Bombay High Court
Pvt. Ltd. & Anr vs Company Limited & Ors on 23 December, 2010
Bench: B.H. Marlapalle, U. D. Salvi
1
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mgn
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 2324 of 2010
Knowledge Infrastructure Systems
Pvt. Ltd. & Anr. .... Petitioner
Vs.
Maharashtra Power Generation
Company Limited & Ors. ..Respondents
Mr. Mukul Rohatagi, Senior Counsel with Mr. Janak Dwarkadas,
Senior Counsel with Mr. D.D.Madon, Senior Council along with
Mr. Saurabh Kirpal, Ms. Manali Singhal, Mr. Karan Bharioke,
Mr. C.D. Mehta and Mr. B.C. Mehta i/b.Dhruve Liladhar & Co.,
for the petitioner.
Mr. V.Thorat, Senior Counsel with Mr.Dipankar Das and Mr.
Apurv Harsh i/b. M.V. Kini & Co., for respondent No.1.
Ms.C.Nanavatty i/b., Manadiar & Co., for respondent No.2.
CORAM: B. H. MARLAPALLE &
U. D. SALVI, JJ.
RESERVED ON: DECEMBER 14, 2010
PRONOUNCED ON: DECEMBER 23, 2010
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JUDGMENT (PER B.H. MARLAPALLE, J.):
1. Heard.
2. Rule.
3. Respondent Nos.1 and 2 waive service. Respondent No.3 is
a formal party. Respondent No.1 has filed affidavit-in-reply as
well as sur-rejoinder affidavit and, therefore, the petition has been
heard finally with the consent of the parties.
4. In this petition filed under Article 226 of the Constitution
the decision of the respondent No.1 and as communicated to the
petitioner through the letter dated 27th October, 2010, forfeiting
five bank guarantees submitted as earnest money deposit on the
ground that the bid submitted by the petitioners had rendered
invalid in terms of the tender, is under challenge and the earnest
money deposit is to the extent of Rs.16,75,00,000/- crore.
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5. The petitioner No.1 is a company incorporated under the
Companies Act, 1956 with petitioner No.2 as its shareholder, is
engaged in trading of coal amongst other activities. Respondent
No.1 is a company incorporated under the Companies Act, 1956
and is in the business of generation of electricity in the State of
Maharashtra and thus a State instrumentality within the meaning
of Article 12 of the Constitution.
6.
On 20th March, 2010 respondent No.1 published a
notification inviting bids for tender for the supply of 3.35 metric
tonnes of coal of foreign origin for its plants. In response to the
said bid eight parties including the petitioner had submitted their
offers. The petitioner No.1 company along with the bid had
submitted five bank guarantees for an amount aggregating to Rs.
16,75,00,000/- as bid security for its bid and as required under
the tender terms. On 29th May, 2010, the techno-commercial bids
of the parties were opened on-line and the bid submitted by the
petitioner company was found to be techno-commercial valid and
accepted and the physical support documents were opened on 3rd
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June, 2010 as scheduled. It appears that two letters dated 22nd
July, 2010 in a sealed envelope were submitted by the petitioner
No.1 company to the respondent No.1 on 23rd July, 2010 and were
delivered in the mail receiving section at about 10.45 a.m. The
first letter offered an unconditional discount of 3.5% on the price
offered at all locations/plants under the tender and the second
letter stated that since the respondent No.1 had allowed various
bidders to amend/change/modify their technical documents (even
after opening of the technical bids) the petitioner believed that it
should be treated similarly and hence it should be allowed to offer
adjustments to its unopened price bid.
7. The bids were opened on 23rd July, 2010 at about 1.00 p.m.
and the letters dated 22nd July, 2010 inwarded by the petitioner
company on 23rd July, 2010 at about 11.00 were not before the
Bids Opening Committee at that time and thus the unconditional
discount offered or adjustment offered so proposed by the
petitioner company were not known to the Committee when the
bids were opened. The petitioner company was not a
successful bidder, in any case. However, a show cause notice
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dated 17th August, 2010 was received by it calling upon the
company to explain as to why the bid security amount should not
be forfeited in terms of the tender conditions i.e. clause No.7.1(i)
and 12.2 of Section 1 of the tender. The said show cause notice
was replied by the petitioner on 7th September, 2010 pointing out
that there was no deviation from the tender conditions and the
discount so offered did not in any manner influence the tender
committee when the tenders were opened on 23rd July, 2010 at
about 1.00 p.m. The petitioners received yet another letter dated
18th September, 2010 calling upon it to furnish its detailed reply to
the show cause notice and such a reply was again submitted on
20th September, 2010. In the meanwhile by letter dated 28th
September, 2010 the petitioner was called upon to extend the bid
security/bank guarantees as the case regarding forfeiture of bid
security was under process and vide its letter dated 29th
September, 2010 the petitioner company informed the respondent
No.1 that the bid security was extended till 29th September, 2010.
