1 2025:CGHC:39682-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPC No. 4223 of 2025 Sunil Kumar Agrawal S/o Late Shri Satyanarayan Agrawal Aged About 52 Years Proprietor Of M/s. Sunil Roadlines, And Residing At Flat No. B/9, Happy Home Green Land Vishal Nagar Raipur Chhattisgarh 492001 ... Petitioner versus 1 - Food Corporation Of India Through Its Executive Director, Zonal Officer (West) Dattapada Road Rajendra Nagar, Borivali (East) Mumbai- 400066 2 - The General Manager, Food Corporation Of India, Regional Office, Vidhan Sabha Marg, Raipur Chhattisgarh- 492005 3 - The Assistant General Manager, Food Corporation Of India, Regional Office, Vidhan Sabha Road, Kapa Raipur, Chhattisgarh ... Respondents For Petitioner : Mr.Devashish Tiwari, Advocate For Respondents : Mr.R.S.Patel, Advocate Hon'ble Shri Ramesh Sinha, Chief Justice Hon'ble Shri Arvind Kumar Verma , Judge Order on Board Per Ramesh Sinha , Chief Justice BABLU RAJENDRA BHANARKAR Digitally signed by BABLU RAJENDRA BHANARKAR Date: 2025.08.08 18:43:24 +0530 2 8.8.2025 1. Heard Mr.Devashish Tiwari, learned counsel for the petitioner as well as Mr.R.S.Patel, learned counsel appearing for the respondents. 2. The present writ petition has been filed by the petitioner with the following prayers: “A. Issue a writ or any other appropriate order or direction, thereby quashing and setting aside the impugned order dated 27.03.2025 (Annexure-P1) passed by Respondent No. 1; B. Stay the effects, implementation and operation of the impugned order dated 27.03.2025 (Annexure-P1) passed by the Respondent No.1 thereby forfeiting the Earnest Money Deposit/Security Deposit of all the contracts of the Petitioner; C. Direct the Respondent No.2 to refund the forfeited amount of Earnest Money Deposit/Security Deposit which aggregates to INR 20,91,14,763/- (Rupees Twenty Crores Ninety One Lakhs Fourteen Thousand Seven Hundred and Sixty Three Rupees only) to the Petitioner under the name and style of M/s Sunil Roadlines, along with interest at the rate of 18% per annum; D. Direct the Respondents to release Earnest Money Deposit amounting to INR. 16,63,500/- (Rupees Sixteen Lakhs Sixty Three Thousand Five Hundred only) dated 26.06.2016 and Rs. 4,000/- (Rupees Four Thousand only) dated 31.08.2016 and also the outstanding amount of Rs.33.42.440/- (Rupees Thirty Three Lakhs Forty Two Thousand Four Hundred and Forty only) towards unpaid running bills for the successfully completed tender contract awarded to the Petitioner for the period 22.10.2014 to 21.10.2016, along with interest at the rate of 18% per annum; E. Pass appropriate directions to initiate an inquiry 3 against the concerned officers of the Food Corporation of India who, have acted in an arbitrary and oppressive manner, causing undue harassment and mental agony to the Petitioner and take suitable disciplinary and corrective action in accordance with law; F. Grant ex parte ad interim relief in terms of prayer clause (b) above, pending final adjudication of the present petition; G. Pass such other or further order(s) as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case.” 3. Brief facts of the case are that on 18.07.2012, first complaint was filed against the Petitioner, pursuant to which an internal committee was constituted to conduct an enquiry. Subsequently, after the completion of investigation by the said committee over a period from 2012 to 2014, the said complaint was found to be unsubstantiated and was accordingly closed by the Respondents. Upon closure of the aforesaid complaint on 21.10.2014, the Petitioner was awarded a tender on the very next day, i.e., on 22.10.2014, for handling and transportation (H&T) work from RH- Kargi Road to FSD Bilaspur for a period of two years, i.e., from 22.10.2014 to 21.10.2016 under the name and style of M/s Sunil Roadlines, a sole proprietorship firm. The said tender was completed successfully and to the satisfaction of the Respondents, without any complaint or adverse remark regarding the performance of the Petitioner. Copy of the Notesheet dated 21.10.2014 and the copy of the Appointment Letter dated 22.10.2014 are collectively annexed herewith and marked as 4 Annexure P-3. 4. During the pendency of the aforementioned first complaint, two additional complaints dated 23.06.2014 and 19.09.2014 were made against the Petitioner by one Mr. Kailash Agrawal, who is a direct competitor of the Petitioner in the same line of business. Pursuant to the aforesaid complaints, the Respondent No.2 issued a show-cause Notice dated 10.02.2016 to the Petitioner alleging that the Petitioner had submitted false information in tender documents regarding the composition of his firm, i.e., that the firm was projected as a proprietorship concern whereas it was allegedly converted into a partnership firm. Copy of the Show Cause Notice dated 10.02.2016 issued by the Respondent No.2 to the Petitioner is annexed herewith and marked as Annexure P-4. The said Show-cause notice was duly responded by the Petitioner vide Reply dated 26.02.2016. In the said reply, it was submitted that although a partnership deed was executed on 01.10.2010 between the Petitioner and one Shri Ashish Agrawal, the same was never acted upon and was subsequently dissolved by way of mutual declaration of dissolution of partnership dated 24.10.2010. It was also clarified that no business, financial transaction, or banking operation was ever conducted in the name of the said partnership firm, and that all business with the Respondent Corporation was exclusively undertaken by the Petitioner in his capacity as the sole proprietor of M/s Sunil Roadlines. It was, however, despite making the said submissions, 5 the said complaint was forwarded to the Vigilance Division, FCI HQ, leading to further inquiries and constitution of a three- member committee. Copy of the Reply dated 26.02.2016 issued by the Petitioner to the Respondent No.2 is annexed herewith and marked as AnnexureP-5. 