Company Can Be Blacklisted From Future Tenders If Employee Files Forged Documents In Bid: Delhi High Court

The Delhi High Court has held that a company can be blacklisted from future tenders if its employee, authorised to submit the bid forges the documents submitted, irrespective of the company management’s knowledge regarding such forgery.

Justice Jyoti Singh thus upheld the suspension of an IT company by the New Delhi Municipal Council (NDMC), on finding that the Turnover Certificate submitted by the Petitioner-company on behalf of the Original Equipment Manufacturer (OEM/ Respondent no.2) was forged, with a view to attain financial eligibility.

The bench observed, “a master is liable even for acts he has not authorized, provided they are connected with the employment or the acts which were authorized.”

It recollected the words of Lord Denning in Ormord v. Crosville Motor Services Ltd., (1953) that owner is not only liable for negligence of the driver, if the driver is his servant acting in the course of his employment but also where the driver is, with the owner’s consent, driving the car for his own purpose.

The Petitioner had been blacklisted by NDMC and debarred from participating in any bid in NDMC for a period of 02 years.

In its plea, the Petitioner claimed that it had no involvement even remotely in the act of forgery committed by its employees in connivance with representative of Respondent no. 2.

It was averred that despite the fact that Petitioner initiated disciplinary action and terminated the delinquent employees who had indulged in wrong practices for personal gains, NDMC issued a non-speaking order blacklisting it.

Petitioner relied on Kulja Industries Limited v. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Limited and Others, (2014) to contend that the Supreme Court recognized that there could be cases where few employees may be involved in the wrong doing without the knowledge of the management and thus the entire company should not be penalized for the unauthorized acts of those employees.

The issue thus before the Court was whether Petitioner can claim that it cannot be held vicariously liable for the forgery admittedly committed by its employees.

After analyzing the facts and arguments, the Court said that the delinquent employee was duly authorized to process the bid documents and upload them.

“(He) scrutinized and submitted the bid under authorization of the Petitioner and hence with its knowledge and consent…therefore his act of submitting the bid documents, including the forged Turnover Certificate was an act in the course of employment…Petitioner cannot claim immunity.”

Even otherwise, the bench continued, “the onus of submitting factually correct information and documents was on the Petitioner. The tender in question was a high value bid and it is unbelievable that the Management of the Petitioner had completely distanced itself from the process of preparing the documents etc. for submission of the bid.”

The Court also remained unconvinced with Petitioner’s “self-serving internal inquiry” against the delinquent, conducted without involving NDMC or the OEM, whose Turnover Certificate was in question.

Thus, the Court held that NDMC had the right and prerogative to debar the bidder, if it determines that bidder has breached the Code of Integrity.

As such, the petition was dismissed.

Appearance: Mr. Dayan Krishnan, Senior Advocate with Mr. Manoranjan Sharma, Mr. Rajat Joneja and Mr. Anmol Kumar, Advocates for Petitioner; Mr. Arun Birbal and Mr. Sanjay Singh, Advocates for R-1/NDMC. Mr. Ashish Prasad, Mr. Sam C. Mathew and Ms. Madhuri Mittal, Advocates for R-2.

Case title: CCS Computers Pvt Ltd v. NDMC

Case no.: W.P.(C) 11006/2024

Click here to read judgment

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