Finally by the impugned order dated 27th October, 2010 the
respondent No.1 informed the petitioner company that the earnest
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money stood forfeited. The said letter dated 27th October, 2010
reads as under:-
"With reference to the above, it is clarified that, the bidders
including you have submitted post bidding documents in
response to the additional clarifications called by
Mahagenco regarding bid. Mahagenco has never asked
for submission of revised prices on any account. The
modification in prices cannot be co-related with post
bidding correspondence. As such, your statement
regarding acceptance of suo-moto post bidding
documentation is not in order. The submission of revised
price bid was within the validity of offer. As per tender
terms, the modification in prices during validity period is
ground for forfeiture of Bid Security.
The circular of Railways regarding recommended port for
respective TPS was issued in March 2010 much earlier
than bid closing date and it is bidders' responsibility to
arrange all logistics following all rules, regulations and
circulars issued by concerned authorities viz. Railways,
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ports and offer the price accordingly. Therefore,
submission of the revised prices on this account is not
relevant and it does not ensure any purpose in view of
public interest. In all it is observed that, the reply to the
Show Cause Notice vide letter dated 7th September 2010
referred at Sr. No.3 above, is not relevant.
As such, in terms of tender, your bid had rendered invalid
and is declared as invalid and five nos. of bank guarantees
preferred above towards Earnest Money Deposit are
forfeits."
8. Mr.Mukul Rohatagi, the learned Senior Counsel appearing
for the petitioners submitted that the invocation of the bid security
is ultra vires the tender conditions and contrary to the terms of the
bank guarantee. The letters dated 22nd July, 2010 submitted to the
respondent No.1 company on 23rd July, 2010 at about 11.00 a.m.,
were with bonafide intention so as to offer discount in view of the
circular of the Ministry of Railways issued in June, 2010 and it
was in public interest. Such an offer did not in any manner
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amount to either a fresh physical bid price or a modification to the
bid already submitted. In short clause 7.7(i) as well as Clause
12.1.2 of the tender bid did not apply. Mr. Rohatagi also
submitted that in any case when the bids were opened on 23rde
July, 2010 at about 1.00 p.m., these offers of discounting made
by the petitioner company were not before the committee when
opened the bids and, therefore, these letters did not in any way
influence the decision making so as to accept the successful
bidder and the petitioner is not a successful bidder. The
Committee was not aware that any such offer of discount or
concession was made by the petitioner in writing when the bids
were opened. He has referred to the additional affidavit filed on
behalf of respondent No.1 and submitted that these letters dated
22nd July, 2010 were opened for the first time by the concerned
official only around 3.00 p.m. On 23rd July, 2010 i.e. much after
the bids were opened and the successful bidder was decided. In
such a situation the said letters cannot be treated as modified the
petitioners original bid did not amount to a fresh bid sought to be
submitted physically. The impugned decision is without
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application of mind to these facts and is a decision which smacks
arbitrary exercise of powers. The decision impugned is violative
of the rights guaranteed under Article 14 of the Constitution.
There was no case to issue a show cause notice to the petitioners
and to pass the order of forfeiture of the security deposit. The
respondent No.1 failed to consider the reply submitted to the
show cause notice and applied its mind to the legal position
before the impugned order was passed. The decision impugned is
in colourable exercise of powers by a State instrumentality and,
therefore, is required to be quashed and set aside in a writ petition
filed under Article 26 of the Constitution. As per Mr. Rohatagi
the respondent No.1 failed to act fairly, rationally and in due
exercise of its powers in terms of the tender conditions and,
therefore, under the powers of judicial review this Court is
required to set aside the order dated 27th October, 2010 forfeiting
an amount of Rs.16,75,00,000/-.
