Forfeiture of Earnest Money requires intent to mislead; accidental clerical errors should not disqualify bidders nor invoke punitive measures, affirming principles of natural justice.

JUDGMENT :

Smita Das De, J.

1. The instant writ petition has been filed by the petitioner in WPA No. 13131 of 2025, challenging inter alia, the rejection of a bid dated May 8, 2025 for leasing under lot No 12381-SLR-R1-HWH-NDLS-25-1 coupled with forfeiture of the earnest money to the tune of Rs. 7,45,321/-

2. Apropo, the facts made out in the ‘Writ Petition’ is that the petitioner is a proprietorship firm engaged in the business of transportation of goods of various natures under the name and style of ‘Vishal Enterprise’. The petitioner has submitted his bid and became the highest bidder pursuant to a tender notification dated May 8, 2025 for leasing of a parcel space in SLR coach of 12381, ex HWH to NDLS Poorva express. The petitioner has been declared as the highest bidder. At the outcome of the tender process, the petitioner has secured the business commitments from customers to ensure smooth execution of the lease work, but as such no formal agreement has been executed with the railway authorities. The petitioners bid has been cancelled by the railway authorities by forfeiting the earnest money to the tune of Rs. 7,45,321/- without serving any formal notice and/or order of cancellation by the railway authorities, subsequently the same could be unravelled from the online portal.

3. The E-Auction process of the Railway Administration and subsequent conferment of leasehold right is at present is overall guided and regulated by F.M Circular No. 11 of 2022 read with Circular No. 12 of 2022 along with Standard Conditions of Contract.

4. To participate in the auction process the participants are adhered to certain rules of the circular which are categorically dealt with from Clause 1.2 to Clause 1.4 of F.M. Circular 11of 2022 which is reproduced below-

“1.2 The entity shall be required to upload the Audited Balance Sheets P&L Account Statements of the last three Financial Years in their profile in IREPS before start of bidding in the auction in which they want to participate. Railways shall verify the Audited Balance Sheet and P&L Account statement uploaded in the profile in IREPS of the successful contractors anytime after acceptance of the bid or during the currency of contract, and if the information about the Financial Eligibility is found to be false /misleading or the documents uploaded by the firm are found to be false/invalid , then the allotment of a lot shall be cancelled or if the contract has been issued, the same shall be terminated forfeiting the EMD/ Security Deposit without any further notice.

1.3 If the Audited Balance Sheet and/or P&L Account Statement of all of the three preceding Financial Year(s) are not available, then the documents of the years (out of the three preceding years) for which the same are available shall be uploaded, and the same will be taken into consideration for judging the eligibility of the bidder.

1.4 If the turnover details are not entered by a registered entity in its IREPS profile, the system will not allow the entity to participate in auctions for lots for which the minimum turnover required is greater than zero.”

5. As per Clause 1.4 of the F.M Circular No. 11 of 2022 if all the requisite particulars are not filled up in computer generated IREPS, the system will not allow any entity to take part in the Auction process.

6. As per Clause 1.0 to Clause 1.4 if the turnover details are not correctly uploaded the system itsel