Punjab-Haryana High Court
Pandit Road Carrier vs Food Corporation Of India And Another ... on 22 January, 2013
Equivalent citations: AIR 2014 (NOC) 57 (P. & H.)
Author: A.K.Sikri
Bench: A.K.Sikri
C.W.P. No. 23575 of 2012 1
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
C.W.P. No. 23575 of 2012
Date of Decision 22.1.2013
Pandit Road Carrier,Yamuna Nagar ...Petitioner
Vs.
Food Corporation of India and another --Respondents
CORAM: HON'BLE MR. JUSTICE A.K.SIKRI, CHIEF JUSTICE HON'BLE MR. JUSTICE RAKESH KUMAR, JAIN,JUDGE Present: Mr.Anil Kshetarpal Advocate, for the petitioner Mr. Sumeet Goel, Advocate, for respondent No.1.
A.K.SIKRI, CJ: (Oral) The petitioner firm was awarded four road transport contracts by the F.C.I-respondent No.1. These pertain to FCI Depots situated at Jagadhri, Chhachhrauli, Khizrabad and Radaur. The details where are as given as under:-
From To Date of Security (Rs. In Bank
Telegram lacs) Guarantee for
(Rs. In lacs)
Jagadhri Uttrakhand 19.06.2012 24.6 73.8
Chhachhrauli Uttrakhand 19.06.2012 2.5 7.5
Khizrabad Uttrakhand 19.06.2012 2.5 7.5
Radaur Uttrakhand 19.06.2012 2.5 7.5
The contracts were awarded on 19.6.2012 and as per the conditions contained in the tender form, the petitioner was required to deposit the bank guarantees equivalent to 50% each of the contracts' value . The petitioner duly furnished these bank guarantees in addition C.W.P. No. 23575 of 2012 2 to the security amounts which he had deposited along with his tender in the sum of `96.30 lacs. These bank guarantees are valid up to 28.12.2014. The aforesaid letter of award dated 19.6.2012 in favour of the petitioner was challenged in this Court in CWP No.10480 of 2012. In the said writ petition, order dated 26.9.2012 was passed which was a consensus order based on agreement of the parties and as per which the F.C.I was required to invite fresh tenders for the aforesaid road transport contracts for the said four stations. The F.C.I. has invited fresh tenders. The petitioner also participated in the said tenders and alongwith the tenders, he has given security amounts.
The petitioner as an expectant tenderer, wrote a letter dated 11.10.2012 to the respondent-FCI, stating that in case he is awarded that contracts again, bank guarantees which are already furnished, may be treated as bank guarantees against the said contracts as well. This representation of the petitioner is, however, rejected vide communication dated 11.10.2012 stating as under:-
"As per clause IX (c) of M.T.F, the Security Deposit will be refunded to the Contractors on due satisfactory performance of the services, and on completion of all obligations by the Contractor under the terms of the Contract, and on submission of a 'No Demand Certificate', subject to such deduction from the Security as may be necessary for recovering the Corporations' claim against the contractor. There is no provision of adjusting any Security/Bank Guarantee against any future contracts.
In view of above, your request for considering the Bank Guarantee and EMD cum Security for the fresh tenders for Uttrakhand Region is not acceptable"C.W.P. No. 23575 of 2012 3
Challenging this order, the present writ petition is filed. Notice of motion was issued in this petition, pursuant to it, the F.C.I has filed its reply. It is stated in the reply that there is no provision in the tenders in question to adjust the security deposited and the bank guarantees furnished by the petitioner in the earlier tender process for the present tenders. It is further stated that the earlier contracts awarded to the petitioner are operating. Once the present tenders are finalized and awarded, the operation/work done by the petitioner in pursuance to the earlier tender will cease. Thereafter, the bank guarantees etc. furnished by the petitioner in pursuance to the earlier tenders would be refunded in a period uptill six moths of such ceasing to take place and for this reason the petitioner cannot be allowed to have the benefit of the earlier bank guarantees to be adjusted against the present contracts, if these are ultimately awarded to the petitioner.
Learned counsel for the respondents has also referred to the following conditions of the contract:-
"III. SECURITY DEPOSIT
(i) The Successful Tenderer shall furnish, within fifteen working days of acceptance of his tender, a Security Deposit for the due performance of his obligations under the contract. The Security Deposit shall consist of:
(a) A sum equivalent to 5% of the value of the Contract in the form of demand draft or Pay Order issued by a scheduled bank or Electronic Clearing System (ECS)/ Other electronic means in favour of the General Manager, Food Corporation of India; and
(b) Another sum equivalent 15% of the C.W.P. No. 23575 of 2012 4 value of contract, in the form of an irrevocable and unconditional Bank Guarantee issued by SBI & Its Associate Banks/ the other Public sectors Bank in the format prescribed in Appendix-IV which shall be enforceable till six months after the expiry of the contract period".
Predicated on the aforesaid clause, the submission of the learned counsel for the respondents is that 15% of the value of the contract in the form of irrevocable and unconditional Bank Guarantee has to be furnished as prescribed in Appendix IV and since it is enforceable till six months after the expiry of contract period, for each contract a separate bank guarantee needs to be furnished.