9. Affidavit in reply opposing the petition has been filed by
the Chief General Manager of the respondent No.1 company and
by relying upon clause 7.7 and 12(1) of Section 1 of the tender as
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well as Clause 2.3 of the bid specification it has been contended
that the petitioners attempted to interfere and derail the tender
process by submitting a revised price bid in physical form on
23rd July, 2010 with fraudulent intention. It has been pointed out
that the bid was valid upto 25th August, 2010 and the petitioners
have fraudulently submitted the revised price bid in physical
form on 23rd July, 2010. The petitioners have also violated clause
7.7(i) of the bid specification and, therefore, they are liable for
the consequence thereof. It is further contended that once the
petitioners had submitted their price bid online by e-tendering
platform there is no occasion for the petitioners to submit the
revised bid in physical form and that they have knowingly and
intentionally modified their bid within the bid validity period and,
therefore, the bid security is liable to be forfeited as contemplated
under the tender terms and, therefore, the impugned order has
been passed. It has been further submitted that the petitioner
company has been associated with the respondent No.1 since the
year 2006 on various contracts and it was aware of the procedure
and policy of the respondent No.1 in purchase of imported coal.
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The estimated cost of the tender in question was about 2000
crores and the bid security of Rs.16.75 crores was less than 1%
of the cost of the tender. The attempt on the part of the petitioenr
company in submitting the price bid in physical form was a
calculated risk taken by the petitioner to derail the tender process
and/or to adopt legal proceedings.
10. There is no dispute that the petitioner is not a successful
bidder and the price quoted by the petitioners was about 20%
more than the L1 in 5 tenders. Even the revised price bid
purportedly submitted by the petitioners would not be lower than
the L1 bidder.
11. Mr. Thorat, the learned Senior Counsel appearing for the
respondent No.1 company submitted that the petition was not
maintainable and is required to be dismissed as such. As per Mr.
Thorat, the dispute between the parties is arising out of a tender
bid and whether the forfeiture was permissible or not could be an
issue to be decided in a civil suit and such an issue cannot be
adjudicated upon in a Writ Petition under Article 226 of the
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Constitution. Coming to the merits of the impugned decision Mr.
Thorat submitted that Clause 7.7, 12.12 and other clauses have
been rightly invoked by the respondent No.1 company and the
reasons mentioned in the impugned order dated 27th October,
2010 cannot be faulted with on the touch stone of Article 14 of
the Constitution. The tender terms provide for such forfeiture in
certain eventualities and those have been set out in the show
cause notice as well as in the impugned order. The principles of
natural justice have been complied with and it cannot be alleged
that the decision is arbitrary or against the tender terms.
12. The main issue which falls for consideration is whether the
action of the respondent No.1 company in forfeiting the security
deposit of Rs.16.75 crores submitted by way of bank guarantee
along with the tender deed by the petitioners is sustainable in the
facts and circumstances of this case.
13. It ought to be noted at this stage that there are no disputed
questions of fact while adjudicating the legality of the impugned
decision of forfeiting the security deposit. In the case of Tata
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Cellular v. Union of India, 1994 (6) SCC 651 the Supreme
Court stated that where decision/action is vitiated by arbitrariness,
unfairness, illegality, irrationality or "Wednesbury
unreasonableness" it will require judicial intervention and the
Courts will set right the decision making process. In the case of
ABL International Ltd. & Anr. Vs. Export Credit Guarantee
Corporation of India Ltd. & Ors., (2004) 3 SCC 553, the
Supreme Court while dealing with the issue of maintainability of
a Writ Petition under Article 226 of the Constitution in the matter
of tenders/contracts held in paragraphs 27 and 28 as under:-
"27. From the above discussion of ours, the following
legal principles emerge as to the maintainability of a writ
petition:
(a) In an appropriate case, a writ petition as against a State
or an instrumentality of a State arising out of a contractual
obligation is maintainable.
(b) Merely because some disputed questions of fact arise
for consideration, same cannot be a ground to refuse to
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entertain a writ petition in all cases as a matter of rule.
(c) A writ petition involving a consequential relief of
monetary claim is also maintainable.
28. However, while entertaining an objection as to the
maintainability of a writ petition under Article 226 of the
Constitution of India, the court should bear in mind the fact
that the power to issue prerogative writs under Article 226
of the Constitution is plenary in nature and is not limited
by any other provisions of the Constitution. The High
Court having regard to the facts of the case, has a
discretion to entertain or not to entertain a writ petition.
The Court has imposed upon itself certain restrictions in
the exercise of this power. (See Whirlpool Corpn. v.
