M/S Hira Agency vs. The Union Of INDIA

Facts

The petitioner, M/s Hira Agency, a catering contractor with East Central Railway (ECR), challenged an order debarring them from bidding on Railway catering contracts for five years. The petitioner was awarded six contracts for General Minor Units (GMUs) but claims the Catering Policy, 2017, limited awards to five. The petitioner sought cancellation of one contract and delayed remittance for others, citing the pandemic. The Railways contended that the pandemic occurred after the remittance dates and that the petitioner failed to comply with tender conditions for GMUs 30 (Samastipur) and 45 (Darbhanga) by not depositing license fees and guarantee amounts within the stipulated seven days, leading to the cancellation of Letters of Award (LOAs) and subsequent debarment.

Held

The Court found no reason to interfere with the debarment order issued by the East Central Railway. The petitioner's arguments regarding the Catering Policy, 2017, and the pandemic were not accepted. The Court noted that the petitioner was awarded four GMU contracts, which was within the prescribed limit. The petitioner's failure to make remittances and enter into agreements for two of the awarded LOAs (GMU 30 and GMU 45) within the stipulated seven days was a clear breach of tender conditions. The Court observed that the pandemic had not commenced when the LOAs were issued and remittances were due, thus invalidating that excuse. The Railways were justified in cancelling the LOAs and debarring the petitioner for non-compliance. The ratio decidendi is that failure to adhere to the essential terms and conditions of a tender, such as timely remittance of fees and execution of agreements, can lead to cancellation of awards and debarment, irrespective of subsequent events like pandemics or claims of policy limitations if not properly addressed by the bidder at the time of award.

Key Issues

1. Whether the petitioner's contention that they were entitled to delay remittances for catering contracts due to the Catering Policy, 2017, limiting awards to five GMUs, and awaiting cancellation of one contract and allotment of a fifth, is legally tenable, particularly when LOAs for four GMUs were issued in 2019, and the petitioner entered into agreements and made remittances for only two of them? (Question of law and fact, turning on interpretation of tender conditions and Railway policies). Petitioner's arguments: The petitioner argued that the Catering Policy, 2017, restricted the number of catering stalls to five. They also claimed delays in remittance were due to awaiting cancellation of a sixth GMU and allotment of a fifth, and later, due to the pandemic. Respondent's (Railways) arguments: The Railways contended that the petitioner could not use the policy limitation as an excuse for non-compliance with tender conditions for the four awarded GMUs. They asserted that the pandemic occurred after the remittance dates and that the petitioner failed to deposit the annual license fees and guarantee amounts within seven days of receiving the LOAs for GMUs 30 and 45, justifying the cancellation of LOAs and subsequent debarment.