WPMS/1530/2016
2021 Latest Caselaw 1108 UK

IN THE HIGH COURT OF UTTARAKHAND
           AT NAINITAL
           ON THE 24THDAY OFMARCH, 2021
                         BEFORE:
 HON'BLE SHRI JUSTICE MANOJ KUMAR TIWARI
       Writ Petition (M/S) No. 1530of 2016
BETWEEN:

M/s Hillways Construction Company Ltd. ...Petitioner
     (By Ms. Vandhna Singh, Advocate)

AND:

Union of India &&others                  ...Respondents

     (By Mr. VinodNautiyal,Deputy Advocate General for the
     State of Uttarkhand and Mr. RajendraArya, Advocate
     holding brief of Mr. PiyushGarg, Advocate for respondent
     no. 3)

                        JUDGMENT

By means of this writ petition, petitioner has sought following reliefs:-

(i) Issue a writ, order in the nature of mandamus commanding the respondents not to forfeit the Bid Security of the petitioner company in pursuance to the impugned order/communication dated 27.5.2016 (Annexure No. 6) issued by the respondents to the Bank.

(ii) Issue any other writ, order or direction as this Hon'ble court may deem fit and proper in the facts and circumstances of the case.

(iii) Award cost of the petition to the petitioner.

(iv) Issue a writ, order or direction in the nature of certiorari quashing the order no. RVNL/RKSH-KNPG/2014/14/Works (Chandrabhaga)/RT dated 27.5.2016

issued by respondent no. 3 annexed as Annexure No. 7 to the writ petition.

2. Facts of the case, in brief, are as follows:

Petitioner is a Private Limited Company. Rail Vikas Nigam Private Limited (respondent no.3), which is a Government of India enterprise, invited tenders for construction of a Bridge over river Chanderbagha in Rishikesh-Karanprayag new BG Rail Line. It was a two bid system and, upon qualifying in the technical bid, price bid of the bidder was to be opened. Petitioner submitted bid in response to the Tender Notice issued by respondent no. 3. Alongwith his bid, petitioner submitted a bank guarantee as bid security for the sum of ` 1.16Crores, which is on record as Annexure No. 5 to the writ petition. Relevant extract of the bank guarantee is reproduced below:

"1. KNOW ALL MEN that by these present that I/We the undersigned ShriNagendraAswal (Branch Manager), Rs. 1,16,00,000.00 (Rupees One Crore Sixteen Lacs Only) being fully authorized to sign and incur obligations for and on behalf of the Bank, confirm that the Bank, hereby, unconditionally and irrevocably gurantee to pay to the Employer full amount in the sum of as above stated.

2. The Bank undertakes to immediately pay on presentation of demand by the Employer any amount up to and including aforementioned full amount without any demur, reservation or recourse. Any such demand made by the Employer on the Bank shall be final, conclusive and binding, absolute and unequivocal on the Bank notwithstanding any disputes raised/pending before any Court, Tribunal, Arbitration or any Authority or any Authority or any threatened litigation by the Bidder or Bank.

3. The Bank shall pay the amount as demanded immediately on presentation of the demand by Employerwithout any reference to the Bidder and without the Employer being required to show grounds or give reasons for its demand ofthe amount so demanded.

4. The guarantee hereinbefore shall not be affected by any change in the constitution of the Bank or in theconstitution of the Bidder.

5. The Bank agrees that no change, addition, modifications to the terms of the Bid document or to anydocuments, which have been or may be made between the Employer and the Bidder, will in any way absolvethe Bank from the liability under this guarantee; and the Bank, hereby, waives any requirement for notice ofany such change, addition or modification made by Employer at any time.

6. This guarantee will remain valid and effective from 25.02.2016 till 24.08.2016. Any demand in respect ofthis Guarantee should reach the Bank within the validity period of Bid Security.

7. The Bank Guarantee is unconditional and irrevocable."

Respondent no. 3 issued a letter on 27.05.2016 to the Manager, Union Bank of India, Rishikesh, requesting him to encash the bank guarantee submitted by the petitioner as bid security and credit the amount in the account of respondent no. 3. Thus, feeling aggrieved, petitioner has approached this Court. However, the Bank, which had issued bank guarantee, has not been made a party respondent.

3. A counter affidavit has been filed by respondent no. 3, stating therein that the bid security

submitted by the petitioner was forfeited, in terms of Clause 19.6 (b) & (d) of the Instructions to Bidders, as petitioner had indulged in fraudulent practice, inasmuch as, he had misrepresented facts in order to procure the contract. Clause 19.6 of the Instructions to Bidders deals with forfeiture of bid security in certain contingencies. The affidavit enclosed by the petitioner with his bid has been brought on record as Annexure No. 4 to the counter affidavit. Paragraph nos. 8, 9, 10 & 11 of the affidavit are reproduced below:

"8.We declare and certify that we have not made any misleading or false representation in the forms, statements and attachments in proof of the qualification requirements.

