Case Note & Summary
The petitioner, M/s. Shiv & Sons, a proprietory concern, participated in a tender issued by the Central Railway, Nagpur Division, for catering services at Nagpur Railway Station. The petitioner's bid was found eligible and a letter of allotment was issued on 15.05.2023, demanding a performance security deposit of 10% of the total contract value. The petitioner contended that this was a departure from the Railway Board Circular dated 20.11.2020, which stipulated a performance guarantee of only 3%. The petitioner filed a writ petition challenging the demand. The court examined the circular and found that it was binding on the respondents. The respondents failed to provide any justification for the higher demand. The court held that the demand for 10% was arbitrary and unsustainable, and directed the respondents to accept a performance guarantee of 3% as per the circular. The petition was allowed with no order as to costs.
Headnote
A) Administrative Law - Tender - Performance Security Deposit - Railway Board Circular dated 20.11.2020 - The petitioner challenged the demand for 10% performance security deposit instead of 3% as per the circular. The court held that the circular was binding and the demand for 10% was arbitrary and unsustainable. (Paras 2-10) B) Contract Law - Tender - Discrimination - The court found that the respondents had not justified the departure from the circular and that the demand for 10% was discriminatory. (Paras 8-10)
Issue of Consideration
Whether the demand for performance security deposit at 10% of the contract value instead of 3% as per the Railway Board Circular dated 20.11.2020 is arbitrary and unsustainable.
Final Decision
The petition is allowed. The respondents are directed to accept performance guarantee to the extent of 3% of the contract value as per the Railway Board Circular dated 20.11.2020. No order as to costs.
Law Points
- Administrative Law
- Contract Law
- Tender Law
- Performance Security Deposit
- Railway Board Circular
- Arbitrariness
- Discrimination
