The National Highway Authority Of ... vs M/S U Toll Corporation Ltd
2023 Latest Caselaw 5068 Patna

          IN THE HIGH COURT OF JUDICATURE AT PATNA
                       Letters Patent Appeal No.254 of 2018
                                         In
                   Civil Writ Jurisdiction Case No.21975 of 2012
     ======================================================

1. The National Highway Authority Of India Ministry Of Road Transport And Highways

2. Chief General Manager CO, National Highway Authority of India Ministry of Road Transport and Highwar

3. General Manager CO, National Highway Authority of India Ministry of Road Transport and Highway,

... ... Appellant/s Versus M/s U Toll Corporation Ltd.

... ... Respondent/s ====================================================== Appearance :

For the Appellant/s : Dr. Maurya Vijay Chandra, Advocate Mr. Gaurav Govinda, Advocate For the Respondent/s : Mr. Sanjay Singh, Sr. Advocate Mr. Priyajeet Pandey ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE PARTHA SARTHY CAV JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE)

Date : 05-10-2023

The appeal by the National Highways Authority of

India, (for brevity "NHAI") impugn the judgment of the

learned Single Judge which not only asserted jurisdiction to

decide the case, but also interfered with the action of the

respondent NHAI in having cancelled the Letter of Award ( for

brevity "LoA") issued to the writ petitioner and set aside the

fresh tender notification issued by the NHAI pursuant to the

cancellation. The learned Single Judge also directed the bank Patna High Court L.P.A No.254 of 2018 dt 05-10 -2023

guarantee invoked on alleged misdemeanor of producing false

documents to be refunded to the writ petitioner.

2. Learned Counsel Dr. Maurya Vijay Chandra

appearing for the NHAI seriously assailed the findings in the

impugned judgment regarding jurisdiction insofar as the entire

tender process having been carried out from Delhi, wherein the

writ petitioner also had their office and so were the further

transactions including the cancellation carried out from Delhi.

There was also this specific clause excluding jurisdiction

anywhere other than those of the Courts within Delhi, in the bid

document the Request For Proposal (RFP); which term is

deemed to have been agreed to by the petitioner who

participated in the bid and came out successful. The mere fact

that the subject of the tender was to be carried out inside the

State of Bihar does not by itself confer jurisdiction by reason of

the specific clause agreed to by both the parties. Though it could

be argued that there was cause of action within the State of

Bihar also, when by consensus, the parties had agreed to

exclude all other jurisdiction, but for Delhi wherein also there

was part of cause of action for reason of initiation of and

finalization of the tender proceedings being carried out in that

State; clearly excludes the jurisdiction of this Court. The Patna High Court L.P.A No.254 of 2018 dt 05-10 -2023

respondent had taken up the contention of lack of jurisdiction at

the very first instance of an affidavit being filed in the above

proceedings and the finding of the learned Judge of the

respondent having acquiesced to the jurisdiction of this court

cannot at all be sustained.

3. A list of dates is proffered by the learned counsel

to specifically contend that there were no mala fides in the

cancellation of the tender and that it emanated from an inquiry

conducted into the net worth of the tenderer, which ended in the

finding that the certificate of net worth furnished by the writ

petitioner was fraudulent. It is hence, by virtue of the specific

clause of the agreement, the LoA was cancelled. There is no

question of any mala fides being alleged on the respondents nor

are the submissions regarding that sustainable for reason of

none having been impleaded in the personal capacity.

4. As for the finding regarding the net worth, it is

argued that the same cannot be gone into in judicial review,

especially since the verification has been done by experts and

there is insufficient material on record to find the said decision

to be faulty or illegal. It was also pointed out that the fresh

notification had come to its logical conclusion by appointment

of the successful bidder who had also taken up the work and had Patna High Court L.P.A No.254 of 2018 dt 05-10 -2023

been carrying on the same while the proceedings were pending

before this Court. There is no question of cancellation of the

work, especially since there is no interim order granted in the

writ petition and even at the stage of filing of the appeal, it was

noted by a Division Bench, while considering the interim

prayer, in order dated 23.10.2019 that the matter primarily

survives for the second relief relating to refund of the amount of

bank guarantee. There was also a stay of refund of the bank

guarantee granted as per the said order. It is contended that the

appeal has to be dismissed not only on the question of

jurisdiction, but also on the merits, even if it is examined by this

Court.

