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2017 Supreme(Del) 765
IN THE HIGH COURT OF DELHI AT NEW DELHI
BADAR DURREZ AHMED & SANJEEV SACHDEVA, JJ.
ASHOKA BUILDCON LIMITED & ANR. – Petitioners
Versus
NATIONAL HIGHWAYS AUTHORITY OF INDIA & ORS. – Respondents
WP(C) 76 of 2015 & CM Nos. 119, 4891 of 2015
Decided On : 06-03-2017
For the Petitioner:Mr. Rajiv Nayar, Sr. Advocate with Mr. Abhishek Sharma and Mr. Yash Srivastava, Advocates
For the Respondent:Mr. Pradeep K. Bakshi, Ms. Prachi V. Sharma and Mr. Ritvick Navel, Advocates
The clause stipulating forfeiture of bid security for a non-responsive bid was penal in nature and could not be sustained.
Headnote:
Bid Security - Non-Responsive Bid - Clause 2.20.5, Clause 3.1.6, Section 74 of the Contract Act - The court held that the clause stipulating forfeiture of 100% of the bid security for a non-responsive bid was penal in nature and could not be sustained. The Bid security submitted by the Petitioners could not be forfeited, and the Respondent No. 1 was directed to return the bank guarantees and refund the amount received from encashment.
Fact of the Case:
The Petitioner sought quashing of a letter declaring their bid as non-responsive and restraining the encashment of bank guarantees submitted as bid security. The Respondent declared the bid as non-responsive for not submitting the Joint Bidding Agreement physically, and forfeited the bid security.
Finding of the Court:
The court found that the clause stipulating forfeiture of bid security for a non-responsive bid was penal in nature and could not be sustained. The Respondent was directed to return the bank guarantees and refund the amount received from encashment.
Issues: The issues revolved around the declaration of the bid as non-responsive, forfeiture of bid security, and the legality of the Respondent's actions.
Ratio Decidendi: The court held that the clause stipulating forfeiture of bid security for a non-responsive bid was penal in nature and could not be sustained. It also considered the subsequent decision of the Ministry of Road Transport in deleting the ground of submission of a non-responsive bid.
Final Decision: The Petition was allowed, and the Respondent was directed to return the bank guarantees and refund the amount received from encashment. The Bid security submitted by the Petitioners could not be forfeited.
SANJEEV SACHDEVA, J.
WP(C) 76/2015 & CM Nos. 119/2015 (for stay) & 4891/2015 (for return of amount)
1. The Petitioner by the present petition seeks quashing of the letter dated 01.01.2015, whereby the Respondent No. 1 has informed the petitioner that its bid is non-responsive and further seeks a direction thereby restraining the Respondents from encashing the two bank guarantees submitted by the petitioner as bid security.
2. The case of the Petitioner is that the Respondent No.1 on 28.01.2014 issued a Request For Qualification (“RFQ”) for Development and Up gradation of Bijapur-Gulbarga-Homnabad Section of NH-218 (New NH- 50) to 2-Lane with Paved Shoulders from KM. 195.000 to KM. 418.000 in the State of Karnataka under NHDP Phase-IV to be executed on Engineering, Procurement and Construction (EPC) Mode (“Project”).
3. As per the Petitioners, in order to participate in the RFQ as members of a Joint Venture, they executed a Joint Bidding Agreement for Joint Venture dated 11.03.2014. The Petitioners thereafter participated in the RFQ process as a Joint Venture and were declared as Pre-qualified/Shortlisted Bidders for the Project. In response to the RFQ, the Petitioners submitted various documents to the Respondent No. I including the original JV Agreement dated 11.03.2014 in physical form. After the process of Pre-qualification/Short-listing of bidders had been completed, the Respondent No.1 issued a Request For Proposal (“RFP”) dated 28.10.2014 inviting bids from the Pre-qualified/Shortlisted Bidders.
4. As per the RFP there was a single stage two part system for selection of the bidder for award of the Project. The bid was invited under two parts-Technical Bid and Financial Bid. First eligibility and qualification of the Bidder was to be examined based on the Technical Bid and the Financial Bid of only those bidders was to be opened whose Technical Bids were found to be responsive to eligibility and qualifications requirements laid down in the RFP.
5. As per the Petitioners, only those documents which were mentioned in Clause 2 (ii) of the “Procedure for E-tendering” were to be filed with the Respondent No.1 in both soft copy as well as in physical form and not the documents mentioned in Clause 2.11 of the RFP. It is submitted that, Clause 2.11 of the RFP mandated submission of the Joint Bidding Agreement, if any, along with the bid and that Clause 2 of the “Procedure for E-tendering” superseded this requirement and did not mandate the filing of the Joint Bidding Agreement (Electronically or physically) along with the bid. It is further contended that the Petitioners had, as far back as when they filed their response to the RFQ, filed the original JV Agreement dated 11.03.2014 with the Respondent No. 1.
6. Clause D of Section 2 titled ‘Instructions to Bidders’ which deals with submission of Bid Security by the Bidders mandates that a Bidder shall be required to submit alongwith its bid, a Bid Security in favour of the Respondent No.1. Clause 2.20.1 provides that the Bid Security shall be provided in terms of Clauses 2.1.6 and 2.1.7 of the Instructions to Bidders. Clause 2.1.6 in turn mandates a bidder to deposit a bid security of Rs. 7.09 crores.
7. As per the Petitioners in addition to making the deposit of Bid Security, each bidder was required to pay Rs. 80,000/- towards cost of the bid document and submit proof of the online payment of this amount. In compliance with the said term of the Instruction to Bidders, the Petitioners paid Rs. 80,000/- to the Respondent No.1 as cost of RFP documents and RFP Processing Fee. Further, even at the time when the Petitioners JV submitted its response to the RFQ, it was mandated to pay an amount of Rs. 80,000/- distinct and separate from the identical amount which had to be paid at the RFP stage. It is contended that the said amounts cannot be the cost of the documents but is in reality a pre-estimate of the cost of the processing the RFP or RFQ, as the case may be.
8. The Joint Ventur
