1. Heard Mr. K.N. Balgopal, learned senior counsel representing the petitioners, assisted by Ms. T. Khro and Ms. M. Deb, Advocates, as well as Mr. B. D. Das, learned senior counsel representing APDCL, assisted by Mr. H. K. Sarma and Mr. D. Nath, Advocates. Also heard Mr. A.C. Buragohain, learned Advocate General, State of Assam and Mr. J. Deka, learned counsel representing respondent no.5.
2. All the 12 (twelve) writ petitions filed by the same Company are taken up together and concluded by a common judgment and order. The basic facts are 11 pari materia to each other save and except WP(C)5811/2015 and WP(C)5812/2015 which are clothed with certain additional facts requiring findings and decision independent of the other 10 (ten) writ petitions.
3. Invitation for Bids (IFB) for rural electrification works in various districts of Assam was issued by the Assam Power Distribution Company Limited (APDCL) during July-August 2014, on being so entrusted to execute the projects by the Government of Assam. Funds are to be received by the Government of Assam from Rural Electrification Corporation Limited (REC) and for the purpose of all procurement activities related to the projects, APDCL was to be referred to as Employer and the Government of Assam the Owner . The IFB covered 73 packages in all and the 12 (twelve) writ petitions involves award of 12 (twelve) packages to the petitioner Company. The particulars being :
| Sl | Case No. | Package |
| 1 | WP(C)5811/2015 | Package-GPR-1 for Rural Electrification works in Jaleswar, Lakhipur, Kharmuya and Balijana Development Blocks of Goalpara District in Assam [Spec.No.:APDCL/RGGVY/XII/GPR] |
| 2 | WP(C)5812/2015 | Package-GPR-2 for Rural Electrification works in Krishnai, Matia, Kushdhowa and Dudhnoi Development Blocks of Goalpara District in Assam [Spec.No.:APDCL/RGGVY/XII/GPR] |
| 3 | WP(C)5179/2015 | Package-BSK-C for Rural Electrification works in Rangia and Tamulpur Development Blocks of Baska District in Assam [Spec. No.: APDCL/ RGGVY/ XII/LAR/BSK] |
| 4 | WP(C)5172/2015 | Package-NGN-XII/01 for VEI works for Block Kapili Pt. Raha, Batadrawa, Dulongghat, Moirabari of Nagaon District in Assam under Rajiv Gandhi Grammeen Vidyutikaran Yojna (RGGVY) [Spec. No.: APDCL/ RGGVY/ XII/NGN]. |
| 5 | WP(C)5206/2015 | Package-BSK-F for Augmentation of Existing 33/11 kv Substations in Borjhar [Capacity- OLD 2 x 2.5 to NEW 2 x 5 MVA], Goreswar [Capacity- OLD 2 x 2.5 to NEW 1x2.5 + 1 x 5 MVA] and Narayanpur [Capacity OLD 1 x 2.5 to NEW 1 x 2.5 +1x5 MVA] of Baska District in Assam and Construction and Commissioning of New 33/11 kv Substations along with associated 33Kv and 11 KV Lines in Nagrijuli Bazar [Capacity-2x5 MVA] and Salbari [Capacity-2x5 MVA] of Baska District in Assam] [Spec. No.: APDCL/ RGGVY XII/LAR BSK]. |
| 6 | WP(C)5207/2015 | Package-BAR-2SS for REDB works. Construction of 2(two) new 33/11 KV sub-stations (1x5 MVA at Gomafulbari Block) and (2x5 MVA at Pakabetbari Block) along with augmentation of 5(five) existing 33/11 KV sub-stations of Barpeta District in Assam. [Spec. No.: APDCL/ RGGVY/ XII/LAR BAR]. |
| 7 | WP(C)5201/2015 | Package-NGN-XII/03 for VEI works for Block Laokhowa, Rupahi, Barhampur, Koliabor, Pachim Koliabor of Nagaon District in Assam [Spec. No.: APDCL/ RGGVY/ XII/NGN]. |
| 8 | WP(C)5199/2015 | Package-DMJ-XII/03 for VEI works for Block Dhemaji and Machkhowa of Dhemaji District in Assam under Rajiv Gandhi Grammeen Vidyutikaran Yojna (RGGVY) [Spec. No.: APDCL/ RGGVYXII/DMJ]. |
| 9 | WP(C)5200/2015 | Package-DMJ-XII/04 for VEI works for Block Bordoloni of Dhemaji District in Assam[Spec. No.: APDCL/ RGGVY/ XII/DMJ]. |
| 10 | WP(C)5204/2015 | Package-TSK-XII/01 for REDB (Augmentations work of 33/11 KV Makum S/S 33/11 KV Lekhapani S/S, and 33/11 KV Sunpura S/S works of Tinsukia District in Assam [Spec.No.:APDCL/RGGVY/ XII/TSK |
| 11 | WP(C)5176/2015 | Package-SNP-XII/05 for REDB (Augmentation work of 33/11 KV Paruwa S/S, 33/11 KV Gahpur S/S, 33/11 KV Jamaguri S/S New 33/11 KV Bokabil S/S), New 33/11 KV Chariduar and New 33/11 KV Samokia Kachari S/S works of Sonitpur District in Assam [Spec. No.: APDCL/ RGGVY/ XII/SNP]. |
| 12 | WP(C)5210/2015 | Package-DRG-1D for Rural Electrification works in Sipajhar Development Block of Darrang District in Assam [Spec. No.: APDCL/ RGGVY/ XII/LAR/DRG]. |
