IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE FOURTH DAY OF APRIL TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE V.ESWARAIAH WRIT PETITION NO : 24483 of 1998 Between: Nallam Sreeramchandra Murthy S/o Venkata Reddy Kakinada, E.G.Dist. ..... PETITIONER AND APIICorp Ltd., Rep by its Chief Engineer, Saifabad, Hyd. .....RESPONDENT Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to to issue a writ of mandamus or any other appropriate writ, order or direction the action of the respondents in for feiting the bid security amount of sum of Rs 38,000/- by bid No. 8/WB/96-97/2702 DT 2-11-96 as illegal, arbitrary etc with consequential direction to the respondents torefund the amouunt covered by the above bank gurantee with interest at such rate as this Hon'ble Court may deem fit Counsel for the Petitioner:MR.V.V.L.N.SARMA Counsel for the Respondent No.: MR.P.RAMABHOOPAL REDDY The Court made the following : Order: Petitioner filed this Writ Petition seeking a writ of Mandamus to declare the forfeiture of the bid security amount of Rs.38 lakhs by encashing the bank guarantee dated 02-01-1997, in respect of the bid notification dated 02-11-1996, as illegal and arbitrary, and to direct the respondent to refund the amount covered by the bank guarantee. Heard learned Counsel appearing for the petitioner. None appears for the respondent. It is the case of the petitioner that in response to the notification dated 02-11-1996, in respect of bid No.8/WB/96-97/2702, calling upon the bids from the interesting bidders, the petitioner submitted his bid on 01-04-1997 for construction of the buildings for classrooms, hostel and dining hall in the IAR at Mandapet of West Godavari District. The petitioner also paid a sum of Rs.2,000/- for issuance of tender document and further sum of Rs.38,000/- towards bid security. Pursuant to the same, the respondent addressed a letter dated 26-02-1997, requesting the petitioner to furnish the detailed price analysis for consistency of the rates quoted by him as per clause 29.5 of the ITB of the bidding document. It was also stated that the bid price arrived by the respondent was Rs.20,72,970/- after availing a rebate @ 11.79 percent offered by the petitioner, and that the petitioner has to give the concurrence for the corrected bid price of Rs.20,72,970/- on or before 10-03-1997. Thereafter, the respondent sent a telegram dated 01-04-1997 requesting the petitioner to extend the validity of his bid up to 04-05-1997. In response to the same, the petitioner vide letter dated 19-04-1997, intimated that he is not in a position to extend the validity of his bid for the said work, as there is considerable increase in the cost of material, labour and transport. Later, the respondent vide proceedings dated 29-04-1997 informed the petitioner that the bid security towards the above said work stands forfeited in view of the petitioner’s non-acceptance to the correction of the bid price as per Clause 16.6 of the bid conditions. The petitioner addressed letter dated 01-05-1997 requesting the respondent not to forfeit the bid security and to release the bank guarantee furnished by him towards bid security, as he has withdrawn his tender pursuant to clause 15.2 of the bid conditions. But, the respondent replied vide letter dated 02-06-1997 stating that forfeiture of the bid security is in accordance with Clause 16.6 (b) read with Clause 27 of the bid conditions, and therefore, the forfeiture has been in order. The petitioner got issued a legal notice, for which a reply was given, but, as the bid security has not been returned, he filed the present Writ Petition. Counter has been filed by the respondent stating that the petitioner was requested to furnish detailed price analysis as per Clause 29.50 of instructions to bidders of the bidding document and for the concurrence of the corrected bid price as per Clause 27 of the instructions, but the petitioner did not give any concurrence, and therefore, the bid security was forfeited as per clause 16.6(b) of the bid conditions. Now, the only question that arises for consideration is as to whether the forfeiture of the bid security is in accordance with the conditions stipulated in the bidding document or not. As per Clause 15.1 of the bid conditions of the bidding document, a bid shall remain valid for a period not less than 90 days. Admittedly, the petitioner filed his bid on 04-01-1997 and its validity period of 90 days will expire by 04-04-1997. As per Clause 27.2 of the bid conditions, certain procedure is prescribed for correction of errors regarding arithmetical errors, discrepancy between rates in figures etc., and if the bidder does not accept the corrected amount, the bid will be rejected and the bid security may be forfeited in accordance with sub- Clause 16.6 (b) of the bid conditions. In the instant case, the respondent addressed a letter to the petitioner on 26-02-1997 to give concurrence for the corrected bid price on or before 04- 04-1997, failing which it was open for the respondent to forfeit the bid security. The petitioner, no doubt, failed to give concurrence for the corrected bid price under Clause 27 of the bid conditions, but, the respondent forfeited the bid security after expiry of the validity period of the bid. Had the respondent forfeited the bid security before expiry of the validity period, it would have been a different thing as the bid conditions permit the respondent to forfeit the bid security, if the bidder fails to adhere to Clause 27 of the bid conditions. Therefore, I am of the opinion that the forfeiture of the bidding security after expiry of the validity period of the bid is not legal or proper even as per clause 16.6(b) of the bid conditions, in terms of which, the bid security can be forfeited, if the bidder does not accept the correctness of the bid price pursuant to Clause 27 of the bid conditions. As per clause 15.2 of the bid conditions, in exceptional circumstances, prior to the expiry of the original time limit, the respondent may request the bidder to extend the period of validity for a specified additional period and the bidder may refuse the request without forfeiting his bid security. In the instant case, before expiry of 90 days validity period of the bid on 04-04-1997, a telegram was issued by the respondent on 01-04-1997 requesting the petitioner to extend the validity of the bid up to 04-05- 1997, but the petitioner refused to extend the said period by letter dated 19-04-1997, which is after expiry of three months validity of the bidding period. As the petitioner refused to extend the bid validity only after its expiry, forfeiture of the bid security by impugned letter dated 29-04-1997 cannot be valid. Even as per clause 15.2 of the bid conditions, in exceptional cases only, the respondent can request for extension of the validity period of the bid, but, no exceptional circumstances have been shown for requesting the petitioner to extend the bid validity. In this view of the matter, I am of the opinion that forfeiture of the bid security by the respondent is illegal and unsustainable. Therefore, the Writ Petition is allowed as prayed for. No costs. ______________ (V.Eswaraiah, J) 4th April, 2008 lur ..... REGISTRAR // TRUE COPY // SECTION OFFICER To 1.APIICorp Ltd., Rep by its Chief Engineer, Saifabad, Hyd. 2.2CCs to 3.2CD copies Form-NIC-OGS/WP{VEENA}