Consequences of submitting a false affidavit as per tender conditions and the liability of the petitioner for forfeiture of bid security.

VIBHU BAKHRU, J.

1. The petitioner has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter 'the Act'), inter alia, impugning the arbitral award dated 05.01.2018 (hereafter 'the impugned award') delivered by the Arbitral Tribunal constituted by the sole arbitrator, Justice V.K. Shali (Retired) (hereafter 'the Arbitral Tribunal').

2. The impugned award was rendered in the context of the disputes that had arisen between the parties in respect of the two separate agreements – captioned as "Memorandum of Understanding" (MOU) – entered into between the parties to form a joint venture in the name of "JMC–KPTL– MRTL (JV)" for submission of the bids in response to the tenders invited by Rail Vikas Nigam Limited (RVNL).

3. Briefly stated, the controversy arises in the following context :-

3.1 On 02.09.2014, RVNL had invited bids for construction of roadbed, bridges, supply of ballast, installation of track excluding supply of rails, electrical (General Electrification) signalling and telecommunication works in Ahmedabad Division of Western Railway, Gujarat. The said tenders were invited for two separate packages referred to as “Package No.1” and “Package No.2”. Package No.1 was related to doubling of the tracks between Samakhyati and Kidiyanagarh (34.66 Km) in the Ahmedabad Division of the Western Railways, Gujarat and Package No.2 related to doubling of track between Bhildi and Diyodar (29.48 Km) in the Ahmedabad Division of Western Railways.

3.2 The tender documents floated by RVNL permitted a consortium to bid for the contracts subject to certain conditions. As stated above, the parties entered into two separate MOUs for forming a consortium for submitting bids and performing the works in respect of the afore-mentioned two packages, for which tenders were invited by RVNL. Respondent No.1 was the lead member of the consortium in terms of the MOUs entered into between the parties.

3.3 The tender documents expressly provided that bidders would be disqualified if any previous contract of the bidder or any of its constituents had been terminated by RVNL within a period of two years prior to the deadline for submission of the bids. Clause 4.4(b) and Clause 4.4(g) of the tender documents floated by RVNL are relevant and are set out below :-

Clause 4.4(b)

“(b) Any previous contract of the bidder or any of its constituents had been terminated for contractor's failure by Rail Vikas Nigam Ltd (RVNL) any time starting from 2 years before the deadline for submission of bids and up to the day before opening of price bids.”

Clause 4.4(g)

“(g) The Bidder shall submit an affidavit stating that they are not liable to be disqualified as per this sub clause using the appropriate Performa given in Section 4. Non-submission of an affidavit by the bidder shall result in summary rejection of his bid.”

3.4 Further, in terms of Clause 4.5 of the tender documents, RVNL was entitled to forfeit the bid security in the event the bidder had submitted a false affidavit. Clause 4.5 of the tender documents is quoted below :-

“4.5 Bidder shall immediately inform the Employer in case they cease to fulfill eligibility in terms of ITB 4.3 & 4.4. In case the bidder fails to inform the Employer or submits a false affidavit his bid shall be summarily rejected and bid security shall be forfeited. The bidder shall also be liable for Banning of Business dealings for a period up to five years.”

3.5 Respondent No.1, being the lead member had submitted the bid security in the form of bank guarantees: a bank guarantee in the sum of Rs. 2 crores was provided as bid security for tender submitted in respect of Package No. 1 and a bank guarantee in the amount of Rs. 1.9 crores was provided as a bid security for Package No.2.

3.6 Respondent no.1 received a letter dated 18.12.2014 issued by RVNL, inter alia, stating that a contract awarded to IVRCL – MRT (JV) dated 13.08.2012 was terminated on 01.10.2013; therefore, the Consortium [JMC – KPTL –