Order Seeking quashing of letter dated 22.09.2014 whereby, the letter of intent dated 22.08.2014 issued to the petitioner has been cancelled and seeking quashing of Clause 7.8 as contained in “Instructions to Bidders”, with a further prayer seeking quashing of Clause 1(f) contained in communication dated 22.08.2014, the present writ petition has been filed. 2. The petitioner-Agency claiming that in connection to tender notice dated 13.05.2014 for appointment of Handling Contractor at Steel Authority of India Limited (SAIL) Warehouse, Bokaro, it was declared L1 vide communication dated 02.08.2014. On 09.08.2014, the petitioner-Agency was directed to justify the rates quoted. However, on the request of the petitioner, the date was extended and finally on 22.08.2014, the petitioner furnished the cost breakup justifying the rates quoted by it. The respondents issued letter of intent dated 22.08.2014 and on the same day another letter was issued directing the petitioner to submit Additional Performance Guarantee Bond of Rs. 2,51,66,800/- (Rupees two crores fifty one lacs sixty six thousand and eight hundred only), though, the entire contract was awarded for Rs. 2,92,20,000/- only. 3. Mr. R.S. Mazumdar, the learned Senior counsel appearing for the petitioner-Agency submitted that the conditions contained in letter dated 22.08.2014 whereby, the respondent-SAIL directed the petitioner-Agency to furnish Additional Performance Guarantee Bond for value of Rs. 2,51,66,800/- is arbitrary, unreasonable and contrary to the rules of nature justice. Challenging the condition contained in Clause 7.8 (b) of the instructions, it is submitted that Clause 7.8(b) is illegal, arbitrary and unguided and therefore, it is liable to be quashed. It is submitted that once it is held that the condition no. 1(f) contained in letter dated 22.08.2014 is illegal, letter dated 22.09.2014 cancelling the LOI issued to the petitioner is liable to be quashed and consequently, the letter dated 26.10.2014 whereby fresh tender was issued for the work under the contract, would also liable to be quashed. Though vide communication dated 27.08.2014, the petitioner-Agency requested the respondent-SAIL to furnish the reasons for demanding Additional Performance Guarantee Bond for Rs. 2,51,66,800/-, no reason was ever disclosed to the petitioner-Agency and in fact, it was also not communicated to the petitioner-Agency that the cost breakup furnished by the petitioner-Agency for justification of the rates quoted by it, has not been accepted by the respondent-SAIL. 4. Percontra, Mr. 2,51,66,800/-, no reason was ever disclosed to the petitioner-Agency and in fact, it was also not communicated to the petitioner-Agency that the cost breakup furnished by the petitioner-Agency for justification of the rates quoted by it, has not been accepted by the respondent-SAIL. 4. Percontra, Mr. Ananda Sen, the learned counsel appearing for the respondent-SAIL submitted that the condition contained in Clause 7.8 is intended at securing performance of the work within the contractual period. The said clause ensures that only the interested and serious bidders participate in the bidding process. The petitioner-Agency after participating in the bid cannot challenge Clause 7.8. The letter dated 22.08.2014 was issued strictly in terms of Clause 7.8(b). The demand raised by letter dated 22.08.2014 for furnishing Additional Performance Guarantee Bond itself demonstrates that the rates quoted by the petitioner-Agency was found not workable and therefore, to ensure the completion of work under contract, the petitioner-Agency was directed to furnish Additional Performance Guarantee Bond for value of Rs. 2,51,66,800/- . 5. I have carefully considered the rival contentions raised on behalf of the parties and perused the documents on record. 6. It is not in dispute that the petitioner-Agency was declared L1 and vide communication dated 02.08.2014 it was directed to furnish cost breakup. Thereafter, the petitioner-Agency furnished cost breakup and on 22.08.2014, the respondent-SAIL accepted the bid of the petitioner and issued Letter of Intent to the petitioner-Agency. Till this stage there appears no dispute between the parties. 