The Court referred to established legal principles concerning the invocation of bank guarantees in commercial dealings. Citing the case law of UP State Sugar Corporation vs. Sumac International Ltd., the Court highlighted the cautious approach required when granting injunctions against the invocation of bank guarantees in commercial transactions.

In conclusion, the Court dismissed the petition due to the petitioner's suppression of material facts and lack of transparency. The petitioner was ordered to pay costs to the respondent authority and the stay application, along with any pending applications, were also dismissed.