Gauhati High Court
Page No.# 1/7 vs The State Of Assam And 2 Ors on 20 June, 2025
Author: Michael Zothankhuma
Bench: Michael Zothankhuma
Page No.# 1/7
GAHC010150532024
2025:GAU-AS:8229
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WP(C)/3765/2024
CHAKRA BHARALI
S/O- LATE BUDHESWAR BHARALI,
VILL- DHENUDHARIA GAON,
PANIGAON,
P.S AND P.O- PANIGAON, LAKHIMPUR, NORTH LAKHIMPUR, ASSAM, PIN-
787052
VERSUS
THE STATE OF ASSAM AND 2 ORS
REP.BY THE COMMISSIONER AND SECRETARY TO THE GOVT. OF ASSAM,
HANDLOOM AND TEXTILES DEPTT., DISPUR, GHY.-06.
2:THE DIRECTOR
DEPARTMENT OF HANDLOOM AND TEXTILES
GOVT. OF ASSAM
AMBARI
GUWAHATI
ASSAM
PIN-781001
3:THE ACCOUNTS OFFICER
DEPARTMENT OF HANDLOOM AND TEXTILES
GOVT. OF ASSAM
AMBARI
GUWAHATI
ASSAM
PIN-78100
Advocate for the Petitioner : MR. N N B CHOUDHURY, MR A BANERJEE,MR P K BASU,MR.
N SARKAR
Advocate for the Respondent : SC, HANDLOOM AND TEXTILE,
Page No.# 2/7
BEFORE
HONOURABLE MR. JUSTICE MICHAEL ZOTHANKHUMA
ORDER
Date : 20-06-2025 Heard Mr. N Sarkar, learned counsel for the petitioner. Also heard Mr. R Dhar, learned Standing Counsel, Handloom & Textiles.
2. The petitioner is aggrieved with the impugned letter dated 20.07.2024 issued by the Director, Handloom & Textiles, Assam, informing the petitioner to deposit an additional performance security amount of Rs.18,01,625/- for execution of the work of "Re-construction of the HTC building (A/T) at HTC, Dhemaji" and the letter of acceptance dated 13.06.2024, in so far as it requires the petitioner to submit an additional performance security for an amount of Rs. 18,01,625/-
3. The petitioner's case is that the petitioner was selected as the successful tenderer, pursuant to an NIT dated 25.07.2023, for "Re-construction of the HTC building (A/T) at HTC, Dhemaji", which had an estimated cost of Rs.87,50,000/-. The petitioner submitted his bid of Rs.62,12,500/-, which was 29% below the estimated cost. Due to the unbalanced bid of the petitioner, the petitioner was asked to submit his justification for submitting a bid which was 29% below the estimated cost. The petitioner submitted his justification and the State respondents thereafter issued letter of acceptance dated 13.06.2024 to the petitioner, informing him that his bid for the said contract work @ Rs.62,12,500/- had been accepted. However, he was requested to furnish 5% performance security for an amount of Rs.3,10,625/- and a further additional Page No.# 3/7 performance security for an amount of Rs.18,01,625/-, to secure his unusually low bid. The petitioner was also issued a letter dated 20.07.2024 by the Director, Handloom & Textiles informing him that if he did not submit his performance security and additional performance security within 5 (five) days from issuance of the said letter dated 20.07.2024, the letter of acceptance that had been issued to him earlier would be cancelled.
4. The petitioner has now approached this Court on the ground that the petitioner cannot be asked to deposit 29% additional performance security, over and above the normal performance security of 5%, which is to be paid in terms of the NIT.
5. Mr. R Dhar, learned Standing Counsel, Handloom & Textiles submits that the petitioner has been asked to pay 29% additional performance security, over and above the 5% performance security, so as to secure the unusually low bid of the petitioner, which is 29% below the estimated cost of the contract.
6. I have heard the learned counsels for the parties.
7. Clause 35 of the ITB provides as follows:-
"35 Performance Security 35.1 Within 21 days of receipt of the Letter of Acceptance, the successful Bidder shall deliver to the Director, Handloom & Textiles, Assam, Guwahati-1, a Performance Security in any of the form given below for an amount equivalent to 5% (five р.с.) of the Contract price plus additional security for unbalanced Bids in accordance with Clause 29.5 of ITB Clause 52 of Conditions of Contract:
Page No.# 4/7 The performance security should be pledged in favour of the Director, Handloom & Textiles, Assam, Guwahati-1.
