Basant Goel v. Union of India & Ors.

1. The present Writ Petition challenges the Order dated 31.05.2023, passed by the Respondent No.3 herein, terminating the Contract Agreement dated 19.08.2020, entered into between the Additional Director, CGHS (HQ) and M/s Goel Medicos against Tender ID No. 2020_DGHS_555011_1 for supply of indented medicines to the CGHS Wellness Centres at Sonipat, and the forfeiture of the Performance Bank Security of Rs.12,10,000/- and also debarring M/s Goel Medicos from participating in any tender or award of contract in any tender published by the CGHS pan India or continuation of any contract with CGHS for a period of two years.

2. Shorn of unnecessary details, the facts, leading to the present Writ Petition are as under: a. The Petitioner herein is the Proprietor of a Proprietorship concern, namely, M/s Goel Medicos, which carries on business of retail pharmacy, pharmacy distributor and institutional supplier of medical/pharmaceutical products in Delhi-NCR Region. It is stated that M/s Goel Medicos is empanelled with CGHS as Authorized Local Chemist for supplying of Allopathic medicines to three CGHS Wellness Centers, namely, Dilshad Garden, Ghaziabad and Sonipat. b. It is stated that on 08.04.2020 Respondents issued a notice inviting tender vide open tender notice No. F. No. 55-01/2016- 17/CGHS/MSD/ALC for empanelment of authorized local chemists for CGHS Delhi/NCR for the Financial Year 2020 to

2023. It is stated that the said tender was advertised on the Public Procurement Portal vide tender ID NO. 2020_DGHS_555011_1. c. It is stated that the Petitioner herein participated in the said tender and was declared as a successful bidder for several CGHS Wellness Centres including the Sonipat CGHS Wellness Centre. d. It is stated that Mrs. Usha Goel, i.e. the mother of the Petitioner herein, was the sole proprietor of M/s Goel Medicos. It is stated that by way of a Gift Deed dated 31.07.2020, Mrs. Usha Goel transferred the proprietorship of M/s Goel Medicos to the Petitioner herein. e. It is stated that on 18.08.2020, i.e. after executing the Gift Deed dated 31.07.2020 in favour of his son, Mrs. Usha Goel executed a Power of Attorney in favour of one Mr. Akash Jain, who was an employee of M/s Goel Medicos, authorizing him to sign the tender documents on her behalf in her absence. f. It is stated that on the basis of the PoA, the tender documents were signed by Mr. Akash Jain on behalf of Mrs. Usha Goel, who had ceased to be the owner of M/s Goel Medicos pursuant to execution of Gift Deed dated 31.07.2020 in favour of her son, i.e. the Petitioner herein. g. It is stated that a Contract Agreement dated 19.08.2020 was entered into between the Additional Director, CGHS (HQ) and M/s Goel Medicos. A Performance Security dated 17.08.2020 for a sum of Rs.12,10,000/- was submitted on behalf of M/s Goel Medicos vide BG No. 0255NDLG00004621 by Akash Jain. h. It is stated that show cause notice dated 06.04.2023 with respect to CGHS Wellness Centre at Sonipat was issued by the Respondents against M/s Goel Medicos on the ground that the intimation of change of the proprietorship of M/s Goel Medicos was not given to the Respondent No.3 and the bid documents were signed by Mr. Akash Jain on the basis of the PoA executed by Mrs. Usha Goel who ceased to be the proprietor of M/s Goel Medicos subsequent to her signing the Gift Deed dated 31.07.2020 in favour of her son and the same amounts to fraudulent act/misrepresentation of facts on the part of M/s Goel Medicos as a false Power of Attorney, which is a notarized legal document, has been submitted to the CGHS based on which the Contract Agreement was executed between Goel Medicos through authorized signatory Akash Jain and Additional Director, CGHS (HQ) and, therefore, the Agreement does not have any legal sanctity. Relevant portion of the said Show Cause Notice reads as under: “The Tender Inviting Authority CGHS Delhi, for tender ID 2020_DGHS_555011_1, i.e., Additional Director CGHS (HQ), CGHS Bhawan, Sector-13, R.K.Puram, New Delhi-66 prima facie, is of the opinion that Section I, Clause 15 (i) of the tender has been contravened and Sh, Basant Goel, proprietor of M/s Goel Medicos has committed a fraudulent act, by misrepresenting facts and submitting a false Power of Attorney. Therefore, CGHS intends to forfeit your Performance Bank Security for Sonipat Wellness Centre and terminate your contract (under Section I, Clause 15 (v), Section I, Clause 16B and Section II, Clause 10 for the said fraudulent act of misrepresenting facts and submitting false Power of Attorney. In view of above, you are hereby asked to show cause within 48 hours of receipt of the show cause notice through email, as to why action should not be taken against you for violation of provisions of tender ID 2020_DGHS_555011_1, Section 1, clause 15 (i) and (ii) b. In case no clarification is submitted, it will be presumed that you have nothing to say in this matter; and necessary action shall be initiated against you without further notice.” i. Reply to the show cause notice was given by the Petitioner. The explanation given by the Petitioner was rejected by the Respondents Vide order dated 31.05.2023 and the Contract Agreement dated 19.08.2020 was terminated and the Performance Security of Rs.12,10,000/- was forfeited. M/s Goel Medicos was debarred from participating in CGHS tenders/contracts published by the CGHS pan India or continuation of contract with CGHS for a period of two years. j. It is this Order which is under challenge in the present Writ Petition.

