Delhi High Court - Orders
Bls International Services Limited vs Union Of India & Ors on 29 January, 2025
Author: Sachin Datta
Bench: Sachin Datta
$~86
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 1133/2025 & CM APPL. 5591/2025
BLS INTERNATIONAL SERVICES LIMITED .....Petitioner
Through: Mr. Shashank Garg, Sr. Adv.
alongwith Mr. Naman Joshi, Ms.
Ritika Vohra, Mr.Aakash and Ms.
Nishtha Jain, Advocates.
versus
UNION OF INDIA & ORS. .....Respondents
Through: Mr. Nidhi Raman, CGSC alongwith
Mr. Zubin Singh, Advocates for UoI.
Ms. Rashmi alongwith Mr. Ashish
Mahajan, AR for respondent Bank.
CORAM:
HON'BLE MR. JUSTICE SACHIN DATTA
ORDER
% 29.01.2025 CM APPL. 5592/2025
1. Allowed, subject to all just exceptions.
2. Application stands disposed of.
W.P.(C) 1133/2025
3. The present petition assails an order dated 28.01.2025 passed by the Deputy Director General (Stats.), Ministry of Health and Family Welfare, Government of India (hereinafter 'the impugned order'). The impugned order itself has been passed pursuant to the direction contained in the order dated 20.01.2025 passed by this Court in W.P.(C) 717/2025, which is as under:-
"3. The present petition has been filed by the petitioner seeking quashing of the show cause notice dated 09.01.2025 and consequent direction/s that the respondents be restrained from encashing the petitioner's bank W.P.(C) 1133/2025 Page 1 of 6 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/01/2025 at 22:40:21 guarantee submitted along with its bid, pursuant to the Request for Proposal dated 04.07.2024 (hereinafter 'RfP') for appointment of a helpdesk service provider for augmentation, operationalization, management and ongoing support of a Mother and Child Tracking Facilitation Centre (hereinafter " the MCTFC").
4. It is contended on behalf of the petitioner that the proposed invocation of the bank guarantee/earnest money deposit (hereinafter 'the EMD') is illegal inasmuch as: (i) petitioner is not in breach of the conditions set out in the RfP floated by the respondent no.1, (ii) the petitioner can only encash the bank guarantee/EMD subject to the conditions precedent to the RfP i.e. failure to execute contract upon award or failure to furnish a Performance Bank Guarantee, the occasion for which has not arisen since the petitioner has been disqualified at the technical stage itself. Reliance is sought to be placed on clause 8.13 of the RfP which provides as under:-
"• The EMD can be forfeited if a bidder a. Withdraws its bid during the period of bid validity or b. Does not accept the correction of errors or c. To furnish performance bank guarantee in accordance with Form 15 of Annexure 5."
5. Learned standing counsel for the respondents vehemently opposes the present petition. She contends that the EMD is liable to be forfeited inasmuch as Clause 8.13 of the RfP also specifically provides as under:-
"In case the bidder is found in breach of any condition(s) of this RFP, at any stage, legal actions per rules/laws, shall be initiated against the bidder and EMD will be forfeited.
Bids that do not accompany EMD shall be summarily rejected."
6. She also draws attention to Clause 9.8 of the RfP which speaks of 'fraud and corrupt practices' and which clearly contemplates that in the event of any bidder indulging in any fraudulent practices, the EMD/performance security shall be forfeited. The said clause goes on say that the amount of the EMD/performance security has been mutually agreed upon to be in the nature of a genuine pre-estimate of compensation and damages payable to the MOHFW for, inter alia, time, cost and efforts on behalf of the MOHFW in the consideration and evaluation of the bid.
7. Specific attention is drawn to the definition of fraudulent practices which is as under:-
""Fraudulent practice" means a misrepresentation or omission of facts or disclosure of incomplete facts, to influence the selection process."W.P.(C) 1133/2025 Page 2 of 6
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/01/2025 at 22:40:21
8. It is pointed out that one of the mandatory pre-qualification criteria is as under:-
"11. The bidder (each member in case of consortium) should not have withdrawn from similar government projects or should not have any contract termination from similar project with Govt. of India/State Govt./Govt. Agencies in the last 3 years from the date of submission of the bid."
9. It is submitted that it was discovered pursuant to submission of the bid that action has been taken against the petitioner, qua other contracts in relation to projects with government agencies, for termination. One of the projects was also afflicted on account of "withdrawal" by one of the consortium partners of the petitioner. In the circumstances, the petitioner did not even meet the pre-qualification criteria and was ineligible to bid. It was only on the strength of a false certificate that the petitioner participated in the bid. As such, having committed a "fraudulent practice", the EMD/performance guarantee submitted by the petitioner is liable to be forfeited.
