The main legal point established in the judgment is the violation of principles of natural justice in the termination of the agreement and invocation of bank guarantees, leading to the court setting aside the impugned government order.

ORDER :

This Writ Petition is filed under Article 226 of the Constitution of India seeking the following relief:-

"to issue a Writ, Order or Direction more particularly one in the nature of Writ of Mandamus declaring the G.O.Rt.No.319, Transport, Roads and Buildings (R.) Department dated 16.04.2011, Issued by the 1st respondent herein as arbitrary, illegal, violative of principles of natural justice, colourable exercise of power, non-application of mind to the relevant material available on record, violative of the Fundamental Rights guaranteed under Articles 14 and 19 of the Constitution of India apart from being violative of the conditions stipulated in the agreement and consequently set aside the same and pass..."

2. The petitioner is a company registered under the Companies Act, 1956. The main objects of the petitioner company are to carry on the business of designing, engineering, assessing, valuing, surveying, building, constructing, erecting, upgrading etc., of Build, Own, Transfer (BOT), Build, Own Operate (BOO), Build, Own, Operate and Transfer (BOOT), Build, Own, Operate and Maintain (BOOM) basis or any other basis. In pursuance of a tender notice issued by the 2nd respondent dated 26.11.2007, inviting proposals under a Single Stage Process from bidders for qualification and prescribed the commercial terms and conditions for selection of bidder for design, construction, finance, operation and maintenance of two lane bridge across Vasista Branch of River Godavari, connecting Narsapur of West Godavari District with Sakhinetipalli of East Godavari District in Andhra Pradesh on annuity basis.

3. The petitioner has participated in the tender process and became the successful bidder. The petitioner has also furnished bid security for Rs.80 lakhs from the State Bank of India on 14.01.2008. Thereafter, the 2nd respondent has issued a Letter of Award in favour of the petitioner within the stipulated time. Accordingly, the petitioner and the 2nd respondent entered into a Concession Agreement dated 09.07.2008. As per the said agreement, the petitioner has to go for financial closure. In accordance with the agreement, the petitioner has provided two bank guarantees viz., 1) Bank Guarantee No.0195608IFG000140 dated 28.05.2008 along with amendment dated 30.06.2008 for an amount of Rs.1,33,14,000/- and 2) Bank Guarantee No.095608IFG000139, dated 28.05.2008 along with amendment dated 30.06.2008 for an amount of Rs.1,99,71,000/- respectively, in favour of the 2nd respondent through the 3rd respondent Bank, towards performance security. The said Bank Guarantees are being extended from time to time and the same are valid till the end of 27.06.2011. As the petitioner could not achieve financial close within the stipulated time, the petitioner has requested the 2nd respondent for extension of time for financial closure and the time was extended accordingly.

4. Thereafter, due to the Satyam episode in January 2009, the petitioner was also caught in the said controversy and as such, the petitioner could not achieve the financial closure and requested the 2nd respondent for extension of time for financial closure, which was extended from time to time till 05.01.2010. Thereafter, the petitioner has again made a request to induct one more promoter in the consortium in order to strengthen the financial stability of the petitioner and that request was also considered by the 2nd respondent vide letter dated 19.09.2009. On the request of the 2nd respondent for extension of the original bank guarantees, the petitioner has been extending the bank guarantees from time to time and they are subsisting till 28.06.2011.

5. Subsequently, the parties entered into an amendment agreement dated 20.02.2009 to the Concession Agreement dated 09.07.2008. Thereafter, the Tata Capital Limited, sanctioned the term loan for the project in favour of the 'petitioner, which fact was informed by the petitioner to the 2nd respondent through letter dated 17.06.2010 and which wa