4. Letters of Intent (LoI) for implementation of respective packages in respective districts were issued in favour of the Petitioner Company in December, 2014. As per the said LoIs, intention was expressed to offer the work in question as per the petitioner s quoted rates. The work description, area of operation, completion period, work standard and payment terms were duly specified, including the terms and conditions which were to be as declared in the Bid document of the NIT under the respective Tender Specifications. The Petitioner Company was asked to convey acceptance with information that the final Letter of Award (LoA) with the detailed terms and conditions, work parameters etc. would be issued after acknowledgement of acceptance of the LoI. Pursuant thereof, acceptance was expressed in writing with request to send the LoAs with detailed terms and conditions, work parameters etc. at the earliest.
5. The Letters of Award (LoA) against respective works were issued during January-February 2015 which specified, amongst others, the contract price in two parts - supply part and erection part, the taxes and duties payable, the furnishing of unconditional and irrevocable Bank Guarantee equal to 10% of the total contract price towards Contract Performance Guarantee (CPG), quantity variation limit, execution of Contract Agreement, mode of settlement of disputes by Arbitration etc. The terms and conditions also stipulated that any matter that was not clearly covered in the Bid-document or in the LoA, the same shall beaddressed as per APDCL s General Conditions of Supply and Erection 2009 . Further, in the event of any conflict between the Bid-document and the LoA, the conditions incorporated in the LoA would prevail.
6. Series of exchange of letters followed thereafter between the Petitioner Company and APDCL. While APDCL insisted on the requirement of the Contract Performance Guarantee and thereafter to enter into the Contract Agreement, the Petitioner Company represented that if APDCL had asked for ex-work price item rates and other taxes such as Excise Duty, Sales Tax, VAT, Entry Tax other Taxes and Duties as extra, pursuant to which the bidders had submitted their bid accordingly, it cannot therefore omit Other Taxes and Duties and Entry Tax unilaterally and segregate VAT from each item, thereby reducing the total value of the bid offer substantially. The Petitioner Company also represented that the sanctity of the Bid has to be maintained and the LoA is required to be awarded without any change of the bid format and the amount quoted. Amidst the controversy with regard to the difference between the prices quoted and the prices indicated in the LoA, the furnishing of the Bank Guarantees towards Contract Performance Guarantee within the specified time and/or the extended time took a backstage for the time being. The Petitioner Company held on to its stand that the Bank Guarantees for all 12 (twelve) packages would be submitted upon receipt of corrected LoAs.
7. The issue with regard to non-submission of Contract Performance Guarantee by the Petitioner Company gained momentum and on 24.6.2015 the APDCL issued letter extending the time for submission up to 10.7.2015 as the last chance. By the said letter it was made clear that the failure to do so would entail cancellation of the LoAs. In one of the replies, particularly that of 10.7.2015, the Petitioner Company raked up the same issues stating that the same had not been resolved with further information that the Petitioner Company is ready with the CPGs but are unable to submit the same for want of finalization of the matter with regard to taxation related issues and non-issuance of revised LoAs. The xerox copies of two letters issued by Dena Bank, Vadodara were enclosed thereto as proof of having obtained the CPGs in respect of the X packages. The Petitioner Company marked another letter dated 18.8.2015 to APDCL indicating that considerable time have elapsed and APDCL has neither resolved the tax related issues nor have revised the LoAs in terms of the tender conditions. On grounds that the public at large were affected due to the delay ensuing and due to the mounting pressure of APDCL to start with the work, the Petitioner Company submitted the Bank Guarantees in respect of GPR-1 and GPR-2 ( X packages) along with the said letter for due acceptance with request for resolving the issue with regard to revised LoAs. It was also indicated that upon confirmation of the same the contract agreements would be executed. Also, in respect of the N packages the CPGs would be submitted upon receipt of confirmation.
