Supreme Court Imposes Rs 5 Lakh Fine On Himachal Pradesh Housing For Securing Contract For Pvt Company By Deceiving High Court

The Supreme Court imposed a fine of Rs 5 lakhs on the Himachal Pradesh Housing and Urban Development Authority (HIMUDA) for colluding with a private company to secure a tender by deceiving the High Court for building a commercial complex in Shimla.

Reversing the High Court's decision, the Bench Comprising Justices Bela M Trivedi and Pankaj Mithal observed that HIMUDA deceived the High Court in collusion with the private entity by misusing the process of law for covering up the irregularities and illegalities committed in the tender process by the 13 officers of the HIMUDA, to anyhow benefiting the private entity/respondent no.2 to receive the contract under the guise of the court's order.

“We have no hesitation in holding that the respondent no. 1 (HIMUDA) in collusion with the respondent no. 2 (Vasu Constructions), had taken the high court for a ride and misused the process of law for covering up the irregularities and illegalities committed in the tender process by the officers of the respondent no. 1, and for anyhow awarding the contract to the respondent no. 2 under the guise of the court's order.”, the Judgment authored by Justice Bela M Trivedi said.

The court questioned the High Court decision which had approved the contract to respondent no.2/Vasu Constructions, as the High Court's order was passed without a proper application of mind and without assigning any cogent reason for brushing aside the findings recorded by the Independent Committee.

“It is a matter of surprise for us that the High Court also could not notice the ill-intention of the respondents nos. 1 and 2 and disposed of the petition, permitting them to go ahead with the original tender, ignoring the reports of the independent committee and the observations made by the Single Bench in the Order dated 08.01.2021 with regard to the irregularities and illegalities committed by the officers of the respondent no. 1 HIMUDA.”, the court said.

“Since, we have found that the respondent no.1 HIMUDA, though 'State' within the meaning of Article 12 of the Constitution of India, had acted malafide and in collusion with the respondent no.2, and had taken the High Court for a ride, the present appeal deserves to be allowed with heavy cost.”, the court added.

Thus, the court directed the HIMUDA to deposit Rs. 5 Lakhs with the Supreme Court Advocates-on-Record Association within two weeks from the date of the Judgment. However, the court clarified that the HIMUDA shall be at liberty to initiate a fresh tender process in accordance with law and after following the due process of law.

Background

In December 2018, HIMUDA granted a letter of intent (LOI) to Vasu Constructions to construct a commercial complex in Shimla. However, the Letter of Intent (LOI) had to be rescinded due to complaints of procedural irregularities and subsequent litigation initiated by unsuccessful bidders before the high court.

After finding irregularities in the tendering process based on the report submitted by the Independent Committee, the HIMUDA in Feb. 2021 canceled the tendering process due to proceedings challenging the tendering process being pending in the Himachal Pradesh High Court.

Aggrieved by the cancellation of the tendering process by the HIMUDA, respondent no.2/Vasu Construction challenged the HIMUDA's action before the High Court. Before the Division Bench of the High Court, HIMUDA stated that it had no objection to going ahead with the initial tendering process, in case respondent no.2/Vasu Construction was ready to execute the work on the same terms and conditions as were agreed initially.

Based on the HIMUDA's no objection to granting a contract to the Vasu Constructions, the High Court disposed of the matter. Accordingly, the contract was signed between HIMUDA and Vasu Constructions.

Questioning the High Court's order the Appellant preferred a SLP before the Supreme Court challenging the High Court's Division Bench order.

Counsel For Petitioner(s) Mr. P.S. Patwalia, Sr. Adv. Mr. Ritesh Khatri, AOR Ms. Deveshi Chand, Adv.

Counsel For Respondent(s) Mr. Anoop G. Chaudhari, Sr. Adv. Mr. Shankar Divate, AOR Mr. J. P. Mishra, Adv. Mr. Navin Pahwa, Sr. Adv. Mr. D. K. Thakur, Adv. Mr. Rajeev Kumar Gupta, Adv. Mr. Tavleen Singh, Adv. Mr. Joginder Mann, Adv. Ms. Vallabhi Shukla, Adv. Mr. Divyansh Thakur, Adv. Mr. Bimlesh Kumar Singh, AOR 1 Mr. Kanwal Chaudhary, Adv. Mr. Neeraj Agarwal, Adv. Mr. Santosh Kumar Yadav, Adv. Ms. Niharika, Adv. Mr. Nishant Anand, Adv.

Case Title: LEVEL 9 BIZ PVT. LTD. VERSUS HIMACHAL PRADESH HOUSING AND URBAN DEVELOPMENT AUTHORITY & ANOTHER

Citation : 2024 LiveLaw (SC) 275

Click Here To Read/Download The Judgment