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2013 DIGILAW 377 (PNJ)

Munish Kumar Bansal v. State of Punjab

2013-03-21

A.K.SIKRI, RAKESH KUMAR JAIN

body2013
Judgment A.K. SIKRI, J 1. By means of this writ petition filed under Articles 226/227 of the Constitution of India, the petitioner-firm seeks writ in the nature of certiorari and prays for quashing of orders dated 31.8.2009 and 24.4.2009 by which earnest money of Rs.15,34,000/- deposited by it has been forfeited. According to the petitioner, these orders are not only illegal, arbitrary and void but without jurisdiction and contrary to principles of natural justice as well. The writ petition has been filed in the following factual background. 2. The petitioner, which is a partnership concern registered under the provisions of the Indian Partnership Act, had submitted its bid pursuant to the notice inviting tenders (NIT) issued by the Executive Engineer, Construction Division, PWD, B&R, Branch Muktsar under the State of Punjab. The said NIT was for the work of construction of raising/widening/strengthening of Kauni Khirkianwala-Bhutti Wala- Thandewala to Bye Pass Road Muktsar RD 0.00-19.88 Km. The bids were to be submitted in two parts, namely, financial as well as technical bids along with earnest money in the shape of FDR for Rs.15.34 lacs. After processing the technicalities of tenders of petitioner and others, the Tender Evaluation Committee found the petitioner to be eligible. On this, the financial bids were opened and the bid of the petitioner was lowest. However, another contractor, namely, M/s Yadav Builders, who was the second lowest, issued legal notice dated 16.2.2009 to the respondents stating that the petitioner was not technically viable and had no bidding capacity. On that basis, it claimed that the contract be awarded to it instead of petitioner. After receipt of this legal notice, the respondents addressed letter dated 17.4.2009 to the petitioner seeking certain clarifications and stating that if the clarification/documents are not supplied by 20th April, 2009, earnest money of the petitioner would be forfeited. As the petitioner failed to respond, vide communication 24.4.2009 the earnest money was forfeited stating as under in the said letter: “Ref: In continuation to this office letter No.212-13 dated 17.4.2009 On the subject cited letter under reference you were requested to clarify your position in respect of tender documents up to 20.4.2009 but you have not submitted the clarification/documents as desired by this office due to which you have been declared non responsive by the Tender Processing Committee. Therefore your earnest money deposit has been forfeited.” 3. Therefore your earnest money deposit has been forfeited.” 3. The petitioner submitted representation dated 10.5.2009 questioning the aforesaid move. As the respondent did not bother to give any reply, the petitioner filed CWP-11803-2009 which was disposed of vide order dated 6.8.2009 directing the respondent no.4 to take a decision on the representation of the petitioner in accordance with law by passing a speaking order. It resulted in passing of speaking order dated 31.8.2009 rejecting the representation of the petitioner and maintaining the order of forfeiture. 4. A perusal of speaking order dated 31.8.2009 would reveal that to be eligible to participate in the bids, one of the conditions was that the bidder should have executed two works of Rs.5 crores or one work of Rs.10 crores each year in the last three years. Objection of M/s Yadav Builders was that turnover of the petitioner in the last three years was not Rs.30 crores but it was much less. It had also not executed two works of Rs.5 crores or one work of Rs.10 crore each year in the last three years, though it was wrongly shown in the tender documents. In fact, it had included sublet work in World Bank Division, PWD, B&R Division, Ferozepur which was factually incorrect. It was also alleged that the balance-sheet annexed with the tender documents by the petitioner was fake and incomplete which could be verified from the Income Tax Department. It is on this basis that various letters including letter dated 18.2.2009, 27.2.2009, 27.2.2009, 12.3.2009, 25.3.2009 and finally letter dated 17.4.2009 were written asking the petitioner to supply further documents to show that it fulfilled the eligibility requirements, but the petitioner had not done so. As the petitioner failed to give any explanation, due to submission of wrong information/clarification in the technical documents, the Tender Processing Committee had decided to forfeit the earnest money. This order also mentioned that information was sought from the Income Tax office which had provided requisite information vide Letter No.244 dated 6.5.2009 and that did not tally with the information given by the petitioner in the technical bid which clearly showed that false documents/information was given. Additionally, it was also stated that the petitioner had given in writing on 26.2.2009 that its bid capacity had been changed and, therefore, the bid capacity be recalculated, which meant that the petitioner had modified its offer within the validity period. 5. Additionally, it was also stated that the petitioner had given in writing on 26.2.2009 that its bid capacity had been changed and, therefore, the bid capacity be recalculated, which meant that the petitioner had modified its offer within the validity period. 5. At the time of arguments, learned counsel for the petitioner did not dispute the aforesaid facts. However, his submission in law was that in spite thereof, there could not have been action for forfeiting the earnest money. In this behalf, he drew the attention of this Court to the clauses relevant forfeiture of money, as contained in the instructions in the document titled “Instructions to the Bidders’. Relevant Clauses are as under:- “8. The contractor whose tender is accepted, shall be required to furnish security at the rate of five percent of the cost of work to be deducted from the running bills (three percent of the total cost of cover the liability of defects and short comings and two percent of the total cost for winding up the contract satisfactory). The earnest money if released from Bank of Treasury will be treated as part of the Security deposit. 9. The offer shall remain open for acceptance for a period of ninety days from the date of opening of tenders. The Earnest money shall be forfeited if the tendered withdraws or modifies his offer within the validity period (Ninety days) or fails to sign the agreement (Format Contract) after acceptance of his offer or fills (sic) to commence the work within ten days of issuance of acceptance letter. After the forfeiture of Earnest Money the contract shall be immediately nullified. 