8. Two sets of orders came to be issued by APDCL - one on 19.8.2015 thereby terminating the LoAs in respect of the N packages, the other on 29.8.2015 terminating the LoAs in respect of the X packages. The first set was confined to violation of Clause 6.2 and 15.2 of the LoA, particularly, in not depositing the Contract Performance Guarantee within the specified time limit and/or the extended time. The second set was laid on similar lines with an addition that although CPG had been submitted on 18.8.2015 vide Bank Guarantee dated 8.7.2015, the same was not acceptable in view of the further conditions imposed by the Petitioner Company to enter into contract agreement. The LoAs were terminated and the bid security submitted for amounts of Rs.10.00 lakh each was forfeited as per Clause 6.2 and 15.2 of the Letter of Award. Forfeiture of bid security amount in respect of the other N packages was also made.
9. Cause of action arose from the orders of termination of LoAs dated 19.8.2015 and 29.8.2015. The two different sets of orders, by way of illustration, are reproduced below:
ASSAM POWER DISTRIBUTION COMPANY LIMITEDO/o the Chief General Manager (RE), Bijulee Bhawan (Annex Building), Paltanbazar,
Guwahati-1.Ph:0361-2735684,FAX:0361-2739626, E-mail:[email protected]
No.CGM(RE)/LAD-II/RGGVY/XIIPlan/BSK-C/2014-15/05 Dated 19.08.2015
To,
M/s Diamond Power Infrastructure Limited,
Essen House, 5/12, B.I.D.C, Gorwa,
Vadodara, Gujarat (India)
Pin:390016.
Sub: Termination of Contract Awards.
Ref: (A) Letter of Award No: CGM(RE)/LAD-II/RGGVY/XII Plan/BSK-C/2014-15/01 Dated 06.02.2015
(B) Our letter nos:
1) CGM(RE)/LAD-II/RGGVY/XII Plan/BSK-C/2014-15/02 Dated 23.03.2015
2) CGM(RE)/LAD-II/RGGVY/XII Plan/BSK-C/2014-15/03 Dated 02.05.2015
3) CGM(RE)/RGGVY/LA-1/DDUGJY/15-16/07 Dated 24.06.2015
Dear Sir(s),
As per Clause-6 of the Letter of Award, cited under Ref.(A) above, you were required to furnish unconditional and Irrevocable Contract Performance Guarantee (CPG) amounting to Rs.2,23,04,739/-against work package BSK-C from a Bank being 10% of the Contract Value within 28(twenty eight) days from the date of Award; but you have failed to do so.
Reminders were sent to you for early submissions of CPG including the letters under Ref.(B) above, the last being dated 25.06.2015; wherein the final extension till 10th July 2015 was given as a last chance to furnish the CPG; failing which your LOA will be cancelled.
In view of above, it is found that you have violated the provisions of Clause-6 of the Letter of Award dated 06-02-2015 by not depositing the Contract Performance Guarantee as stated above despite several letters and reminders sent to you. It has also been noted that after the issuance of the Letter of Award due to non-submission of the Contract Performance Guarantee as per Clause-6 of the Letter of Award, the works reminded un-executed and as a result public interest has suffered, as the work relates to infrastructure development of the State of Assam.
For all the aforesaid reasons, the letter of Award No. CGM(RE)/LAD-II/RGGVY/XII Plan/BSK-C/2014-15/01 Dated 06.02.2015 issued in your favour is hereby terminated in public interest in terms of Clause 6.2 of the Letter of Award. Further, the bid guarantee submitted by you for an amount of Rs.10.00 Lakh is also hereby forfeited as per Clause 6.2 and 15.2 of the Letter of Award.
Yours faithfully,
Sd/ Illegible 19.8.15
Chief General Manager (RE),
APDCL.
ASSAM POWER DISTRIBUTION COMPANY LIMITED
O/o the Chief General Manager (RE), Bijulee Bhawan (Annex Building), Paltanbazar, Guwahati-1.Ph:0361-2735684, FAX:0361-2739626, E-mail:[email protected]
No.CGM(RE)/LA-I/RGGVY/XII/Plan/GPR-1/2014-15/36Dated 29.08.2015To,
M/s Diamond Power Infrastructure Limited,
Essen House, 5/12, B.I.D.C, Gorwa,
Vadodara, Gujarat (India)
Pin:390016.
Sub: Termination of Contract Awards. Ref: (A) Letter of Award No: CGM(RE)/LA-I/RGGVY/XII Plan/GPR-1/2014-
15/05 Dated 23.1.2015
(B) Our letter nos:
1)CGM(RE)/LA-I/RGGVY/XIIPlan/GPR-1/14-15/19Dated 30.4.2015
2)CGM(RE)/RGGVY/LA/1/DDUGJY/15-16/07 dated 24.06.2015
Dear Sir(s),
As per Clause-6 of the Letter of Award, cited under Ref.(A) above, you were required to furnish unconditional and Irrevocable Contract Performance Guarantee (CPG) amounting to Rs.4,87,29,857/-against work package GPR-1 from a Bank being 10% of the Contract Value within 28(twenty eight) days from the date of Award; but you have failed to do so.
