Case Note & Summary
The case involves a writ petition filed by Nisa Industrial Services Pvt. Ltd. and another (Petitioners) challenging the debarment of Petitioner No.1 by State Bank of India (Respondent) from participating in future Requests for Proposal (RFPs). Petitioner No.1 was a contractor for e-surveillance of over 10,000 ATMs of the bank. The RFP contained a stipulation that if the successful bidder failed to sign the contract or furnish a performance bank guarantee within the specified period, the Earnest Money Deposit (EMD) would be forfeited and the bidder could be debarred from future RFPs at the bank's sole discretion. It is undisputed that Petitioner No.1, though declared the successful bidder, failed to furnish the performance bank guarantee. The petitioner provided reasons for the failure, claiming adequate justification. However, the bank, after issuing a show cause notice and considering the petitioner's submissions, passed a detailed speaking order debarring the petitioner. The bank noted that multiple opportunities were given to the petitioner to submit the guarantee, evidenced by letters dated 23 January 2020, 26 February 2020, 13 March 2020, 17 June 2020, 20 July 2020, and 6 October 2020, as well as meetings with senior officials. The court examined whether the debarment was arbitrary, malafide, or a colourable exercise of power. The court found that the bank had acted in accordance with the RFP terms, given due opportunity, and passed a reasoned order. The court held that in contractual matters, judicial review is limited to cases of malafides, colourable exercise, or capricious/arbitrary action, none of which were present. Consequently, the petition was dismissed.
Headnote
A) Contract Law - Debarment - Performance Bank Guarantee - RFP Stipulations - The petitioner, a successful bidder, failed to furnish performance bank guarantee within stipulated time despite multiple opportunities. The bank forfeited EMD and debarred the petitioner from future RFPs as per RFP terms. The court held that the bank's action was not arbitrary or malafide, as it followed due process including show cause notice and a speaking order. (Paras 2-4) B) Administrative Law - Judicial Review - Contractual Matters - Scope of Interference - The court held that in contractual matters, judicial review is limited to cases of malafides, colourable exercise, or capricious/arbitrary action. Since the bank acted in accordance with RFP terms and gave adequate opportunity, no interference was warranted. (Paras 3-4)
Issue of Consideration
Whether the debarment of Petitioner No.1 by the Respondent bank from participating in future RFPs, for failure to furnish performance bank guarantee, was arbitrary, malafide, or in violation of principles of natural justice.
Final Decision
The petition is dismissed. The court upheld the debarment order, finding no malafides, colourable exercise, or arbitrariness in the bank's action.
Law Points
- Debarment from future contracts
- Contractual stipulations
- Performance bank guarantee
- Natural justice
- Speaking order
- Judicial review of contractual decisions
