The Supreme Court on Tuesday imposed a penalty of ₹5 lakh on the Himachal Pradesh Housing and Urban Development Authority (HIMUDA) for acting in cahoots with a private company for the award of a tender for the construction of a commercial complex in Shimla.

A bench of justices Bela M Trivedi and Pankaj Mithal noted that the public body tried to hoodwink the high court by agreeing to award the contract to the same construction company despite a previous declaration by the state high court regarding gross irregularities in the tendering process.

“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,” held the bench.

Setting aside the high court order of October 2022 that approved the award of the contract to Vasu Constructions, the top court underlined that since HIMUDA, despite being a ‘State’ within the meaning of Article 12 of the Constitution of India, acted malafide and in collusion with the private firm took the high court for a ride, the public authority must be saddled with a heavy cost.

“In that view of the matter, the impugned order passed by the high court is set aside. The appeal is allowed with cost of ₹5 lakh, to be deposited by HIMUDA with the Supreme Court Advocates-on-Record Association, within two weeks from today,” said the court, adding the authority may issue a fresh tender though.

In December 2018, HIMUDA had issued a letter of intent (LIO) to Vasu Constructions for building a commercial complex in Shimla but the LOI had to be withdrawn following complaints of irregularities in the process and litigation before the high court at the instance of unsuccessful bidders.

An independent committee set up by the high court to enquire into the tender process also recommended cancellation of the tender, highlighting many shortcomings and irregularities. In February 2021, HIMUDA cancelled the tender process in the wake of the proceedings before the high court.

However, after Vasu Constructions challenged the cancellation of the tender, HIMUDA made a statement before the division bench that it had no objection to go ahead with the initial tendering process, in case the firm was ready to execute the work on the same terms and conditions as were agreed initially. The division bench then disposed of the petition recording HIMUTA’s no-objection to the award of tender to Vasu Constructions. This order was challenged before the top court by another bidder.