Reminders were sent to you for early submissions of CPG including the letters under Ref.(B) above, the last being dated 24.06.2015; wherein the final extension till 10th July 2015 was given as a last chance to furnish the CPG; failing which your LOA will be cancelled.
It has also been noted that after issuance of the Letter of Award due to non-submission of the Contract Performance Guarantee as per Clause-6 of the Letter of Award, the works reminded un-executed and as a result public interest has suffered, as the work relates to infrastructure development of the State of Assam.
Although , on 18.08.2015 you submitted CPG amounting to Rs.4,87,29,857/- for GPR-1 Package vide BG No.074915/GPER0042 dated 08-07-2015, issued by Dena Bank, Alkapuri Branch, Vadodara-390007, the same is not acceptable for further conditions imposed by you for entering into contract agreement. As such, the BG no.074915/GPER0042 dated 08072015, issued by Dena Bank Alkapuri Branch is returned herewith in original.
You are aware that RGGVY is an important flagship programme of the Govt. of India and your delaying act has deprived the target habitations from getting the benefits of electrification and has not only tarnished the image of APDCL but also hinders the development of the State of Assam.
For all the aforesaid reasons, the letter of Award No. CGM(RE)/LA-I/RGGVY/XII Plan/GPR-1/2014-15/05 Dated 23.01.2015 issued in your favour is hereby terminated in public interest in terms of Clause 6.2 of the Letter of Award. Further, the bid guarantee submitted by you for an amount of Rs.10.00 Lakh is also hereby forfeited as per Clause 6.2 and 15.2 of the Letter of Award.
Yours faithfully,
Sd/ Illegible 29.8.15
Chief General Manager (RE), APDCL.
10. Common prayers are made in all the 12 (twelve) writ petitions for setting aside the respective letters of termination; for a direction to the respondent authorities to review the terms and conditions stipulated in the Letter of Award and for affording reasonable time to the petitioner to submit the Contract Performance Security. Although a Notice Inviting Tender in respect of 16 (sixteen) cancelled packages, including the 12 packages awarded to the Petitioner company, was issued and published on 8.9.2015, no primary prayer was made for interfering with the same, save and except, an interim prayer to restrain the respondents from proceeding with the said NIT during the pendency of the case. The said interim prayer, however, was only confined to the writ petitions where the subject-matter was in respect of GPR-1 and GPR-2 under Goalpara District ( X packages).
11. Generally, the grounds of challenge to the letters of termination is that the same could not have been issued without first resolving the issues raised by the Petitioner Company on the unilateral action of APDCL in reducing the price per unit from that offered/quoted by the petitioner, in changing the terms of the contract to the detriment of the petitioner and in adding certain tax structures etc. According to the petitioner, although two separate contracts had been awarded, -one for supply and the other for labour and services - the APDCL combined the two contracts for the purpose of determining of the total values of both the contracts and had deducted 5% as Value Added Tax (VAT) on the works contract. The argument advanced is that the petitioner not having opted for the composition scheme notified vide Notification dated 31.3.2012 under the Assam Value Added Tax Act, 2003, as such, the question of deducting 5% VAT from the gross value of the total contract was not permissible, rather the issue did not arise at all. It is contended that the APDCL misconstrued the solemn object of the 46th Amendment to the Constitution of India, in as much as, after the said amendment all composite and individual works contract, comprising of both supply and labour portion, have been made divisible and the State has been empowered to levy VAT only on the supply portion. Reference is made to APDCL letter dated 29.5.2015 to say that the authorities have taken the view that the contract in question is a Turnkey Project and is a composite works contract and, therefore, the taxes as applicable to composite works contract is applicable. This view, according to the petitioner, is erroneous as there is no provision that in such contract the rate applicable in respect of composition scheme shall automatically be applicable, more so, when the petitioner had not opted for the scheme in lieu of the taxes normally payable in respect of execution of works contract. Further, when the petitioner had not opted for the composition scheme, then the composite works contract shall become divisible and the State can levy tax only on the supply portion, that too, subject to the restrictions imposed by Article 286 of the Constitution. In this connection, strong reliance is placed in the case of Builders Association of India and ors. vs Union of India, reported in AIR 1989 SC 1371 and in Bharti Airtel vs Union of India, reported in AIR 2015 SC 2583.
