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Bidder Who Gave Cannot Challenge LOA: Rules
In a significant ruling on tender law, the has held that a bidder who voluntarily furnishes an unconditional expressing willingness to execute the work cannot later challenge the on grounds of lack of jurisdiction or expiry of the . The Division Bench comprising Acting Chief Justice Sudhir Singh and Justice Rajesh Kumar Verma dismissed a writ petition filed by Raj Kishor Singh, a bidder who had quoted 25.44% below the estimated cost for a bridge construction project in Araria district.
A Tender Tale: From Bid to Dispute
The case arose from Notice Inviting Tender (NIT) No. BRPNNL/WD/KA17/1862/2024 issued on , by the for constructing an RCC bridge over the Parman River. The estimated contract value was Rs. 19,87,12,838. Raj Kishor Singh submitted his bid and furnished an earnest money deposit of Rs. 36,65,000 through a bank guarantee valid until .
Upon evaluation, Singh was declared the lowest bidder (L-1) with a quote 25.44% below the estimated cost. However, on , the Senior Project Engineer issued a Letter of Acceptance directing Singh to furnish Performance Security and Additional Performance Security of Rs. 4,79,49,408 within 21 days, failing which action under would be taken.
The Challenge: 'Letter of Acceptance Was '
Singh approached the High Court seeking quashing of the LOA on two primary grounds. First, he argued that the LOA was issued by the Senior Project Engineer, who was merely the Engineer-in-Charge and not the 'Employer' as defined under the Contract Data. According to , only the Employer could issue the LOA. Second, he contended that the of 120 days had expired before the LOA was issued, and no formal extension had been sought or obtained under . Consequently, the LOA was ',' and the proposed forfeiture of his bid security was unlawful.
The Defense: 'You Promised to Do the Work'
Opposing the petition, the respondents highlighted a crucial sequence of events. On , the Senior Project Engineer had sought rate justification from Singh due to his substantially lower quote. In response, on , Singh submitted a detailed justification along with an categorically stating that he was ready and willing to execute the work at his quoted rate with prescribed technical specifications within the stipulated time. The respondents argued that having voluntarily given this , Singh was now estopped from challenging the LOA that was issued based on that very representation.
Why the Court Said No: The Principle of Consistency
The Court framed the limited issue: whether the petitioner, having voluntarily furnished an expressing unconditional willingness to execute the work, is estopped from challenging the LOA on grounds of want of jurisdiction and expiry of bid validity.
Answering in the affirmative, the Court observed that the petitioner had neither pleaded nor established that the were obtained by fraud, coercion, or misrepresentation. The undertaking was given voluntarily and without protest.
"The sequence of events clearly demonstrates that the issuance of the Letter of Acceptance was preceded by and founded upon the petitioner's own unequivocal representation expressing its willingness to execute the work,"
the Court noted.
Applying the , the Court cited the Supreme Court's rulings in R.N. Gosain v. Yashpal Dhir (1992) 4 SCC 683 and Rajasthan State Industrial Development & Investment Corporation v. Diamond & Gem Development Corporation Ltd. (2013) 5 SCC 470. The principle prohibits a party from accepting the benefit of a transaction and later challenging its validity.
What the Court Said
The Court made several key observations:
"Once the petitioner consciously represented its willingness to perform the contract and induced the respondents to act upon such representation, it cannot thereafter be permitted to challenge the Letter of Acceptance on grounds which were available even at the time when the undertaking was furnished."
"If the petitioner was genuinely of the view that the bid validity had already expired or that the Senior Project Engineer lacked competence to proceed further, nothing prevented it from asserting such objections at the stage when the respondents sought the rate justification."
"It is trite that the extraordinary jurisdiction under
is equitable and discretionary. A litigant invoking such jurisdiction must act fairly, consistently and with candour."
The Court held that permitting the petitioner to challenge the LOA would amount to allowing him to
"approbate and reprobate in the same transaction, which is impermissible in law."
Final Word: Petition Dismissed
The dismissed the writ application, holding that the petitioner's conduct in giving an estopped him from raising objections to the LOA. The Court directed that pending applications also stand disposed of. The ruling reinforces the importance of consistency in contractual dealings and affirms that bidders cannot blow hot and cold in the tender process.