5. Sri. Sanjay Singh, learned Senior Counsel,

appearing for the writ petitioner, however, points out from the

judgment itself that the appellant has acquiesced to the

jurisdiction of this Court and had never raised the question

before the learned Single Judge other than at the time of final

hearing. The specific term spoken of by the appellant is in the

bid document which has no relevance after the successful bidder

has been issued with the LoA. The LoA was cancelled without a

hearing and from the very fact that a fresh notification was

issued 5 days after the cancellation of the LoA, clearly Patna High Court L.P.A No.254 of 2018 dt 05-10 -2023

demonstrates that the appellant had, beforehand decided to

cancel the LoA and initiated the process of fresh tender followed

up with the cancellation. There is no ground to implead the

parties in the personal capacity, since what is alleged is

institutional mala fides and it is pointed out that the verification

of the petitioner's net worth is also said to have been initiated by

reason of a complaint raised by a total outsider through an

Hon'ble Member of the Parliament. In any event, the finding

that the writ petitioner had produced fraudulent documents to

establish the net worth was without giving them an opportunity

for explanation and even the verification carried out by the

experts was behind the back of the writ petitioner.

6. It is urged that even going by the net worth found

by the NHAI, the writ petitioner was entitled to be qualified.

There was absolutely no misdemeanor which could lead to

forfeiture of earnest money deposit, since the cancellation has

occurred unilaterally at the hands of the NHAI, without notice

to the writ petitioner. As of now, it is admitted that what remains

is only the refund of the bank guarantee which has to be with

interest as would be the liability of the writ petitioner to the

bank for satisfaction of the amounts paid to the NHAI on

enforcement of the bank guarantee.

Patna High Court L.P.A No.254 of 2018 dt 05-10 -2023

7. Learned Single Judge has elaborately dealt with the

contention regarding jurisdiction or the lack of it, as raised by

the learned counsel for the NHAI in Paragraphs 6 to 8 of the

impugned judgment. The entire tender process originated in

Delhi and was finalized therein. The transactions which led to

the cancellation also originated from Delhi, but it is to be

noticed that the very tender was for collection of toll at the

Parsoni Toll Plaza located at Km. 468.800 on Km. 520.002 to

Km. 440.000 (Muzaffarpur-Kotwa-Mehsi) of National Highway

No. 28 in the State of Bihar, which is admittedly within the State

of Bihar. What has been emphasized by the NHAI is Clause 25

of the agreement of the RFP produced as Annexure-2. The

Courts at New Delhi was to have exclusive jurisdiction on all

disputes arising 'under, pursuant to and/or in connection with

the bidding process'. The petitioner was issued with LoA by the

NHAI, but admittedly, the contract was not signed. In the above

circumstances, it cannot be said that the terms in the bidding

process would not bind the parties. The bidding process comes

to an end when the contract is signed; which stage had not

reached between the petitioner, the bidder and the respondent,

the awarder.

8. However, it has to be noticed that the subject of the Patna High Court L.P.A No.254 of 2018 dt 05-10 -2023

tender, the collection of fees for the toll implemented was within

the State of Bihar and the jurisdiction of the Courts within Bihar

stood excluded because of the specific condition in the bid

document. As has been noticed by the learned Single Judge,

"cause of action": 'means every fact which, if traversed, it

would be necessary for the plaintiff to prove in order to support

his right to a judgment of the Court'. It cannot for a moment be

doubted that this Court having jurisdiction over the State of

Bihar would have had jurisdiction over the matter, but for the

fact that there is an ouster of jurisdiction in the bid document

and the writ petitioner who applied under the bid document

would be regulated by such exclusion. What has been agreed

upon between the parties to be excluded can also be later agreed

to be included; or in other words, the specific terms agreed upon

by the parties can also be waived, which can be either expressed

categorically or inferred from subsequent conduct. It was the

specific contention of the writ petitioner that the petitioner had

proceeded based on the LoA and had even deposited the

performance security by way of demand draft. There was also a

request made by the NHAI on 23.05.2012 to sign the contract

within three days after which the NHAI made a U-turn and

sought for clarification of the net worth of the petitioner, which Patna High Court L.P.A No.254 of 2018 dt 05-10 -2023