12. Mr. Balgopal further submits that once a transparent procedure had been followed resulting in the issuance of Letter of Intent and due acceptance thereof, the Respondent APDCL cannot alter the foundation of the contract by introducing detrimental tax structure, reducing unit prices etc. Also, the State cannot be allowed to act against the law framed by it which clearly prescribes under what conditions composition of the tax can be made at a flat rate of 5%. The imposition of 5% VAT is not a mandatory requirement but discretion vested with the assessee/petitioner who has to opt for it. Only thereafter, the State has to follow the prescribed procedure. Alleging breach of solemn undertaking as violative of the doctrine of promissory estoppel, reliance is placed in the case of Gujarat State Financial Corporation vs M/s Lotus Hotels Pvt. Ltd., reported in AIR 1983 SC 848 and in M/s Motilal Padampat Sugar Mills Co. Ltd. vs the State of U.P. and others, reported in AIR 1979 SC 621.
13. The further contention of the petitioner is that had it known that the conditions of the contract would change, it would not have participated, far from depositing the substantial bid security amount standing at Rs.1.20 crores (all 12 packages), which now stands are be forfeited. It is also contended that in so far as the termination order of X packages are concerned, the stipulation at para 4 thereof is a far cry from being in violation of Clause 6.2 and 15.2 of the Letter of Award. Termination could not have been made on grounds that the Bank Guarantee towards CPG had been submitted with conditions attached. According to the petitioner, the same is an incorrect rendering of facts, in that, the letter dated 18.8.2015 to which the Bank Guarantees had been enclosed, clearly indicates absence of any conditions. Rather, only a request had been made for resolving and considering the revising of the LoA s and that contract agreements would be executed upon confirmation by APDCL. It was only in respect of the N packages that it was informed that Bank Guarantee will be submitted upon confirmation. Lastly, it is contended that the LoA was not in consonance with the mandates of the Constitution and that the obligations flowing out of the Constitution being higher than the obligations arising out of a contract, the latter must invariably yield to the former. Accordingly, those parts of the LoA which are unconstitutional, has to be read down.
14. Mr. A.C. Buragohain, learned Advocate General, State of Assam, submits that the Petitioner Company is unnecessarily bringing in the issue on VAT, in as much as, any controversy thereof can only arise at the time of submission of bills for payment. The implementation of the projects, time being of essence and of paramount public interest, are inordinately being delayed at the sole behest of the petitioner Company. Reliance is placed in the case of Raunaq International Ltd. vs I.V.R. Construction Ltd and others, reported in (1999) 1 SCC 492, particularly paragraphs 10, 11 and 13 thereof. Mr. J. Deka, learned counsel representing respondent no.5, makes similar submission on the inordinate delay caused. Mr. Deka also contends that the rural electrification work have assumed priority status on the part of the Government of India in the Ministry of Power. In fact, by letter dated 25.8.2015 the Ministry have asked the Rural Electrification Corporation Ltd. (REC) for updation of progress on weekly basis so that the same can be incorporated in the Monthly Report of the Ministry for onward transmission to the office of the Prime Minister (PMO) on monthly basis. The necessity for doing so was expressed in view of the announcement made by the Prime Minister from the ramparts of the Red Fort on the 69th Independence Day that the works relating to laying of electricity cables, erecting of poles and supply of electricity to 18,500 villages is to be completed in 1000 days.
15. Mr. B.D. Das, learned senior counsel representing APDCL, at the outset, questions the locus of the deponent to represent the Petitioner Company. The contention is that the writ petitions have not been filed by a competent officer as per Rule 21 of the Companies Court Rules, 1959 read with Section 179 of the Companies Act, 1956 and to this end relies upon the case of Nibro Ltd. vs. National Insurance Co. Ltd, reported in AIR 1991 Delhi 25 and in Assam Company India Ltd. vs Bank of New York Mellon, London, reported in 2014 (3) GLT 430.
16. Further submission of Mr. Das is that out of the total 73 packages for rural electrification, contract agreements have been signed for 57 packages and, in fact, the parties concerned have also commenced works. Out of the remaining 16 packages, the Petitioner Company was awarded 12 packages. Whereas no Contract Performance Guarantee was submitted in respect of 10 packages ( N packages), conditional Contract Performance Guarantees were submitted in respect of 2 packages ( X packages), that too, after reminders. Referring to relevant clauses in the Instructions to Bidders, Mr. Das contends that the Employer has reserved the right to vary the quantities of any of the spares and/or to delete any items of spares at the time of issuing LoA. In fact, due to increase in the quantities of the items there has been a corresponding increase in the contract value. As per the Instructions to Bidders, the price quoted by any party is to include the Sales Tax/VAT on the works contract, Turnover Tax or any other similar taxes under the Sales Tax/VAT Act for services to be performed, as applicable, and the Employer would not bear any liability on this account. Deduction of such taxes would be made at source and the party would be furnished with the Certificate of Tax Deducted at Source (TDS). Mr. Das submits that, accordingly, in the LoA the tax component has been separated from the quoted price, being a requirement facilitating payment of the petitioner s bill amounts as well as for payment of taxes to the statutory authorities.
