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IN THE HIGH COURT OF CHHATTISGARH AT BILASPUR
Arup Kumar Goswami, Parth Prateem Sahu, JJ.
M/s Rana G Power Co. Through its Authorized Representative, Mr. Satish Singh Tiwari S/o. Lt. Shri Mahaveer Singh Tiwari - Petitioner
Versus
South Eastern Coalfields Limited Through its Chairman cum Managing Director - Respondents
WPC No. 1914 of 2022
Decided On : 17-08-2022
Bank Guarantee - Tender Dispute - Clause 24.1(i), Clause 4.2 - The court discussed the validity of the Bank Guarantee submitted by the petitioner, the acceptance of Bank Guarantee from a Foreign Bank, and the compliance with the tender document. The court found that the Bank Guarantee submitted by the petitioner from a Foreign Bank was not acceptable as per the tender document, and the respondents had followed the principles of natural justice in their actions. The court quashed the penalty imposed on the petitioner but upheld the cancellation of the LOI and the banning of the petitioner from future tenders.
Fact of the Case:
The petitioner challenged the cancellation of the Letter of Intent (LOI), banning from future tenders, and imposition of a penalty by the respondents. The petitioner failed to submit the Performance Security Deposit (PSD) as required in the tender document, leading to the issuance of a show-cause notice and subsequent actions by the respondents.
Finding of the Court:
The court found that the Bank Guarantee submitted by the petitioner from a Foreign Bank was not acceptable as per the tender document. The court also determined that the respondents had followed the principles of natural justice in their actions. The court quashed the penalty imposed on the petitioner but upheld the cancellation of the LOI and the banning of the petitioner from future tenders.
Issues: The issues involved the validity of the Bank Guarantee submitted by the petitioner, compliance with the tender document, and the application of principles of natural justice by the respondents.
Ratio Decidendi: The court held that the Bank Guarantee submitted by the petitioner from a Foreign Bank was not acceptable as per the tender document. The court also determined that the respondents had followed the principles of natural justice in their actions. The court quashed the penalty imposed on the petitioner but upheld the cancellation of the LOI and the banning of the petitioner from future tenders.
Final Decision: The court allowed the writ petition in part, quashing the penalty imposed on the petitioner but upholding the cancellation of the LOI and the banning of the petitioner from future tenders.
ORDER :
Parth Prateem Sahu, J.
1. Petitioner by way of filing this writ petition under Article 226 of the Constitution of India has challenged the letter of communication of order dated 03.11.2021 (Annexure P/1) whereby Letter of Intent ('LOI') bearing No.SECL:BSP:CMC:1050 dated 24.08.2021 was cancelled, petitioner firm was banned from participating in any future tender in South Eastern Coalfields Limited ('SECL') and subsidiaries of Coal India Limited ('CIL') for a period of 24 months and imposed penalty of Rs.31,38,12,832.28 (Rupees Thirty One Crore Thirty Eight Lakh Twelve Thousand Eight Hundred Thirty Two and Paise Twenty Eight only).
2. Facts relevant for disposal of this writ petition, are that, petitioner is a joint venture of Ranavir Projects & Goldmine Power Infrastructure Industries engaged in civil constructions and other works. Respondents issued e-Tender (Annexure P/2) vide Tender Notice No.SECL/BSP/CMC/e-Tender/450 dated 13.05.2021 for “Hiring of Vertical Ripper machines or other suitable strata cutter machines to be used as primary extraction machine for blast less excavation in all kinds of strata/overburden/in seam bands on per cum basis and hiring of HEMM for excavation, mechanical loading, mechanical transportation, unloading, the excavation material and silt, dumping, dozing, scrapping, preparation and maintenance of haul road, water sprinkling and spreading of material and other allied activities at the site shown in the plan and as per the directives of management/engineer in charge of the Dipka Expansion Project for a total quantity of 153,01,614 cum in 730 days @ 20,961 Cum/day” at Dipka OC, Tehsil : Katghora, Dist : Korba, State : Chhattisgarh, Pin-495452. The estimated value of work was Rs.1,68,71,65,764.92 (inclusive of GST) to be completed within a period of 730 days. Petitioner along with other tenderers submitted their bids, in which petitioner became successful being L-1 bidder. Petitioner was issued LOI on 24.08.2021. As per requirement of tender conditions, petitioner was required to furnish Performance Security Deposit ('PSD') in prescribed form, details of which is given under Instructions to Bidders. The amount of PSD was quantified as Rs.2,35,35,963.00, which is equal to 3% of the annualized value of contract amount. The period prescribed for furnishing PSD was 21 days from the date of issuance of LOI. Petitioner on 29.09.2021 wrote letter to respondents submitting drafts of Bank Guarantee issued from the EMERIO BANQUE Ltd. (Bank) for approval. Petitioner failed to submit PSD as required in terms of tender document, which made the respondents to issue letters to the petitioner reminding to submit PSD within the stipulated period. Petitioner failed to submit PSD in the form of Bank Guarantee in terms of tender document. Show-cause notice was issued and thereafter, considering the reply submitted to show-cause notice to be non-satisfactory, order of cancellation of LOI, banning the petitioner for a period of 24 months and penalty to the tune of Rs.31,38,12,832.28 was issued. This made the petitioner to approach this Court by way of filing this writ petition seeking following reliefs :
10.2 Direct the Respondent SECL to consider representations of the Petitioner (Annexure P/17 (Colly.) to accept the bank guarantee of EUROPA BANK Public Limited as valid on account of no available bidders to fresh tenders and ECL having already accepted the same, to treat equals as equals under article 14.
10.3 Any other relief/reliefs, which this Hon'ble Court may think fit and proper in the facts and circumstances of the case may also please be granted to the Petitioner.”
3. Respondents submitted reply to the writ petition raising preliminary objection of maintainability of writ petition on the ground of availabi
The main legal point established in the judgment is the validity of the Bank Guarantee submitted by the petitioner and the application of principles of natural justice by the respondents.
The submission of a bogus Bank Guarantee by a bidder justifies a two-year ban under tender conditions, as the term 'certificate' includes documents.
The invocation of Bank Guarantees must be aligned with contractual terms; unauthorized invocation is deemed arbitrary.
Bank guarantee represents an independent contract between bank and beneficiary, both parties would be bound by terms thereof.
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