5. The abovementioned committee, in its report dated 07.10.2016, incorrectly concluded that there was an intention of the Petitioner to convert the proprietorship firm into a partnership firm, and that there was concealment of material facts by the Petitioner. Hence, based on the said report, the Respondent. No.2 passed the order dated 04.11.2016 forfeiting all the EMD/SD/All running bills and all bank guarantee which were furnished by the Petitioner and furthermore blacklisted the Petitioner from 04.11.2016 for a period of five years from participation in future FCI tenders. Copy of the order dated 04.11.2016 passed by the Respondent No. 2 is annexed herewith and marked as Annexure P-6. 6. The Petitioner furthermost respectfully submits that despite the successful completion of the aforesaid tender contract awarded on 22.10.2014, a substantial portion of the running bills raised during the contract period for the work of Kargi Road to RH H & T, FSD Bilaspur remains unpaid by the Respondents. The total outstanding dues payable to the Petitioner towards completed contract work amount to INR 33,42,440/- (Rupees Thirty Three Lakhs Forty Two Thousand Four Hundred Forty only) which 6 continues to remain withheld without any justified reason or communication, thereby causing severe financial hardship to the Petitioner. 7. Being aggrieved by the said order dated 04.11.2016, the Petitioner filed a Writ Petition bearing No.3206/2016 before this Court. After hearing the said matter, this Court vide order dated 12.12.2024 directed the Petitioner to approach the Grievance Redressal Committee (GRC) of FCI ZO (W), Mumbai, and directed the said Committee to consider and dispose of the representation made by the Petitioner within three months. Copy of the order dated 12.12.2024 passed by this Court in Writ Petition No. 3206/2016 is annexed herewith and marked as Annexure P-7. 8. Astonishingly, during the pendency of the aforesaid writ petition before this Court, on 11.04.2017, the Respondents, without obtaining any permission or leave of this Court, arbitrarily invoked and encashed the Petitioner's Bank Guarantee from the concerned bank which amounts at Rs. 24,70,000/-. The said action on the part of the Respondents not only reflects mala fide intention, but also constitutes a gross abuse of process, as the matter was sub-judice before this Court and no liberty had been granted to the Respondents to take such coercive steps. Copy of the Letter dated 11.04.2017 sent by the Respondent No.3 to the Indian Overseas Bank and the copy of the Letter dated 7 12.04.2017 sent by the Indian Overseas Bank to the Petitioner are annexed herewith and marked as Annexure P-8. 9. In compliance with the liberty granted by this Court, the Petitioner submitted the representation dated 26.12.2024 to the Grievance a detailed Redressal Committee (hereinafter referred to a "GRC"), reiterating that there was no operational existence of the alleged partnership firm and that the actions taken by FCI were arbitrary and in violation of principles of natural justice. The Petitioner also clarified that the partnership firm never operated, never held a bank account, never participated in any FCI tender and never had any license such as Labour License, EPF Code, ESIC and other relevant licenses. Copy of the representation dated 24.12.2024 submitted by the Petitioner is annexed herewith and marked as Annexure P-9. 10. After hearing the matter and perusing the records, the GRC submitted its report dated 24.03.2025, wherein it upheld the finding that the EMD/SD of all the contracts of the Petitioner be forfeited. The GRC relied on the registration of the partnership deed dated 01.10.2010 and its dissolution on 12.09.2012 with the Registrar of Firms, and observed that during this period, the status of M/s Sunil Roadlines stood as a partnership firm, and that bidding as proprietorship firm during this period amounted to concealment. Copy of the Partnership Deed dated 01.10.2010 along with certificate of registration of partnership firm dated 8 13.10.2010 is annexed herewith and marked as Annexure P-10. 