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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.J. Kathawalla, J.
Provident Multi-trading Pvt. Ltd. - Appellant
Versus
Maharashtra Maritime Board Home Department (ports And Transport) - Respondent
Arbitration Petition (L) No. 956 of 2018
Decided On : 30-05-2019
Petitioner, a successful bidder for a Ro-Pax vessel operator contract, challenged the termination of the Letter of Award (LOA) and issuance of a new tender. The Court held that the Petitioner's actions delayed the project and the new tender was issued in public interest. It found that the Petitioner was not financially capable of performing the contract and failed to procure or long-term hire/charter 2 vessels as required. The Court also held that the Petitioner's readiness and willingness to perform the contract was not continuous and must be judged from the totality of facts and circumstances. It dismissed the petition, noting that damages would be an adequate remedy.
Fact of the Case:
Petitioner, a successful bidder for a Ro-Pax vessel operator contract, challenged the termination of the Letter of Award (LOA) and issuance of a new tender. The Petitioner argued that the termination was arbitrary and unreasonable, that the Respondent failed to follow proper procedures, and that the new tender was issued in bad faith.
Finding of the Court:
The Court found that the Petitioner's actions delayed the project and the new tender was issued in public interest. It found that the Petitioner was not financially capable of performing the contract and failed to procure or long-term hire/charter 2 vessels as required. The Court also held that the Petitioner's readiness and willingness to perform the contract was not continuous and must be judged from the totality of facts and circumstances.
Issues: 1. Whether the termination of the LOA was arbitrary and unreasonable? 2. Whether the Respondent failed to follow proper procedures? 3. Whether the new tender was issued in bad faith?
Ratio Decidendi: 1. The Court held that the termination of the LOA was not arbitrary and unreasonable. It found that the Petitioner's actions delayed the project and the new tender was issued in public interest. 2. The Court held that the Respondent did not fail to follow proper procedures. It found that the Petitioner was given ample opportunity to remedy its breaches of contract. 3. The Court held that the new tender was not issued in bad faith. It found that the new tender was issued after the termination of the LOA and that the Petitioner could challenge the new tender before the appropriate forum.
Final Decision: The Court dismissed the petition, noting that damages would be an adequate remedy.
JUDGMENT
S J Kathawalla, J. - The above Petition is filed by the Petitioner under Section 9 of the Arbitration and Conciliation Act, 1996 ("the Act") for the following interim reliefs:
"a. Pending the hearing and final disposal of the arbitral proceedings, this Hon''ble Court be pleased to stay the operation and effect of the Impugned Letter cancelling / revoking the Letter of Award;
b. Pending the hearing and final disposal of the arbitral proceedings, the Respondent be restrained by an order of injunction from this Hon''ble Court from acting upon or taking any steps in furtherance to or on the basis of the Impugned Letter cancelling / revoking the Letter of Award;
c. Pending the hearing and final disposal of the arbitral proceedings, the Respondent be restrained by an order of injunction from this Hon''ble Court from acting upon or taking any steps in furtherance to or on the basis of the SCN;
d. Pending the hearing and final disposal of the arbitral proceedings, the Respondent be restrained by an order of injunction from accepting any bids or taking any steps for awarding the contract under the new tender document floated by Respondent at Exhibit "LL" hereto;
e. Pending the hearing and final disposal of the arbitral proceedings, this Hon''ble Court be pleased to issue an injunction restraining the Respondent from invoking the bank guarantee furnished by the Petitioner and forfeiting the EMD deposited by the Petitioner;"
2. The facts necessary for the adjudication of the present Petition are as under:
2.1 The Respondent issued a tender being Tender No. MMB/Traffic/Tender No.2 in October, 2017 ("Tender"). Under the Tender, the Respondent invited bids for the selection of a Ro-Pax Vessel Operator for plying Ro-Pax ferry from Ferry Wharf, Mumbai to Mandwa, Raigad ("Project"). Clause 7.6 of the Tender provides that the Ro-Pax service is to be ready to start by March, 2018.
2.2 The Petitioner, along with a consortium, submitted its bid pursuant to the Tender on 6th November, 2017.
2.3 On 27th November, 2017, the Petitioner submitted a letter providing a brief description of 2 vessels. No names of the proposed vessels were furnished by the Petitioner.
2.4 On 6th December, 2017, a letter of award came to be issued by the Respondent in favour of the Petitioner declaring the Petitioner as the successful bidder pursuant to its bid in response to the Tender ("Letter of Award"). The following terms under the Letter of Award are relevant :
"5. You are requested to furnish details of vessel procurement, leasing and mobilization of suitably experienced staff with Ro-Pax/ passenger ferry experience, post which, the contract will be signed by MMB.
6. You are also requested to provide a commitment undertaking on a non-judicial stamp paper of appropriate value by your investors, stating their financial commitment in your company for the subject project, before signing of contract with MMB.
7. Please note that MMB has a right to revoke this Letter of Award and forfeit the Bank Guarantee in case of non-compliance of relevant terms and conditions of the Tender and this LOA."
2.5. On 12th December, 2017, the Petitioner confirmed its acceptance of the Letter of Award and the terms and conditions therein by forwarding an acknowledged copy of the Letter of Award to the Respondent.
2.6 By a further letter dated 21st December, 2017, the Petitioner furnished in favour of the Respondent a bank guarantee amounting to Rs.50,00,000/- (Rupees Fifty Lacs Only) ("Bank Guarantee"). The Bank Guarantee is valid until the 31st of March, 2020.
2.7 On 1st January, 2018, the Respondent addressed a letter to the Petitioner calling upon it to comply with certain obligations under the Letter of Award. Under Clause 5 of the Letter of Award, the Respondent called upon the Petitioner to furnish details of vessel procurement/leasing and mobilization of suitable experienced staff with Ro-Pax/passenger ferry experience. The Respondent requested that the Project timelines are m
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