A false declaration regarding disqualification grounds justifies the termination of a contract, with the affected party expected to seek arbitration as a remedy.

IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR BEFORE HON'BLE SHRI JUSTICE VISHAL MISHRA

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ON THE 15 OF JULY, 2025 WRIT PETITION No. 20372 of 2025 M/S A.F. ENTERPRISES Versus M.P. STATE AGRO INDUSTRIES DEVELOPMENT CORPORATION LTD. AND OTHERS Appearance:

Shri Anil Lala - Advocate for the petitioner.

Shri Vivek Ranjan Pandey - Advocate for the respondents.

ORDER The present petition is being filed assailing the order dated 28.05.2025 filed by the Respondent No. 2 whereby the contract awarded to the petitioner has been terminated vide notice dated 02.05.2025.

2. It is the case of the petitioner that he entered into a contract for supply of plastic crates useful in Horticulture, Sericulture and Fisheries in pursuance to the tender document dated 27.11.2024. The respondent No.1 issued a notice on 02.05.2025 proposing termination of aforesaid contract alleging suppression of the fact of blacklisting of the petitioner at Uttar Pradesh. Petitioner duly communicated the reply to the aforesaid notice on 03.05.2025 rebutting the aforesaid allegation. The petitioner immediately moved the Arbitrator referred in the arbitration clause for the contract. To frustrate the purpose of arbitration case, without awaiting for the decision, the Respondent No. 1 passed the impugned order on 28.05.2025 terminating his Signature Not Verified Signed by: ANINDYA contract without any consideration of reply filed by the petitioner. Being aggrieved by the same, the present petition is being filed. It is argued that once the notice issued to the petitioner has been put to challenge in arbitration proceedings without awaiting for the outcome of the arbitration proceedings, the final order of termination has been passed.

3. On notice being issued, the respondents have filed a detailed reply in the matter. It is pointed out that the petitioner has given a wrong affidavit in terms of Annexure-3 which was annexed with a tender document and he has given a declaration and undertaking to the effect that he has neither been blacklisted or debarred by any Government or Government undertaking and no legal proceedings are pending in any other Court regarding non-supply or quality issue in any Courts. Vide order dated 09.04.2025, the approval given in favour of the petitioner was kept on hold. Thereafter, the enquiry was got conducted. They have written a letter on 26.07.2024 to M/s. A.F. Enterprises Faridabad, Haryana. A letter to the State of Uttar Pradesh enquiring about the proceedings drawn up against the petitioner. He was not even considered for the bid owing to pendency of the enquiry against the petitioner. He was granted an opportunity on 02.05.2025 wherein it is mentioned that the said proceedings drawn up by the State of Uttar Pradesh were not in his knowledge. That cannot be a plausible defence taken by the petitioner. When the proceedings of blacklisting were pending enquiry on the action taken by the State of Uttar Pradesh then non-declaration of the said proceedings as informed in Annexure-3, annexed with the tender document amounts to suppression of information, therefore, the agreement was cancelled and an Signature Not Verified Signed by: ANINDYA amount of Rs.1,00,000/- has been forfeited. The same is put to challenge in the present petition.

4. The fact remains that once there is a false declaration on part of the petitioner, then the agreement cannot be entered into with the petitioner in terms of the tender document and his contract can be terminated at any point of time. The tender document shows that there is an alternative remedy of challenging the termination order before the competent forum. Clause 28 deals with the same. The petitioner should approach the arbitration to challenge the termination order.

5. Heard the learned counsel for the parties and perused the record.

6. The record indicates that along with the tender document the petitioner was required to submit a