11. The Petitioner furthermost respectfully submits that, the GRC further made adverse remarks against the Petitioner by raising doubts on the genuineness of the mutual consent affidavit dated 24.10.2010 based on a purported mismatch in stamp paper serial numbers. However, it is imperative to mention that such an issue regarding the stamp paper had earlier been raised during the Petitioner's appearance before the FCI's Regional Office, Raipur, whereupon the Committee conducted an inquiry into the matter and, having found no irregularity, had closed the said inquiry by its communication dated 21.10.2014. Despite the said closure of the issue, the GRC unjustly revisited and relied upon the same issue without acknowledging the earlier findings. Moreover, the GRC also made the findings which alleged the inflated billing by the Petitioner for longer routes during certain contracts and took into account a pending money suit bearing No. B-27/2019 filed by FCI RO (CG) against the Petitioner. However, it is imperative to mention here that, the subject matter of recovery of money is subjudice as the same is pending for its adjudication before the Learned Civil Court. Copy of the affidavit affirming the mutual Dissolution of Partnership firm dated 24.10.2010 is annexed herewith and marked as Annexure P-11. 12. The Petitioner most respectfully submits that, the Impugned Order dated 27.03.2025 passed by Respondent No.1, being based 9 entirely on the GRC report, suffers from non-application of mind, is arbitrary, perverse, and without any legal foundation. Furthermore, the said order fails to take into account the fact that the Petitioner has never carried out any transaction or tender in the name of partnership firm and continued to function exclusively as a proprietorship concern. Respondent No.1 has passed the Impugned Order dated 27.03.2025 without adequately considering the material on record and the grave hardship caused to the Petitioner by forfeiting the EMD and SD of all the contracts of the Petitioner which amounts to INR. 20,91,14,763/-(Rupees Twenty Crores Ninety One Lakhs Fourteen Thousand Seven Hundred Sixty Three only). Therefore, being aggrieved by the said Order dated 27.03.2025, and having no other efficacious alternative remedy, the Petitioner is constrained to prefer the present Writ Petition. 13. Learned counsel for the petitioner submits that Impugned Order dated 27.03.2025 passed by Respondent No.1 is ex facie arbitrary, mechanical and violative of the principles of natural justice, inasmuch as the same is passed without objective consideration of the submissions, documents, and replies submitted by the Petitioner, and without any cogent evidence demonstrating that the Petitioner had ever acted or participated in any contractual activity on behalf of the partnership firm. The Petitioner has never suppressed or concealed the existence of the short-lived partnership firm. Instead, the fact that a partnership 10 deed was executed on 01.10.2010 and subsequently dissolved by mutual consent dated 15.10.2010 and notarized affidavit dated 24.10.2010 was fully disclosed in the Petitioner's reply to the show cause notice. Hence, the conclusion that the Petitioner had suppressed material information is wholly erroneous and unsustainable. There exists no document, evidence or finding in the Impugned Order dated 27.03.2025 to show that the Petitioner ever acted in the capacity of a partner of the said partnership firm while participating in any tender floated by the Respondents or any other authority. He further submits that no bank account was ever opened in the name of the partnership firm, nor was any transaction conducted under the name of the partnership firm and in the absence of a bank account, even basic prerequisites like deposit of EMD or acceptance of payments could not have been fulfilled by the firm. Hence, the said fact reveals that the said partnership firm was never in operation. He also submits that the dissolution certificate dated 12.09.2012 issued by the Registrar of Firms, Chhattisgarh, acknowledges that the said partnership firm stood dissolved from the date of execution of the said affidavit dated 24.10.2010. Moreover, the said certificate conclusively affirms that the partnership firm had ceased to exist since 24.10.2010 itself and at no point have the Respondents ever raised any objection or challenged the genuineness or validity of the said affidavit. The mere existence of a registered partnership deed cannot, in absence of actual conduct of business, amount to 11 a legal bar against the Petitioner from functioning as a proprietorship concern, especially when there is no overlap in transactions or misuse of such status for contractual gain. The second ground forming the basis of the Impugned Order dated 27.03.2025 i.e., the alleged inflation of transportation bills, is sub-judice before a competent civil court by way of Civil Suit Class No. B-27/2019 filed by the Respondents. The matter being under adjudication, the Respondents could not have treated the issue as a concluded fact for the purposes of disciplinary action, without due process. 