Back
2020 Supreme(MP) 809
MADHYA PRADESH HIGH COURT
Sanjay Yadav, B.K. Shrivastava, JJ.
Hargovind Purvaiya - Appellant
Versus
State Of Madhya Pradesh & Ors. - Respondent
Writ Petition No. 6769 of 2020
Decided On : 25-09-2020
Rohit Jain, Advocate, Purushaindra Kaurav, Advocate, Samdarshi Tiwari, Advocate
Headnote:
Net Worth Certificate - Sand Mining Contract - Clause 5([k), Clause 6(v)(d)(ii) - The court discussed the essential conditions stipulated in Clause 5([k) and Clause 6(v)(d)(ii) of the Notice Inviting Tender (NIT), which required the tenderer's net worth to be not less than 50% of the group's initial price and to be based on audited accounts. The court highlighted the importance of strict compliance with such essential conditions in contract matters and cited relevant legal principles to support its decision to quash the award of the sand mining lease to the respondent No.4.
Fact of the Case:
The Writ Petition challenged the award of a sand mining contract in District Raisen to respondent No.4, alleging non-fulfillment of essential conditions stipulated in the NIT. The petitioner and respondent No.4 were held qualified for the financial bids, but objections were raised regarding the validity of their Net Worth Certificates. The court analyzed the objections and the decision-making process, and ultimately quashed the award of the sand mining lease to respondent No.4.
Finding of the Court:
The court found that the Net Worth Certificates of the petitioner and respondent No.4 did not adhere to the essential conditions stipulated in the NIT, as they were not based on audited accounts. The court also noted that the decision-making process was arbitrary and suffered from malafides, leading to the quashing of the award of the sand mining lease to respondent No.4.
Issues: The main issue was the validity of the Net Worth Certificates submitted by the petitioner and respondent No.4, and whether they adhered to the essential conditions stipulated in the NIT. The court also addressed the fairness and lawfulness of the decision-making process in awarding the sand mining contract.
Ratio Decidendi: The court emphasized the importance of strict compliance with essential conditions in government contracts and cited legal principles to support its decision to quash the award of the sand mining lease. It also highlighted the need for Net Worth Certificates to be based on audited accounts, as required by the NIT.
Final Decision: The court quashed the award of the sand mining lease to respondent No.4 and directed the authorities to take over the possession of the mines, with the option to re-auction or operate the mines through the Department. The relief claimed by the petitioner was declined, as their Net Worth Certificate also did not adhere to the essential conditions stipulated in the NIT.
JUDGMENT
Sanjay Yadav, J. - Challenge in this Writ Petition under Article 226 of the Constitution is to an award of contract of sand mining in District Raisen in favour of the respondent No.4 on the allegation of his not fulfilling the essential condition stipulated in Clause 5( ) and Clause 6(v)( )(ii) of the Notice Inviting Tender (referred as 'NIT').
2. That, Madhya Pradesh State Mining Corporation Limited, an enterprise under the Department of Mineral Resources, State of Madhya Pradesh issued NIT on 07.10.2019 inviting E-tender for sand mining in District Raisen on or before 26.11.2019. The NIT stipulated certain essential conditions to be adhered to by prospective bidder for successful participation. One such essential conditions, around which centers the controversy, are contained in Clause 5([k) and Clause 6(v)(d)(ii), stipulating therein that if the initial base price (upset price) of the group is more than Rs.10 crores, then as on 31.03.2019, the tenderer's net worth is required to be not less than 50% of the group's initial price. And that, it will be mandatory for the tenderer to provide the Net Worth Certificate issued by the Chartered Accountant on the basis of audited accounts (stand-alone basis) for the year 2018-19 as on 31.03.2019. It further stipulates that in case the accounts of 2018-19 is not finalized, then in such a situation, the certificate of net worth as on 31.03.2018 on the basis of audited account for the year 2017-18 will be valid. For ready reference, these clauses are reproduced below :
3. In response to the NIT, 5 bids were received, viz, from (i) Ambey Suppliers Pvt. Ltd. (ii) Shri Hargovind Purvaiya (iii) Shri Rajendra Raghuvanshi (iv) Shri Roopendra Mishra and (v) M/s S.A. Infra Developers Pvt. Ltd. That, Technical bids of these five bidders was accepted and were held qualified for financial opening.
4. After acceptance of Technical Bids, one of the participants, viz, M/S S.A. Infradevelopers Private Limited filed a Writ Petition No.27699/2019 against the order dated 05.12.2019; whereby, the petitioner, respondent No.4 and one Mr. Roopendra Mishra were held qualified for the financial bids, alleging that the Net Worth Certificate submitted by these persons, viz., the petitioner- M/S Hargovind Purvaiya, respondent No.4-Shri Rajendra Raghuvanshi and Shri Roopendra Mishra were defective.
5. The objections raised by the petitioner in Writ Petition No.27699/2019 against Rajendra Raghuwanshi (respondent No.4), M/S Hargovind Purvaiya (the present petitioner) and Shri Roopendra Mishra, respectively were :
"1. Mr. Rajendra Raghuwanshi
This bidder has relied upon the Net Worth Certificate dated 22.11.2019 issued by Ali Jain and Sharma, Chartered Accountant wherein his net worth is quantified as Rs.10.6 crores as on 31.03.2019 on the basis of the following properties/assets:
(i) Loan and Advances of Rs.4.25 crores to various persons/entities, based on balance confirmation received from these persons/entities and not on the basis of audited financial statements.
(ii) Capital contribution of Rs.0.82 crores in a proprietorship firm;
(iii) Vehicles of Rs.0.04 crores;
(iv) Jewellery of Rs.0.19 crores;
(v) Cash and Bank Balance of Rs.0.26 crores, based on 'Self-Certification' of the Bidder and not on the basis of audited financial statement; and
(vi) Immovable Properties valued at Rs.5.05 crores, based on the certificate of Omen Assessors, Chartered Engineers and Approved Valuers and Design Mart and not on the basis of audited financial statement.
Issues/Deficiency in Net Worth Certificate:
(i) This Certificate is wrong and cannot be relied upon due to apparent errors and mistakes therein. It has included immovable property (Property at Sr. No.7) valued at Rs.0.71 crores which is registered in the name of wife of this Bidder which is not permissible.
It has also included separately Rs.0.38 crores as value of renovation and reconstruction work of some immovable properties (including property registered in th
