1 2025:CGHC:58507-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPC No. 6196 of 2025 M/s. S. Kumars Associates Proprietor Mrs. Priya Agrawal W/o Sanjay Agrawal Through Its Authorized Power Of Attorney Of The Sole Proprietorship Firm Sanjay Agrawal S/o Gaurishankar Agrawal Aged About 40 Years, R/o G. S. Compound, New Bus Stand, T. P. Nagar, Korba, Tahsil And District Korba, Chhattisgarh. P I N- 495 677. ... Petitioner versus 1 - State Of Chhattisgarh Through Its Secretary, Indravati Bhawan, Block No. 04, Third Floor, Atal Nagar, Naya Raipur, District- Raipur, Chhattisgarh P I N- 492 002 2 - Raipur Development Authority Through Its Chief Executive Officer, 2nd Floor, Bhaktmata Karma Vyavsayik Parisar, New Rajendra Nagar, Raipur, Tahsil And District- Raipur, Chhattisgarh P I N 492 006 3 - Superintending Engineer Raipur Development Authority, 2nd Floor, Bhaktmata Karma Vyavsayik Parisar, New Rajendra Nagar, Raipur, Tahsil And District- Raipur, Chhattisgarh P I N 492 006 4 - Executive Engineer Raipur Development Authority, 2nd Floor, Bhaktmata Karma Vyavsayik Parisar, New Rajendra Nagar, Raipur, Tahsil And District- Raipur, Chhattisgarh P I N 492 006 ... Respondents For Petitioner : Mr. Raj Kamal Singh through video conferencing along with Mr. Shubham Dwivedi, Advocate For Respondent No.1/ State For Respondent Nos. 2 to 4 /RDA : : Mr. Praveen Das, Dy. Adv. General Mr. Animesh Tiwari, Advocate Hon'ble Shri Ramesh Sinha, Chief Justice Hon'ble Shri Bibhu Datta Guru , Judge Order on Board ROHIT KUMAR CHANDRA Digitally signed by ROHIT KUMAR CHANDRA 2 Per Ramesh Sinha , Chief Justice 03 . 12 .202 5 1. Heard Mr. Raj Kamal Singh through video conferencing along with Mr. Shubham Dwivedi, learned counsel for the petitioner as well as Mr. Praveen Das, learned Deputy Advocate General, appearing for the State/respondent Nos. 1, 3 & 4 and Mr. Animesh Tiwari, learned counsel, appearing for respondent No.2 / RDA. 2. The petitioner has approached this Court under Article 226 of the Constitution challenging the communication dated 22.07.2024 issued by the Executive Engineer, Raipur Development Authority (RDA), whereby the petitioner’s bid under NIT No.13 dated 11.06.2024 was cancelled and the Earnest Money Deposit (EMD) of Rs. 10,00,000/- was forfeited. The petitioner seeks quashment of the said communication and a direction for refund of the EMD with commercial interest @ 18% per annum, along with compensation for alleged losses and harassment. 3. The reliefs sought by the petitioner are as follows: “10.1 This hon'ble Court may please be kind enough in quashing and setting aside the Memorandum No. 2623/ C-2018/59/Part-1/ Vipra Raipur, Dated 22.07.2024 (Annexure P-1). 10.2 This hon'ble court may please be kind enough in directing the respondents to release the petitioner's Earnest Money Deposit of Rs. 10,00,000/- deposited vide Fixed. Deposit Receipt No.498603030090581 dated 21.06.2024 with commercial interest @ 18% per anum and 3 compensate the petitioner for harassment caused and also to compensate the petitioner for the losses suffered because of unreasonable cancellation of its Bid. 10.3 This hon'ble court may please be kind enough in granting the cost of the petition and any other relief to the petitioner.” 4. Mr. Raj Kamal Singh, learned counsel appearing for the petitioner through video conferencing, submits that the petitioner was declared successful in the tender process for construction of 253 EWS (2BHK) units and was issued a Letter of Award dated 05.07.2024 requiring it to execute the agreement and furnish the Performance Security. According to the petitioner, the initial communication allowed seven days for compliance, but the petitioner asserts that the letter was received belatedly. Thereafter, a reminder dated 16.07.2024 granted only three days to furnish the Bank Guarantee towards Performance Security, out of which two days were public holidays, effectively leaving no workable time to comply. The petitioner contends that immediately upon receipt of the reminder on 18.07.2024, it requested an additional seven days to furnish the Performance Guarantee, but without considering this request, the RDA cancelled the tender and forfeited the EMD on 22.07.2024. It is submitted that under Clause 27.3 of the tender conditions, the successful bidder is afforded a period of twenty-one days following the notification of award, and therefore, the action of the RDA in cancelling the bid before the expiry of this period is arbitrary and contrary to the tender terms. 4 The petitioner further submits that the EMD could not have been forfeited as no Performance Security was ever deposited, and that EMD is distinct and cannot be treated as Performance Security. After the forfeiture, the petitioner claims to have repeatedly written to the RDA seeking release of the EMD, but no action was taken, compelling the filing of this petition. 5. On the other hand, Mr. Animesh Tiwari Advocate, learned counsel appearing for the RDA Respondent No 2 to 4, submits that the entire action of the respondents is strictly in accordance with the tender document. It is contended that Clause 27.3 clearly stipulates that the successful bidder must sign and deliver the agreement within seven days of receipt of the Letter of Acceptance, while Clause 32 mandates that the Performance Security of 5% of the contract value must be deposited before execution of the agreement. It is pointed out that the petitioner did not furnish the Performance Security at all, nor did it execute the agreement within the specified time. Furthermore, Clause 13.4(c) empowers the RDA to forfeit the EMD in the event the successful bidder does not sign the agreement within the specified time. It is submitted that despite issuance of the Letter of Award on 05.07.2024 and a subsequent reminder on 16.07.2024, the petitioner took no steps to comply with the essential post-award requirements and merely sought further extension, which the RDA was not obliged to grant. Since the petitioner undisputedly failed to fulfil the conditions of the NIT, the forfeiture of EMD was a natural 5 contractual consequence. Learned counsel further submits that the tender process has since been completed and any interference at this stage would adversely affect public interest. 