Allowed

J K Exim Private Limited through Its Manager Anuj Kumar Agarwal v. the State of Jharkhand through Chief Secretary

Jharkhand HC6 Sept 2023WPC/4129/2022

Case brief

AI extract

What is this about?

High Court ruled that forfeiture of earnest money and blacklisting were unjustified as the authorities delayed issuing the purchase order beyond the bid validity period. The Court quashed the blacklisting order due to violation of natural justice as no show-cause notice was issued and ordered refund with interest.

What did the court decide?

Impugned order dated 12.09.2022 set aside, decision to blacklist quashed, refund of earnest money with 6% interest per annum ordered.

J K Exim Private Limited through Its… — Contract and Commercial Disputes | Jharkhand HC (2023)

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IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P.(C) No. 4763 of 2022 WITH

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W.P.(C) No.4129 of 2022

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---- J.K. Exim Private Limited, having Registered Office at 104/34, Bank Colony, Khanna, PO PS & District Khnna, Punjab and works at Village Rupamajra, Hissar Road, Ambala City, PO PS & District Ambala, Haryana through its Manager Anuj Kumar Agarwal, son of Satrudhan Prasad, resident of Village Kusri, Manatu, PO PS Kusri, District Palamau, Jharkhand.

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… Petitioner [in both cases]

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Versus

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The State of Jharkhand through Chief Secretary, having its Office at Project Building, Dhurwa, Ranchi.

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Principal Secretary, Department of Women Child Development and Social Welfare, Government of Jharkhand, Office at Project Building, Dhurwa, Ranchi.

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The Director, Social Welfare Directorate, Department of Women Child Development and Social Security, Government of Jharkhand, Office at Project Building, Dhurwa, Ranchi.

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… Respondents [in both cases]

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----

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CORAM : SRI SANJAYA KUMAR MISHRA, C.J. SRI ANANDA SEN, J.

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----

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For the Petitioner : Mr. Indrajit Sinha, Advocate Mr. Ankit Vishal, Advocate For the Respondents : Mr. Mrinal Kanti Roy, G.A. I

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----

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03/ 06.09.2023 Upon hearing the learned counsel for the parties, this Court passed the following (Per Ananda Sen, J.):-

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O R D E R

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1. In W.P.(C) No.4129 of 2022, petitioner has prayed for a direction to show cause upon the respondents as to why the amount of Rs.29,97,696/-, i.e., the Earnest Money Deposit has not been released and has been withheld. He also prayed to release the aforesaid Earnest Money Deposit in his favour.

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Writ Petition being W.P.(C) No. 4763 of 2022 has been filed by the petitioner, praying therein to quash the letter No.1904 dated 12.09.2022 (Annexure 6) passed by the concerned respondent, whereby the petitioner firm has been blacklisted for a period of two years and the amount of earnest money has been forfeited. Petitioner has also prayed for refund of the Earnest Money Deposit.

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2. Both these writ petitions arise out of same transaction and out of

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-: 2 :-

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same contract. Writ Petition, being W.P.(C) No.4129 of 2022 has become infructuous in view of the subsequent development and forfeiture of Earnest Money Deposit and by filing of W.P.(C) No.4763 of 2022, wherein, blacklisting and forfeiture of Earnest Money has been challenged and prayer has been made to refund the aforesaid amount. Thus, W.P.(C) No.4129 of 2022 is disposed of as infructuous.

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3. An e-tender was floated for procuring Pre School Education Kits for Angan Bari Centres in the State of Jharkhand. The said procurement was through Government e-Market Place (GEM Portal). The last date of submission was 11.02.2021. The bid offer validity was for a period of 60 days, i.e., 12.04.2021 and the bid life cycle was only for 90 days as per general terms and conditions. Bidders were required to deposit Earnest Money of Rs.29,97,696/-. Admittedly, the petitioner deposited the same on 11.02.2021 along with all the documents. The petitioner was found to be the lowest bidder and was declared successful for the said supply. The petitioner did not receive any purchase order from the respondents till 12.04.2021 (i.e., the bid validity period). The purchase order was not issued till first week of June, 2021. Only after expiry of the validity period of the bid, a telephonic information was sent to the petitioner for extending the bid validity, since the bid validity period had already expired on 12.04.2021. The petitioner wrote to the respondents to provide at least 45 days’ time for sample submission and 120 days delivery period and to consider 12% price escalation due to the second wave of Covid. It is the case of the petitioner that petitioner’s prayer was not considered, rather, the respondents cancelled the bid without providing any official information and vide letter dated 12.09.2022 forfeited the Earnest Money Deposit. This action is under challenge. 4. Learned counsel for the petitioner argued that admittedly, the petitioner was the lowest tenderer and the bid was valid for 60 days and the bid life cycle was only for 90 days. Since, admittedly, no purchase order was issued within the aforesaid period, the offer of the petitioner automatically stood lapsed, thus, the petitioner cannot be held responsible, to attract forfeiture of Earnest Money Deposit and blacklisting the petitioner. 5. The respondents filed their counter affidavit and admitted that the petitioner was the lowest bidder. They also admitted that the recommendation was made in favour of the petitioner on 19.03.2021 and the approval of the Department was communicated vide letter dated 31.03.2021. As the financial

