Full Judgment Text
$~59
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ LPA 342/2025
NATIONAL HIGHWAYS AUTHORITY OF INDIA...Appellant
Through: Ms. Tanu Priya Gupta, Advocate
with Ms. Khushi Sharma,
Advocate.
versus
ATLANTA LIMITED ...Respondent
Through: Mr. Chirag M. Shroff, AOR with
Ms. Mahima Shroff, Advocate.
st
Date of Decision: 21 May, 2025
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE TUSHAR RAO GEDELA
JUDGEMENT
TUSHAR RAO GEDELA, J : (ORAL)
CM APPL. 31183/2025 (Condonation of delay in filing the appeal)
1. Cause shown is sufficient. Accordingly, the application is
allowed. Delay of 3 days in filing the appeal is condoned.
2. The application stands disposed of.
CAV 199/2025
3. Since the caveators have entered appearance, the caveat stands
discharged.
LPA 342/2025 & CM APPL. 31181-82/2025
4. Present Letters Patent Appeal has been filed assailing the
judgment dated 24.03.2025 passed in the underlying writ petition
Signature Not Verified
LPA 342/2025 Page 1 of 9
Digitally Signed
By:MADHU SARDANA
Signing Date:23.05.2025
16:07:13
bearing W.P.(C) 6646/2010 filed by the respondent, whereby the
learned Single Judge set aside the appellant/NHAI’s decision to reject
the respondent’s bid as non-responsive and also directed the
appellant/NHAI to refund Rs.48.50 lakhs (on account of forfeiture of
5% bid security) to the respondent alongwith 6% simple interest.
5. On 29.10.2009, NHAI had invited Request for Qualification
(hereafter referred to as ‘RFQ’ ) for the two-laning with paved shoulder
of Dindigul-Theni section km. 2.750 to km. 73.400 of NH-45 (Extn.)
and Theni-Kumili section from km. 215.500 to km 273.600 of NH-220
in the state of Tamil Nadu under NHDP Phase III Project. In terms of
Clause 1.2.1 (Brief Description of the Bidding Process) of the RFQ, the
NHAI adopted a two-stage bidding process. The first stage involved the
interested parties submitting request applications for qualification
whereafter the appellant would announce list of pre-qualified
applicants. The second stage involved bidding process comprising of
Request for Proposal (hereafter referred to as ‘RFP’ ).
6. The respondent was declared a pre-qualified applicant on
05.03.2010, and accordingly, the respondent submitted its RFP on
23.04.2010. The respondent’s bid was opened on 23.04.2010 and
examined by the Independent Financial Consultants appointed by the
NHAI, who identified the following deficiencies, (i) The Power of
Attorney submitted in Appendix-III was executed by Mr. Rajhoo Barot,
but no Board Resolution authorizing him to execute the Power of
Attorney was submitted; and (ii) Notes to Appendix-III required
submission of supporting documents such as charter documents or
board/shareholder resolutions verifying the authority of the signatory.
Signature Not Verified
LPA 342/2025 Page 2 of 9
Digitally Signed
By:MADHU SARDANA
Signing Date:23.05.2025
16:07:13
7. It is the case of the appellant/NHAI that despite being fully
aware of the mandatory nature of this requirement under Clause 2.2.6
of the RFP, the respondent failed to submit any Board Resolution
authorizing Mr. Rajhoo Barot, Managing Director (MD) to execute the
Power of Attorney in favour of Mr. Ulhas N. Bhole, who in turn signed
and submitted the bid on behalf of the respondent. It is stated that this
omission was not a mere procedural lapse but a substantive legal
deficiency, rendering the bid incomplete, unauthorized and non-
responsive, not only in terms of the express stipulations of the RFP but
also under the Company Law. It is further stated that as per Clause
2.20.7 of the RFP, submission of a non-responsive bid is one of the
grounds for forfeiture and appropriation of 5% of the bid security as
pre-estimated damages. Accordingly, by letter dated 13.05.2010, the
appellant requested the respondent to deposit Rs. 48.50 lakhs (5% of
the Bid Security amount) within 7 days, failing which partial
encashment of the Bank Guarantee was indicated.
8. Thereafter, the respondent, vide its letter dated 19.05.2010,
categorically contended that its bid was not non-responsive, however,
the appellant, through its letter dated 03.06.2010, rejected the said
contention and reiterated its demand for deposit of Rs. 48.50 lakhs,
being 5% of the bid security amount. It is further stated that after
affording a personal hearing to the respondent on 01.07.2010 and after
due consideration of its oral and written submissions as well as all
relevant correspondences, the appellant issued a letter dated 20.07.2010
wherein it was communicated that the respondent’s bid had been
adjudged as non-responsive and accordingly, the appellant once again
Signature Not Verified
LPA 342/2025 Page 3 of 9
Digitally Signed
By:MADHU SARDANA
Signing Date:23.05.2025
16:07:13
called upon the respondent to deposit the aforesaid sum of Rs. 48.50
lakhs. In accordance with Clause 2.20.7(a) of the RFP, which provides
for forfeiture of bid security in the event of material misrepresentation
or incomplete submission, the appellants appropriated 5% of the bid
security as liquidated damages. The amount, restricted to Rs. 48.5
lakhs, was deposited by the respondent without prejudice.
9. Aggrieved by the said rejection and forfeiture, the respondent
filed the underlying writ petition seeking quashing of the NHAI’s
rejection letters dated 13.05.2010, 03.06.2010 and 20.07.2010 and a
refund of the forfeited amount. The learned Single Judge, however,
proceeded to allow the writ petition in favour of the respondent vide
impugned judgement dated 24.03.2025 and granted reliefs including
refund of Rs. 48.50 lakhs with 6% simple interest. Aggrieved thereof,
the present appeal has been filed by the NHAI.