14. He contended that the Impugned Order dated 27.03.2025 is highly subjective and based on presumption, without any objective appreciation of the Petitioner's explanation or supporting documentation. It is apparent from the said order which fails to engage with the Petitioner's oral and written submissions and reflects a bias in favour of the complainant, which is evident from the tone and findings recorded. He further contended that the Respondents, without establishing any specific act of default or demonstrating any actual financial loss caused by the Petitioner during the contract period, have arbitrarily imposed inflated liability upon him. Moreover, the documents on record is devoid of any complaint, inquiry, or adverse remark relating to the Petitioner's performance under the contract, and no material on record has been brought on record by the Respondents to show that any quantifiable loss was suffered by the Corporation on account of 12 the Petitioner's actions. Hence, the imposition of penalty by forfeiting EMD and SD amounts without supporting evidence reflects clear non-application of mind and a mechanical exercise of power, thereby rendering the Impugned Order legally unsustainable and vitiated by arbitrariness. The first complaint made against the Petitioner dated 23.06.2014 was duly investigated by the Respondent authorities and was conclusively closed by the Respondent No.2, vide communication dated 21.10.2014, without drawing any adverse inference against the Petitioner. However, during the pendency of the said complaint, another complaint was filed on 19.09.2014 containing substantially similar allegations. It can be easily garnered that, the filing of the said second complaint, while the earlier one was still under consideration, indicates a clear ulterior motive and mala fide intention to cause undue harassment to the Petitioner. He also contended that the action of the Respondents in ordering the blanket forfeiture of all EMD and SD of the Petitioner is arbitrary, excessive, and contrary to the settled principles of law under Section 74 of the Indian Contract Act, 1872. The entire action initiated against the Petitioner is tainted with mala fides and commercial rivalry, as the original complaint was lodged by a business competitor nearly two years after the dissolution of the partnership, and the Respondents failed to exercise due diligence in verifying the factual matrix from their own records or government registers. He submitted that this Court, vide order 13 dated 12.12.2024, had specifically directed the Respondents to decide the representation of the Petitioner within a period of three months from the date of its submission. Accordingly, in compliance with the said direction, the Petitioner submitted his representation on 26.12.2024, however, the Respondent authorities failed to decide the same within the stipulated time. The Impugned Order dated 27.03.2025 does not contain any explanation, justification, or reference to the delay in compliance, nor does it acknowledge the lapse on their part. Hence, the failure to adhere to the time-bound direction of this Court, coupled with the absence of any reasoned justification in the Impugned Order, renders the said order vitiated and non est in the eyes of law. As such, the writ petition deserves to be allowed and the impugned order dated 27.03.2025 passed by respondent No.1 deserves to be set aside. 15. On the other hand, learned counsel appearing for the respondents opposes the submissions made by learned counsel for the petitioner and submits that respondent No.1 considering the facts and recommendations of GRC arrived at the conclusion that the petitioner / M/s. Sunil Roadlines not only concealed the factum of conversion of his proprietary firm into Partnership firm during contract period but also raised inflated bills for higher distances, thereby, the petitioner has violated the MTF provisions and thus, the actions taken by FCI RO (CG) against the petitioner for violations of MTF are in accordance with MTF provisions and 14 does not warrant any interference. As such, the writ petition deserves to be dismissed. 16. We have heard learned counsel appearing for the parties, perused the impugned order and other documents appended with writ petition. 17. The Supreme Court in Prestige Lights Ltd. v. State Bank of India, reported in (2007) 8 SCC 449 has held that a prerogative remedy is not available as a matter of course. In exercising extraordinary power, a writ court would indeed bear in mind the conduct of the party which is invoking such jurisdiction. If the applicant does not disclose full facts or suppresses relevant materials or is otherwise guilty of misleading the court, the court may dismiss the action without adjudicating the matter. It was held thus: “33. It is thus clear that though the appellant Company had approached the High Court under Article 226 of the Constitution, it had not candidly stated all the facts to the Court. The High Court is exercising discretionary and extraordinary jurisdiction under Article 226 of the Constitution. Over and above, a court of law is also a court of equity. It is, therefore, of utmost necessity that when a party approaches a High Court, he must place all the facts before the Court without any reservation. If there is suppression of material facts on the part of the applicant or twisted facts have been placed before the Court, the writ court may refuse to entertain the petition and dismiss it without entering into merits of the 15 matter.” 