The invocation of Bank Guarantees must be aligned with contractual terms; unauthorized invocation is deemed arbitrary.

1. This Writ Petition is filed aggrieved by the action of the respondents in invoking the Bank Guarantees furnished by the 1st petitioner along with its tenders in response to the tender notification dated 5-3-2002.

2. The 1st petitioner claims to be a registered special class Contractor with the department of the Roads and Buildings. The 1st respondent-Superintending Engineer (Rand B), APHM and ECRP, issued a tender notification inviting tenders for widening and strengthening of Mydukur to Tadichearla Road from KM 50/0 to 57/0 and KM 57/0 to 65/0 under Package Nos. 28-C and 28-D respectively. The 1st petitioner submitted its tenders, furnishing the required security as specified in Clause 16.1 of the Instructions to Bidders (ITB), by way of two Demand Drafts i.e., BG.No.2002/0015 for Rs. 2,92,000/- and BG. No. 2002/0016 for Rs. 3,34,000/- issued by the Andhra Bank, Nandyal, respectively, in respect of the above said two packages. It is not in dispute that as per the tender schedule, bids were opened on 9-4-2002 and finalized.

3. Thereafter, the 1st petitioner by letter dated 1-5-2002 informed the 1st respondent-Superintending Engineer, that the bids submitted by it on 9-4-2002 were tampered by some unknown persons and the Certificates of experience submitted by it were replaced, which act was beyond their control. While assuring that such instances will not be repeated as they would adopt foolproof precautions in future, the 1st petitioner requested not to initiate any punitive action against it keeping in view its good record of work done in the Department. It is not in dispute that the bids of the 1st petitioner were rejected as non-responsive in terms of Clause No. 37.1 of 'ITB'. Subsequently, the 1st petitioner made a request to return the Bank Guarantees furnished by it claiming that since its bids were rejected under Clause 37.1 of 'ITB', they are entitled for return of the Bank Guarantees. The 1st petitioner states that in pursuance or the said request, the 2nd respondent-Chief Engineer, vide memo dated 31-7-2002 directed the 1st respondent-Superintending Engineer, to act in terms of Clause 16.4 of 'ITB' and return the bid security furnished by the 1st petitioner. In spite of that the 1st respondent addressed a letter dated 13-8-2002 directing the 4th respondent - Pay and Accounts Officer, Telugu Ganga Project, to invoke the Bank Guarantees furnished by the 1st petitioner. Consequently, the Bank Guarantees furnished by the 1st petitioner were invoked and the 5th respondent-Andhra Bank, released the amounts covered by the two Bank Guarantees to the tune of Rs. 6,26,000/- (Rs. 2,92,000/- + Rs. 3,34,000/-). The said action of the respondents is under challenge in this Writ Petition, contending inter alia, that the invocation of Bank Guarantees is contrary to the terms and conditions of the tender as well as the conditions of the Bank Guarantee. The 1st petitioner contends that since there was no concluded contract between the parties, the Respondents 1 to 4 are not entitled to invoke the Bank Guarantees. It is further contended that as per the conditions stipulated, the Bank Guarantees are liable to be invoked only on the happening of any of the two conditions mentioned thereunder, and since none of the said conditions exists, the 5th respondent-Bank, ought not to have released the amount covered by the Bank Guarantees.

4. The 1st respondent-Superintending Engineer filed a counter-affidavit stating that the bids submitted by the 1st petitioner were opened on 9-4-2002, and when the Certificate of experience produced