7. The dispute arose when the respondent-SAIL demanded Additional Performance Guarantee Bond purportedly under Clause 7.8 (b) which is extracted below :- 7.8 “Negotiation/Justification of rates quoted – (a) Order in the Contract will be placed on the basis of L1 quotation. If required, negotiations will be held with L1 bidder only. If a bidder quotes unworkable rates, i.e. if the quoted price is less than the lower limit of the estimated rate (as determined by the Company) the bidder will be asked to justify the rates quoted. (b) On non-acceptance of justification/refusal of the same, the bidder will be asked to furnished Additional PG Bond equal to the amount which will be the difference between lower limit of the estimated rate and the quoted rate of the bidder. The amount of PG Bond to be furnished will be calculated by multiplying such differential rate with the estimated quantity for first year of operation. The amount of PG Bond to be furnished will be calculated by multiplying such differential rate with the estimated quantity for first year of operation. The bidders, who refuse to comply with this, their EMD shall be forfeited and they will not be considered for participating in the retendering process if the contract is not finalized from the present tender.” 8. It is well settled that after participating in the tender process and having been declared successful, a tenderer cannot be permitted to challenge the condition in the contract unless the condition is shown to be violative of Article 14 of the Constitution. The petitioner has not shown how Clause 7.8(b) confers unguided power on the respondent-SAIL. Conferment of power on an authority and exercise of power by the said authority are two different things. Unless it is shown that, the power conferred upon the authority is unguided or suffers from excessive delegation, the provision conferring power upon the authority cannot be held to be illegal or ultravirus. I do not find any substance in the challenge of the petitioner to the condition contained in Clause 7.8 (b). 9. The next issue is the condition imposed vide letter dated 22.08.2014, directing the petitioner-Agency to furnish Additional Performance Guarantee Bond for the value of Rs. 2,51,66,800/-. Condition No. 1 (f) reads as under :- 1(f) “Within 30 Days from the date of this letter, Additional Performance Guarantee Bond as per the proforma prescribed by the company duly executed on non-judicial stamp paper of appropriate value of Rs. 2,51,66,800 (Rupees two crores fifty one lacs sixty six thousand eight hundred only).” 10. Mr. R.S. Mazumdar, the learned Senior counsel appearing for the petitioner-Agency has submitted that no reason has been disclosed by the respondent-SAIL for demanding Additional Performance Guarantee Bond for Rs. 2,51,66,800/-. The petitioner-Agency vide letter dated 27.08.2014 requested the respondent-SAIL to disclose the reason for the same however, no reason whatsoever has been disclosed to the petitioner-Agency. Percontra, Mr. Ananda Sen, the learned counsel appearing for the respondent-SAIL submitted that the reason is incorporated in Clause 7.8(a) itself. Since the bid of the petitioner-Agency was very low and it was found unworkable, the petitioner-Agency was directed to furnish cost breakup. Justification of the petitioner-Agency was found unaccepted and therefore, vide letter dated 22.10.2014, it was directed to furnish Additional Performance Guarantee Bond. 11. Since the bid of the petitioner-Agency was very low and it was found unworkable, the petitioner-Agency was directed to furnish cost breakup. Justification of the petitioner-Agency was found unaccepted and therefore, vide letter dated 22.10.2014, it was directed to furnish Additional Performance Guarantee Bond. 11. A perusal of Clause 7.8(a) indicates that the lower limit of the estimated rate for the work under contract has to be determined by the company. If it is found that the bidder quoted unworkable rate i.e. the rate quoted is less than the estimated cost, the bidder may be directed to justify the rates quoted. What was the estimated rate as determined by the company has not been disclosed by the respondent-SAIL in the present proceeding. It is also not in dispute that the estimated rate was not ever disclosed to the petitioner-Agency. To a pointed query from the Court, why the estimated cost as determined by the company was not disclosed to the bidder, Mr. Ananda Sen, the learned counsel appearing for the respondent-SAIL submitted that “confidentiality” is the reason. 