eventually led to the cancellation of the LoA without affording

any opportunity to the petitioner to explain the alleged reduction

in net worth. As has been noticed from Swastik Gases (P) Ltd.

v. Indian Oil Corpn. Ltd.; (2013) 9 SCC 32, the intention of the

parties to confer jurisdiction on a particular Court, if it is clear

and unambiguous, the expression of one such place where the

cause of action arises would be in exclusion to another location

wherein also part of the cause of action arises. The conferment

of jurisdiction by consent of parties confining it to any place,

should also be where part of such cause of action arises. Herein

both Delhi, where the tender proceedings were initiated &

finalized and Bihar, the location of the toll, are places where

part of the cause of action arise. However, this can be varied by

the parties and disputes can be agitated in any other location

where part of the cause of action arises, if by express or implied

conduct the restriction is waived.

9. In the present case, the writ petition was filed in

the State of Bihar in 2012 and the same was finally heard and

allowed only in the year 2017. Though, in the first counter

affidavit filed, the issue of jurisdiction was raised, it was never

addressed or decided even while passing the interim order. As

early as on 13.05.2013 an interim order was passed restraining Patna High Court L.P.A No.254 of 2018 dt 05-10 -2023

the Bank of Baroda from paying the bank guarantee to NHAI

and if already paid, restraining the NHAI from withdrawing the

amounts. There were many more proceedings recorded by way

of altogether 23 orders mostly prayers for adjournments, at

which time the question of jurisdiction was never raised. It

cannot be doubted that the State of Bihar has jurisdiction since

the location of the subject of the tender was within the State of

Bihar. The learned Single Judge who heard the writ petition had

recorded in Paragraph 26 of the impugned judgment that, at no

point when the matter was pending, there was raised a question

of jurisdiction. It has been specifically observed that even on the

last occasion when the matter was taken up by the very same

Single Judge, no such jurisdictional issue was raised and only

when the hearing was found to go against the respondent, the

question of jurisdiction was raised.

10. Specific reliance was placed on Nawal Kishore

Sharma v. Union of India; (2014) 9 SCC 329, wherein it had

been categorically declared that the Court having entertained the

application and also passed interim order ought not to have

dismissed the writ petition for want of total jurisdiction.

Reliance was also placed on Harihar Prasad v. Union of India,

2009 SCC OnLine Pat 1511 wherein the question of alternate Patna High Court L.P.A No.254 of 2018 dt 05-10 -2023

remedy was held to be not possible of consideration, if raised at

a later juncture. We are inclined to agree with the learned Single

Judge that since part of the cause of action, the specific location

for which the RFP was issued for collection of toll was within

the State of Bihar and the petitioners having invested substantial

amounts towards establishing the toll plaza, a right had accrued

to the petitioner to function the toll within the State of Bihar, by

which alone there is jurisdiction within the State, which can be

validly invoked but for the clause otherwise in the bid

document. The respondent NHAI had appeared and contested

the matter and despite raising the question of lack of jurisdiction

in the counter affidavit, never pressed it seriously. The writ

petition was pending for more than five years in this Court; with

an interim order passed. The NHAI has acquiesced to the

jurisdiction of the High Court at Patna and part of the cause of

action, by way of the location of the toll plaza being within the

State of Bihar, having arisen within the jurisdiction of this

Court, we are inclined to uphold the order of the learned Single

Judge on that aspect. There is no inherent lack of jurisdiction

insofar as this High Court is concerned.

