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2018 Supreme(Pat) 953
IN THE HIGH COURT OF JUDICATURE AT PATNA
NILU AGRAWAL, J.
Kalika Swachchhanda Joint Venture Private Limited - Appellant
Versus
Secretary, Bihar Rural Works Department - Respondent
Civil Writ Jurisdiction No. 3640 of 2018
Decided On : 08-08-2018
Prakash Srivastava, Adv., Jyoti Shankar, Adv., Pradip Kumar Sinha, Adv., Kameshwar Prasad Gupta, Adv., Dupanjali Gupta, Adv.
The main legal point established in the judgment is that the acceptance of a bank guarantee from a foreign bank, in violation of the Standard Bidding Document, renders the agreement void.
Headnote:
Bank Guarantee - Contract Dispute - Clause 32.2 of Standard Bidding Document - 18.12.2017 - The court discussed the Acts and Sections referenced in the judgment, including the terms of the contract, the Dispute Redressal System under clause 24, and the Standard Bidding Document clause 32.2. The interpretation of these provisions influenced the court's decision to dismiss the writ application.
Fact of the Case:
The petitioner was allotted a construction work order, but failed to complete the work within the specified time frame. Disputes arose regarding the termination of the agreement, the validity of the bank guarantee, and the constitution of the Empowered Standing Committee.
Finding of the Court:
The court found that the bank guarantee submitted by the petitioner was of a foreign bank, which violated clause 32.2 of the Standard Bidding Document. As a result, the agreement was void, and the court dismissed the writ application. However, the court directed the scrutiny of the petitioner's claims and ordered the payment of dues within three months.
Issues: The issues involved the termination of the agreement, validity of the bank guarantee, constitution of the Empowered Standing Committee, and compliance with the Standard Bidding Document.
Ratio Decidendi: The court held that the acceptance of a bank guarantee from a foreign bank was in violation of the Standard Bidding Document, rendering the agreement void. The court also directed the scrutiny and payment of the petitioner's claims.
Final Decision: The writ application was dismissed, but the court ordered the scrutiny and payment of the petitioner's claims within three months.
NILU AGRAWAL, J.
1. Heard learned counsel for the petitioner and the learned counsel appearing on behalf of the State.
2. The petitioner seeks following reliefs:
"(I) To issue a writ in the nature of certiorari for quashing of the order dated 18.12.2017 passed by the Respondent no.6 communicated through the letter dated 04.01.2018 bearing memo No. BRRDA(HQ)- PMGSY-304/2016-66 (Annexure-P/38), issued under the signature of the Respondent No.7, by which the communication was made with respect to the fact that the claim of the petitioner was rejected.
(II) To issue a writ in the nature of certiorari for quashing of the order dated 18.12.2017 (Annexure-P/38) passed by the Respondent No.6, by which the Respondent No.6 in complete departure of the notice dated 05.10.2013 issued under the signature of the Respondent No.5, by which the tender of the petitioner was rescinded on the ground that the work assigned to the petitioner was not concluded within the time frame.
(III) To issue a writ in the nature of certiorari for quashing of the order dated 18.12.2017 (Annexure- P/38) passed by the Respondent No.6, by which the Respondent No.6 failed to appreciate that the bank guarantee provided by the petitioner was duly accorded and approved by the Departmental Tender Committee in its meeting 27.02.2009 communicated through the letter dated 02.03.2009 bearing Memo No. 38 (Annexure-13).
(IV) To ask an explanation-cum-show cause from the Respondents No. 2 to 5, asking therein that under what statutory authorization, they used to change their stand in rescinding the work allotted to the petitioner.
(V) To issue a writ in the nature of mandamus commanding the Respondents No. 2 to 5 to revalidate the agreement including the rate of tender work bearing 01-SBD/2009-10 dated 25.05.2009, because the petitioner is still ready to complete the work subject to revision of rate.
(VI) To stay the operational effect of the order dated 18.12.2017 passed by the Respondent No.6 communicated through the letter dated 04.01.2018 bearing memo No. BRRDA(HQ)- PMGSY-304/2016-66 (Annexure-P/38), issued under the signature of the Respondent No.7, because the Respondent Authorities are adamant to forfeit the bank guarantee of the petitioner.
(VII) To issue a writ in the nature of mandamus commanding the Respondent Authorities from taking any coercive steps pertaining to the forfeiture of the bank guarantee provided by the petitioner.
(VIII) Any other relief or reliefs."
3. The facts of the case is that the petitioner was allotted work order and an agreement was entered into between the petitioner and Respondent No.5 under Agreement No. 01-SBD/2009-10 for construction of road under the Bihar Rural Roads Development Agency in the district of Sheohar bearing Package No. BR32R/ Sheohar II (No. of Road 07, Total length - 31.755 Kms.). The period of commencement of work was 18.05.2009 and was to be completed within one year i.e. 17.05.2010. After commencement of the work, there were certain obstructions for which the petitioner corresponded with the respondent - authorities, but having not completed the work order within the time frame, a notice was published in the daily newspaper Prabhat Khabar dated 30.09.2013 mentioning that since the petitioner had not completed the work, he was directed to file show cause on or before 23.09.2013, failing which the process to rescind the agreement shall be made. A show cause notice by Letter No. 633 dated 14.09.2013 requiring compliance by 23.09.2013 was served on the petitioner on 24.09.2013, a day after the date fixed for filing show cause reply, which the petitioner replied on 30.09.2013. However, the termination order dated 05.10.2013, Annexure-P/2 was issued without taking notice of the show cause reply. Aggrieved by the termination order, the petitioner moved this Court in CWJC No. 6186 of 2014 and by order dated 24.08.2015, termination order dated 05.10.2013, Annexure-P/2 was set aside on account of being in violation of principle