6. We have heard learned counsel for the parties and perused the impugned orders and the material available on record. 7. Upon consideration of the submissions and the material placed on record, it is evident that tender conditions constitute binding contractual terms between the parties. Clause 27.3 obligates the successful bidder to execute and deliver the agreement within seven days of receipt of the Letter of Award. Clause 32 expressly requires the Performance Security to be furnished before execution of the agreement. Clause 13.4(c) authorizes forfeiture of EMD where the successful bidder fails to sign the agreement within the specified time. These clauses imposed clear and mandatory duties upon the petitioner immediately upon receipt of the communication dated 05.07.2024. The petitioner does not dispute that it neither furnished the Performance Security nor executed the agreement within the mandated time. Even after receipt of the reminder dated 16.07.2024, the petitioner did not comply. A request for extension does not suspend contractual obligations, nor does it create any vested right to have the extension granted. The authority responsible for public works is not expected to indefinitely await compliance by a bidder who has already failed to adhere to the stipulated timeline. 8. The contention of the petitioner that Clause 27.3 allows an overall 6 period of twenty-one days is misconceived. The tender condition does not grant twenty-one days to the bidder; rather, it obligates the RDA to keep the agreement ready within twenty-one days. The bidder’s obligation to sign the agreement within seven days of receipt is separate, distinct and mandatory. The petitioner’s failure to comply with this essential obligation therefore attracted the consequence expressly provided under the tender: forfeiture of EMD. The submission that the EMD was wrongly treated as Performance Security is also incorrect. The EMD was not treated as Performance Security; it was forfeited because the petitioner failed to furnish the Performance Security within time. The forfeiture was not substitutionary but punitive under the tender clause applicable to such default. 9. The law with respect to interference in tender matters is limited to certain extent as has been considered by the Hon'ble Supreme Court in large number of cases including in the case of Tata Motors Limited vs Brihan Mumbai Electric Supply & Transport Undertaking (BEST) and others1 wherein the Hon’ble Supreme Court has considered the factum of interference in the tender matters and has held as under: "48. This Court being the guardian of fundamental rights is duty-bound to interfere when there is arbitrariness, irrationality, mala fides and bias. However, this Court has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in 1 2023 SCC OnLine SC 671 7 contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. The courts must realise their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in Judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. The courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give “fair play in the joints” to the government and ublic sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer." 10. Recently, the Hon’ble Supreme Court, in the matter of Banshidhar Construction Pvt. Ltd. v. Bharat Coking Coal Ltd. & Others, {Civil Appeal No. 11005 OF 2024, decided on 04.10.2024}, taking note of the decisions rendered in various 8 other celebrated judgments, observed as under: “21. There cannot be any disagreement to the legal proposition propounded in catena of decisions of this Court relied upon by the learned counsels for the Respondents to the effect that the Court does not sit as a Court of Appeal in the matter of award of contracts and it merely reviews the manner in which the decision was made; and that the Government and its instrumentalities must have a freedom of entering into the contracts. However, it is equally well settled that the decision of the government/ its instrumentalities must be free from arbitrariness and must not be affected by any bias or actuated by malafides. Government bodies being public authorities are expected to uphold fairness, equality and public interest even while dealing with contractual matters. Right to equality under Article 14 abhors arbitrariness. Public authorities have to ensure that no bias, favouritism or arbitrariness are shown during the bidding process and that the entire bidding process is carried out in absolutely transparent manner. 11. 22. At this juncture, we may reiterate the well- established tenets of law pertaining to the scope of judicial intervention in Government Contracts. 23. In Sterling Computers Limited vs. M/s. M & N Publications Limited and Others2, this Court while dealing with the scope of judicial review of award of contracts held: - “18. While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the “decision making process”. In this connection reference may be made to the case of Chief Constable of the North Wales Police v. Evans [(1982) 3 All ER 141] where it was said that: (p. 144a) “The purpose of judicial review is to ensure that the individual receives fair treatment, and not to ensure that the authority, after according fair treatment, reaches on a matter which it is authorised or enjoined by law to decide for itself 2 (1993) 1 SCC 445 9 a conclusion which is correct in the eyes of the court.” By way of judicial review the court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State. Courts have inherent limitations on the scope of any such enquiry. But at the same time as was said by the House of Lords in the aforesaid case, Chief Constable of the North Wales Police v. Evans [(1982) 3 All ER 141] the courts can certainly examine whether “decision-making process” was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution.” 