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IN THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
DEVASHIS BARUAH, J.
Sri Paran Jyoti Saikia S/o Sri Dharma Saikia – Appellant
Versus
The Assam Power Distribution Company Ltd. and Ors – Respondents
WP(C) 2499 of 2017
Decided on : 05-08-2023
Constitution of India, 1950 - Article 226, 12, 14 - Forfeiture of Bank Guarantee - Breach of Pre-Contract - Petitioner challenging letter issued as regards forfeiture of Bank Guarantee of petitioner for setting aside and quashing impugned letter – There is no material on record to show that at time of taking decision to forfeit entire earnest money deposit. Para 37.
Finding of the Court: Respondent No.1 suffered loss, there is nothing mentioned as to why entire earnest money deposit was sought to be forfeited and not any amount which would commensurate with actual loss suffered - There is no material on record to show that at time of taking decision to forfeit entire earnest money deposit, Board of respondent No.1 had taken into account any materials as regard loss so suffered on account of re-tendering, price increase etc - Court is of opinion that Resolution so adopted to forfeit entire earnest money deposit was unfair, arbitrary, unreasonable as well as irrational - Consequent steps so taken for issuance of impugned communications on basis of Board meeting held, in opinion of this Court, is also arbitrary, unreasonable, irrational and unfair and violates mandates of Article 14 of Constitution - Impugned letter to invoke Bank Guarantee is set aside and quashed in view of fact that conditions of Bank Guarantee do not permit invocation of Bank Guarantee on account of any other condition other than enumerated in Bank Guarantee.
Result: Writ petition disposed of.
JUDGMENT :
The extra ordinary jurisdiction under Article 226 of the Constitution had been invoked by the petitioner challenging the letter dated 24.04.2017 issued under Office Memo No.APDCL/CGM(RE)/DDUGJY/Gen-Corres/CAD/2015-16/187 by the Chief General Manager (RE), APDCL as regards forfeiture of Bank Guarantee of the petitioner; for setting aside and quashing the impugned letter dated 25.04.2017 issued under Office Memo No.APDCL/CGM(RE)/DDUGJY/DDU/II/Hills/2016-17/79 by the Chief General Manager (RE), APDCL to the Allahabad Bank for invocation of Bank Guarantee No.0177416IPG000074 dated 04.08.2016 (for short, ‘the Bank Guarantee in question’) of the petitioner as well as for a direction upon the APDCL Authorities to forebear from invoking the said Bank Guarantee in question.
2. The facts involved in the instant case as can be discerned from the pleadings and the materials on records is that an Invitation for Bids was issued by the Chief General Manager (RE), of the Respondent No.1 for execution of projects, i.e. electrification works (BEI) of unelectrified villages of 20 districts in Assam under Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY), Phase-II on behalf of the Government of Assam. From a perusal of the said Invitation for Bids, it transpires that there were five packages.
3. The instant writ petition, however, relates to Package No.4, i.e. DDU/II/Hills for electrification work of unelectrified villages of Dima Hasao, Karbi Anglong districts of Assam (Spec. No.:APDCL/DDUGJY/II/XII/Hills). To the said Invitation for Bids, there was an Instruction to Bidders (ITB) which stipulates the various terms for the purpose of eligibility, bid security, bid validity etc. The petitioner being interested participated in the said tender process.
4. At this stage, it is relevant to take note of that as per Clause 9.1 of the Invitation for Bids dated 11.07.2016, the bids were to be submitted in single sealed envelope at or before 12:00 hours (IST) on 06.08.2016. It was mentioned that the Techno Commercial Part shall be opened on the same day i.e. on 06.08.2016. This Court further finds it relevant to take note of that on the very day, i.e. on 06.08.2016, the petitioner entered into a Pre-Contract Integrity Pact with the Chief General Manager (RE) of the Respondent No.1 Company.
5. It further reveals from the records that on 19.09.2016, the Tender Purchase Committee of the respondent No.1 took a decision and made recommendations for grant of the contract in respect to the five packages.
6. From the said Resolution dated 19.09.2016 in respect to Package No.4, it transpires that out of the three bidders, the bids of M/S Windpower Infra Pvt. Ltd. and M/S N. K. Power & Infrastructure Pvt. Ltd. were found non-responsive. Accordingly, the bid of the petitioner, being the lowest bidder, the Tender Purchase Committee recommended awarding of the work to the petitioner.
7. It further reveals from the record that the Performance Certificate dated 30.06.2016 on the basis of which the petitioner claimed to be eligible for submission of the bid was sent for verification to the Office of the Executive Engineer (E), Daporijo Electrical Division, Department of Power, Arunachal Pradesh. The record further shows that on 23.09.2016, the Executive Engineer (E), Daporijo Electrical Division, Department of Power had issued a communication to the Chief General Manager (RE) of the Respondent No.1 stating inter-alia that the Performance Report in favour of M/S Paran Jyoti Saikia dated 30.06.2016 for an amount of Rs.22,14,71,979.00 was not issued from their Office.
8. Upon receipt of the said communication dated 23.09.2016, the Board of Directors of the respondent No.1 in its meeting dated 23.09.2016 observed that the petitioner had manipulated the documents and forged the signature of the Executive Engineer, and as such, the Board instructed the Chief General Manager (RE) to initiate legal action against the petitioner and his JV partner M/S D&G Construction for providi
Bank guarantee represents an independent contract between bank and beneficiary, both parties would be bound by terms thereof.
The invocation of Bank Guarantees must be aligned with contractual terms; unauthorized invocation is deemed arbitrary.
The court upheld the banning order based on the violation of the Integrity Pact and directed the refund of forfeited Security Deposit/Earnest Money Deposits, emphasizing the importance of adhering to....
Banning orders require proof beyond reasonable doubt of misconduct; otherwise, natural justice demands adherence to procedural fairness, especially in cases invoking penalties like forfeiture.
The main legal point established in the judgment is the validity of the Bank Guarantee submitted by the petitioner and the application of principles of natural justice by the respondents.
Bank guarantees are enforceable independent contracts, subject to invocation conditions; courts refrain from interference unless fraud or injustice is evidenced.
Submission of Earnest Money Deposit (EMD) through bank guarantee was non-compliant with the mandatory electronic modes prescribed in the Detailed Tender Call Notice, and subsequent modifications to t....
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It is well settled that mere existence of an alternative remedy or an alternative forum does not stand as an impediment on Court to exercise its jurisdiction under Article 226 of Constitution of Indi....
Point of Law : It is trite law that a Court can restrain encashment of bank guarantee in cases of established fraud in invocation of bank guarantee. The fraud has to be absolute and egregious, vitiat....
The submission of a bogus Bank Guarantee by a bidder justifies a two-year ban under tender conditions, as the term 'certificate' includes documents.
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