11. As far as the merits are concerned, the

cancellation was for reason of the certificate submitted by the Patna High Court L.P.A No.254 of 2018 dt 05-10 -2023

writ petitioner/respondent regarding its net worth being

fraudulent; which also led to the forfeiture. One of the grounds

raised by the learned counsel for the NHAI was that the

forfeiture of bank guarantee was as per clause 11(iv) of

Annexure-3 NHAI which is a copy of the bid document

submitted by the petitioner to the NHAI. The specific clause

speaks of the performance security being forfeited by the

authority under the following circumstances:

(a) if the successful bidder fails to sign the contract.

(b) if the successful bidder fails to get the contract engrossed within the stipulated period or

(c) in accordance with the provision of the contract.

12. Clause (b) and (c) are not relevant, since the

contract itself was not entered into. The contention of the NHAI,

the appellant, is that the respondent failed to sign the contract

within the stipulated time. In this context, we have to notice

clause 11 itself which speaks of bid security, the form and the

amount for which it has to be furnished which has to be returned

without any interest within 120 days from the date of opening of

bids. Sub-clause (iii) also speaks of forfeiture by the NHAI, if

the bidder withdraws his bid, does not accept the correction of

the bid price or fails within the specified period to furnish the

required performance security. The bid security can be adjusted Patna High Court L.P.A No.254 of 2018 dt 05-10 -2023

in the amount of performance security as per clause (5). The

forfeiture carried out in the present case is of the performance

guarantee and the same can only be for reason of the respondent

having failed to sign the contract; which failure definitely has to

be attributable to the respondent-successful bidder.

13. The relevant dates as pointed out by the NHAI

assumes relevance and we notice it from the tabulation

produced by the learned counsel for the NHAI. Looking at the

above tabulated dates, the NHAI had requested the petitioner to

sign the contract within three working days on 23.05.2012 and

had issued a further notice on 30.07.2012 directing the

petitioner to clarify their net worth. Hence, it has to be

understood that the execution of contract was kept in abeyance

while clarification was pending. The NHAI again issued a

reminder on 16.08.2012 regarding the net worth to which on

24.08.2012, a clarification was given. Almost 2 months from

that date on 18.10.2012, the NHAI issued show cause notice to

the respondent for termination of the LoA and forfeiture of

performance guarantee. A fresh tender for the very same Parsoni

Plaza was issued on 23.10.2012 without waiting for the show

cause to be furnished by the writ petitioner. The writ petitioner

showed cause by letter dated 05.11.2012 and the cancellation of Patna High Court L.P.A No.254 of 2018 dt 05-10 -2023

the LoA was by the communication of the NHAI on 04.12.2012.

From the dates afore noticed as supplied by the NHAI itself, it

cannot be said that the bidder had refused to sign the contract

though a letter was issued on 23.05.2012, asking the bidder to

sign the contract within three working days. Admittedly, the

matter was kept in abeyance, since a complaint was raised by a

Member of Parliament about the net worth certificate submitted.

The complaint from the Member of Parliament is also said to be

on 11.05.2012, on which date itself the Central Government had

entrusted the stretch in which the toll plaza was to be

established to the NHAI. It is the said complaint which gave rise

to the inquiry regarding the net worth certificate furnished by

the respondent; initiated by the NHAI, and in that circumstance,

the notice issued on 23.05.2012 can only be viewed with

suspicion. When an inquiry was pending, there was no reason

why a demand should be made for execution of the contract

itself. Be that as it may, after the said demand, again the NHAI

issued a letter dated 30.07.2012 directing the writ petitioner to

clarify its net worth. Hence, despite the letter issued on

23.05.2012 to sign the contract within three working days, the

failure did not lead to a cancellation or forfeiture of the security

offered.

