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2015 Supreme(Mad) 228
HIGH COURT OF JUDICATURE AT MADRAS
C.S. KARNAN, J.
M/s. R.P.P. Infra Projects Limited – Appellant
Versus
M/s. Tamil Nadu Generation and Distribution Corporation Ltd., (TANGEDCO), Represented by its Chief Engineer, Materials Management & Another – Respondents
W.P. Nos. 13268, 13269 of 2013 & M.P. Nos. 1 to 3 of 2013
Decided on: 06-01-2015
For the Petitioners:P.J. Rishikesh, Advocate.
For the Respondents:R1, P. Gunaraj, R2, F.B. Benjamin George, Advocates.
The main legal point established in the judgment is that while the respondent was entitled to invoke the bank guarantee, their decision to do so without prior notice or comprehensive inquiry was arbitrary and unfit for execution.
Headnote:
Bank Guarantee - Tender Dispute - Tamil Nadu Transparency in Tender Act 1998, Cl.37, 38, Vol.I Sec.I(c), Vol.I Sec.I(d), Vol.I Sec.II Cl.40.3, Cl.44.1 - The court discussed the tender conditions, the validity of bank guarantee, and the forfeiture of Earnest Money Deposit (EMD) under the Tamil Nadu Transparency in Tender Act 1998. The court found that the petitioner failed to substantiate their technical qualifications and submitted a fraudulent certificate, leading to the invocation of the bank guarantee by the respondent. However, the court held that the respondent's decision to invoke the bank guarantee without prior notice or comprehensive inquiry was arbitrary and quashed the decision, allowing the petitioner to seek back the bank guarantee.
Fact of the Case:
The petitioner, a leading contractor, submitted a bid for a tender with a bank guarantee as Earnest Money Deposit (EMD). The respondent invoked the bank guarantee due to the petitioner's failure to substantiate their technical qualifications and submission of a fraudulent certificate. The petitioner sought relief through a writ petition.
Finding of the Court:
The court found that while the petitioner's actions warranted the invocation of the bank guarantee, the respondent's decision to do so without prior notice or comprehensive inquiry was arbitrary. The court quashed the decision and allowed the petitioner to seek back the bank guarantee.
Issues: The issues revolved around the validity of the bank guarantee, the forfeiture of EMD, and the respondent's decision to invoke the bank guarantee without prior notice or comprehensive inquiry.
Ratio Decidendi: The court held that while the petitioner's actions warranted the invocation of the bank guarantee, the respondent's decision to do so without prior notice or comprehensive inquiry was arbitrary and unfit for execution.
Final Decision: The court allowed the writ petition, quashed the decision to invoke the bank guarantee, and granted the petitioner the liberty to seek back the bank guarantee.
1. The short facts of the case are as follows:-
The petitioner submits that the petitioner's Company is a leading Contractor having successfully undertaken various major projects in Civil construction and other allied works both in India and abroad. The 1st respondent herein had floated a tender dated 29.07.2012 for execution of distribution of strengthening works under R-APDRP Part B scheme in 7 towns in Erode Region of TANGEDCO. The last date of submission of bid was 29.09.2012 and the validity of the bid was 180 days i.e., to end by 28.03.2013.
2. The petitioner further submits that under the bid document, liberty was given to the tenderer to have a JV Partner who would possess requisite eligibility and experience. Accordingly, the petitioner entered into a consortium agreement dated 12.09.2012 with one M/s. Ubitech Private Limited, Faridabad, Haryana 121001 and the said consortium was called as M/s. RPP-Unitech JV. The said RPP-Ubitech JV gave a power of attorney dated 12.09.2012 to the petitioner company to represent the consortium in the tenders. Accordingly, the petitioner submitted the bids on 29.09.2012, along with EMD in the form of Bank Guarantee dated 28.09.2012 for value of Rs.2,35,00,000/-. The said BG was to expire on 27.06.2013. The said BG was drawn from the 2nd respondent herein bearing No.73/2012. This being so, the 1st respondent addressed a letter dated 12.11.2012 seeking for two particular documents, A. Documentary evidence for having executed turnkey contract during last seven years for a minimum of 25 Kms length of 11Kv/higher voltage UG cable network (BQR-3(b) and B. Guaranteed technical particulars consisting of “Maximum total loss at 50% and 100% load” for 11 Kv, 16,25,40,63 KVA and 22Kv, 16,25,40,63 KVA distribution Transformers. The said documentary proof was to be submitted by 15.11.2012.
3. He further submits that on receipt of the above referred letter, this petitioner by its undated letter provided the requisite documents before the date as stipulated by the 1st respondent and the petitioner submitted all documents satisfying the tender conditions and was eagerly waiting to be declared technically qualified and was waiting to be called for price bid meeting. However, to the shock and surprise of this petitioner, the 1st respondent without no reason whatsoever, tried to invoke the BG by writing a letter to the 2nd respondent. Immediately, on learning the petitioner approached the 1st respondent and was informed by the 1st respondent that there was ambiguity in the experience certificate issued by Uttar Haryana Bijli Vitran Nigam Limited. On this ground the 1st respondent wanted to invoke the BG which was held by the 2nd respondent.
4. On knowing this, the petitioner engaged in talks with the 1st respondent and requested the 1st respondent by its letter dated 28.12.2012 for further time to provide clarification on the experience from Uttar Haryana Bijli Vitran Nigam Limited. Understanding this, the 1st respondent also issued a letter dated 29.12.2012 to the 2nd respondent asking the bank to keep the invocation of BG in abeyance and this petitioner approached M/s. Uttar Haryana Bijli Vitran Nigam Limited (UHBVNL) to provide the clarification as requested by the 1st respondent. M/s. Uttar Haryana Bijli Vitran Nigam Limited (UHBVNL) issued another confirmation letter this time issued by General Manager of UHBVNL, ascertaining the experience as submitted by the petitioner in its bid. The said confirmation letter cum certificate of experience dated 31.12.2012 was obtained and the same was immediately handed over to the 1st respondent in person on the same day itself.
5. He further submits that there was no response whatsoever from the 1st respondent, this petitioner addressed a letter dated 21.02.2013 to the 1st respondent along with UHBVNL certificate dated 31.12.2012. Inspite of this letter, there was no response whatsoever from the 1st respondent. He stated that thereafter this petitioner learnt