17. Mr. Das also submits that the primary grievances raised by the petitioner are in respect of deduction of 5% VAT from its quoted rates and in not allowing 2.06% Works Contract Taxes (WCT) and 1% Welfare Cess. It is contended that these are issues not related to the prayers made in the writ petitions. These are distinct issues which can well be agitated in separate proceedings, if so advised.
18. Case laws were relied upon by Mr. Das in support of the State s power to bifurcate a contract and to levy sales tax on the value of materials i.e. the case of M/s Associated Cement Companies vs Commissioner of Customs, rendered vide judgment dated 25.1.2001 in Appeal (Civil) 821 of 2000 together with other analogous cases and in the case of State of Karnataka and ors vs Pro Lab and ors, reported in (2015) 8 SCC 557.
19. As regards the termination orders, Mr. Das contends that the issue with regard to non-submission of Bank Guarantees towards CPG had received strong views and concern of the Board of Director of APDCL. The proceedings of the meeting of the Board on 10.6.2015 recorded that the non-submission had not only resulted in delay in the implementation of rural electrification programme in the State but has also created a negative environment. A consensus was arrived at to give a final extension till 10.7.2015, failing which LOA would be cancelled. Accordingly, the Petitioner Company was informed by letter dated 24.6.2015, which it not only failed to abide by within the given time but while doing so on a date beyond the final extended period had imposed conditions, which was not acceptable to APDCL. This was in so far as X packages were concerned. Mr. Das submits that it was in this backdrop that the termination orders were issued in terms of Clause 6.2 and 15.2 of the LOA. As regards the N packages, no Bank Guarantees towards CPG had been submitted at any given point of time.
20. On the scope and power of judicial review over administrative actions, Mr. Das relies in the case of Jagdish Mandal -vs- State of Orissa and ors, reported in (2007) 14 SCC 517 ; Sorath Builders -vs- Shreejikrupa Buildcon Limited and anr, reported in (2009) 11 SCC 9 and Raunaq International Ltd. vs I.V.R. Construction Ltd (supra). With regard to the power of the authority to issue cancellation order on account of failure to provide Bank Guarantee, reliance is placed in the case of Purvankara Projects Ltd. vs Hotel Venus International and ors, reported in (2007) 10 SCC 33.
21. The intention to traverse and record the submissions of the Petitioner Company and the replies thereto has a definite purpose. The intention is to ascertain and highlight whether the exhaustive deliberations and the cited case laws fits into the scheme which precipitated urgent institution of the writ petitions. The common prayers made in all the writ petitions are three fold: (i) for setting aside the termination orders (ii) for a direction to the respondent authorities to review the terms and conditions stipulated in the Letter of Award, and (iii) for a direction to afford reasonable time to submit Contract Performance Security. Having noticed the reliefs sought for vis- -vis the gamut of the deliberations, this Court is of the view that it would be inappropriate to allow the petitioner to enlarge the scope of the writ petition beyond the prayer so made. The grievances raised in respect of deduction of 5% VAT from the quoted rates, holding back/non-submission of CPG, the extent of power of the State to levy tax consequent upon the 46th Amendment of the Constitution, are issues having least nexus to the reliefs prayed for. The State is the best judge to consider review of any terms and conditions and this Court will not sit as an appellate authority to judge the actions of an expert body, save in cases where the decision making process is flawed, the action is fret with arbitrariness, irrationality and unreasonableness, the process adopted is mala fide or intended to favour another person and where the action affects public interest. Apparently, the writ petitions were instituted consequent upon issuance of the termination orders. The LOAs were issued in January-February 2015 and even if aggrieved by any of the terms and conditions therein, the Petitioner Company made no challenge to it before this Court. In the instant cases, recourse is made to certain taxation related issues in the LoA and to the series of correspondences to justify non-submission/withholding of Bank Guarantees towards CPG. There is a pronounced tangent in the submissions made vis-a-vis the reliefs sought for. One submission made by the Petitioner Company is for reading down those part of the Letter of Award which, in its comprehension, is unconstitutional, however, without any challenge to the same. Be that as it may and without much ado, this Court proceeds to adjudicate only on the legality and validity of the termination orders and no further. The orders under challenge shall stand or fall on its own merits and demerits.