3. Mr. Vivek Sood, learned Senior Counsel appearing for the Petitioner, has focused his argument only on that portion of the impugned order by which the Petitioner herein has been debarred from participating in the tenders/contracts floated by the CGHS pan India for a period of two years from the date of the impugned Order or for continuation of any contract entered by M/s Goel Medicos with CGHS for the same period. He has drawn the attention of this Court towards the show cause notices and has submitted that in the show cause notices, the Petitioner has only been asked to show cause as to why the contract agreement dated 19.08.2020 should not be terminated and the Performance Security of Rs.12,10,000/- should not be forfeited. He submits that the Order by which the Proprietorship concern of the Petitioner herein has been debarred from participating in the tenders floated by the CGHS pan India for a period of two years is unsustainable in the absence of any mention about the same in the show cause notice.

4. Mr. Sood draws the attention of this Court towards the judgment of the Apex Court in UMC Technologies (P) Ltd. v. Food Corpn. of India, (2021) 2 SCC 551, to contend that the basic principle of natural justice is that before any adjudication starts, the authority concerned should give the affected party a notice of the case against him so that he can defend himself and such notice should be adequate and the grounds necessitating action and penalty/action proposed should be mentioned specifically and unambiguously. He states that the Apex Court in the said judgment has held that an order travelling beyond the bounds of notice is impermissible and without jurisdiction.

5. Per contra, Mr. Chetan Sharma, learned ASG, has drawn the attention of this Court to Clause 15 of the tender document which relates to Corrupt or Fraudulent Practices and to Clause 16 which deals with forfeiture of EMD/Performance Security. He submits that Clause 16(b) of the tender document states that if it is found during the bidding process or thereafter that factual information is being or has been suppressed, then the bidder will be debarred from further participation and the EMD will be forfeited. Learned ASG has also drawn the attention of this Court to the Show Cause Notice dated 06.04.2023 pertaining to Wellness Centres at Dilshad Garden and Ghaziabad and submits that apart from the present infraction several other infractions have been committed by the Petitioner. He, therefore, contends that the Order debarring the Proprietorship concern of the Petitioner herein does not require any interference.

6. Mr. H. S. Phoolka, learned Senior Counsel appearing for M/s Kaushik Medical Store and M/s Gandhi Medicos, contends that the Petitioner does not require any leniency from this Court. He contends that the Petitioner is also guilty of other malpractices and any interference by this Court with the Order of debarment will have deleterious effect on the tender process.

