M/s Shree Shyamji Transport Co. vs Food Corporation of India and another

M.M. Kumar, J.—The prayer made in the instant petition is for quashing order dated 5.11.2011 (P-16) received on 12.11.2011, canceling the contract with respondent No. 1. According to the aforesaid order the prayer of the petitioner for extension of time limit in respect of the period specified in Clause 7 was rejected on the ground that there was no such provision in the Model Tender Form (for brevity, ''MTF''). The basic reason for rejection of the contract was the inability of the petitioner to furnish requisite security deposit by 3.11.2011 i.e. within a period of 15 days of the acceptance of the tender.

It is conceded by the learned counsel for the parties that tender was accepted on 19.10.2011 and the period of 15 days was to come to an end on 3.11.2011 (P-6). On account of failure of the petitioner to furnish the requisite security deposit and bank guarantee, the order was passed on 5.11.2011 (P-16).

Mr. Ashok Gupta, learned counsel for the petitioner has submitted that the impugned order of rejection suffers from legal infirmity because on account of the defect in the banking operations on 3rd and 4th of November, 2011, the bank guarantee could not be prepared and the benefit of failure of the banking system should be given to the petitioner. Mr. Gupta has also submitted that the order dated 5.11.2011 has been passed in a hurry as the period of 15 days would include 19.10.2011 as well as 3.11.2011, and if so calculated then the period of 15 days would be completed on 5.11.2011. Therefore, the order could not have been passed on 5.11.2011 itself. For the aforesaid submission reliance has been placed on Section 9 of the General Clauses Act, 1897. An apprehension expressed by Mr. Gupta is that on the basis of clause 7 of the MTF, the respondents may resort to debarring the petitioner for the future to participate in the tender process for a period of three years.

Mr. K.K. Gupta, learned counsel for the respondents has, however, argued that the period of 15 days would come to an end on 3.11.2011 and the order having been passed on 5.11.2011 would not entail any benefit to the petitioner. According to the learned counsel one day of 19.10.2011 could be excluded and if that is done the period of 15 days would come to an end on 3.11.2011 and the order having been passed on 5.11.2011 would be fully justified and would be after the expiry of the period of 15 days. In support of his submission learned counsel has placed reliance on a Division Bench judgment of the Rajasthan High Court rendered in the case of Sureshchandra and others v. Birdichand and others, AIR 1965 Rajasthan 229.

After hearing learned counsel for the parties we are of the considered view that the argument of the learned counsel for the respondents deserves to be accepted. In order to examine the first submission of the counsel for the petitioner it would be necessary to read clause 7(i)(a) & (b) along with clause 7(iii) of the main tender form (P-4), which is as under:-

Security Deposit.

(i) The successful tenderer shall furnish, within fifteen 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 in favour of the General Manager, Food Corporation of India and;

(b) Another sum equivalent to 15% of the value of contract, in the form of an irrevocable and unconditional bank guarantee issued by any nationalized bank in the format prescribed in Appendix IV which shall be enforceable till six months after the expiry of the contract period.

(c) xxx xxx xxx

(ii) xxx xxx xxx

(iii) In the event of the tenderer failure, after the commission of acceptance of the tender by the corporation, to furnish the requisite security deposit by the due date, his contract shall be summarily terminated besides forfeiture of the earnest money and the corporation shall proceed for appointment of another contractor. Any losses or damages arising out of and incurred by the corporation by such conduct of the contractor will be recovered from the contractor, without prejudice to any other rights and remedies of the corporation under the contract and law. The contractor will also be debarred from participating in any future tenders of the corporation for a period of three years. After the completion of prescribed period of three years, the party may be allowed to participate in the future tenders of FCI provided all the recoveries, dues have been elected by the corporation and there is no dispute pending with the contractor/party.

A perusal of the aforesaid clause would show that the successful tenderer must furnish within 15 days of acceptance of its tender, a security deposit for the due performance of his obligation under the contract. The security deposit is to consist of 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 in favour of the General Manager, Food Corporation of India and another sum equivalent to 15% of the value of contract in the form of an irrevocable and unconditional bank guarantee issued by any nationalized bank in the format prescribed. In the event of failure to comply with the aforesaid provision by furnishing requisite security deposit by the due date, the contract is to be summarily terminated besides forfeiture of earnest money. Thereafter the Corporation is clothed with the authority to appoint another contractor and losses or damages arising out of and incurred by the Corporation by such conduct of the contractor were to be recovered from the defaulter.

When the aforesaid clause of the contract is applied to the facts of the present case it becomes evident that the tender was accepted on 19.10.2011 and the period of 15 days was completed on 3.11.2011. If the 19th day of October 2011 is excluded from the reckoning and even the last day of 3rd of November 2011, the period of 15 days would come to an end on 4th of November 2011. The argument based on Section 9 of the General Clauses Act, even if stretched to the imaginary limitation as per the submission of the counsel for the petitioner, the order passed on 5.11.2011 would not be a premature order. In any case, it would be an order passed after the expiry of 15 days. Therefore, the argument is unsustainable.

The other argument that clause 7 was not part of the original tender notice and has been incorporated later on, would also not cut any ice because by reference all the clauses stand incorporated in the contract. According to the tender notice, the tender document containing the terms and conditions were required to be obtained by the petitioner from the concerned FCI District Office of Haryana or from the Regional Office, Haryana, Panchkula. It has been made clear that the tender would be in two parts viz. Technical Bid and Price Bid. Therefore, all the conditions mentioned in the tender documents would be deemed to be incorporated by reference and, therefore, even that argument would not advance the case of the petitioner.

In so far as the argument of the learned counsel for the petitioner apprehending debarment under clause 7 of the MTF is concerned, we are of the view that there is nothing in the impugned order dated 5.11.2011 (P-16) which may indicate that the respondents have any intention to invoke that part of clause 7 against the petitioner. The reason for not invoking clause 7 of the MTF appears to be that there is no intentional lapse committed by the petitioner and the delay in furnishing the security and the bank guarantee appears to be on account of failure of banking operations. Therefore, we appreciate the respondents for not having invoked clause 7 of the MTF to debar the petitioner for the contract period. Therefore, the apprehension of the petitioner expressed through their counsel is ill founded.

With the aforesaid observations, the instant petition is disposed of.