M/S K.S. Infra Jv vs. South Eastern Coalfields Limited

Held

The Court held that the forfeiture of the EMD by the Respondent was unsustainable. The Court found that the bid validity, initially for 120 days, was extended by the Petitioner until December 31, 2017, as per Clause 13.2. Despite this, the Respondent failed to finalize the evaluation within this extended period. The Court noted that the Respondent's attempt to seek further extension was not accepted by the Petitioner. Therefore, after December 31, 2017, the Respondent could not unilaterally extend the deliberation period or forfeit the EMD without the Petitioner's consent. The Court found it significant that the Respondent's similar action against an 'L-2' bidder was set aside by this Court and upheld by the Supreme Court. The Court concluded that the Petitioner was entitled to succeed. The impugned order was set aside, and the Respondent was directed to return the EMD to the Petitioner within one month.

Facts

The Petitioner, M/s K.S. Infra JV, participated in a tender floated by South Eastern Coalfields Limited (Respondent) for hiring Heavy Earth-Moving Machinery. The Petitioner was declared 'L-1'. The tender stipulated a 120-day evaluation period. The Respondent requested an extension of 120 days, which the Petitioner granted, extending the validity to December 31, 2017. The Respondent sought a further extension, but the Petitioner did not respond, implying non-consent. After the validity expired, the Respondent forfeited the Petitioner's Earnest Money Deposit (EMD), citing non-qualification. The Petitioner challenged this forfeiture, arguing it was high-handed, occurred after the validity period, and without a hearing. The Respondent contended that the Petitioner was not eligible due to incomplete documentation and relied on Clause 23.4 of the Instructions to Bidder.

Key Issues

1. Whether the forfeiture of the Earnest Money Deposit (EMD) by the Respondent is valid, considering it was done after the expiry of the bid validity period and without affording an opportunity of hearing to the Petitioner, as per Clause 13.2 of the tender conditions? 2. Whether the Respondent's reliance on Clause 23.4 of the Instructions to Bidder, which states that reasons for rejection should be intimated after awarding the work, absolves them of the obligation to act within the bid validity period? Petitioner's Arguments: The Petitioner argued that the forfeiture was arbitrary and illegal because it occurred after the bid validity expired on December 31, 2017. They contended that the Respondent failed to finalize the evaluation within the stipulated or extended period. Furthermore, the Petitioner asserted that the forfeiture was made without providing any opportunity of hearing, violating principles of natural justice. They also pointed out that a similar forfeiture against an 'L-2' bidder was set aside by this Court and upheld by the Supreme Court. Respondent's Arguments: The Respondent argued that the Petitioner was not qualified as they failed to submit all requisite materials. They relied on Clause 23.4 of the Instructions to Bidder, suggesting that the intimation of rejection and refund of EMD to unsuccessful bidders is only required after the award of work to the successful bidder, implying no obligation to communicate forfeiture earlier.