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10. On 05.12.2007 the financial bids of all the bidders were opened and the Appellants emerged as the lowest bidder for supply of 389 MW of power to the Corporation (R-2). Then on negotiations the revised bids were submitted. Since the Appellants bid was the lowest, they once again were declared as L1 bidder.

11. On 17.07.2008, the successful bidders were issued LOI. The Appellants being one of the parties accepted the request for proposal unconditionally. As per clause 2.1.6.3 of RFP, the selected bidder shall furnish to the procurer i.e. the Power Corporation (R-2), performance Bank Guarantee and then sign the PPA within 60 days of the issue of LOI. The other parties signed the PPA. However, the Appellant did not come forward to sign even though Bank Guarantee was furnished. The Appellant gave various reasons for the delay. Ultimately, the Power Corporation (R-2)on 25.07.2008 reminded the Appellant to send its representative to sign the PPA. However, there was 9 of 51 no response. Therefore, a legal notice was issued by the Power Corporation (R-2) on 19.09.2008 directing the Appellants to fulfill it obligations to sign the PPA as agreed by them through the RFP documents.

15. We have carefully considered the rival contentions in regard to the first issue. It is the stand of the Appellant that the Letter of Intent (LOI) dated 17.07.2008 issued by the Power Corporation (R-2) in favour of the Appellant, is only a statement of intent and there would not be a concluded contract till the Performance Bank Guarantee and signing of the Power Purchase Agreement, and if the selected bidder refuses to sign the PPA, the Appellants being the bidder, can only be penalised by forfeiture of the bid bond and they cannot be compelled to sign the PPA and then supply power.

(ii) Failure to furnish the Performance Bank Guarantee;

and

(iii) Submission of wrong information by the bidder or making any misrepresentation in the bids.

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24. But the mere invocation or encashment of the bid bond is not necessarily consequential upon the prior annulment of the contract.

25. In this context, clause 3.4.2.3 of RFP document is relevant. The same is quoted below:

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27. As a matter of fact, the Power Corporation has communicated to the Appellants encashment of the bid bond stating that the same has been adjusted in the Performance Bank Guarantee. This also would show that the encashment of the bid bond amount was not consequent to the cancellation of the contract.

28. No material has been placed by the Appellant to show that the Respondent-2 has ever resorted to the cancellation of contract. That apart, one more document would clarify that same stand has been consistently taken by the Power Corporation (R-2). The said document is the legal notice sent by the Power Corporation to the Appellant on 19.02.2008. The relevant portion is as follows: