RAJENDERA SETHIA Vs. GAIL INDIA LIMITED

JUDGEMENT

(1.) BY this application under Section 9 of the Arbitration and Conciliation Act, 1996 (for short, "the Act"), the petitioner has made a prayer that the respondent should be restrained from acting any further in receiving of tender No. GAIL/nd/bd/candp/pw8004/2002234 1 (Bid Invitation no. 8000001069) dated 3rd April 2009, inviting Bids for "transportation of polymer from Gails Petrochemical Complex Pata to various Zones across the country", particularly with regard to inviting of Bid in respect of Zones West-1 and West-2. The contention of the petitioner is that the petitioner was a successful bidder in respect of these Zones in the previous tender invited by the respondent and as per the terms and conditions contained in bid documents dated 12th August 2008, the petitioner was required to submit bank guarantee towards earnest money/ bid security. The petitioner had submitted the bank guarantee and the petitioner was duly awarded the contract pursuant to bid of document dated 12th August 2008 for Region west-1 and West-2. The respondent had issued a fax of intent dated 16 th december 2008 awarding the contract for Zones West-I and West-II for an estimated value of approximately Rs. 19. 49 crore and in accordance with the terms and conditions of the contract; the petitioner was required to furnish the performance bank guarantee. The petitioner was already having contract vide acceptance letter dated 19th May 2008 in respect of regions Daman and maharashtra, falling in the said two zones. Only additional contract was to be awarded to the petitioner for regions Madhya Pradesh, Silvasa and Goa. The petitioner wrote a letter that since he was already having the contract for two regions, he should be allowed to furnish the bank guarantee only in respect of remaining three regions viz Madhya Pradesh, Silvasa and Goa and sought clarification regarding this from the respondent. The respondent should have clarified this and asked the petitioner to give performance bank guarantee only for three regions but instead the respondent insisted on contract performance bank guarantee for the entire zones and threatened that in case of failure, the respondent would be constrained to initiate actions as per the provisions of the contract. After this threat, the petitioner approached this court under Section 9 of the Act and sought an injunction against encashment of the bank guarantee towards earnest money for a sum of rs. 21,50,000/ -. Since the respondent had retendered the same region again for which the letter of intent was issued to the petitioner, the petitioner has approached this Court with this second application under Section 9 of the arbitration and Conciliation Act, 1996.

(2.) COUNSEL for the respondent submitted that there was no concluded contract between the petitioner and the respondent. Issuance of letter of intent does not amount to conclusion of contract in terms of clause 1. 1. 1. 0. The tender documents very categorically provided that the contract shall mean the agreement between the employer and the contractor for execution of work including therein all contract documents. The contract documents have been defined as collective tender document designs, drawings, specifications, schedule of quantity, rates, letter of acceptance and agreed variations, if any and such other documents constituting the tender and acceptance thereof. It is submitted that pursuant to acceptance of tender, no agreement was executed between the parties as required under the tender document and mere acceptance of tender does not tantamount to a concluded contract. Counsel for the petitioner rebutted this argument by stating that the tender invitation amounted to an offer on behalf of the petitioner and once this offer was accepted by sending an acceptance letter, a concluded contract came into force and therefore there was a concluded contract.

(3.) COUNSEL for the respondent further submitted that the tender document specifically provided that this tender was for zero deviation tender as provided in clause 16. 2. and the offer was to be made by the parties based on terms and conditions as specified in the tender document, general conditions of contract, special condition of contract and instructions to bidder, scope of work, technical specifications etc. It was also provided that no commercial clarification or technical clarification will be sought by the bidder after receipt of bid and in case of any deviation/ non-confirming, the bid was liable to be rejected. It is submitted that the petitioners non giving of performance bank guarantee in respect of zones for which he gave bid, amounted to non conformity to the conditions of the tender and the bid therefore stood rejected despite letter of intent given by the respondent. The acceptance letter was an indication to the petitioner that if he fulfils all the conditions as given in the bid, then only the contract will become concluded contract and the contract will come into force. No concluded contract can come into force without fulfilling all the conditions.