The decision to disqualify a tenderer based on the forfeiture of security deposit is a policy decision of the employer and cannot be interfered with unless it is actuated by malice or misuse of statutory powers.

HEMANT GUPTA, CJ.

1. This order shall dispose of two writ petitions raising identical questions of law and facts. One petitioner is MEIL Prasad (Joint Venture) whereas the other writ petitioner is MEIL-KBL (Joint Venture). The petitioner in W.P. No.21126/2017 [MEIL Prasad (JV) vs. State of M.P. & Another] was granted contract for Upper Narmada Irrigation Project in the year 2013 whereas the petitioner in W.P. No.1473/2018 [MEIL-KBL (JV) vs. State of M.P. and others] was granted contract for construction of Khargone Lift Canal in the year 2011.

2. Though the two contracts are for different projects but the arguments raised is identical that on account of disqualification clause in the subsequent Notice Inviting Tender (NIT), the petitioners stand disqualified from participating in the tender process. As per the petitioners, 11 tenders have been issued in the year 2018-19 so far. However, the condition in the Notice Inviting Tender that a contractor whose contract has been terminated and security deposit forfeited, stands disqualified from participating in the tender, seriously affects the rights of the petitioners to carry out their business, therefore, it violates the provisions of Articles 14 and 19(1)(g) of the Constitution of India.

3. The petitioners have disputed the action of the respondents in forfeiture of the security deposit and enforcement of the Bank Guarantee and that such question is pending before Madhya Pradesh Arbitral Tribunal (for short “the Arbitral Tribunal”) constituted under Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 and/or in proceedings under Section 9 of the Arbitration and Conciliation Act, 1996 (for short “the Act”).

4. The condition of disqualification is identical in all the tenders which have been issued but for facility of reference, the relevant disqualification clause is quoted from Prequalification Document (Volume I) Tender No.7734 of NIT No.502/2016-17/ENC/etendering dated 06.02.2017 (Annexure P/25 to W.P. No.1473/2018) issued by the Government of Madhya Pradesh, Water Resources Department, Chief Engineer, Projects, Bhopal (M.P.) for the supply of water from left bank rising main system and delivering at farmers’ field indicated in the index map for Left bank Micro Irrigation system under Mohanpura Major Project. The relevant clause reads as under:-

“2. Disqualification Even though the bidder satisfies the above requirements they are subject to be disqualified -

(a) If the design submitted by the bidder does not fulfill the criteria in general, his offer is liable for disqualification.

(b) If they have made untrue or false representations or hidden the material information in the forms, statements and attachments required in the prequalification documents.

(c) If any Department of GoMP including Municipal Corporation, Development Authority, Corporation of Society has, in consequence of some penal action, during last five years:-

(i) Cancelled or suspended the registration of the firm.

(ii) Registration was cancelled or suspended before five years and not revoked up to the date of bid submission.

(iii) Black listed the Contractor

(iv) Debarred the Contractor for participating in future tendering.

(v) Termination of contract due to default of contractor.

(vi) Forfeiting of full or partial SD for poor performance. (including cases where the forfeiting has been done in last 5 years) though the contract period/case may be older than 5 years provided the above said penal action was in force on the last date of submission of the bid. (Emphasis Supplied)

In case of JV all the partners shall be required to submit an affidavit giving full information of above facts.”

5. The argument of the learned counsel for the petitioners is that forfeiture of the security deposit or encashment of performance Bank Guarantee is a matter, which is pending before the statutory Arbitral Tribunal or in proceedings