THE HON’BLE MR. JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION No.17142 of 2007 Date: .01.2008 Between: M/s.S.Lalaiah & Co., Special class Cosntractors & Engineers Hyderabad. … Petitioner AND Government of A.P., Roads and Buildings Department, Rep by S.E., R & B Circle, Nalgonda. & others. … Respondents Counsel for the petitioner: Sri K.Raghuveer Reddy Counsel for respondents: G.P. for Roads & Buildings. HON’BLE MR. JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION No. 17142 of 2007 ORDER:- This writ petition is filed for a writ of mandamus to set aside proceedings dated 25.1.2007 issued by the Superintending Engineer, R & B Circle, Nalgonda district and consequent proceedings dated 2.8.2007 of respondent No.2 whereby the sum of Rs.4,07,800/- paid through bank guarantee towards earnest money deposit (EMD) is forfeited and sought to be recovered respectively. The Superintending Engineer, R & B Circle, Nalgonda (for short “the Superintending Engineer”) issued notice inviting tender (NIT) on 26.8.2006 “for execution of Nereducherla-Janpahad road from KM 0/0 to 25/0 (work in KM 5/0 to 11/5) in Nalgonda district”. In response to the same, the petitioner firm filed its tender by quoting 5.14% less than the estimated contract value. As per the tender conditions, the petitioner furnished bank guarantee for Rs.4,07,800/- towards Earnest Money Deposit (EMD). The petitioner emerged the lowest bidder. Under condition 13.1 of the NIT the validity period of tenders is three months from the last date of receipt of the tender. The validity period of 90 days expired on 17.12.2006. On 25.12.2006 a letter was addressed on behalf of the petitioner to the Superintending Engineer wherein it was mentioned that the last date of tenders was 18.9.2006 and that the validity period of the tender expired on 17.12.2006. It was further mentioned that as no communication of acceptance of tender was received by the petitioner and as it was not interested in extending the validity of the tender, the EMD may be returned. In reply to the said letter the Superintending Engineer in his letter dated 25.1.2007 informed the petitioner that the award of contract was communicated through ‘e-notice’ online on 27.11.2007 itself and that acceptance of tender was also communicated through conventional method vide office letter dated 15.12.2006 despatched on the same day, before the expiry of the tender validity period. It was further stated that as the petitioner’s representatives failed to attend the circle office alongwith required documents, its tender was being cancelled by forfeiting the EMD. It is also stated that further action for black-listing the firm will be initiated as per G.O.Ms.No.94 and the tender conditions. The said letter was replied to by the Managing Partner of the petitioner firm through letter dated 14.2.2007 wherein they denied the respondents sending any ‘e- notice’ of acceptance of the tender. It is also mentioned that the alleged ‘e-notice’ does not indicate the contract amount for which the tender is accepted as required under Clause 29.1 of the NIT. The petitioner also denied receipt of any registered letter of acceptance as envisaged in clause 29.1 of the NIT. Respondent No.2 through his letter dated 2.8.2007 informed the petitioner that in pursuance of the instructions issued by the Superintending Engineer, he is taking steps to recover EMD amount from the petitioner’s bills pertaining to Kodad-Revoor road work. Feeling aggrieved by the said action, the petitioner filed the present writ petition. On behalf of the respondents, Sri K.Ashok Reddy, Superintending Engineer, filed the counter affidavit. It is averred inter alia that communication of acceptance of tender through registered post is no longer necessary in view of G.O.Ms.No.2 dated 15.1.2003, and that having intimated acceptance through e-notice, as an abundant caution his office sent a letter of acceptance through ordinary post on 16.12.2006. It is also averred that after receiving notice dated 25.1.2007, the petitioner attended meeting held on 2.4.2007 in the chambers of Engineer-in-Chief alongwith Superintending Engineer and the M.L.A., of Miryalaguda constituency and that the petitioner promised that he would commence the work and accordingly, the work was commenced on 12.4.2007 by bringing the poclainer to the site and started digging of trench on left side of the road to an extent of 1 KM. The Superintending Engineer maintained that as e-notice and written notice were sent on 27.11.2006 and 15.12.2006 respectively, the writ petition is liable to be dismissed. In the reply affidavit filed by the Managing Partner of the petitioner firm service of e-procurement notice is denied and it is further averred that having realized that they failed to comply with the requirement of sending the communication of acceptance of tender within the prescribed time under clause 29.1, the respondents have come out with the plea that they have sent e-notice, as an afterthought. The petitioner also denied receipt of alleged letter dated 15.12.2006. He also denied application of G.O.Ms.No.2 dated 15.1.2003 in the face of the specific conditions contained in the NIT. In this regard the petitioner stated that in respect of the