(i) A bank guarantee in the form given in section. 8; or Fixed Deposit Receipt as indicated in Appendix.
(ii) Fixed Deposit Receipt for Additional Security for unbalanced bid as per office order memo No. BN/12/Pt.-1/84-Dtd. 15.02.2011.
35.2 If the performance security is provided by the successful Bidder in the form of a Bank Guarantee, it shall be issued at the Bidder's option, by a Nationalized Indian bank, prepared in non-judicial stamp paper of specified value.
35.3 Failure of the successful Bidder to comply with the requirements of Sub- Clause 34.1 shall constitute sufficient grounds for cancellation of the award and forfeiture of the Bid Security."
8. A perusal of the above Clause 35 of the ITB shows that a successful bidder would have to deposit a performance security for an amount equivalent to 5% of the contract price, plus additional security for unbalanced bids, in accordance with Clause 29.5 of ITB.
9. Clause 35(ii) further provides that fixed deposit receipt for additional security for unbalanced bid would have to be in terms of the Office Memo dated 15.02.2011.
10. Clause 29.5 of the ITB provides that if the bid of the successful bidder is seriously unbalanced, the bidder would have to produce detailed price analysis to demonstrate the internal consistency with the construction methods and Page No.# 5/7 schedule proposed. If the same is accepted by the authorities, the performance security may be increased at the expense of the successful bidder, to a level sufficient to protect the employee against financial loss in the event of default of the successful Bidder under the Contract. Clause 52 of the Conditions of the Contract provides that the performance security including additional performance security for unbalanced bids should be submitted within a specific time period and should be valid for atleast 28 days, from the date of expiry of the defects liability period and/or from the date of issuance of the completion certificate.
11. The office order under Memo No. BN/12/82/pt-1/84 dated 15.02.2011 provides as follows:-
"In the Interest of public works. It is for Information to all concerned that. Performance security/Security deposit which is to be submitted by qualified bidders in connection with awarding a work are modified as follows.
1. For accepted rated as per and above SOR od APWD (Bldg.)/NIT amount. a. In case of tender drawn in F-2 Form 2%(two percent) of Bid value. b. In case of tender drawn In SBD 5% (five percent) of Bid value.
2. For accepted rates upto 10% (ten percent) below SOR of APWD (Bldg.)/NIT amount.
a. In case of tender drawn In F-2 Form 5% (five percent) of Bid value. b. In case of tender drawn In SBD 5% (five percent) of Bid value
3. For accepted rated beyond 10% (ten percent) below SOR of APWD (Bldg.)/NIT amount.
a. In case a tender drawn In F-2 Form Accepted rate (percentage)minus(-) 5% (five percent) of Bid value b. In case of tender drawn In SBD Accepted rate (percentage)minus(-) Page No.# 6/7 5% (five percent) of Bid value This order will come into force with immediate effect & until further order."
12. A perusal of Clause 3(b) of the office order dated 15.02.2011 shows that in case of a tender pertaining to Standard Bid Document (SBD), the additional performance to be submitted pertaining to the accepted rate for bids beyond 10% below the schedule of rates of the NIT amount, would be the accepted rates (%) minus 5% of the bid value. As the accepted rate below the estimated cost is 29%, the additional performance security to be paid by the petitioner, would be 29% minus 5% of the bid value, thereby requiring the successful tenderer to pay 24% additional performance security and not 29% additional performance security. One of the reasons for the above would be due to the fact that the petitioner would, in any event, have to pay the normal performance security of 5% for being the successful tenderer and as such, the addition of the additional 24% would secure the State respondents from any loss that might occur in the contract, due to the fault of the bidder.
13. In view of the reasons stated above, the State respondents are directed to accept the additional performance security at the rate of 29% minus 5% = 24%, i.e., as per the office order dated 15.02.2011, besides the normal performance security being submitted by the petitioner at 5%. Consequently, the impugned letter of acceptance dated 13.06.2024 and the impugned letter dated 20.07.2024 issued by the Director, Handloom & Textiles, Assam to the extent that it has asked for additional performance from the petitioner, at the rate of 29% amounting to Rs.18,01,625/-, is hereby set aside.
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14. The performance security and the additional security @ 24%, should be deposited by the petitioner within a period of 1 (one) week from today.
15. The writ petition is accordingly allowed.
JUDGE Comparing Assistant