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IN THE HIGH COURT OF GAUHATI, ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH
DEVASHIS BARUAH, J.
M/s D.G. Raj Highway Services And Anr. – Appellant
Versus
The Union Of India And 7 Ors. – Respondents
WP(C) 710 of 2022
Decided on : 21-04-2022
Constitution of India, 1950 - Article 226, 14 and 19(1)(g) - General Clauses of the Act, 1897 - Section 10 - Contract - Terminated - Forfeiture Of Entire Security Deposit - Imposing Debarment From Participating In Parcel Leasing Tender - Instant petition under Article 226 of Constitution of India challenges communication bearing Leasing whereby contract was terminated by respondent authorities with forfeiture of entire Security Deposit amounting to Rs.40,03,415/- and further imposing debarment from participating in Parcel Leasing Tender in Tinsukia Division and over N.F. Railway for a period of 2 (two) years with immediate effect.
Finding of the Court :
Respondent authorities did not enter into Contract Agreement when authorized respondents of Petitioner appeared and terminated contract along with forfeiture of Security Deposit and debarring Petitioner Firm from participating in similar contracts for a period of 2 years in respect to same Division of N.F. Railway - Above facts would clearly go to show that respondent authorities have granted petitioner ample opportunities to commence loading - Under such circumstances non-commencement of loading by petitioner violates mandate of Clause 8(a) of "Instruction to Tenderers" and consequently Railway Authorities were justified in terminating said contract and forfeiting Security Deposit - Petitioners clearly knew at submission of their tender, that non-compliance to Clause 8(a) would result in befalling of consequences under said Clause 8(a) and 8(b) and under such circumstances this Court does not find any illegality in passing of the impugned order - instant contract in question is a revenue earning contract of Railways and with each day of non-commencement of loading there is a revenue loss to Railway Authorities or in other words loss to Public Exchequer - In terms with tender documents, Petitioner Firm was required to start loading latest by Non-commencement of loading operation has caused colossal revenue loss to Railway Authorities for which Railway Authorities were justified in forfeiting Security Deposit - Petitioners had given commitment to start loading as would be very much apparent from communication wherein petitioner gave a commitment to start loading - Under such circumstances, action of Respondent Authorities to terminate contract, forfeit Security Deposit and debar petitioner in terms with Clause 8(b) of "Instruction to Tenderers" cannot be said to be illegal or arbitrary or unreasonable - Consequently no interference is called for to impugned order.
Result: Petition dismissed.
JUDGMENT :
1. Heard Mr. P.D. Nair and Mr. G. Alam, learned counsel appearing on behalf of the petitioners and Mr. B.K. Das, the learned counsel appearing on behalf of the respondents.
2. The instant petition under Article 226 of the Constitution of India challenges the communication bearing No.CM/VP Leasing (05960/05959)/TSK/21, dated 03.01.2022, whereby the contract was terminated by the respondent authorities with forfeiture of the entire Security Deposit amounting to Rs.40,03,415/- and further imposing debarment from participating in the Parcel Leasing Tender in Tinsukia Division and over N.F. Railway for a period of 2 (two) years with immediate effect i.e. on and from 03.01.2022.
3. This Court vide order dated 08.02.2022 had issued notice and in the interim, the impugned order dated 03.01.2022, as well as the consequential ETender Notice No.CM/VP Leasing (15960/15959)/TSK/21-22, dated 17.01.2022, was stayed. The railway authorities on 11.03.2022 filed an application for modification/alteration/vacation of the interim order dated 08.02.2022 which was registered and numbered as IA(C) No.1023/2022. The said application for modification/alteration/vacation of the interim order dated 08.02.2022 came up for disposal before this Court on 04.04.2022. Taking into consideration that the disposal of the said Interlocutory Application would have an impact on the decision on merits of the writ petition, this Court heard the matter on 05.04.2022, 07.04.2022 and on 08.04.2022 for final disposal.
4. The facts of the instant case in brief is that, an E-Tender Notice No.CM/VP Leasing (05960/05959)/TSK/21, dated 25.08.2021, was issued by the Senior Divisional Commercial Manager, N.F. Railway Tinsukia (the respondent No.6 herein) for leasing of 24 Tonne 1 VPH by Train No.05960/05959, Kamrup Express Special EX-DBRG (Dibrugarh) Railway Station to HWH (Howrah) Railway Station and back on round trip basis for 5 (five) years. It is relevant to take note of that the tender documents contained 4 (four) parts and Annexures in 33 pages, the details are as herein under.
b) 2nd part : Application & schedule of rate
c) 3rd part : Instruction to tenderers
d) 4th part : Draft agreement as instructions
e) Annexure – A, B, C, D & E
5. In the “Instruction to the Tenderers” which was the 3rd part of the tender documents, there were various terms and conditions set out therein. It is relevant to note that the running frequency was 5 (five) days per week and the reserved price of the 24 Tonne VPH per round trip/day was Rs.2,14,020/-. Clause 7 stipulated the terms relating to the Security Deposit (SD)/Performance Guarantee (PG). It was mentioned in Clause 7(a) that the Security Deposit is required to be submitted by the successful bidder within 15 days from the date of issue of the Letter of Acceptance. Clause 7(c) stipulates that in case of failure of the highest bidder/Allottee of the contract to start the loading within the stipulated period, on account of over biding or failure of the lease holder to continue the loading during the contractual period without giving notice of the Railway Administration, the Security Deposit/Performance Guarantee money shall be forfeited. Clause 8 of the “Instructions to the Tenderers” is relevant for the purpose of the instant dispute and more particularly Sub-Clause (a) and Sub-Clause (b) of the said Clause; and for the sake of convenience, the same are quoted herein below.
The accepting authority shall be empowered to condone the delay on the merit of the case on written application from leaseholder and give another 15 days (maximum period) to the leaseholder for commencing the contract.
(b) If the highest bidder fa
Clause 8(a) stipulates that the commencement of loading has to be done within 15 days from the date of allotment of the contract.
The court affirmed that failure to commence loading within the stipulated time justified contract termination and forfeiture of the security deposit.
The court established that termination of a lease contract without proper notice violates principles of natural justice and contractual obligations.
The main legal point established in the judgment is that the conclusion of a contract can occur upon the award of work, and non-compliance with tender and contract terms can justify contract terminat....
The court established that contractual termination and debarment must comply with the specific terms of the agreement and adhere to principles of natural justice.
Government Contract – A Letter of Intent (LoL) merely indicates party’s intention to enter into a contract with other party in future and is not intended to bind either party ultimately to enter into....
The main legal point established is that in contractual matters, the court may intervene to prevent arbitrariness or favoritism by the government bodies, especially if the actions violate the equalit....
The court affirmed that failure to demonstrate actual loss precludes the forfeiture of security deposits, underscoring the principle that a breach must cause substantial damages to warrant penalties.
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