Delhi High Court
M/S N. Kumar Associates ... vs Union Of India on 15 January, 2016
Author: Badar Durrez Ahmed
$~11
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 15.01.2016
+ WP(C) No.1682/2015 & 17914/2015 (u/s 8 of Arbitration &
Conciliation Act), CM Nos.3028/2015 (stay)
M/S N. KUMAR ASSOCIATES INTERNATIONAL ..... Petitioner
versus
UNION OF INDIA ..... Respondent
Advocates who appeared in this case:
For the Petitioner : Mr Sagar Dhama with Mr Kshitiz Ahuja,
Advocates.
For the Respondent : Mr Amitara Poddar, Advocate.
CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE SANJEEV SACHDEVA
JUDGMENT
BADAR DURREZ AHMED, J (ORAL)
1. The petitioner had participated in tender No.79/14-15 dated
18.07.2014 for the work "House Keeping of Yamuna Rest House, Rail
Niwas, Annexe Yamuna & ORH near Rail Club in the section of
SSE/W/Transit Camp under ADEN/E-II". The petitioner's bid was
accepted by the competent authority. The petitioner had made, inter alia,
an earnest money deposit of Rs1.80 lakhs alongwith the tender and the
same was retained as security money of the work. A letter of acceptance
was issued to the petitioner by the competent authority of the Northern
Railways on 12.08.2014. It was indicated in the letter of acceptance that
the contract value of the work would be Rs 66,34,505.04 and that the
performance guarantee amounting to Rs 3,31,730/- was required to be
deposited within 30 days failing which penal interest @ 15% per annum
would be charged as per tender condition No.5.2.1(a). The said tender
condition No.5.2.1(a) reads as under:-
"5.2 Performance Guarantee:
5.2.1 The procedure for obtaining Performance Guarantee is
outlined below:
(a) The successful bidder shall have to submit a
Performance Guarantee (PG) within 30 (Thirty) days
from the date of issue of letter of Acceptance (LOA).
Extention of time for submission of PG beyond
30(Thirty) days and upto 60 days from the date of
issue of LOA may be given by the Authority who is
competent to sign the contract agreement. However, a
penal interest of 15% per annum shall be charged for
the delay beyond (Thirty) days, i.e. from 31 st day after
the date of issue of LOA. In case the contractor fails to
submit the requisite PG even after 60 days from the
date of issue of LOA, the contract shall be terminated
duly forfeiting EMD and other dues, if any payable
against that contract. The failed contractor shall be
debarred from the participating in re-tender for that
work.
(b) xxxx xxxx xxxx xxxx
2. The petitioner did not deposit the performance guarantee within the
initial period of 30 days stipulated in the said tender condition. However,
the petitioner deposited the performance guarantee alongwith interest @
15% per annum on 13.10.2014. The respondent thereupon issued a letter
dated 23.12.2014 terminating the contract and forfeiting the earnest
money of Rs1.80 lakhs. The respondent also debarred the petitioner from
participating in future tenders for the subject work. The petitioner is
aggrieved by the said letter dated 23.12.2014.
3. The impugned letter dated 23.12.2014 is set out hereinbelow:-
"NORTHERN RAILWAY
DRM OFFICE
NEW DELHI
128-W/269/79/14-15/WE
Dated: 23.12.2014
M/s. N. Kumar Associates International,
Starlink Navalkunj Building,
Linking Road (Bandra),
Mumbai-400050
Sub:- House Keeping of Yamuna Rest House, Rail Niwas,
Annexe Yamuna & ORH near Rail Club in the section of
SSE/W/Transit Camp under ADEN/E-II.
Ref:- Acceptance letter of even no. dated 12.08.2014.
Dear Sir,
The contract for the above mentioned work has awarded to
you vide this office acceptance letter of even no. dated 12.08.2014.
As per tender condition No.5.2.1(a) you were required to deposit
[email protected] 5% of contract value amounting to Rs.3,31,730/- positively
within 30 days from the date of issue of acceptance letter failing
which interest @ 15% p.a. was leviable from 31st days to 60 days i.e.
upto 10.10.2014.
As per tender condition No.5.2.1
(a) The successful bidder shall have to submit a Performance
Guarantee (PG) within 30 (Thirty) days from the date of issue of
letter of Acceptance (LOA). Extension of time for submission of
PG beyond 30(Thirty) days and upto 60 days from the date of
issue of LOA may be given by the Authority who is competent to
sign the contract agreement. However, a penal interest of 15%
per annum shall be charged for the delay beyond (Thirty) days,
i.e. from 31st day after the date of issue of LOA. In case the
contractor fails to submit the requisite PG even after 60 days
from the date of issue of LOA, the contract shall be terminated
duly forfeiting EMD and other dues, if any payable against that
contract. The failed contractor shall be debarred from the
participating in re-tender for that work.
But you have failed to deposit the required amount of
Performance Guarantee within the stipulated period, hence the
contract is hereby terminated with immediate effect as per GCC
and the earnest money deposited by you alongwith tender in the
shape of FDR No.341137 dated 16.07.14 of Rs.1,80,000/- issued
by State Bank of India, Mumbai, is forfeited. You are also
debarred to participate in future tender for the subjected work.
Please note.
This issue without prejudice.
Your's faithfully
Divl. Engineer Estate-1
Northern Railway, New Delhi
For & on behalf of President of India
Copy to:- 1. Sr. DFM, N.Rly., New Delhi for information with
request to get the above mentioned FDR encashed in favour of
Railway immediately.
2. ADEN/E-II/NDLS for information & necessary action please."
4. The contention of the learned counsel for the petitioner is that the
contract could not have been terminated because of the reason that the
performance guarantee was furnished on 13.10.2014 and the same was
within time. He submitted that the 59 th day from the issuance of the letter
of acceptance was on 10.10.2014. The 60th day fell on 11.10.2014, which
was a holiday. This fact is admitted by the learned counsel for the
respondent. The next day i.e. 12.10.2014 was also a holiday being a
Sunday. Therefore, the next date on which the petitioner could have
submitted the performance guarantee was 13.10.2014, which was a
Monday. It is on that date that the performance guarantee was, in fact,
submitted. This principle of computation of time is also indicated in
Clause 10 of the General Clauses Act, 1897, which although does not
strictly apply to the present case, would be the basis of the aforesaid
principle that if a thing is to be done by particular day and if on that day
the office is closed, the said thing could be done on the next working day.
This is exactly what has happened in the present case. Therefore, we are
of the view that the termination of the contract was not in order.
5. The performance guarantee amount has already been returned to
the petitioner after it had been encashed by the respondent. The EMD,
however, had been forfeited and, therefore, the same is liable to be
returned to the petitioner. It also follows that the debarment order has to
be set aside. It is, accordingly, set aside.
6. We are making it clear that, in the meanwhile, as the contract had
been awarded to some other party, we are not interfering with that
contract. But if the petitioner has any surviving grievance or claim left,
he is free to do so before any appropriate forum in accordance with law.
Insofar as this petition is concerned, we are making it clear that the
impugned order dated 23.12.2014 is set aside to the extent that the earnest
money deposit be returned to the petitioner forthwith with interest @ 6%
per annum and that the petitioner shall not be debarred from participating
in future tenders with regard to the subject work, the debarment having
been set aside.
7. The writ petition is allowed to the aforesaid extent. All the
pending applications stand disposed of.
8. Costs of Rs10,000/- be paid by the respondent to the petitioner
within four weeks.
BADAR DURREZ AHMED, J
SANJEEV SACHDEVA, J
JANUARY 15, 2016/st
