C.K. Asati v. Union of India 2005 (Case Summary)

In this significant decision, the Madhya Pradesh High Court addressed whether the experience of a proprietor could be attributed to a newly formed partnership firm for tender eligibility, setting a precedent for evaluating collective business experience under contract law.

Facts of C. K. Asati v Union of India 

1. Smt. Chandrakala Asati operated as a sole proprietor and executed multiple construction projects meeting the eligibility criteria for tenders.
2. Later, she formed a registered partnership firm, M/s C.K. Asati, with four other individuals.
3. The respondents floated a Notice Inviting Tender (NIT) specifying eligibility criteria requiring prior experience in completing three similar works of specified value.
4. The petitioner firm’s application for tender documents was rejected on the grounds that the partnership lacked the requisite experience.
5. Aggrieved, the petitioner challenged the rejection through a writ petition.

Issues framed

1. Whether the experience of an individual proprietor be attributed to a newly formed partnership firm for the purpose of fulfilling tender eligibility criteria?
2. Whether the rejection of the petitioner’s application for tender documents was lawful?

Judgment of C. K. Asati v Union of India

Madhya Pradesh High Court primarily interpreted principles under The Indian Partnership Act, 1932, specifically Section 4, which defines a partnership as “the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.

The court emphasized that a partnership firm has no independent legal personality distinct from its partners. The experience of Smt. Chandrakala Asati, as the proprietor of her earlier firm, could be attributed to the partnership firm since it is merely a collective name for its partners.

The court quashed the impugned communication and directed the respondents to proceed with the tender process as per law. It further directed the issuance of fresh NIT for one specific tender, with bids to be finalized thereafter.