12. I find that, the plea of confidentiality taken by the respondent-SAIL is frivolous for the reason that in the counter-affidavit the respondent-SAIL has disclosed that the bid of the petitioner was less than the 15% of cost as assessed by the Technical Evaluation Committee and the rate of Rs. 88 (weighed average) was lower by 54.3% of the departmental estimate and 46.25% lower than the lower band of the estimated rate. 13. I further find that the procedure adopted by the respondent-SAIL is arbitrary and against the canons of principles of natural justice. It is not disputed that the petitioner-Agency submitted cost breakup on 22.10.2014 and on the same day the letter of intent has been issued by the respondent-SAIL. What is surprising is that on 22.10.2014 itself, the letter contained in Annexure-5 to the writ petition was issued by the respondent-SAIL directing the petitioner-Agency to comply with several conditions, within 30 days. One of the conditions was to furnish Additional Performance Guarantee Bond of Rs. 2,51,66,800/-. The petitioner-Agency sought information vide letter dated 27.08.2014 however, it was not replied by the respondent-SAIL. It is not disputed that the agreement between the parties was yet to be signed and thus, there was no concluded contract. The total value of the contract awarded to the petitioner-Agency is Rs. 2,51,66,800/-. The petitioner-Agency sought information vide letter dated 27.08.2014 however, it was not replied by the respondent-SAIL. It is not disputed that the agreement between the parties was yet to be signed and thus, there was no concluded contract. The total value of the contract awarded to the petitioner-Agency is Rs. 2,92,20,000/- whereas, the amount of Additional Performance Guarantee Bond is Rs. 2,51,66,800/- . 14. Now, the issue is, had the “estimated cost” been disclosed to the petitioner-Agency on or after 02.08.2014, the petitioner-Agency would have taken a decision whether to continue with their bid or not. There is no condition in the contract that before the tender is awarded, a tenderer cannot withdraw. In “Natural Resources Allocation, in RE, Special Reference No. 1 of 2012”, reported in (2012) 10 SCC 1 , the Hon'ble Supreme Court has observed, “a public authority is ordained, therefore, to act reasonably in good faith and upon lawful and relevant grounds to public intent”. In “Mahabir Auto Stores and others v. Indian Oil Corporation and others”, reported in (1990) 3 SCC 752 , the Hon'ble Supreme Court has held thus, - “12. ................... Where there is arbitrariness in State action of this type of entering or not entering into contract, Article 14 springs up and judicial review strikes such an action down. Every action of the State executive authority must be subject to rule of law and must be informed of reason. ............................. Even though the rights of the citizens are in the nature of contractual rights, the matter, the method and motive of a decision of entering or not entering into a contract, are subject to judicial review on the touchstone of relevance and reasonableness, fair play, natural justice, equality and nondiscrimination in the type of transactions and the nature of the dealing as in the present case.” 15. From the aforesaid discussion, it is apparent that the procedure adopted by the respondent-SAIL in not disclosing the “estimated price” to the petitioner-Agency, however, demanding the bidder to furnish Additional Performance Guarantee Bond for the value almost equivalent to the contract price, is arbitrary and against the rules of natural justice. I do not find any justification for forfeiting EMD of Rs. 25 lakhs deposited by the petitioner-Agency. I do not find any justification for forfeiting EMD of Rs. 25 lakhs deposited by the petitioner-Agency. Letter dated 22.08.2014 whereby, the petitioner-Agency was directed to furnish Additional Performance Guarantee Bond, provides that on failure of the bidder to comply with the condition contained in letter dated 20.10.2014, the letter of intent shall be cancelled and EMD shall stand forfeited. Since the Additional Performance Guarantee Bond has been directed to be furnished in terms of Clause 7.8(b) and the petitioner failed to comply with the condition 1(f) contained in letter dated 22.08.2014, the cancellation of LOI does not require any interference by this Court though, forfeiture of EMD is bad in law. 16. In the result, the writ petition is partly allowed. The respondents are directed to refund the earnest money of Rs. 25,00,000/- (Rupees Twenty Five lakhs only) deposited by the petitioner.