IN THE HIGH COURT OF DELHI
Prathiba M. Singh, J.
Dwarka Das Agarwal - Appellants
Vs.
Union of India and Ors. - Respondent
W.P. (C) 336/2021
Decided On : 02-02-2021
Bank Guarantee - Invocation - Force Majeure - RFQ/ Bidding Documents - [W.P.(C) 336/2021 & CM APPL. 886/2021] - [Clause 25(b)(iii), 25(b)(iv), 2.4, 4.1, 5 of RFQ document] - The court discussed the invocation of the bank guarantee in the context of force majeure events as per the RFQ and bidding documents. It highlighted the irrevocable nature of the bank guarantee and the consequences of bidder withdrawal as stipulated in the documents. The court also considered the exclusive jurisdiction clause for disputes and the absence of evidence for force majeure event, leading to the decision not to restrain the bank guarantee from being invoked.
Fact of the Case:
The Petitioner sought to restrain the Respondent from invoking a bank guarantee after withdrawing from a tender due to ongoing farmers' agitation. The Respondent had awarded the tender to a third-party bidder and sought to invoke the bank guarantee. The Petitioner relied on force majeure clause in the bidding documents to argue against the invocation.
Finding of the Court:
The court found that the Petitioner's withdrawal from the bid was aware of the consequences under the bidding documents, and there was no evidence of a force majeure event. It also noted that another bidder had been awarded the tender and taken possession of the toll plaza, leading to the decision not to restrain the bank guarantee from being invoked.
Issues: Jurisdiction of the court, force majeure event, irrevocable nature of bank guarantee, consequences of bidder withdrawal, and award of tender to another bidder.
Ratio Decidendi: The court's decision was based on the absence of evidence for force majeure event, the irrevocable nature of the bank guarantee, and the consequences of bidder withdrawal as stipulated in the bidding documents. It also considered the award of the tender to another bidder.
Final Decision: The court disposed of the petition and all pending applications, allowing the Respondent to encash the bank guarantee to the tune of Rs. 36,90,000 and ordering the refund of the remaining amount to the Petitioner within two weeks.
JUDGMENT :
Prathiba M. Singh, J.
1. This hearing has been done through hybrid mode (physical and virtual hearing).
CM APPL. 887/2021(for exemption)
2. Allowed, subject to all just exceptions. Application is disposed of.
CM APPL. 2358/2021(for additional documents)
3. This is an application for taking additional documents on record. The same is taken on record. Application is disposed of.
W.P.(C) 336/2021 & CM APPL. 886/2021 (for stay)
4. The Petitioner, in the present case, seeks a direction to restrain the Respondent from invoking the bank guarantee bearing no. 3116320BG0000006, dated 2nd June 2020, furnished by the Petitioner in favour of the Respondent, for a sum of Rs. 50,00,000/-.
5. The case of the Petitioner is that Respondent No. 2- National Highway Authority of India (hereinafter, "NHAI") had floated a financial bid on 1st October, 2019 for collection of user fee through a contractor/ bidder, in respect of the Section of highway located at Bagaliya fee plaza at Km 84.850 and Baggar Fee Plaza at Km 136.137 for Beawar Gomti Section from Km 58.245 to Km 177.050 of NH-8 in the State of Rajasthan. The Petitioner firm M/s. Dwarka Das Agarwal was one of the successful bidders, in the pre-qualification bid, and had submitted a bank guarantee through the State Bank of India, Kothari Corner, Dr. Ambedkar Circle, Hospital Road, Bikaner branch, amounting to Rs. 50,00,000/-.
6. Pursuant to the Request For Qualification (hereinafter, "RFQ") document issued on 1st October, 2019, the said bank guarantee was furnished as a "common bid security" for the purpose as indicated in the RFQ. The financial bid commenced on 11th November, 2020 in which the Petitioner participated and submitted a bid amount of Rs. 44,21,88,888/- as the amount payable annually. On 26th November 2020, the authority opened the bid and awarded the bid in favour of the Petitioner. The 'Letter of Award' was issued to the Petitioner Company on 2nd December, 2020 and a performance security of Rs. 3,68,50,000/- was required to be submitted by the Petitioner within 14 days of the said letter being issued.
7. According to the Petitioner, immediately after the letter of award of tender was given in favour of the Petitioner, the farmers nationwide agitation against the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, commenced, and hence the Petitioner communicated to the Respondent vide letter dated 8th December 2020, that it does not wish to accept the letter of award, dated 2nd December 2020, due to the said ongoing agitation. In view of the same, Respondent No. 2- NHAI wrote a letter dated 11th December, 2020, calling upon the Petitioner to deposit the amount equal to the bid security of Rs. 36,90,000/- failing which, it would invoke the bank guarantee which was already submitted in its favour by the Petitioner. The Petitioner then made a representation vide letter dated 21st December 2020, requesting the NHAI not to invoke the bank guarantee. The Petitioner, in the said letter, relied on the doctrine of force majeure as stipulated in the Request for Proposal (Bid, Financial and Draft Contract Agreement), dated 11th November 2020 (hereinafter, "RFP") to argue that the farmers agitation would constitute force majeure.
8. Mr. Vibhor Verdhan, ld. counsel for the Petitioner, relies upon various portions of the RFP document in support of his case. The primary reliance is placed on the force majeure clause in the contract. According to ld. counsel for the Petitioner, the farmers agitation would be a force majeure event in terms of Clause 25(b)(iii) and 25(b)(iv) of the RFP document. He, therefore, submits that the bank guarantee ought not to be invoked against the Petitioner by the Respondent.
9. On behalf of Respondent No. 2- NHAI, it is firstly submitted by Mr. Banerjee, ld. Standing Counsel, that this court does not have the territorial jurisdiction to entertain this petition, as the toll plaza is locked in Rajasthan. Secondly, it is submitted that the said
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