05. 18.09.2026 Court No.236 (Tanmoy) WPA/3587/2021 M/S MA CHANDI MOTOR WORKS VS UNION OF INDIA AND ORS. Mr. Pratikur Rahaman …for the petitioner. Ms. Aparna Banerjee …for the respondents. 1. Affidavit of service, filed by the petitioner in Court today, is taken on record. 2. Learned advocates for the petitioner and the respondents are present. 3. The respondents in 2010 floated two tenders, bearing tender no. DCE/Con/III/03 of 2011-2012 and tender no. DCE/Con/III/04 of 2011-2012 inviting applications from eligible bidders for hiring vehicles for official use. One of the conditions of the said tenders was that the successful bidder was required to furnish a Performance Guarantee as per Clause 23 of Chapter-IV of the tender terms and conditions. The petitioner participated in both the tenders and turned out to be the successful bidder. 4. Subsequently, a letter of acceptance dated 19th September, 2011 was issued in connection with tender no. DCE/Con/III/04 of 2011-2012, whereby the Deputy Chief Engineer, Eastern Railway, 2 Sealdah, informed the petitioner that the tender submitted by him had been accepted by the respondents. The petitioner was directed to submit a Performance Guarantee amounting to 5% of the contract value, i.e., Rs. 12,500/- in accordance with paragraph 23 of Chapter-IV of tender documents within 30 days from the date of issue of the letter of acceptance. It was further informed that if it was found that there was a delay in submission of the Performance Guarantee beyond 30 days and up to 60 days, a penal interest of 15% per annum would be charged. The petitioner was also informed that in case he failed to submit the requisite Performance Guarantee even after 60 days from the date of the letter of acceptance, the contract would be terminated and the earnest money deposited by him would be forfeited. 5. An identical letter of acceptance dated 24th August, 2011 in connection with tender no. DCE/Con/III/03 of 2011-2012 was also issued by the Deputy Chief Engineer to the petitioner. 6. The petitioner alleged that although he supplied vehicles pursuant to those tenders, no payment in connection with the said tenders was made. The petitioner, by a representation dated 27th June, 2013, informed the respondents that although the contract period of both the tenders had expired, 3 no agreement had been executed in connection with the said tenders and no payment had been made in respect of the services provided by him. The petitioner thereafter made further representations to the respondents dated 24th December, 2014, 26th March, 2015 and 3rd July, 2015 followed by a demand for justice dated 26th July, 2016 addressed to the respondents. 7. Pursuant to an application by the petitioner under the Right to Information Act, 2005, seeking certain information, the Chief Engineer of Eastern Railway sent a reply dated 12th September, 2019. By the said reply, the petitioner was informed that the petitioner submitted the Performance Guarantee on a belated date in gross violation of Clause 23 of Chapter-IV of tender Terms and Conditions and as a consequence thereof, no agreement could be executed between the petitioner and the respondents. Since the petitioner failed to submit the Performance Guarantee within the period prescribed by the respondents as indicated in the Tender Terms and Conditions, no bills of the petitioner were considered for payment. 8. Heard the parties. 9. It is an admitted fact that the petitioner supplied vehicles in terms of the said tenders. Clause 23 of the tender Terms and Conditions under 4 Chapter-IV thereof deals with Performance Guarantee. The relevant portion of Clause 23 of the Tender Terms and Conditions is as follows:- “23. PERFORMANCE GUARANTEE. The procedure for obtaining Performance Guarantee is outlined below :- (a) The successful bidder shall submit a Performance Guarantee (PG) within 30 (thirty) days from the date of issue of Letter Of Acceptance (LOA). Extension of time for submission of PG beyond 30 (thirty) days and upto 60 days from the date of issue of LOA may be given by the Authority who is competent to sign the contract agreement. However, a penal interest of 15% per annum shall be charged for the delay beyond 30 (thirty) days, i.e. from 31st day after the date of issue of LOA. In case the contractor fails to submit the requisite PG even after 60 days from the date of issue of LOA, the contract shall be terminated duly forfeiting EMD and other dues, if any payable against that contract. The failed contractor shall be debarred from participating in re-tender for that work…” 10. It is an admitted fact that the petitioner failed to submit the Performance Guarantee within the time-frame fixed by the respondents. However, the respondents, instead of terminating the contract, went on receiving the services of the petitioner for the entire contract period. The respondents could have terminated the contract immediately after the 5 violation was detected in terms of Clause 23 of the tender Terms and Conditions and also could have forfeited the earnest money deposited by him in accordance with the tender Terms and Conditions. However, the respondents, in violation of their own tender Terms and Conditions, did not terminate the contract and the services provided by the petitioner were duly accepted by the respondents for the entire contract period. 11. Therefore, the decision taken by the Chief Engineer contained in the letter dated 12th September 2019 is not proportionate to the violation committed by the petitioner. The conduct of the respondents was also contrary to the tender Terms and Conditions. The respondents, after accepting the services of the petitioner for the entire contract period, despite having detected the violation of non- submission of the Performance Guarantee within the stipulated time, cannot take a stand that no payment can be made due to non-execution of the agreements and non-submission of the Performance Guarantee within sixty days from the date of issue of the Letter of Acceptance. Such a stand taken by the respondents is arbitrary, disproportionate, unreasonable and thus is liable to be set aside. 12. Accordingly, the decision taken by the respondents not to release the payment in 6 connection with the services provided by the petitioner in connection with the said tenders, is quashed. 13. The respondents are directed to reconsider the entire issue with regard to the claim of the petitioner and shall decide the same after extending an opportunity of hearing to the petitioner within six weeks from the date of receipt of the copy of this order. If it is found that the petitioner is entitled to the bill amount submitted by him or any other amount decided by the respondents as per tender Terms and Conditions, the respondents shall disburse such amount to the petitioner within two weeks from the date of such decision along with interest at the rate of 7% per annum from the date of entitlement till the date of actual disbursement of the said amount. 14. The writ petition stands disposed of. 15. Urgent photostat certified copy of this judgment and order, if applied for, be made available to the parties upon compliance with all requisite formalities. (ARJUN RAY MUKHERJEE, J.)