22. Before adverting to the primary issue in hand, the objection on the maintainability of the Writ Petitions needs to be addressed to. The batch of cases was heard on several dates and the parties agreed to a final hearing of the matters. These cases were not taken up by this Court at any stage for a preliminary hearing on the point of maintainability, not that the said plea could not have been raised during final hearing. Perhaps, there may or may not have merit in the plea but having heard the parties at great length, this Court is of the opinion that short of non-suiting the Petitioner Company, the matter is essentially to be adjudicated upon on merits. This Court deems it appropriate to decide on merits in order to do complete justice between the parties by exercising judicial discretion. To add, the facts in the case of Assam Company India Ltd (supra), relied upon by Mr. Das, are distinct and do not come to the aid of APDCL to non-suit the Petitioner Company.
23. The moot question to decide is as to whether the termination orders were issued on grounds that the Bank Guarantees so submitted were with conditions attached or the same being in violation of essential conditions of the LOA, as envisaged under Clause 6.2 and 15.2 thereof. Whether the former, if assumed to be correct, is a condition stipulated in the LoA entailing termination of the contract and what are the categorical grounds canvassed and pleaded by APDCL in its affidavits in support of the impugned orders. The findings and decision, however, would differ between X packages and the N packages. To begin with, it would be apposite to reproduce Clause 6.2 and 15.2 of the LoA [from WP(C) 5811/2015] :
6.0 CONTRACT PERFORMANCE GUARNATEE
You shall furnish an unconditional and irrevocable Bank Guarantee from a bank, the acceptability of which has been specified in the Bidding Document, in favour of the Chief General Manager (RE), APDCL, for an amount of Rs. 4,87,29,857/- (Rupees Four Crore Eighty Seven Lakh Twenty Nine Thousand Eight Hundred Fifty Seven) only i.e. equal to ten percent (10%) of total Contract Price, towards Contract Performance Guarantee (CPG) within twenty eight (28) days, as per format prescribed in the bid-document, from the date of issue of this Letter of Award. The above Contract Performance Guarantee shall be kept valid until expiry of ninety (90) days after the end of Defect Liability Period. The Defect Liability Period is twelve (12) months from the date of Taking Over/Completion of Facilities (or any part thereof). The CPG shall be valid initially up to and including 23-04-2018 and shall be extended from time to time until expiry of ninety (90) days beyond the actual completion of Warranty/Defect Liability Period.
6.1 ..
6.2 In the event of non-submission of the CPG within the stipulated period, the award may be terminated and the Bid Guarantee submitted by you shall be forfeited without any further notice.
15.0 CONTRACT AGREEMENT
15.1 ..
15.2 You shall enter into a Contract Agreement with us within twenty-eight (28) days from the date of this Notification/Letter of Award. In the event of non-entering into Contract Agreement within the specified time period, the award may be terminated.
24. The stipulation/requirement under Clause 6 is for furnishing an unconditional and irrevocable Bank Guarantee equal to 10% of the total contract price towards Contract Performance Guarantee within 28 days from the date of issue of the Letter of Award. Clause 6.2 postulates the consequences on the failure to do so, that is, the Award may be terminated and the bid guarantee forfeited. The same period is allowed for entering into the Contract Agreement, failing which the prescription is that the Award may be terminated.
25. In so far as the X packages are concerned, it is an admitted position that Bank Guarantees dated 8.7.2015 had been submitted on 18.8.2015, although the extended time limit for doing so had expired on 10.7.2015. It was not accepted due to further conditions imposed by the Petitioner Company for entering into contract agreement. This takes us to the stand of APDCL, as demonstrated in their affidavits, whether termination was on account of alleged imposition of conditions or on account of operation of Clause 6.2 and 15.2 of the LoA. At paragraph 7 of the Affidavit-in-opposition filed by APDCL on 30.9.2015, the following statement is made (relevant part):
7 Out of the aforesaid 73 Packages, Contract Agreements have been signed for 57 Packages and the parties have started their works. The Contract Performance Guarantees for the remaining 16 Packages have not been deposited after issuance of respective Letter of Awards. Out of these 16 Packages, 12 Packages were awarded to the petitioner s Company; the petitioner s Company could not submit the Contract Performance Guarantee for 10 Packages and therefore, the Letters of Awards were cancelled by Orders dated 19.08.2015. For 2 Packages, the petitioner s Company has given conditional Contract Performance Guarantee after reminders dated 20.03.2015 (at 26 Annexure-XI Page 147 of the writ petition), dated 30.04.2015 (at Annexure-XVII, Page 157 of the writ petition) and dated 24.06.2015 (at Annexure-XXII, page 171 of the writ petition). As the conditional Contract Performance Guarantee is not acceptable to the respondent authorities, the contract in question was terminated by an Order dated 29.08.2015 vide Annexure-XXX, page 195 of the writ petition) (Emphasis supplied)
Again at paragraph 21 thereof, the following statement is made:
