The court emphasizes the importance of fulfilling contractual obligations and the need for parties to ensure their capability to execute contracts before participating in tenders.

Prateek Jalan, J. (Oral)

1. The present writ petition has been filed challenging a communication dated 08.06.2023 issued by the Ministry of Railways, Government of India by which it has communicated its decision to forfeit and encash a performance bank guarantee dated 30.11.2021 for the sum of Rs.25.20 lakhs. The performance bank guarantee was submitted by the petitioner in support of a bid for supply of 1000 nos. Box N/BG Axle in terms of the specifications stated in the tender documents.

2. The petitioner is a small scale industry registered under the Micro, Small and Medium Enterprises ["MSME"] Development Act, 2006. It participated in the aforesaid tender and was awarded the tender by the Ministry of Railways, Government of India, by a letter of acceptance dated 17.11.2021. The delivery period specified in the letter of acceptance was "D+30 weeks", "D" being the date of the Development Order. It is undisputed that the Development Order in the present case was issued on 29.12.2021, and the period of 30 weeks therefrom would conclude on 26.07.2022.

3. The contention of the petitioner in the writ petition is that it was unable to supply the axles in terms of the aforesaid contract due to the investment required for manufacturing of axles, in terms of the technical specifications in the tender. The petitioner was earlier in the business of forging and had disclosed that it had not supplied axles previously. Ms. Purti Gupta, learned counsel for the petitioner, submits that the petitioner was not aware of the extent of investment required for manufacturing of axles, particularly with regard to the required heat treatment facility, and such information was also not disclosed in the tender document. She states that the petitioner was unable to invest resources at the required level. The petitioner, in fact, visited the wheel and axle plant of the Indian Railways in Bangalore in June 2022, and was surprised to see its scale and the equipment required for the manufacturing process. It therefore requested the Ministry of Railways to cancel the Development Order.

4. Ms. Gupta relies upon a Scheme dated 06.02.2023 [Vivad se Vishwas I], as revised on 11.04.2023, issued by the Ministry of Finance, Government of India [hereinafter, "the Scheme"] for relief to be granted to MSMEs which have been unable to provide goods and services to the Government of India and public sector undertakings. She submits that, in terms of the aforesaid Scheme, the petitioner, being a small scale industry, was entitled to refund of 95% of the performance security and earnest money deposit forfeited by the procuring agency. According to learned counsel, this creates a special equity in the petitioner's favour, upon which encashment of the bank guarantee in question may be injuncted.

5. Mr. Vineet Dhanda, learned Central Government Standing Counsel, however, submits that relief in terms of the Scheme was denied to the petitioner in view of the fact that it did not meet the eligibility conditions for applicability of the Scheme. He submits that the delivery period in the present case extended until 26.07.2022, whereas one of the eligibility conditions in the Scheme was that the original delivery period/completion period stipulated in the contract must be between 19.02.2020 and 31.03.2022. Mr. Dhanda contends that the petitioner was therefore not eligible for the relief sought.

6. In rejoinder, Ms. Gupta draws my attention to the fact that the Scheme was applicable to eligible tenders where the date of closing of the tender was between 19.02.2020 and 31.03.2022. She submits that in the present case, the tenders were to be submitted by 22.07.2021 and the present case therefore falls within the Scheme parameters.

7. Having heard learned counsel for the parties, I am of the view that no injunction can be granted at this stage against invocation of the performance bank guarantee. A copy of the bank guarantee dated 30.11.2021 has been annexed to the petition. It