10. On acceptance of tender the contractor shall either himself remain available at site of work or arrange the availability of an accredited representative, fully authorized in writing at site of work to receive instructions of the Engineer-in-Charge or his representative and to ensure prompt compliance thereof. xx xx xx xx 19. Sealing and marking of Bids. a) The inner outer and separate envelopes containing Technical and Financial Bids shall be addressed to the Executive Engineer, Constn. Division PWD B & R Br Muktsar. xx xx xx xx 19. Sealing and marking of Bids. a) The inner outer and separate envelopes containing Technical and Financial Bids shall be addressed to the Executive Engineer, Constn. Division PWD B & R Br Muktsar. b) In addition of the identification required each of the envelopes shall indicate the name and address of the bidder to enable the bid to be returned unopened in case it is declared late or the Tender Processing Committee declares the bid as non responsive.” Referring to Clause-9, he submitted that earnest money could be forfeited in the following circumstances:- (a) On the bidder withdrawing its offer within the validity period of 90 days; (b) On modifying the offer within the validity period; (c) After the acceptance of the tender, on failure to sign the agreement or failing to commence the work within 10 days of issuance of the acceptance letter. 6. His submission was that none of these conditions were satisfied. Learned counsel argued that even as per the respondents, the petitioner had submitted false information in the technical bid because of which the contract was never awarded. However, submission of wrong particulars in bid was not the reason prescribed in Clause-9 for forfeiting the earnest money. 7. It is not in doubt that the earnest money can be forfeited only under the circumstances contained in Clause-9. If the petitioner had submitted false information, which surfaced even before the bid of the petitioner could be accepted, the petitioner can be liable for any consequences arising therefrom including action of black-listing, etc., if warranted under law. But, as that is not the ground mentioned for forfeiting the earnest money, on this ground, the earnest money cannot be forfeited. 8. Learned counsel for the respondent, conscious of the aforesaid limitation, tried to bring the case within the ambit of Clause-9 by arguing that petitioner had “modified” its offer within the validity period. For this, learned counsel for the respondent referred to following reason given in the orders dated 31.8.2009: “In addition to the above M/s Munish Kumar Bansal Contractor, has given in writing on 26.2.09 that now his bid capacity has been changed therefore his bid capacity be recalculated. The agency has modified its offer within the validity period in violation of Annexure-A at Sr. The agency has modified its offer within the validity period in violation of Annexure-A at Sr. No.9 of the DNIT as under:- The offer shall remain open for acceptance for a period of ninety days from the date of opening of tenders. The earnest money shall be forfeited if the tenderer withdraws or modifies his offer within the validity period (ninety days) or fails to sign the agreement (Format Contract) after acceptance of his offer or fails to commence the work within ten days of issuance of acceptance letter. After the forfeiture of earnest money the contract shall be immediately nullified.” It is clear from the aforesaid facts that the information/documents furnished by the agency are not correct and the Agency has modified its offer within validity period, therefore according to condition No.9 of DNIT of Annexure-A earnest money was required to be forfeited.” 9. The entire case, therefore, rests on the question as to whether the petitioner had modified its offer vide letter dated 26.2.2009. It so happened that when after receipt of legal notice dated 16.2.2009 from S.N. Yadav, the petitioner was confronted with the same and its clarification was sought. Vide communication dated 28.2.2009, the petitioner had sought to project that he had the available bid capacity, by stating as under:- “AVAILABLE BID CAPACITY Available Bid capacity = (A*N*2-B) where A=Maximum value of civil engineering works executed in any one year during the last five years (updated to the price level of the year indicated in Appendix) taking into account the completed as well as works in progress. N=Number of years prescribed for completion of the works for which bids are invited B=Value (updated to the price level of the year indicated in Appendix) of existing commitments and on-going works to be completed during the next ……..years (period of completion of the works for which bids are invited). A=1627x11=1789.7 lacs N=6 months or 6/12 years=0.50 years B=378 Available Bid Capacity =1789.7x0.50x2-378 =1411.7 lacs Year to be turnover in last three years with factor updated to present year Year 2005-2006 5,23,18,200 @33% 6,95,83,206 Year 2006-2007 10,49,53,066 @21% 12,69,93,209 Year 2007-2008 16,27,46,524 @ 10% 17,90,21,176 32,00,17,790 37,55,97,591” 10. It is clear from the above that the petitioner in its technical bid, originally submitted, had claimed its eligibility on different grounds, namely, by mentioning some other works and giving different figures of bid capacity. It is clear from the above that the petitioner in its technical bid, originally submitted, had claimed its eligibility on different grounds, namely, by mentioning some other works and giving different figures of bid capacity. When it was exposed, as it came to the notice that the claim was based on wrong premise, the petitioner vide the aforesaid clarification still insisted that he had the available bid capacity and he had also the turnover of more than 30 crores in the last three years. This claim was now based entirely on different set of facts. Though the petitioner could not justify the reasons therefor, according to us, it would amount to modifying the offer. Clause-9, in this behalf, has to be widely interpreted so that bidders are precluded from making false averments in their bid documents and then make an attempt to change the same. 11. We, thus, hold that Clause-9 was rightly invoked and the earnest money was forfeited appropriately. We do not find any fault with the action of the respondents. Writ petition is accordingly, dismissed with costs, quantified at Rs.15,000/-.