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year ended on 31^st March, 2021, it was necessary to seek approval to procure the aforesaid goods in the new financial year 2021-22. A request was made to that effect to the authorities on 06.04.2022, but due to the outbreak of Covid 19, State went in lockdown from April, 2021. Entire official work got hampered, which caused delay in placement of the order. Respondents, in their counter affidavit, admitted that the offer of this petitioner was valid only up to 12^th April, 2021. They also admitted that since the offer was valid till 12^th April, 2021, Directorate requested the petitioner to extend the validity of the offer up to 29.06.2021. As nothing was heard from the petitioner, the Department kept on requesting the petitioner on multiple occasions, but the petitioner set forth multiple conditions for extending the validity period. The conditions, which were sought to be changed, was the time period, sample submission period, delivery period and escalation of 12% in price. As the Directorate did not accept the said conditions, the bid was cancelled. As per the respondents, since the action of the petitioner was against the State, it was decided to forfeit the Earnest Money Deposit and blacklist the petitioner.

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6. After hearing both the sides, we find that it is an admitted fact that the petitioner was the lowest bidder in the tender process and there was a bid validity period. Respondents admitted that they could not issue work order within the bid validity period, mainly on two grounds:-

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(i) Expiry of the financial year in which purchase was supposed to be made; and

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(ii) Due to lockdown because of outbreak of Covid 19.

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7. It is also admitted fact that request was made to extend the bid. The petitioner put forth some additional conditions, i.e., to review the price and give escalation because of Covid 19 and also extend the period of supply, considering the Covid 19 situation. These conditions were not accepted, resulting in forfeiture of the Earnest Money Deposit and blacklisting the petitioner.

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8. The fact that purchase order could not be issued within the bid validity period due to Covid 19 is admitted. When a bid validity period has been mentioned and the respondents did not issue purchase order within the said bid validity period, whatever be the reasons, it was not proper for the respondents to pressurize the petitioner to extend the bid validity on the same terms and conditions. On one hand, the respondents had taken a plea that they could not issue the work order within the bid validity period due to Covid

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19 but on the other hand when the petitioner had put forth their condition that the period of supply be extended due to Covid 19 and price be enhanced because of Covid 19, the respondents rejected the same. This action was not proper on the part of the respondents. They took benefit of Covid 19, but refused to consider to give benefit of the Covid 19 period to the petitioner. This is an arbitrary action on the part of the State.

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9. Since the respondents did not issue work order within the bid validity period, they could not have forced the petitioner to extend the bid validity period on the same terms and conditions mentioned in the bid itself. It is open to the bidder either to accept or refuse extension of bid validity period. If the petitioner refuses to extend the validity period and/or parties did not agree on fresh terms and conditions, respondents cannot force the lowest tenderer to accept the earlier conditions and extend the bid. Cancellation of the tender notice is definitely justified, but forfeiture of the Earnest Money Deposit and blacklisting the petitioner is not justified. The State cannot take benefit of their own laches as on one hand they did not issue purchase order within the bid validity period and on the other hand, they forfeited the Earnest Money Deposit and blacklisted the petitioner for not accepting the conditions as put forth by the petitioner for extending the bid validity period. 10. Further, from the documents brought on record with the writ petition and the counter affidavit, we find that no notice was issued to the petitioner asking for a show cause as to why not the petitioner would be blacklisted. In absence of any show cause notice, intending to blacklist the petitioner, respondents could not have blacklisted the petitioner. This action of the respondents amounts to violation of principles of natural justice. The Hon’ble Supreme Court, in the case of UMC Technologies Private Limited versus Food Corporation of India and Another reported in (2021) 2 SCC 551 has held that it is necessary to issue a notice for proposed blacklisting and there should be a clear mention of the proposed action in the show cause notice itself. The respondents have to disclose their mind that they intend to blacklist the tenderer/bidder and the reasons thereof should also be mentioned in the notice. In the instant case, no notice has been issued, which makes the action of the respondents absolutely bad and violative of principles of natural justice.

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11. Thus, in view of what has been discussed and held above, the writ petition deserves to be allowed. Accordingly, we hereby set aside the impugned order as contained in letter No.1904 dated 12.09.2022 (Annexure 6). We direct the respondents to refund the amount of Earnest Money Deposit to the petitioner with interest at the rate of 6% per annum from the date of cancellation of the tender, i.e., from the date of issuing the impugned letter. The decision to blacklist the petitioner is also quashed.

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12. This writ petition stands allowed. There shall be no orders as to costs. Urgent certified copies of this order shall be issued as per the Rules.

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(Sanjaya Kumar Mishra, C.J.)

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(Ananda Sen, J.)

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Kumar/Cp-02

J K Exim Private Limited through Its Manager Anuj Kumar Agarwal v. the State of Jharkhand through Chief Secretary

Case brief

What is this about?

What did the court decide?

J K Exim Private Limited through Its Manager Anuj Kumar Agarwal v. the State of Jharkhand through Chief Secretary

Case brief

What is this about?

What did the court decide?

What the court decided

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