Case Note & Summary
The case involved a dispute regarding the acceptance of additional performance security in a tender process. The appellant, M/s Om Gurusai Construction Company, was declared the lowest bidder for a construction project by the Executive Engineer, Lower Wardha Project Division, on 12.03.2021. According to Clause 2.22.0 (ix) of the tender conditions, the appellant was required to submit the additional performance security within two working days. However, due to a nationwide bank strike on 15.03.2021 and 16.03.2021, the appellant submitted the security on 17.03.2021. The first respondent challenged the work order in the High Court, which ruled that the acceptance of the security was a breach of the tender conditions. The Supreme Court, upon review, found that the High Court had overstepped by considering the time limit for completion of work, which was not within its purview. The Court held that the tendering authority had acted within its rights to accept the security given the circumstances of the bank strike, thus allowing the appeal and dismissing the writ petition. The Court reiterated that the law does not compel performance of impossible tasks and that the tendering authority's interpretation of the tender conditions was reasonable and not arbitrary.
Headnote
A) Contract Law - Tender Conditions - Compliance with Performance Security - Clause 2.22.0 (ix) of the tender conditions - The court held that the acceptance of the additional performance security on 17.03.2021 was justified due to the nationwide bank strike on 15.03.2021 and 16.03.2021, which rendered compliance impossible within the stipulated time. The court emphasized that the tendering authority acted reasonably in accepting the security after verifying the circumstances (Paras 23-26).
Issue of Consideration
Whether the High Court was justified in setting aside the work order on the ground that the tendering authority breached Clause 2.22.0 (ix) by accepting the additional performance security on 17.03.2021.
Final Decision
The Supreme Court set aside the High Court's order and upheld the acceptance of the additional performance security submitted on 17.03.2021, ruling that the tendering authority acted reasonably given the circumstances of the bank strike.
Law Points
- Tender conditions
- performance security
- judicial review
- public interest
- impossibility of performance
