Partner Cannot Claim Experience Of Erstwhile Firm In Independent Capacity: Punjab and Haryana High Court

In a landmark judgment on partnership law and the scope of judicial review in tender matters, a Division Bench comprising Chief Justice R.S. Jha and Justice Arun Palli while deciding CWP-20130/2020, held that a person who was earlier a partner of an erstwhile partnership firm could not claim the benefit of experience certificates issued in the name of such firm for satisfying the eligibility criteria of a tender he applies for in his independent capacity. The judgment was authored by Justice Arun Palli and was pronounced on 10th February 2021. The case appears to have finally put to rest the quandary surrounding computation of experience in tender matters. Facts The petitioner, M/s A.G. Construction Co., was a sole proprietorship concern of one Ajay Kumar Garg, who was earlier one of the three partners in M/s B.G. Constructions Co. (erstwhile partnership firm), and held 50% share, whereas, the other two partners held 25% share each. On the dissolution of the firm, it was agreed among the three partners that they were free to set up their new ventures and could also use the technical and financial credentials of the firm corresponding to their respective shares. The respondent authorities, in August, 2020, invited E-tenders for some construction work. The eligibility criteria entailed that the tenderer must have satisfactorily completed, during the last five years, at least, Three Multi Storey RCC Framed Structure Government Office Building/Institute Building works costing not less than the amount equal to 40% of the estimated cost (Rs.3,95,47,577/-) of the tender; or Two Multi Storey RCC Framed Structure Government Office Building/Institute Building works costing not less than the amount equal to 60% of the estimated cost of the tender; or One Multi Storey RCC Framed Structure Government Office Building/Institute Building work of aggregate cost not less than the amount equal to 80% of the estimated cost put to tender. The petitioner's bid was rejected during technical evaluation and the petitioner claimed that such rejection was not appended with any reasons. Instead, Ajay Kumar Garg, the sole proprietor of the petitioner concern, was orally informed, that his prior work experience acquired in the capacity of a partner of M/s B.G. Constructions Co., Bathinda, could not be reckoned as his experience or that of his sole proprietorship concern. Therefore, petitioner approached the High Court in 2020. Arguments Counsel for the petitioner argued that firstly, his experience was in compliance with the conditions of the tender as the experience was not necessarily supposed to be in the name of the petitioner; what was material was that the petitioner concern's sole proprietor had the experience in reality. The petitioner sought to buttress this argument citing M/s New Horizons Limited v. Union of India, 1995 (1) SCC 478, Samruddha Buildcon Pvt. Ltd. v. Indore Development Authority, (CWP No. 4448 of 2015, MP HC) and P.K. Delicacies Pvt. Ltd. v. Union of India, 2005 (13) RCR (Civil) 491. Secondly, the counsel argued that during its working, M/s B.G. Constructions Co. had executed a work valuing Rs. 852 lakhs and that due to Ajay Kumar Garg's 50% stake in the firm, he had acquired 50% experience, i.e., valued at Rs. 426 lakhs (852/2) or Rs. 4.26 crores which was much more than what was required in the tender (3.95 crores). So, if not the whole of the experience acquired while being a partner of the erstwhile firm M/s B.G. Constructions Co., the petitioner should be held to be entitled at least to 50% of such experience in proportion to his share in the firm. Per contra, the learned counsel for respondent argued that the petition should be dismissed as there was no foul-play on part of the authority and that the petitioner's bid was rejected due to the non-compliance with the 'requisite experience' condition. The experience acquired by Ajay Kumar Garg while being a partner of M/s B.G. Constructions Co. could not be termed as his experience in his independent capacity. Issues The Court answered two issues in the case: (1) whether the experience gained/acquired by M/s B.G. Constructions Co. (erstwhile partnership firm), could be construed as experience of Ajay Kumar Garg, who happened to be one of the three partners in the firm, in his individual/independent capacity; (2) could he claim the work experience of the erstwhile firm at least in proportion to the share he held in such firm? Issue (1): Nature of Partnership Firm's Experience Answering the issue in a negative, the Court held: "Quite naturally, the experience certificate…certifies the performance, capacity and capabilities of the firm (M/s B.G. Constructions Co.), that had executed the project and not of any partner individually. It is true that from the same subject of experience, more than one can gain experience, however, that must not by itself evince the ...

Partner Cannot Claim Experience Of Erstwhile Firm In Independent Capacity: Punjab and Haryana High Court

Bhavyata Kapoor

This is a premium content
Available exclusively to
Our subscribers

INR 1099+GST

Tags

Bhavyata Kapoor

Partner Cannot Claim Experience Of Erstwhile Firm In Independent Capacity: Punjab and Haryana High Court

Bhavyata Kapoor

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

Bhavyata Kapoor

This is a premium content
Available exclusively to
Our subscribers