Patna High Court L.P.A No.254 of 2018 dt 05-10 -2023

14. Now, we come to the cancellation itself, which

was on the ground that the net worth certificate issued by the

respondent was false and fraudulent. In fact, it is very pertinent

to notice that the net worth required for the purpose of the

specific tender was Rs. 4.53 crores whereas even according to

the NHAI, the net worth of the respondent, as verified came to

Rs. 4.93 crores. The allegation was that the net worth submitted

of Rs. 16.15 crores was fraudulent. We cannot, but notice that a

fraud perpetrated, would vitiate the bid process in which the

respondent was found to be successful; if the net worth

certificate was fraudulent despite the respondent otherwise

satisfying the net worth requirement. However, herein the

NHAI, or the agency which verified the net worth asserts the net

worth to be far less than that projected; which net worth found,

also is in excess of the minimum required. In that circumstance

the defect if at all, is of an over valuation, which cannot result in

a finding of fraud having been employed. The enquiry

conducted of the net worth, behind the back of the respondent,

assumes more relevance in the said context. There is no

opportunity afforded to the petitioner to establish its net worth

and also validate the certificates produced by them along with

the bid document. The action of finding the net worth to be far Patna High Court L.P.A No.254 of 2018 dt 05-10 -2023

lesser than that certified, as also the certificates to be fraudulent

& false was a unilateral action without notice or affording an

opportunity to the respondent to show cause; which attempt as

we saw from the admitted facts was illusory, since even before

showing cause, a fresh tender was floated. Despite a show cause

having been issued, without waiting for an explanation from the

respondent and even before cancelling the LoA issued, a fresh

tender for procurement of fee collection agency was issued as

per letter 23.10.2012. It was after the fresh notification that the

cancellation itself was carried out, which reveals the prejudged

mind of the authority who passed a prejudicial order against the

successful bidder after issuance of the LoA; arbitrarily and

without complying with the principles of natural justice.

15. We do not examine whether there are any mala

fides on the officers of the NHAI or the NHAI itself as an

institution, but however, there are very serious procedural

irregularities vitiating the entire process of cancellation of LoA.

There is also violation of principles of natural justice and as has

been held in Mohinder Singh Gill v. Chief Election

Commissioner; (1978) 1 SCC 405, the principles of natural

justice cannot be inferred as absent, merely for reason of

absence of a provision to provide such an opportunity. The Patna High Court L.P.A No.254 of 2018 dt 05-10 -2023

silence does not exclude it totally, unless it be so excluded by

necessary implication. When there is an order passed visiting

the party against whom it is passed, with some consequence,

then the functional obligation should be read in as mandatory

was the declaration in Paragraph 76.

16. We find no reason to interfere with the

judgment of the learned Single Judge and dismiss the appeal. As

we noticed and as has been stated by the NHAI and the

contractor who has been additionally impleaded in the appeal,

there is no scope for cancellation of the further contract awarded

or restoration of the petitioner to the contract. What remains is

only the question of whether the performance security enforced

by the NHAI was proper or not. We have found that there can be

no failure alleged on the writ petitioner to sign the contract. The

NHAI had sought for a clarification of the net worth and before

such clarification was furnished and even before the

cancellation of the LoA issued to the writ petitioner was

cancelled, a fresh tender was floated. The writ petitioner, in the

fact and circumstances cannot be said to have failed to sign the

contract. Allegation of fraud on the successful bidder does not

permit for forfeiture of either the bid security or the

performance security offered by the bidders; which allegation in Patna High Court L.P.A No.254 of 2018 dt 05-10 -2023

the present case was unilaterally declared by the NHAI, without

any opportunity being granted to the successful bidder, leading

to an arbitrary cancellation of LoA; that too after a new tender,

for the contract covered by the LoA was issued.

17. The writ petitioner on the above finding is

entitled to be refunded the entire performance guarantee; which

shall be done within a period of three months. If the amounts are

not refunded within the stipulated time, then the writ

petitioner/respondent shall be entitled to claim interest at the

rate at which they were made liable to pay to the bank, in

repayment of the enforcement of the bank guarantee. The appeal

stands dismissed, leaving the parties to suffer their respective

costs.

                                                                    (K. Vinod Chandran, CJ)


                      Partha Sarthy, J                         I agree



Anushka/-                                                              ( Partha Sarthy, J)
AFR/NAFR
CAV DATE                21.09.2023
Uploading Date          06.10.2023
Transmission Date