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IN THE HIGH COURT OF DELHI
Prathiba M. Singh, J.
Autometers Alliance Limited - Appellant
Versus
Rail Vikas Nigam Limited - Respondent
W.P.(C) 5278 of 2021 & CM Appls. 16240-42 of 2021
Decided On : 12-05-2021
The court emphasized adherence to contractual dispute resolution mechanisms and the binding nature of the procurement policy on performance security, while refraining from adjudicating the underlying merits of the cancellation.
Headnote:(A) Contract Law - Termination of Contract - The petitioner challenges the termination notice issued by the respondent and seeks that an Office Memorandum reducing performance security requirements be binding on the respondent - Disputes surrounding additional performance security and its waiver based on the memorandum dated 12th November 2020 are central. (Paras 2, 4, 9)
(B) Jurisdiction - The court observed that jurisdiction rests with courts in Kolkata as per the contract terms, and the petitioner must avail remedies according to the dispute resolution mechanism specified in the contract. (Para 9)
Facts of the case:
The petitioner was awarded a contract for the Kolkata Metro on 27th October 2020, requiring the submission of performance security, leading to disputes over security amounts demanded.
Findings of Court:
The court recognizes the need for dispute resolution per the contractual mechanism while urging the parties to explore amicable resolution during a planned meeting.
Issues: The primary issue concerned the legality of the termination notice and applicability of the memorandum on performance security.
Ratio Decidendi: The court refrained from ruling on the merits of the dispute, asserting that the jurisdiction lies in Kolkata as per contract terms and remedies must follow the designated dispute resolution process.
Result: The petition is disposed of with remedies left open.
| Table of Content |
|---|
| 1. challenge to contract termination and performance security. (Para 2 , 3 , 4) |
| 2. petitioner's willingness to comply with conditions. (Para 5 , 6) |
| 3. court's suggestive approach to resolve disputes. (Para 7 , 9 , 10) |
| 4. order for petition disposal and compliance protocol. (Para 11 , 12) |
JUDGMENT
Prathiba M. Singh, J. (Oral)--This hearing has been done through video conferencing.
2. The Petitioner has filed the present petition challenging the termination notice issued by the Respondent No. 1- Rail Vikas Nigam Ltd. dated 29th April, 2021. The Petitioner also prays for a direction that the Office Memorandum dated 12th November 2020, issued by the Procurement Policy Division, Ministry of Finance, Union of India, bearing no. No. F.9/4/2020-PPD (hereinafter, "OM"), is binding upon the Respondent No. 1
3. The brief background is that the Petitioner was, on 27th October 2020, awarded a contract for supply, installation, testing and commissioning of telecommunication systems for the Kolkata Metro Railways (hereinafter, "Kolkata Metro"), pursuant to the bid submitted by him it on 11th August 2020. The total contractual value of the said award was Rs.10,75,87,765.91/- (Rupees Ten Crores Seventy Five Lakhs Eighty Seven Thousand Seven Hundred Sixty Five and Ninety One Paise). The Petitioner was, in terms of the tender documents required to submit a performance security amounting to 10% of the bid amount, as the Primary Performance security. The said tender also included a provision of an additional security amount to be given in case the overall bid of the lowest bidder was substantially on the lower side or unbalanced compared to the engineer's estimate. The Petitioner is stated to have furnished the entire Primary Performance security in the form of a bank guarantee on 4th December 2020, on a without prejudice interim basis. Thereafter, vide communication dated 6th January 2021, the Petitioner was awarded further work, upon submission of an offer. The said work is stated to not be a part of the original notice of award dated 27th October 2020. However, disputes arose in respect of the performance security which was to be submitted by the Petitioner, as the Respondent demanded the Additional Performance Security amounting to Rs.1,40,56,126/-
4. The case of the Petitioner is that the Petitioner had already submitted adequate performance security at 10% of the original bid to the Respondent No. 1, via a bank guarantee dated 4th December 2020. Although the Petitioner was also required, in terms of the tender documents, to give the Additional Performance Security, however, the case of the Petitioner was that the payment of the Additional Performance Security could be waived in view of the OM dated 12th November, 2020, issued by the Ministry of Finance, which reduced the Performance Security from 10% to 3%. This, however, was not acceded to by the Respondent No. 1, which finally resulted in the termination of the contract. Accordingly, the prayer of the Petitioner in this petition is for quashing of the said notice of termination, and for a declaration that the said OM would be applicable and binding upon Respondent No.1.
5. During the course of arguments, Mr. Anirudh Wadhwa, ld. counsel for the Petitioner, submits that the Petitioner is willing to furnish the Additional Performance Security of Rs.1,40,56,126/- provided that the termination notice dated 29th April 2021, is withdrawn and the Petitioner is permitted to perform the contract.
6. Ld. counsel for the Respondent, takes a preliminary objection as to the jurisdiction of this court, in terms of the jurisdiction clause contained both in the bid data sheet, as also the GCC and the contract data, which exclusively vests jurisdiction in the Courts in Kolkata.
7. Initially the matter was passed over in order to enable the Respondents to seek instructions as to whether the Respondent No. 1 would be willing to consider the Petitioner's offer, inasmuch as if the termin