Registrar of Trade Marks.) And this plenary right of the
High Court to issue a prerogative writ will not normally be
exercised by the Court to the exclusion of other available
remedies unless such action of the State or its
instrumentality is arbitrary and unreasonable so as to
violate the constitutional mandate of Article 14 or for other
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valid and legitimate reasons, for which the Court thinks it
necessary to exercise the said jurisdiction."
In the case of Vijay Kumar Gupta, Sanjay vs. State of
Maharashtra, 2008 (3) Bom.C.R. 593, a Division Bench of this
Court on the same issue of maintainability of a writ petition under
Article 226 of the Constitution arising from tender bids stated as
under:-
"7. Another facet of fairness in administrative action is
whether the action suffers from the vice of arbitrariness.
The courts while exercising the powers of judicial review
within the prescribed limitation are bound to examine this
aspect of executive actions. The executive besides taking
decisions effecting its powers are expected to act in
consonance with the rule of fair play. Normally, such
actions could be examined by the court on the touch-stone
of Wednesbury's principles. This doctrine has emerged
from English Law and has now been accepted in India as
well. The judicial pronouncements now, for a considerable
time, have applied this principles with all its rigours.
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Normally, it will be impermissible for a State to exercise
its discretion free of any checks and balances and without
any objectivity in their decisions.........."
14. To deal with the challenge raised by Mr. Thorat on the
maintainability of this petition Mr. Rohagati , the learned Senior
Counsel in addition to the above cited decisions also relied upon
a recent decision in the case of Zonal Manager, Central Bank of
India v. M/s.Devi Ispat Ltd. & Ors., JT 2010 (8) SC 1. The
Supreme Court after referring to its earlier decisions including in
the case of KBL International Ltd. (supra) stated that merely
because one of the parties to the litigation raises a dispute in
regard to the facts of the case, the Court entertaining such petition
under Article 226 of the Constitution is not always bound to
relegate the party to a suit. In appropriate cases the Court has
the jurisdiction to entertain a writ petition even involving the
disputed questions of fact and there is no absolute bar for
entertaining a writ petition even if the same arises out of the
contractual obligations and/or involves some disputed questions
of facts.
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In the instant case, the Chief General Manager of
respondent No.1 company has filed affidavit in sur rejoinder and
stated in paragraph 7 as under:-
"7. ............ I say and submit that it appears that at about
11.30 A.M. on 23.07.2010 the Petitioners have submitted a
sealed envelope to the Inward Clerk at 3rd Floor,
Prakashgad, Bandra (West), Mumbai. I say and submit that
since I am the Chief General Manager of MSPGCL in
charge of Fuel Management Cell, as such, I had to go to
Mantralaya in respect of policy related briefing to the
concerned Secretary, Government of Maharashtra on
23.07.2010 at about 10.30 A.M. I was at Mantralaya till
about 11.30 A.M. and bid had to be opened at 1 PM.
Therefore, I rushed from Mantralaya to Bandra office by
car and I reached almost at about 12.45 P.M. and I
immediately rushed to the tender opening hall and I called
all the bidders and price bid opening process was
immediately commenced. As I said earlier, after opening
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the e-bid (price), in the presence of all the bidders and
completing all procedures, I reached my Chamber only at
about 3 P.M. and while I was involved in my file work, one
of my clerical Staff brought a sealed envelope addressed to
me, which was issued by the Petitioners themselves and on
the envelope it was mentioned price bid envelope. I say
that since it was containing price bid of an ongoing tender
process, therefore, I have drawn the attention of the higher
authorities including Directors of E.D. And as per the
decision of the Management, the matter was then referred
to the opinion of Legal Cell of MSPGCL......"
15. Thus it is not in dispute that when the bids were opened on
23rd July, 2010 at about 1.00 p.m., the letters inwarded by the
representative of the petitioners at about 10.45 a.m., on the very
same day were not before the bid opening committee and
consequently, these letters in no way have influenced the decision
making for accepting the successful bidder. Even on other points
this petition does not involve any disputed questions of fact and
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all that we are required to examine is whether as per the bid terms
the respondent No.1 company would be justified in forfeiting the
security deposit amount of Rs.16.75 crores as per the impugned
order dated 27th October, 2010. In the peculiar facts of this case
we do not agree with the submissions made by Mr. Thorat that the
petitioners are required to be relegated to the remedy of a civil
suit and this petition filed under Article 226 of the Constitution
should not be entertained.
16. Some of the relevant clauses of the tender document need
to be reproduced as under:-
"7.0 BID SECURITY (EMD):
7.1 The bidder shall submit the Bid security i.e.
unconditional EMD of amounts equal to Rs.5
Cr./MMT, separate for each TPS's specified
quantity, offered along with its bid.