7. Heard the Counsel for the parties and perused the material on record.

8. The undisputed facts of the case are that the Petitioner is the Sole Proprietor of the Proprietorship concern, namely, M/s Goel Medicos, which was gifted to him by his mother – Mrs. Usha Goel, by way of a Gift Deed dated 31.07.2020. In the Gift Deed dated 31.07.2020 it is specifically mentioned that Mrs. Usha Goel has not been able to run the business due to lack of time and in consideration of her natural love and affection for her son, i.e. the Petitioner herein. It is stated that she gifted her proprietorship business, i.e. M/s Goel Medicos, to the Petitioner herein along with all its assets, liabilities, statutory registrations, goodwill, agencies and all other movable assets including transfer of all the personnel as a going concern. The Gift Deed also mentions that the business will be operated in the same manner and with the same name except that from the date of the gift deed, the Proprietorship concern will become the Proprietorship concern of the Petitioner herein. After execution of the gift deed, Mrs. Usha Goel ceased to be the sole Proprietor of M/s Goel Medicos. Despite executing a Gift Deed in favour of her son on 31.07.2020, Mrs. Usha Goel executed a Power of Attorney dated 18.08.2020 in favour of Mr. Akash Jain authorizing him to sign documents in relation to different tenders as an authorized signatory in the absence of Mrs. Usha Goel, who has been shown as the Sole Proprietor of M/s Goel Medicos. On the basis of the said Power of Attorney, Mr. Akash Jain signed and submitted the tender documents with the Respondents. At the relevant point of time Mrs. Usha Goel was not the Sole Proprietor of M/s Goel Medicos and, therefore, she could not have authorized Mr. Akash Jain to sign the tender documents on behalf of M/s Goel Medicos. Therefore, the tender documents, which have been signed by a person who was authorised to sign them by a person who ceased to be the Sole Proprietor of M/s Goel Medicos, should not have been considered by the CGHS for the tender process.

9. Viewed in this light, this Court does not find any reason to interfere with the portion of the Order dated 31.05.2023, passed by the Respondent No.3 herein, terminating the Contract Agreement dated 19.08.2020 entered into between the Additional Director, CGHS (HQ) and M/s Goel Medicos against Tender ID No. 2020_DGHS_555011_1 for supply of indented medicines to the CGHS Wellness Centres at Sonipat, and forfeiting the Performance Bank Security of Rs.12,10,000/- which was submitted by M/s Goel Medicos at the time of entering into the contract. However, this Court finds merit in the submission of Mr. Vivek Sood, learned Senior Counsel appearing for the Petitioner, that the Petitioner could not have been debarred from participating in any tender or award of contract in any tender published by the CGHS pan India or continuation of contract with CGHS for a period of two years from the date of the Order of termination of contract.

10. In the Show Cause Notice, Respondent No.3 has only asked the Petitioner to show cause as to why the contract of the Petitioner should not be terminated and its Performance Bank Security of Rs.12,10,000/- not be forfeited in terms of Section I, Clause 15 (v), Section I, Clause 16B and Section II, Clause 10 of the tender document for its fraudulent act of misrepresenting facts and for submitting a false Power of Attorney. The Show Cause Notice in any way does not indicate that the consequence of termination of the contract will result in debarment of the Proprietorship concern of the Petitioner from participating in any tender or award of contract in any tender published by the CGHS pan India or continuation of contract with CGHS for a period of two years from the date of the Order of termination of the contract.

11. Clause 15 & 16 of the tender document which lays down the criteria regarding corrupt or fraudulent practices by the bidders and the forfeiture of EMD/Performance Security by the CGHS and/or forfeiture of EMD/Performance Security in case of any such discrepancy, reads as under: “15.

CORRUPT OR FRAUDULENT PRACTICES

(i) CGHS requires that the Bidders observe the highest standards of ethics and conduct during the tender process and afterwards during the execution of such contract.

(ii) In pursuance of this policy, the terms and conditions are set forth as follows: a) "corrupt practice" means the offering, giving, receiving or soliciting of anything of value to influence the action of the public official in the tender process or in the process of execution of contract; and b) "Fraudulent practice" means misrepresentation of facts in order to influence the tender process or execution of a contract to the detriment of CGHS, c) "collusive practice/cartelization" means a scheme or arrangement among Bidder (prior to or after bid submission) designed to establish bid prices at artificial non-competitive levels and to deprive CGHS of the benefits of free and fair competition; d) "coercive practice" means harming or threatening to harm, directly or indirectly, person or their property to influence their participation in the procurement process or affect to execution of a contract.