9. We declare that the information and documents submitted along with the tender by us are correct and we are fully responsible for the correctness of the information and documents, submitted by us.

10. We understand that in case we cease to fulfillthe requirements of qualifying and eligibility criteria at any time after opening of bids and till finalization of bids, it will be our bounden duty to inform the Employer of our changed status immediately and in case of our failure to do so, our bid shall be rejected and bid security shall be forfeited. We shall also be liable for Banning of Business dealings upto a period of five years.

11. We understand that if the contents of the affidavit are found to be false at any stage during bid evaluation, it will lead to rejection of our bid and forfeiture of the bid security. Further, we M/s Hillways Construction Company Pvt. Ltd. 34, Adarsh Gram Dehradun Road, Rishikesh and all our constituents understand that we shall be liable for banning of business dealings upto a period of five years."

4. In sum & substance, case of respondent no. 3 is that petitioner had made wrong declaration, regarding his previous experience, for getting qualified and he was not meeting the requirement of executing two contracts of bridge work with combined value of atleast` 40.45 Cores.

5. In paragraph no. 5 of the rejoinder affidavit, petitioner has stated that although he had completed the contract for construction of Bridge, which was awarded to him by the State Public Works Department; but, due to financial constraint, State Public Works Department had not made complete payment for the contract, therefore, the certificate issued by Executive Engineer, State Public Works Department, cannot be the basis for holding that petitioner has indulged in corrupt practice, for forfeiting his bid security under Clause 19.6 of Instructions to Bidders. It is further contended that Clause 19.6 of Instructions to Bidder gives discretion to the employer to forfeit the bid security, as the expression used therein is 'may' and the said expression cannot be read as 'shall' for forfeiting the bid security of the petitioner.

6. Heard learned counsel for the parties and perused the record. From perusal of writ petition, it is revealed that petitioner has not challenged rejection of his technical bid, which was rejected on the ground that he has furnished incorrect information. In the absence of any challenge to the decision taken by respondent no. 3 to reject petitioner's bid, the reliefs, as claimed in the writ petition, cannot be granted. Forfeiture of bid security is a fallout of rejection of petitioner's bid on the

ground of fraud. In the writ petition, it is not pleaded that petitioner had the required experience of executing similar project and, in paragraph no. 7 of the writ petition, it is vaguely stated that he satisfies the conditions of eligibility provided under Clause 4.1 to 4.3 of the Instructions to Bidders. The experience requirement is not mentioned in the Instructions to Bidders and Clause 4 of Instructions to Bidders lays down other conditions of eligibility. In the writ petition, there is no ground taken that petitioner fulfilled the experience requirement or that his technical bid was wrongly rejected.

7. The relief, which was originally sought by the petitioner, was a direction to respondents not to forfeit the bid security of the petitioner in pursuance to the letter dated 27.05.2016 issued by respondent no. 3 to Union Bank of India. Subsequently, by an amendment, quashing of said letter dated 27.05.2016 was also sought. No other relief has been claimed in the writ petition.

8. A perusal of bank guarantee submitted by the petitioner indicates that it is unconditional and irrevocable. In Clause 2 of the bank guarantee, the bank has given an undertaking to immediately pay, on demand by the employer, full amount without any demur, reservation or recourse. It further stipulates that any demand made by the employer on the bank shall be final, conclusive and binding, absolute and unequivocal notwithstanding any disputes raised/pending before any Court, Tribunal, Arbitration or any Authority or any threatened litigation by the bidder or bank. Clause 3 of the bank guarantee stipulates that bank shall pay the amount, as

demanded by the employer, without any reference to the bidder and without the employer being required to show grounds or give reasons for its demand of the amount.

9. In view of the conditions contained in the bank guarantee, the employer (respondent no. 3) has every right to claim the amount of bank guarantee and the bank cannot refuse to pay the amount as demanded by the employer. Encashment of bid security in the form of bank guarantee cannot be subject matter of a writ petition, as the bank guarantee is an independent contract between the bank and the employer. Moreover, bank is not party before this Court. In such view of the matter also, the relief, as claimed, cannot be granted to the petitioner. The respondent no. 3 has exercised its right, which is available under Instructions to Bidders. Whether respondent no. 3 was justified in exercising such right or not, is basically a question of fact, which cannot be adjudicated in a writ petition. In the rejoinder affidavit, petitioner has stated that he had completed similar work; but, full payment for such work was not made to him. However, this Court, while exercising power under Article 226 of Constitution of India, is not inclined to go into such disputed questions of fact.

10. The dispute raised in the present writ petition is purely a private dispute. There is no element of public law involved in the matter, therefore, this Court does not find any reason to interfere in the matter.

11. Accordingly, the writ petition fails and is hereby dismissed. However, petitioner shall be at liberty to approach the appropriate forum for redressal of his grievance, if any.

(MANOJ KUMAR TIWARI, J.) Aswal