work from KM 0/0 to 5/0 of improvements to carriage way of Kodad- Revoor in Nalgonda district acceptance letter was sent to M/s.S.K.R.Constructions through registered letter dated 27.12.2006 with acknowledgment due and that the similar procedure is not followed in the case of the petitioner. Sri K.Raghuveer Reddy, learned counsel for the petitioner re- iterated the averments contained in the affidavit filed in support of the writ petition and the reply affidavit. He submitted that admittedly the respondents failed to send communication of acceptance of the petitioner’s tender through registered post as envisaged in clause 29.1 and that therefore, forfeiture of the petitioner’s EMD is in violation of the tender conditions. Per contra, the learned Government Pleader for Transport submitted that though clause 29.1 envisages sending communication of acceptance of tender through registered post, in view of G.O.Ms.No.2 dated 15.1.2003 such a requirement is deemed to have been done away with. He further submitted that the petitioner having agreed to execute the work and commenced the same, later stopped the work and that therefore it is not entitled to any relief. I have carefully considered the respective submissions of the learned counsel. Under clause 13.1 of the NIT the validity of tender is prescribed as three months from the last date of receipt of tenders specified therein. The NIT specified 18.9.2006 as the last date for submission of tenders. Accordingly, the tender validity period expired on 17.12.2006. Clause 29 of the NIT, which is pivotal to the case, reads as under: “ 29. Notification of award and signing of agreement: 29.1 The tenderer whose tender has been accepted will be notified of the award of the work by the Superintending Engineer, prior to expiration of the tender validity period of registered letter. This letter (hereinafter and in the conditions of contract called “Letter of Acceptance”) will indicate the sum that the Government will pay the contractor in consideration of the execution, completion, and maintenance of the works b the contractor as prescribed by the contract (hereinafter and in the contract called the “contract amount”). 29.2 When a tender is to be accepted the concerned tenderer shall attend the office of the Superintending Engineer concerned on the date fixed in the letter of acceptance. Upon intimation being given by the Superintending Engineer, of acceptance of his tender, the tenderers shall make payment of the balance EMD and additional security deposit wherever needed by way of Demand Draft with a validity period of six (6) months or unconditional and irrevocable Bank Guarantee obtained from a Nationalised Bank with a validity period of 42 (18+24) months, and sign an agreement in the form prescribed by the department for the due fulfillment of the contract. Failure to attend the Superintending Engineer’s office on the date fixed, in the written intimation, to enter into the required agreement shall entail forfeiture of the Earnest Money Deposited. The written agreement to be entered into between the contractor and the Government shall be the foundation of the rights and obligations of both the parties and the contract shall not be deemed to be complete until the agreement has first been signed by the contractor and then by the proper officer authorized to enter into contract on behalf of the Government. 29.3 The successful tenderer has to sign an agreement within a period of 15 days from the date of receipt of communication of acceptance of his tender. On failure to do so his tender will be cancelled duly forfeiting the EMD paid by him without issuing any further notice and action will be initiated for black listing the tenderer.” A reading of the above re-produced clause makes it clear that award of the contract to the tenderer whose tender is accepted shall be informed through the registered letter before the expiry of the tender validity period and if the tenderer on receipt of such communication does not act as envisaged in clauses 29.2 and 29.3 his tender will be cancelled and EMD is liable to be forfeited. Thus, in order to initiate action under clause 29.3, it is incumbent upon the respondents to follow the procedure prescribed in clause 29.1. In letter dated 25.1.2007 addressed by him, the Superintending Engineer has taken the stand that apart from communicating the e-notice on 27.11.2006, the letter of communication of acceptance was despatched to the petitioner on 15.12.2006. This claim of the Superintending Engineer was denied in no uncertain terms by the petitioner in its letter dated 14.2.2007. However, in the counter affidavit the Superintending Engineer stated that the letter communicating acceptance of tender was sent through ordinary post on 16.12.2006. There is thus material variation of the dates on which the letter was allegedly sent. This apart, the Superintending Engineer candidly admitted in his counter that the letter was sent through ordinary post. The petitioner however, denied receipt of any such letter. Even assuming that the office of the Superintending Engineer sent a letter through ordinary post, in the face of the denial of receipt of letter and in the absence of proof of such receipt by the