Name of the Judgment:
Judgment Title: Pankaj Choudhury v. State of Assam & Ors
Court’s Decision:
The Gauhati High Court dismissed the writ petition challenging the cancellation of a tourism development contract and forfeiture of security deposit by the Assam Tourism Development Corporation (ATDC). Justice Michael Zothankhuma held that the petitioner’s bid contained contradictory and false documents, and that fraud vitiates everything. The Court observed that there was no merit in the petition and upheld the action of the ATDC. The petitioner was, however, granted liberty to pursue civil remedies.
Facts:
Pursuant to a Notice Inviting Tender (NIT) dated 03.08.2022, the petitioner was awarded a contract for the management of the Panbari-Basbari Cluster at Manas National Park, based on a lease agreement dated 15.01.2016 and a trade license, both submitted to show experience in hospitality management. A Show Cause Notice was issued by ATDC after it was revealed that the agreement was allegedly not executed by the supposed lessor, Birina Tourist Lodge, as confirmed in their e-mail dated 05.05.2023. Due to contradictions between the documents—wherein one portrayed the petitioner as a lessee and the other as the proprietor—ATDC cancelled the contract and forfeited the deposit. The petitioner filed the writ petition challenging the cancellation and the subsequent re-tendering.
Issues:
- Whether the cancellation of the tourism management contract and forfeiture of security deposit by ATDC was legal and justified?
- Whether the petitioner was denied natural justice in not being given sufficient opportunity to respond to the Show Cause Notice?
- Whether the documents submitted by the petitioner were fraudulent, warranting cancellation under Clause 10.5 of the NIT?
Petitioner’s Arguments:
The petitioner argued that:
- The documents were wrongly interpreted as contradictory, and he had not been given adequate time to clarify them.
- There was no conclusive proof that the lease agreement and trade license were false or fabricated.
- The Show Cause Notice itself was prejudiced and left no room for explanation.
- The cancellation was arbitrary and violated principles of natural justice.
- The fresh NIT and award to a third party (M/s Monalisa Construction) were illegal and done without affording the petitioner a fair hearing.
Respondents’ Arguments:
The State and ATDC contended that:
- The petitioner submitted contradictory documents: one showing him as lessee, another as proprietor.
- Birina Tourist Lodge explicitly denied executing the lease agreement.
- The petitioner failed to justify or clarify the contradiction or produce confirmation from Birina Tourist Lodge.
- An FIR under Sections 420 and 468 IPC was filed, and a charge sheet was submitted based on false document allegations.
- The new contract had already been awarded to M/s Monalisa Construction, a necessary party who was not impleaded, resulting in non-joinder of parties.
- The lease amount discrepancy was due to a typographical error and the petitioner had failed to deposit the full amount.
Analysis of the Law:
The Court examined the lease agreement and the trade license. It noted:
- Both documents cannot simultaneously be true—one shows the petitioner as a lessee, the other as a proprietor.
- The ATDC acted within its powers under Clause 10.5 of the NIT, which allows cancellation in cases of misrepresentation or submission of false documents.
- Fraudulent submissions invalidate any resulting contract or benefit, in accordance with well-established principles.
- Mere participation in the bid process does not create a vested right when the foundational documents are suspect.
Precedent Analysis:
While no specific Supreme Court cases were cited, the Court relied on the established legal principle that “fraud vitiates everything.” Clause 10.5 of the NIT served as the statutory basis for cancellation, allowing rejection for false or misleading information. The Court impliedly referenced common law principles on fraud and misrepresentation without explicitly citing judgments.
Court’s Reasoning:
The Court reasoned that:
- The petitioner failed to disprove the denial from Birina Tourist Lodge.
- There was a direct contradiction in the bid documents.
- The petitioner took no steps to produce valid confirmation of the lease.
- The criminal case and charge sheet further reinforced the prima facie inference of fraudulent conduct.
- M/s Monalisa Construction, now running the cluster, was not made a party to the writ petition, rendering it defective due to non-joinder of necessary parties.
- Since the bid was based on disputed and discredited documents, the ATDC was justified in cancelling the contract and forfeiting the deposit.
Conclusion:
The writ petition was dismissed. The Court upheld the cancellation of the contract and forfeiture of Rs. 53.28 lakhs as valid under Clause 10.5 of the NIT. However, it granted liberty to the petitioner to pursue civil remedies for any grievance if he believed the documents were genuine.
Implications:
This judgment reinforces the principle that submission of false documents during tendering justifies cancellation and forfeiture of bid security. It underscores that bidders must be consistent and truthful in disclosures. It also highlights that failure to implead the party currently holding the contract can be fatal to legal proceedings, and that contractual fraud can trigger both civil and criminal consequences.
Judgments Referred:
- No direct case law was cited in the order.
- The Court relied on the principle that fraud vitiates everything, a settled principle in Indian jurisprudence.