M/S Shivam Coal Carriers Private Limited vs. South Eastern Coalfields Limited

Held

The Court held that the forfeiture of the EMD by SECL was irrational and arbitrary. The Court found that the Petitioner was never clearly communicated as being declared L-1, nor was there a clear decision to award the contract to them within the extended bid validity period. The Petitioner's refusal to extend the bid validity and demand for refund of EMD was made after SECL's internal deliberations, which themselves indicated uncertainty and potential cancellation of the tender. The Court noted that the stage for notification of award and signing of the agreement, as stipulated in Clause 23 of the 'Instructions to Bidders', was never reached. Therefore, the Petitioner could not be considered to have failed to honour an award of contract. The Court quashed the forfeiture order (Annexure P/1) and directed SECL to refund the EMD to the Petitioner within four weeks.

Facts

The Petitioner, M/s Shivam Coal Carriers Private Limited, filed a writ petition challenging the forfeiture of its Earnest Money Deposit (EMD) of Rs. 16,09,000/- by the Respondent, South Eastern Coalfields Limited (SECL). The EMD was deposited as part of a Notice Inviting Tender (NIT) for hiring HEMM for excavation work. The Petitioner was shortlisted as L-2. The bid validity was extended multiple times, with the Petitioner consenting to extensions until 30.12.2017 and then until 30.04.2018. However, SECL requested a further two-month extension until 30.06.2018. The Petitioner refused this extension and requested a refund of the EMD. SECL subsequently forfeited the EMD, leading to the writ petition.

Key Issues

1. Whether the forfeiture of the Petitioner's Earnest Money Deposit (EMD) by SECL was justified, considering the Petitioner refused to extend the bid validity beyond 30.04.2018 and requested a refund of the EMD. Petitioner's arguments: The Petitioner contended that they were never declared L-1 and no communication was received from SECL indicating the rejection of the L-1 bidder or their own elevation to L-1 status. They argued that internal deliberations by SECL, which suggested cancelling the tender or showed uncertainty in declaring the Petitioner as L-1, did not constitute a clear decision or communication to the Petitioner. They relied on Clause 23 of the 'Instructions to Bidders' which mandates notification of award and signing of an agreement. Respondent's arguments: SECL argued that an auto-generated communication on 09.02.2018 directed the Petitioner to upload certain documents, and subsequent reminders were also sent. The Petitioner's failure to respond and upload the documents was considered a failure to comply with the NIT requirements, making the forfeiture of EMD a natural consequence. They relied on Clauses 11(v), 11(vii), and 14 of the NIT and 'Instructions to Bidders' regarding forfeiture of EMD in case of non-compliance.