7.2 Bid security can be submitted in one of the
following forms:
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(a) Crossed Demand Draft in the name of
Maharashtra State Power Generation Co. Ltd.,
payable at Mumbai drawn on any scheduled bank.
(b) A Bank Guarantee strictly as per the proforma
specified in Annexure -I, in favour of Maharashtra
State Power Generation Co. Ltd. on behalf of bidder
OR any one of the members of the consortium (if
the bidder is a consortium two firms) issued by any
bank as stipulated in Annexure -XI of this
specification.
7.3 The validity of the bank guarantee against Bid
security shall be at least for 120 days from the date
of Bid opening and the same shall be extended as
may be required. Bid security for shorter period
shall make the Bid liable for rejection.
7.4 .....................
7.5 .....................
7.6 .....................
7.7 The Bid submitted by a bidder shall be declared
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invalid and the Bid security shall be forfeited:
i) If the bidder withdraws/modifies his bid within
the bid validity specified in the Bid Specification.
OR
ii) The successful bidder fails to submit
performance guarantee and/or to execute contract
agreement within the prescribed period in
accordance with the instructions to the bidder. OR
iii) If the Bidder does not accept the arithmetical
calculation of the landed Price for evaluation of the
bid. OR
iv) If the bidder being the successful bidder fails to
furnish the acceptance of Letter of Award, within
the specified time limit. OR
v) If the bidder gives any wrong/false
information/documents in the bid.
8.0 VALIDITY OF BIDS:
Offers/bids should be valid for a period of at least
90 days from the date of their opening. Bids with
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shorter validity shall be liable for rejection at the
discretion of the purchaser.
12.0 SUBMISSION OF BIDS:
12.7 It is mandatory for the bidder to submit the Bids
through e-tendering platform and the bidders are
required to provide the "Physical Support
Documents" duly signed and sealed, within the
timelines specified.
12.12 It should be noted that the price Bid can be made
only through the e-tendering platform. No physicals
price Bids shall be submitted. In case a bidder
submits physical price Bids, such Bids shall be
summarily rejected.
14.0 OPENING OF BIDS:
a. The techno-commercial Bid opening will be
at the specified time in the NIT.
b. The evaluation committee would first check
the payment of EMD and tender fee. Any
mismatch between the scanned copy of EMD
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instruments and the physical instrument would be
considered as the basis for rejection of the Bid.
c. The evaluation committee will then refer the
submitted documents for a detailed scrutiny.
d. The price Bids for only those bidders which
meet the qualifying requirements and also which
are technically and commercially acceptable,
shall be
ig opened at the notified time and date in
the presence of the qualified bidders who
choose to be present.
16.0 ACCEPTANCE OF BIDS:
16.1 The purchaser reserves the right to
accept/reject any bid in part or in full or all the bids
without assigning any reasons thereof.
16.2 The purchaser reserves the right to place
order on more than one bidder for any quantity.
17.0 NOTIFICATION OF AWARD OF CONTRACT:
The notification of award of contract shall be
communicated to the successful bidder by Letter of
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Award (LOA) by Registered Post/Air Mail or hand
delivery or Fax or Courier as the purchaser deems
fit. In case of issuance of LOA by fax the same
shall be followed by letter of confirmation by
Registered Post/Air Mail. It shall be noted that the
contract shall be concluded on notification of award
of contract.
19.0 SUBMISSION
ig OF PERFORMANCE
GUARANTE, SIGNING OF CONTRACT &
RETURN OF BID SECURITY:
19.2 After execution of contract with the successful
bidder, the Bid security (EMD) will be returned to
respective bidders, with the exception of the
successful bidder (s).
19.3 The Bid security (EMD) of the successful
bidder will be returned only after furnishing of
Security deposit-cum-Performance Guarantee Bond
and signing of the Contract.
