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2018 Supreme(Del) 1653
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
M/S TECHNO POWER ENTERPRISES PVT. LTD - Petitioner
Versus
FOOD CORPORATION OF INDIA - Respondent
W.P.(C) 6691 of 2018 & CM Nos. 25432, 25433 of 2018
Decided on : 03-07-2018
For the Appellant :Mr Sanjay Jain, Mr Anshuman Sharma, Mr Aakarshan Aditya and Ms Sneh Suman, Advocates.
For the Respondent:Mr Manoj, Ms Aparna Sinha, Advocate.
The validity of bids and the withdrawal of bids during the bid validity period as specified in the RFP documents are crucial in determining the binding nature of acceptance letters and the retention of bid security.
Headnote:
Validity of Bids - Construction of Silos - RFP 2.17.1, 2.17.2, 2.20.7
Fact of the Case:
The petitioner challenged the letters of award issued by the Food Corporation of India (FCI) for the construction of Silos, claiming that their bids were no longer valid and the bid security should be released.
Finding of the Court:
The court found that the validity period of the petitioner's bid had expired as per the RFP documents, and the bids were withdrawn before FCI's acceptance, making the impugned letters non-binding. The court also ruled that there was no ground for FCI to retain the bid security.
Issues: Validity of bids, withdrawal of bids, retention of bid security
Ratio Decidendi: The bids were to remain valid for a period of at least 120 days from the bid due date as per RFP 2.17.1. The withdrawal of bids during the bid validity period specified in the RFP could lead to forfeiture of bid security as per RFP 2.20.7.
Final Decision: The petition was allowed, the impugned letters were set aside, and FCI was directed to refund the bid securities (bank guarantees) furnished by the petitioner.
VIBHU BAKHRU, J
1. The petitioner has filed the present petition under Article 226 of the Constitution of India, inter alia, impugning the letters of award (two in number) dated 19.06.2018 (hereafter collectively referred to as ‘the impugned letters’) issued by the Food Corporation of India (hereafter ‘FCI’) awarding the construction of Silos at Amreli, Gujarat and at Gorakhpur, Uttar Pradesh in favour of the petitioner.
2. By the impugned letters, the FCI has communicated its acceptance to the bids submitted by the petitioner for construction of Silos at Amreli and Gorakhpur on design, build, finance, own and operate (DBFOO) basis. The petitioner claims that the impugned letters are ex facie unsustainable, as the bids submitted by the petitioner were no longer valid and, therefore, incapable of being accepted by the FCI. The petitioner further claims that the bid security furnished by them by way of bank guarantees are also liable to be released.
3. The aforesaid controversy arises in the context of the following undisputed facts:-
3.1 FCI issued a Request for Proposal (RFP) on 16.08.2017 inviting proposals from eligible bidders for construction of Food Grain Silos at various locations on Design, Build, Finance, Own and Operate (DBFOO) basis. The RFP documents also provided the schedule of bidding process, which is set out below:-
“1.3. Schedule of Bidding Process
The schedule for the bidding process is as follows:
Sl. No.
Milestone
Date
Issue of RFP
[August 23, 2017]
Pre-bid conference
[September 5, 2017, 15:00 Hrs]
Last Date for Receiving queries
[September 12, 2017]
Authority’s response to pre-bid queries
[September 20, 2017]
Last Date for Submission of Proposals (Bid Due Date)
[October 24, 2017, 15:00 Hrs]
Date for opening of Qualification Proposal
[October 25, 2017, 15:00 Hrs.]
Date of opening of Financial Proposal 90 calendar days from Issue of RFP(tentative)
Issue of Letter of Award
120 calendar days from Issue of RFP(tentative)
Signing of Concession Agreement
150 calendar days from Issue of RFP(tentative)”
3.2 The last date for submission of the bids was initially extended to 16.11.2017 and, thereafter, by a notification issued on 10.11.2017, it was further extended to 07.12.2017.
3.3 In terms of the RFP documents, the bidder was required to submit bid security in the sum of Rs.58,00,000/- for Silos project of 50,000 metric tons capacity and a bid security in the sum of Rs.85,00,000/- for Silos project of 1,00,000/- metric ton capacity.
3.4 The petitioner submitted its bids for construction of Silos at four locations, namely, Amreli, Gorakhpur, Mirzapur and Jaunpur on 07.12.2017 (that is, the last date for submission of the bids). The petitioner also submitted bid security by way of bank guarantees. The petitioner submitted three bank guarantees in the sum of Rs.58,00,000/- each in respect of its bids for construction of Silos at Amreli, Gorakhpur and Mirzapur. And, a bank guarantee in the sum of Rs.85,00,000/- in respect of its bid for construction of Silos at Jaunpur.
3.5 The bids were opened on 08.12.2017. However, the FCI could not complete the process of evaluating the bids and awarding the contracts to the petitioner within a period of one hundred and twenty (120) days from the submission of the bids, as was indicated in the schedule of the bidding process. The said period of one hundred and twenty days expired on 06.04.2018.
3.6 On 21.05.2018, the petitioner sent a letter expressing its inability to extend the validity of its bids and requested that the bank guarantees furnished as bid securities to be released to the petitioner. FCI neither released the bank guarantees nor responded to the aforesaid letter. Thereafter, on 19.06.2018, FCI issued the impugned letters awarding the contracts for construc