petitioner, the plea of the respondents that the petitioner had knowledge of acceptance of its tender cannot be accepted. Moreover, the procedure allegedly followed by the Superintending Engineer in despatching the alleged letter through ordinary post is contrary to the specific procedure prescribed under clause 29.1 which, as noted above, prescribes sending of communication through registered post. As the respondents failed to comply with this mandatory procedure, they cannot forfeit the petitioner’s EMD and blacklist the petitioner by invoking clause 29.3, which measures are undoubtedly penal in nature. It is of relevance to notice in this context that the tender conditions do not stipulate the method of sending communication of acceptance of tender through e-notice and the only method prescribed for communicating such acceptance is through registered post under clause 29.1. Indubitably, conditions of tender are sanctimonious and the parties are bound to act strictly in accordance there with. If the parties are allowed to deviate from the tender conditions, their sanctity is lost and this would defeat the very purpose for which the tender conditions are prescribed. While dealing with the challenge to the action of the International Airport Authority of India in accepting a tender in deviation of the Tender Conditions, the Supreme Court in Ramana V. I.A. Authority of India[1] held thus: “It is a settled rule of administrative law that an executive authority must be rigorously held to the standards by which it professes its actions to be judged and it must scrupulously observe those standards on pain of invalidation of an act in violation of them”. The respondents cannot, therefore, act in deviation of the procedure specifically laid down in Condition No.29 in seeking to penalize the petitioner. I am unable to countenance the stand taken by the respondents that in view of G.O.Ms.No.2 dated 15.1.2003, sending of written communication of acceptance of tender through conventional method of registered post is not necessary. A careful reading of the said G.O., reveals that accepting the steering committee’s recommendations, the Government through the said G.O. authorized the participating departments/organizations to take up e-procurement through electronic process. The said G.O. thus enables the department to follow the e- procurement process. But, for the reason best known to the respondents in the instant case they have not incorporated any clause in consonance with the said G.O., as regards sending of communication of acceptance of tender. So long as the NIT provides for communication of acceptance through registered letter, the respondents cannot be allowed to deviate from the said method by relying upon G.O.Ms.No.2 dated 15.1.2003. Therefore, even assuming that the petitioner had knowledge of e-notice in the absence of the communication through registered letter, in my opinion, the said e-notice does not constitute proper communication of acceptance of petitioner’s tender. A specific stand is taken by the petitioner that the amount for which the petitioner’s tender is accepted is not mentioned in the alleged ‘e- notice’. Clause 29.1 specifically envisages that the communication (to be sent through registered letter) will indicate the sum that the Government will pay the contractor in consideration of the execution, completion and maintenance of the works. The respondents failed to place before this Court the copy of the e-notice allegedly sent and also failed to plead that they have mentioned in the said e-notice the amount for which the tender is accepted. Hence, even assuming that e-notice is treated as a substitute to the registered letter, the same is not in conformity with clause 29.1. With respect to the submission advanced on behalf of the respondents that the petitioner after attending the meeting started executing the work on 2.4.2007 and subsequently he had withdrawn from the work, in my view the said acts even if true have no legal validity. When once the tender of the petitioner was cancelled, as was done in letter dated 25.1.2007 issued by the Superintending Engineer, neither the Superintending Engineer has any authority to ask the petitioner to commence the work nor the petitioner has any legitimate right to execute the work. Therefore, the meeting said to have taken place on 2.4.2007 and the alleged commencement of the work on 12.4.2007 even if true have neither relevance to nor any legal bearing on the issue under consideration in this writ petition. For the reasons aforementioned, forfeiture of the EMD of the petitioner is in violation of clause 29.1 of the NIT. The writ petition is accordingly allowed and letters dated 25.1.2007 and 2.8.2007 of the Superintending Engineer and the Executive Engineer, R & B, Miryalaguda Division are quashed. It is further declared that forfeiture of EMD of Rs.4,07,800/- is illegal and the respondents are not entitled to recover the said sum from the petitioner. As a sequel to disposal of the writ petition in the manner indicated above, WPMP.No.21932 of 2007 filed by the petitioner for interim relief is disposed of as infructuous. ____________________________ C.V.NAGARJUNA REDDY,J Date: .01.2008 mdaa [1] AIR 1979 SC 1628