Learned counsel has also referred to the judgment of the Supreme Court in the case of ASSISTANT EXCISE COMMISSIONERE AND OTHERS VS. ISSAC PETER AND OTHERS (1994) 4 Supreme Court Cases 104 and particularly the following observations made therein :-
"These cases cannot be equated to cases of persons buying airline tickets, where certain conditions are printed in small print. These are cases of formal contracts arrived at pursuant to a public auction or submission of tenders, and in some cases, by negotiation.
May be these are cases where the licensees took a calculated risk. May be there were not wise in offering their bids. But in law there is no basis upon which they can be relieved of the obligations undertaken by them under the contract. It is well known that in such contracts-- which may be called executory contracts-- there is always an element of risk. Many an unexpected development may occur which may either cause loss to the contractor or result in large profit. Take the very case of arrack contractors. In one year, there may be abundance of supplies accompanied by good C.W.P. No. 23575 of 2012 5 crops induced by favourable weather conditions; the contractor will make substantial profits during the year. In another year, the conditions may be unfavourable and supplies scarce. He may incur loss. Such contracts do not imply a warranty-- or a guarantee-- of profit to the contractor. It is a business for him-- profit and loss being normal incidents of a business. There is no room for invoking the doctrine of enrichment in such a situation. The said doctrine has never been invoked in such business transactions. The remedy provided by Article 226, or for that matter,suits, cannot be be resorted to wriggle out of the contractual obligations entered into by the licensees.
Learned counsel for the respondents sought to invoke the rule of promissory estoppel and estoppel by conduct. The attempt is a week one for the said rules cannot be invoked to alter or amend specific terms of contract nor can they avail against statutory provisions. Here, all the terms and conditions of contract, being contained in the statutory rules, prevail".
"We are, therefore, of the opinion that in case of contracts freely entered into with the State, like the present ones, there is no room for invoking the doctrine of fairness and reasonableness against one party to the contract (State) , for the purpose of altering or adding to the terms and conditions of the contract, merely because it happens to be governed by the terms of the contract (which may be statutory in some cases) and the laws relating to contracts. It must be remembered that these contracts are entered into pursuant to public auction, floating of tenders or by negotiation. There is no compulsion on any one to enter into these contracts It is voluntary on both sides . There can be no question of the State power being involved in such contracts".
It cannot be denied that when notice inviting tender is issued incorporating therein standard terms of condition of contract, bidder has to pay bank guarantee and security money etc. for the same in conformity with the bid conditions. Therefore, it would normally C.W.P. No. 23575 of 2012 6 follow that when a particular contractor is awarded a contract, he is supposed to adhere to the conditions of furnishing bank guarantee in the sum equivalent to 15% of the value of the contract as security deposit in addition to 5% of the value of the contract as stipulated in Clause III (a) (b). Therefore, if the petitioner shall submit another bid in response to another NIT, probably, in terms of the aforesaid clause it would not be permissible for him to seek adjustment of the earlier bank guarantee. However, question which arises in the present case is that it is the same very contracts for which tenders are invited again pursuant to the order dated 26.9.2012 passed by this Court in CWP No. 10480 of 2012. The contracts pertain to the those very four road transport contract-depots awarded to the petitioner and in response to those contracts, the petitioner has already submitted 5% of the amount as security by way of bank guarantees. It is that very contracts/works which are to be executed again. In fact, in the writ petition No. 10480 of 2012, which was filed by a party challenging the award of contracts to the petitioner herein, it was found that there were some irregularities in awarding the contracts and for this reason all the parties agreed that the FCI can invite fresh tenders for those very four road transport contracts. Since the petitioner had been awarded the work and had started the work, as an interim measure it was directed that till the completion of process of inviting fresh tenders and awarding of fresh contracts the petitioner shall continue to operate, but for the aforesaid interim orders, as far as the earlier contracts of C.W.P. No. 23575 of 2012 7 the petitioner are concerned, would come to an end, as a result of the order of the Court and the petitioner would become entitled to the release of bank guarantees. In case, the petitioner is awarded a contract, it would not be awarding of some other contract relating to the same work but it would be restarting the same work and would continue from where it stopped the work under the earlier contract. We do not understand as to why the bank guarantee submitted by the petitioner for the same contract be not allowed to operate if the petitioner is able to get the award of contract again in respect of that very contract.
Insofar as the judgment in the case of ISSAC PETER (supra) relied upon by the learned counsel for the respondents is concerned, observations in the said case which have already been extracted above, would not apply to the facts of the present case. We are, therefore, of the opinion that had it been some other contract or a new contract, the request of the petitioner to furnish this bank guarantee could not have been entertained. The position is ,however, entirely different.
We, therefore, allow this petition, set aside the order dated 11.10.2012 and issue a direction that in case, the petitioner is awarded the contracts again, the bank guarantees already furnished by the petitioner in response to these very works shall enure and would amount to comply with the aforesaid terms of the contract. It would be open to the respondents to ask the petitioner to extend the date of C.W.P. No. 23575 of 2012 8 validity of the bank guarantees. If the petitioner is again asked to furnish bank guarantee, it would amount to give two bank guarantees for the same work which is not to be countenanced.
This writ petition is disposed of in the aforesaid terms.
(A.K.SIKRI)
CHIEFJUSTICE
22.1.2013 (RAKESH KUMAR JAIN )
rr JUDGE