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17. It is thus seen that the bids security forfeiture is
provided only under Clause 7.7. The show cause notice dated 17 th
August, 2010 has purportedly sought to invoke Clause No.7.7(i)
and Clause 12.12 reproduced above. As per clause 12.12 bids
can be made only through the e-mail platform and no physical
price bid shall be submitted. In case a bidder submits physical
price bids such bids shall be summarily rejected. If it is the case
of the respondent No.1 company that the letters inwarded on 23rd
July, 2010 amounted to submission of physical price bids, then
the only implication that the petitioners would suffer is rejection
of their bid and, therefore, this clause does not support the
decision to forfeit the security deposit amount. It is nowhere
provided that if the bid is rejected, bid security amount is liable to
be forfeited. On the other hand as per clause 19.2, after the
execution of the contract with the successful bidder the bid
security (EMD) will be returned to the respective bidders, with
the exception of the successful bidder and in the instant case the
contract with L1 has been executed on 7/9/2010. As per clause
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19.3 the bid security (EMD) of the successful bidder will be
returned only after furnishing of the Security Deposit-cum-
Performance Guarantee Bond and signing of the Contract and,
therefore, this clause is not applicable in the instant case as the
petitioner No.1 is not the successful bidder. As per clause 7.7(i)
if the bidder withdraws/modifies his bid within the bid validity
specified in the Bid Specification, the bid submitted by him shall
be declared invalid and the bid security shall be forfeited. On the
other hand the reasons set out in the impugned order dated 27th
October, 2010 in support of the forfeiture of the bid security read
as under:-
"With reference to the above, it is clarified that, the bidders
including you have submitted post bidding documents in
response to the additional clarifications called by
Mahagenco regarding bid. Mahagenco has never asked for
submission of revised prices on any account. The
modification in prices cannot be co-related with post
bidding correspondence. As such, your statement regarding
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acceptance of suo-moto post bidding documentation is not
in order. The submission of revised price bid was within
the validity of offer. As per tender terms, the modification
in prices during validity period is ground for forfeiture of
Bid Security.
The circular of Railways regarding recommended port for
respective TPS was issued in March 2010 much earlier
than bid closing date and it is bidders' responsibility to
arrange all logistics following all rules, regulations and
circulars issued by concerned authorities viz. Railways,
ports and offer the price accordingly. Therefore,
submission of the revised prices on this account is not
relevant and it does not ensure any purpose in view of
public interest. In all it is observed that, the reply to the
Show Cause Notice vide letter dated 7th September, 2010
referred at Sr. No.3 above, is not relevant.
As such, in terms of tender, your bid had rendered invalid
and is declared as invalid and five nos. of bank guarantees
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preferred above towards Earnest Money Deposit are
forfeited."
In the above reproduced reasonings set out in the
impugned order the gist of para 1 is that the petitioner-company
has resorted to modification in prices during the valid period and,
therefore, forfeiture of bid security was justified under Clause
7.7(i) of the contract terms.
ig We do not agree with these
conclusions and on the face of the facts that when the tenders are
opened on 23/7/2010 at about 1.00 p.m., the alleged modification
letters inwarded by the petitioner no.1-company around 11.45
a.m. on that date were not within the knowledge of the respondent
no.1-company and in the bids so opened, the petitioner's bid was
no where in the reckoning. L1 was already known and it was
only after 3 p.m. that the Chief General Manager opened the
envelops inwarded by the petitioner no.1-company. We,
therefore, hold that in these peculiar circumstances, Clause 7.7(i)
of the contract terms cannot be invoked so as to penalize
petitioner no.1-company by forfeiting the security deposit of Rs.
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16.75 crores. We have already dealt with the other grounds taken,
relying upon Clause No.12.12 of the contract terms and even if
the bid had rendered invalid, as alleged, there is no provision for
forfeiture of the earnest money deposits in such eventualities.
The petitioner's bid was already out of consideration after 1.00
p.m. on 23/7/2010. Viewed in any manner, the decision taken by
the respondent no.1-company to forfeit five bank guarantees is
unsustainable and the impugned order is illegal, arbitrary and
appears to have been passed in colourable exercise of its power
by respondent no.1-company.
18. Hence, this petition succeeds and the same is hereby
allowed. The impugned show cause notice dated 17/8/2010 and
the subsequent order dated 27/10/2010 are hereby quashed and
set aside. Rule is made absolute accordingly, but with no order as
to costs.
(U. D. SALVI, J.) (B. H. MARLAPALLE, J.)
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Mr. Thorat, the learned counsel, made an oral application to
continue the order passed by us on the earlier date directing the
bank to maintain status quo for a period of four weeks.
Mr. Madan, the learned senior counsel appearing for the
petitioners, makes a statement on insturctions that if the
respondent no.1 - company succeeds before the Apex Court, the
petitioners undertake to return the money within a period of four
weeks from the date of such order.
Oral application is rejected.
( U. D. SALVI, J.) (B. H. MARLAPALLE,J.)
