A tendering authority is justified in cancelling a Letter of Award (LoA) and debarring a bidder for three years if the bidder is negligent in submitting fake bank guarantees.

JUDGMENT :

Sabyasachi Bhattacharyya, J.

1. The present challenge has been preferred against a cancellation of a Letter of Award (LoA) and debarment of the petitioner-company. The petitioner participated in a tender floated by the respondent no. 3 and turned out the successful bidder. LoA was, accordingly, issued to the petitioner on March 31, 2023. As per the terms of the tender document, the successful bidder was to sign the AMISP Contract and furnish the initial Performance Security within 14 days from the date of issuance of the LoA. Failure to do so shall constitute “sufficient grounds for the annulment of the award and forfeiture of the Bid Security”. In that event, the Utility may award the AMISP Contract to the next lowest Bidder.

2. The petitioner allegedly engaged the respondent no. 7, a financial service provider, to procure and to issue the performance bank guarantee to the tendering authority on behalf of the petitioner. However, on three successive occasions, the respondent no. 7 issued fake bank guarantees, upon coming to know of which the petitioner immediately lodged complaint with the police, giving rise to an F.I.R. The petitioner ultimately furnished a proper and valid bank guarantee on May 17, 2023. However, the same was not accepted and the LoA was cancelled, and the petitioner debarred for three years from participating in the tenders of the respondent no. 3. The writ petition has been filed against such cancellation and debarment.

3. Learned Senior Advocate appearing for the petitioner submits that the petitioner was not at fault for the issuance of fake bank guarantees. The petitioner entrusted the respondent no. 7 with the task of procuring and furnishing the same, as evident from an agreement annexed to the writ petition. The petitioner also spent substantial amounts on such contract.

4. Immediately upon learning of the forgery, the petitioner lodged complaint with the police and also communicated with the respondent authorities expressing its helplessness. Thus, the petitioner could not be faulted.

5. It is submitted that the petitioner-company has been doing business for over a century and have a formidable goodwill. It would not stoop to so low levels as alleged, that too, after becoming successful in the tender.

6. Learned Senior Advocate appearing for the petitioner next argues that the respondent no. 3 had condoned the delay in issuing the performance bank guarantee by accepting the late filing of the same on May 17, 2023 as well as all prior bank guarantees. Before that, the petitioner had put in the first bank guarantee in due time; however, the same turned out to be fake, for which the petitioner was not responsible in any manner.

7. It is next argued that, as per the conditions in the tender document, delay in furnishing the bank guarantee would only furnish “sufficient ground” for annulling the LoA, and not have the effect of automatically annulling the LoA. Thus, there was sufficient discretion available to the tendering authority to condone the same. The respondent nos. 3 and 4 accepted the bank guarantee much after the expiry of the stipulated time and never tendered back the same. Thus, by its conduct, the tender-issuing authority has accepted the delayed submission of bank guarantee and condoned the delay in filing the same.

8. Learned Senior Advocate, lastly, contends that the technical default on the part of the petitioner, due to no fault of its own, does not justify the cancellation of the LoA and debarment of the petitioner.

9. Before entering into the merits of the case, learned counsel appearing for the respondent nos. 3 and 4 raises an objection as to maintainability of the writ petitioner before the Calcutta High Court on the ground of territorial jurisdiction.

10. It is argued that all the relevant transactions were performed in Madhya Pradesh. Even the website portal of the respondent no.3 is run and operated in Madhya Pradesh by the Government of Madhya Pradesh. The bids in the tender