24. In Tata Cellular vs. Union of India3, this Court had laid down certain priniciples for the judicial review of administrative action. “94. The principles deducible from the above are: (1) The modern trend points to judicial restraint in administrative action. (2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out 3 (1994) 6 SCC 651 10 above) but must be free from arbitrariness not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. Based on these principles we will examine the facts of this case since they commend to us as the correct principles.” 25. It has also been held in ABL International Limited and Another vs. Export Credit Guarantee Corporation of India Limited and Others4, as under: - “53. From the above, it is clear that when an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution.” 26. In Jagdish Mandal vs. State of Orissa and Others5, this Court after discussing number of judgments laid down two tests to determine the extent of judicial interference in tender matters. They are: - “22. (i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or Whether the process adopted or decision made is so arbitrary and irrational that the court can say: “the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached;” (ii) Whether public interest is affected. If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.” 4 (2004) 3 SCC 553 5 (2007) 14 SCC 517 11 27. In Mihan India Ltd. vs. GMR Airports Ltd. and Others6, while observing that the government contracts granted by the government bodies must uphold fairness, equality and rule of law while dealing with the contractual matters, it was observed in Para 50 as under: - “50. In view of the above, it is apparent that in government contracts, if granted by the government bodies, it is expected to uphold fairness, equality and rule of law while dealing with contractual matters. Right to equality under Article 14 of the Constitution of India abhors arbitrariness. The transparent bidding process is favoured by the Court to ensure that constitutional requirements are satisfied. It is said that the constitutional guarantee as provided under Article 14 of the Constitution of India demands the State to act in a fair and reasonable manner unless public interest demands otherwise. It is expedient that the degree of compromise of any private legitimate interest must correspond proportionately to the public interest.” 28. It was sought to be submitted by the learned Counsels for the Respondents relying upon the observations made in Central Coalfields Limited and Another vs. SLL-SML (Joint Venture Consortium) and Others7, that whether a term of NIT is essential or not is a decision taken by the employer which should be respected. However, in the said judgment also it is observed that if the employer has exercised the inherent authority to deviate from the essential term, such deviation has to be made applicable to all the bidders and potential bidders. It was observed in Para 47 and 48 as under:- “47. The result of this discussion is that the issue of the acceptance or rejection of a bid or a bidder should be looked at not only from the point of view of the unsuccessful party but alsofrom the point of view of the employer. As held in Ramana Dayaram Shetty [Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489] the terms of NIT cannot be ignored as being redundant or superfluous. They must be given a meaning and the 6 (2022) SCC OnLine SC 574 7 (2016) 8 SCC 622 12 necessary significance. As pointed out in Tata Cellular [Tata Cellular v. Union of India, (1994) 6 SCC 651] there must be judicial restraint in interfering with administrative action. Ordinarily, the soundness of the decision taken by the employer ought not to be questioned but the decision-making process can certainly be subject to judicial review. The soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone or a decision “that no responsible authority acting reasonably and in accordance with relevant law could have reached” as held in Jagdish Mandal [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517] followed in Michigan Rubber [Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216]. 48. Therefore, whether a term of NIT is essential or not is a decision taken by the employer which should be respected. Even if the term is essential, the employer has the inherent authority to deviate from it provided the deviation is made applicable to all bidders and potential bidders as held in Ramana Dayaram Shetty [Ramana Dayaram Shetty v.International Airport Authority of India, (1979) 3 SCC 489] . However, if the term is held by the employer to be ancillary or subsidiary, even thatdecision should be respected. The lawfulness of that decision can be questioned on very limited grounds, as mentioned in the various decisions discussed above, but the soundness of the decision cannot be questioned, otherwise this Court would be taking over the function of the tender issuing authority, which it cannot.” 12. In the instant case, there is no allegation or material suggesting mala fides, bias or discrimination. The authority acted strictly in accordance with the terms agreed upon by the petitioner at the time of submission of its bid. Judicial review in contractual and tender matters is limited to examining arbitrariness, procedural unfairness or violation of statutory provisions. None of these 13 grounds are made out in the present case. This Court cannot rewrite tender terms or relax contractual obligations for a bidder who has voluntarily participated in the process. 13. Thus, the action taken by the respondents cannot be termed arbitrary or unreasonable. The petitioner, having defaulted on mandatory conditions, cannot seek equitable relief for refund of the EMD or for compensation. Public interest lies in adherence to contractual timelines, especially in matters concerning construction and public development. 14. For all these reasons, this Court finds no infirmity, illegality or arbitrariness in the impugned action of the respondents. The writ petition is accordingly dismissed. No order as to costs. Sd/- Sd/- (Bibhu Datta Guru) (Ramesh Sinha) Judge Chief Justice Chandra