18. In Udyami Evam Khadi Gramodyog Welfare Sanstha and Another v. State of Uttar Pradesh and Others, reported in (2008) 1 SCC 560 the Supreme Court has reiterated that the writ remedy is an equitable one and a person approaching a superior court must come with a pair of clean hands. Such person should not suppress any material fact but also should not take recourse to legal proceedings over and over again which amounts to abuse of the process of law. 19. In K.D. Sharma v. Steel Authority of India Limited and Others, reported in (2008)12 SCC 481 it was held by the Supreme Court thus: “34. The jurisdiction of the Supreme Court under Article 32 and of the High Court under Article 226 of the Constitution is extraordinary, equitable and discretionary. Prerogative writs mentioned therein are issued for doing substantial justice. It is, therefore, of utmost necessity that the petitioner approaching the writ court must come with clean hands, put forward all the facts before the court without concealing or suppressing anything and seek an appropriate relief. If there is no candid disclosure of relevant and material facts or the petitioner is guilty of misleading the court, his petition may be dismissed at the threshold without considering the merits of the claim.” 20. The Supreme Court in the case of K. Jayaram v. BDA, reported in (2022) 12 SCC 815 has held under: 16 “10. It is well-settled that the jurisdiction exercised by the High Court under Article 226 of the Constitution of India is extraordinary, equitable and discretionary and it is imperative that the petitioner approaching the writ court must come with clean hands and put forward all facts before the court without concealing or suppressing anything. A litigant is bound to state all facts which are relevant to the litigation. If he withholds some vital or relevant material in order to gain advantage over the other side then he would be guilty of playing fraud with the court as well as with the opposite parties which cannot be countenanced.” 21. From perusal of the pleadings, it transpires that the committee appointed by the Respondents, in its report dated 07.10.2016, concluded that there was an intention of the Petitioner to convert the proprietorship firm into a partnership firm, and that there was concealment of material facts by the Petitioner. Based on the said report, the Respondent. No.2 passed the order dated 04.11.2016 forfeiting all the EMD/SD/All running bills and all bank guarantee which were furnished by the Petitioner and furthermore blacklisted the Petitioner from 04.11.2016 for a period of five years from participation in future FCI tenders. It further transpires that being aggrieved by the order dated 04.11.2016, the Petitioner filed a Writ Petition bearing WPC No.3206/2016 before this Court and learned Single Judge vide order dated 12.12.2024 directed the Petitioner to approach the Grievance Redressal Committee (GRC) of FCI ZO (W), Mumbai, and directed the said Committee to consider and dispose of the representation made by the 17 Petitioner within three months. In compliance of the said order, the Petitioner submitted the representation on 26.12.2024 to the Grievance Redressal Committee. After hearing the matter and perusing the records, the GRC submitted its report dated 24.03.2025, wherein it upheld the finding that the EMD/SD of all the contracts of the Petitioner be forfeited. The GRC relied on the registration of the partnership deed dated 01.10.2010 and its dissolution on 12.09.2012 with the Registrar of Firms, and observed that during this period, the status of M/s Sunil Roadlines stood as a partnership firm, and that bidding as proprietorship firm during this period amounted to concealment. The GRC further made adverse remarks against the Petitioner by raising doubts on the genuineness of the mutual consent affidavit dated 24.10.2010 based on a purported mismatch in stamp paper serial numbers. It also transpires that respondent No.1 while rejecting the representation of the petitioner has observed that after considering the facts and recommendations of GRC arrived at the conclusion that the appellant / M/s. Sunil Roadlines not only concealed the factum of conversion of his proprietary firm into Partnership firm during contract period but also raised inflated bills for higher distances, thereby, the appellant has violated the MTF provisions and thus, the actions taken by FCI RO (CG) against the Appellant for violations of MTF are in accordance with MTF provisions and does not warrant any interference. 22. Considering the submissions advanced by learned counsel for the 18 parties, perusing the documents appended with writ petition and also considering the observation made by respondent No.1 while rejecting the representation made by the petitioner and in view of law laid down by the Supreme Court in the above-stated judgments (supra), we are of the considered opinion that the petitioner has failed to make out a case for interference. We do not find any merit in this writ petition. 23. Accordingly, the writ petition being devoid of merit is liable to be and is hereby dismissed. No cost(s). Sd/- Sd/- (Arvind Kumar Verma) (Ramesh Sinha) Judge Chief Justice Bablu