10. Admittedly, the petitioner has given a reply to the Show Cause Notice dated 09.01.2025 wherein it has purported to take defences in response to the proposed action of forfeiture of the EMD/performance guarantee.
11. Given that a show cause notice has already been issued to the petitioner pointing out its lapse/s, as also highlighted by the standing counsel herein, and given that the petitioner has responded thereto, at this stage, considering that a decision remains to be taken pursuant to the said show cause notice, this Court is not inclined to entertain the present petition.
12. In the opinion of this Court, it would be apposite for the concerned authority, which has issued the show cause notice, viz. Joint Director, MMPC, Ministry of Health and Family Welfare, to consider the reply of the petitioner and also afford an opportunity of hearing to the petitioner, and thereafter take an appropriate decision in the matter as to whether the concerned EMD/Security deposit is liable to be forfeited or not.
13. Let an opportunity of hearing be also provided by the said authority to the petitioner within a period of three weeks from today and an appropriate decision be taken thereafter by way of a reasoned order.
14. Till the conclusion of the aforesaid exercise, the respondents shall not take steps to encash the concerned bank guarantee.
15. Any observation made in this order shall not be construed as an expression of opinion of this Court as regards the merits of the impugned W.P.(C) 1133/2025 Page 3 of 6 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/01/2025 at 22:40:21 show cause notice.
16. With the above directions, the present petition stands disposed of."
4. It is evident from a perusal of the aforesaid order that the concerned authority viz. the Joint Director, MMPC, Ministry of Health and Family Welfare was required to consider the contentions raised on behalf of the petitioner as recorded in paragraph 4 of the aforesaid order. Specifically, the scope and import of Clause 8.13 of the RfP was required to be considered in the light of the contention that none of the ingredients thereof are satisfied in the present case, so as to justify forfeiture of EMD. The said Clause 8.13 reads as under:
"• The EMD can be forfeited if a bidder a. Withdraws its bid during the period of bid validity or b. Does not accept the correction of errors or c. To furnish performance bank guarantee in accordance with Form 15 of Annexure 5."
5. It was also required to be considered whether the purported invocation of the concerned bank guarantee is beyond/contrary to the terms thereof. In terms of the stipulation/s contained in the bank guarantee, the same can be invoked only "lf the bidder withdraws its bid during the period of bid validity specified by the bidder on the bid; or if the bidder, having been notified of the acceptance of its bid by MoHFW during the period of bid validity: fails or refuses to execute the contract if required; or fails or refuses to furnish the Performance Bank Guarantee, in accordance with the instruction given in Request for Proposal."
6. Necessarily, the purport of requiring the concerned Joint Director to pass a reasoned order was to deal with the aforesaid aspects of the matter. However, a perusal of the impugned order shows that apart from narrating the factual background, the aforesaid aspects have not been cogently dealt W.P.(C) 1133/2025 Page 4 of 6 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/01/2025 at 22:40:21 with. After narrating the background facts, the impugned order makes the following cryptic observation:
"10. WHEREAS, as per the directions of the Hon'ble High Court of Delhi, M/s BLS International Services Ltd. (Lead Bidder) along with M/s Cyfuture India Pvt. Ltd. (Consortium Member) represented their case on 24.01.2025 in MoHFW. During their representation the points raised, and documents submitted by M/s BLS International Services Ltd. (Lead Bidder) and M/s Cyfuture India Pvt. Ltd. (Consortium Member) was not substantial to overturn the decision of EMD forfeiture on the ground of practicing "Fraudulent Practices" in pursuance of the show cause notice issued on 09.01.2025."
7. Clearly, the impugned order is unreasoned and not in consonance with the directions of this Court as contained in the order dated 20.01.2025. Also, prima facie, the purported invocation of the bank guarantee/s is not in consonance with the terms thereof.
8. Issue notice.
9. Learned counsel, as aforesaid, accepts notice on behalf of the respondents.
10. Let reply, if any, be filed within a period of 4 weeks from today. Rejoinder thereto, if any, be filed within a period of 2 weeks thereafter.
11. In view of the aforesaid circumstances, status quo as regards subject bank guarantee/s shall be maintained by the respondent/s till the next date of hearing, subject to the petitioner taking steps to suitably extend/renew the same and keeping it alive and subsisting during the pendency of the present petition.
12. Learned counsel for the respondent no.3/ IndusInd bank submits that although a request has been received by the respondent no.1 for encashment of the bank guarantee, the said bank guarantee has not yet been encashed. The said statement is taken on record.
W.P.(C) 1133/2025 Page 5 of 6This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/01/2025 at 22:40:21
13. List on 10.07.2025.
14. Let copy of this order be given dasti under the signature of the Court Master of this Court.
SACHIN DATTA, J JANUARY 29, 2025/at W.P.(C) 1133/2025 Page 6 of 6 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/01/2025 at 22:40:21