21. That with regard to the statements made in paragraphs 33 and 34 of the writ petition, the deponent accepts the correctness of the same and respectfully states that after issuance of the Letter of Award dated 23.01.2015, the petitioner Company has been provided sufficient clarification in the matter of the Letter of Award and as such, conditional Contract Performance Guarantees vide letter dated 18.08.2015 after the letter dated 24.06.2015 providing the last chance for submission of Contract Performance by 10.07.2015 is not acceptable to the APDCL. Taking into consideration the public interest involved, the matter was placed before the Board of Directors on 29.08.2015 and on consideration of the same, the Board of Directors of APDCL vide resolution dated 29.08.2015 approved the termination of the Letters of Award issued to the petitioner Company in respect of 10 Projects wherein they failed to submit the Contract Performance Guarantees and also considering unsatisfactory performance of the petitioner Company in the contracts awarded for XI Plan works, the APDCL Board has resolved to debar the petitioner Company from participating in APDCL contracts for a period of 3 years w.e.f. 29.08.2015. The Board further resolved to cancel the other two packages (GPR-1 and GPR-2) of the petitioner Company for late submission of Contract Performance Guarantees imposing further condition to enter into Agreement. In pursuant to Board s decision, fresh Notice Inviting Tender has been issued on 08.09.2015 for 16 Package and GPR-2 Package which is the subject matter of WP(C)No.5811/2015 and WP(C)No.5812/2015. (Emphasis supplied)
26. The minutes of the Board s Meeting dated 29.8.2015, (Annexure-7 to the Affidavit-in-opposition) referred to in paragraph 21 extracted above, records the discussion that some contractors had given the CPG after the due date and extensions and the Board had decided not to accept these CPG s as it did not show proper commitment on the part of the contractors to the project.
27. What can be culled out from the demonstrated stand of APDCL in respect of X packages are:(i) the Petitioner Company had given conditional Contract Performance Guarantee after reminders and the same being not acceptable, the contract in question was terminated.
(ii) the Board had decided to cancel the contract due to late submission of CPG imposing further conditions and also considering the unsatisfactory performance of the Petitioner Company in the earlier contracts awarded for XI Plan works, prompted the Board to debar the Petitioner Company from participating in APDCL contracts for a period of 3 (three) yeas w.e.f. 29.08.2015.
28. Apparently the X packages did not suffer termination for default of Clause 6.2 and 15.2 of the Letter of Award but on account of CPG being submitted with conditions attached. The ground of termination, even if factually correct, cannot operate as rejection/termination criteria in the absence of any stipulation in that regard in the LoA. An additional ground is also assigned alleging unsatisfactory performance in earlier contracts.
29. Turning to the letter dated 18.8.2015 with the Bank Guarantees enclosed therewith, the petitioner company had made a request to resolve and consider revising the LoAs in terms of the tender conditions and by agreeing to enter into the contract agreement upon confirmation from APDCL. It was only in respect of the N packages it was informed that the Bank Guarantees will be submitted upon confirmation. A perusal of the contents of the said letter does not per se indicate that conditions had been attached for acceptance of the Bank Guarantee in respect of the X packages.
30. The situation is, however, different in the case of the N packages. The Bank Guarantees had never been submitted despite reminders and extensions. The rigour of Clause 6.2 and 15.2 of the LoAs are squarely applicable. The requirement of essential criterions of the LoA had been flouted by the Petitioner Company. Accordingly, this Court will fight shy from interfering with the termination orders in respect of the N packages.
31. This Court is also full well aware of the paramount public interest involved in the expeditious implementation of the rural electrification works covering nearly 18500 villages. Time is of essence and delay in implementation will only confound relief and succour to thousands of villagers, not to speak of the cost increase of the projects manifold. It would be a travesty of justice to invoke the power of judicial review to protect private interest at the cost of public interest. Having said that, the Court also cannot be oblivious of the process adopted or decision made by the respondent authority in reaching a conclusion in respect of the X packages. There is no gain-saying that unreasonable and arbitrary action is an anathema to the Constitution of India.
32. From the foregoing discussions, the orders of termination of the Letters of Award assailed in WP(C)5811/2015 and WP(C)5812/2015 ( X packages) are hereby set aside. In respect of the orders of termination of Letters of Award in WP(C)5179/2015; WP(C)5172/2015, WP(C)5206/2015, WP(C)5207/2015, WP(C)5201/2015, WP(C)5199/2015, WP(C)5200/2015, WP(C)5204/2015, WP(C)5176/2015 and WP(C)5210/2015 ( N packages), the same do not call for interference. Accordingly, the writ petitions in respect of the X packages are allowed only to the extent of interfering with the termination orders and the writ petitions in respect of the N packages stands dismissed. The parties are left to bear their own costs.