10. Ms. Tanu Priya Gupta, learned counsel for the appellant/NHAI
submits that the forfeiture of bid security was neither arbitrary nor mala
fide , but a consequence of the respondent’s own failure to comply with
a critical tender requirement. She explains that the respondent’s bid was
non-responsive due to the absence of a Board Resolution as mandated
under Clause 2.1.9 read with Appendix III of the RFP, which required
the submission of a valid Board Resolution authorizing the person
executing the bid to bind the company.
11. Learned counsel further submits that the respondent submitted
Power of Attorneys (POAs) at the RFQ and RFP stages. However, no
Board Resolution was submitted at the RFP stage to validate the second
POA. On this, learned counsel submits that allowing a bidder to rely on
Signature Not Verified
LPA 342/2025 Page 4 of 9
Digitally Signed
By:MADHU SARDANA
Signing Date:23.05.2025
16:07:13
documents from the RFQ stage to cure deficiencies in the RFP stage,
sets a damaging precedent. Thus, it is contended that submission of a
bid through an unauthorised signatory i.e., without a Board-authorised
Power of Attorney results in a defect that goes to the root of the bid,
and is not a minor technical defect or irregularity that can be
overlooked by the NHAI.
12. It is further submitted that at no point during the pendency of the
writ petition did the respondent amend its prayers to include any claim
for interest or litigation costs. Remarkably, after a lapse of more than
11 years, the respondent filed an additional application in 2022,
belatedly seeking interest amounting to Rs.53.02 lakhs and litigation
costs of Rs.9.4 lakhs. It is stated that the appellants opposed the
application, submitting that such a prayer was neither part of the
original pleadings nor maintainable at such a late stage, especially when
the claim was not even reserved in the original petition. However, the
impugned judgment not only exceeded the reliefs originally prayed for
in the writ petition but also bypassed the binding provisions of the RFP,
especially Clause 2.20.7, which represents a mutually agreed pre-
estimate of liquidated damages.
13. Learned counsel additionally contends that the tender in question
was issued for a high-value public infrastructure project, and relaxed
enforcement of bidding norms in such cases would defeat the objectives
of fiscal prudence, fair competition, and equal treatment under Article
14 of the Constitution of India.
14. Learned counsel further submits that vide impugned judgement,
the learned Single Judge held that the rejection of the bid was absurd
Signature Not Verified
LPA 342/2025 Page 5 of 9
Digitally Signed
By:MADHU SARDANA
Signing Date:23.05.2025
16:07:13
and irrational, based primarily on the judgments in MSK Projects India
Ltd. vs. NHAI, (2019) SCC Online Del 6569 and Gayatri-DLF
Consortium vs. NHAI, (2011) SCC Online Del 1247 and equated the
factual matrix to the cases cited, despite clear differences in context and
contractual terms.
15. Having heard Ms. Tanu Priya Gupta, learned counsel for the
NHAI, we find that there is no clause or term or a condition of the RFP
which provides that submission of Board Resolution in favour of the
person executing a Power of Attorney who will be authorized to
execute all documents or sign contracts and other incidental and
ancillary documents, is mandatory. Nor has the learned counsel been
able to indicate any such clause which requires filing of the Board
Resolution as a mandatory eligibility condition in the absence whereof,
the bid would be treated as ‘non-responsive’. Equally, learned counsel
is unable to show even a single condition of the RFP which would
empower or entitle the appellant to declare a bidder as non-responsive
for lack of a Board Resolution and would be an infraction of a nature
where the appellant would be empowered to forfeit the bid security.
16. Ms. Gupta has drawn attention to Clause 2.1.9 of the Instructions
to the Bidders in the RFP, in support of the issues noted in the aforesaid
paragraph. Clause 2.1.9 reads thus:
“2.1.9 The Bidder should submit a Power of Attorney as per
the format at Appendix-III, authorising the signatory of the
Bid to commit the Bidder.”
It is clear from a plain and literal reading of the aforesaid clause
that the bidder is to submit a Power of Attorney as per the format at
Signature Not Verified
LPA 342/2025 Page 6 of 9
Digitally Signed
By:MADHU SARDANA
Signing Date:23.05.2025
16:07:13
Appendix-III authorizing the signatory of the bid to commit the bidder.
Other than that, there is no reference, even remotely to the requirement
of submission of a Board Resolution of the bidding company. Though,
learned counsel was at pains to submit that according to the provisions
of the Companies Act, unless the Power of Attorney is supported by a
valid Board Resolution, the Power of Attorney as a standalone
document would have no legal sanctity, yet, we find that unless any
condition or a term stipulates mandatory submission of Board
Resolution, the appellant on its own volition cannot read any mandatory
character to submit such Board Resolution. Thus, the submission on
this aspect is unmerited and unpersuasive.
17. The reference by Ms. Gupta to the format at Appendix-III in
particular to para 2 of the Notes appended to the said Appendix, to
submit that the said note mandates the bidder to submit for verification
the extract of the charter document and documents such as a Board or
Shareholder’s Resolution/Power of Attorney in favour of the person
executing the Power of Attorney for delegation of power, is untenable.
This is for the reason that para 2 of the Notes to the said Appendix
commences with the word “wherever required”, meaning thereby, the
mandatory character of the note may be construed only in such
instances where the term or a condition of the RFP mandates it. There
being no such term or a condition in the RFP, we cannot read any
mandatory character in such note. That being the position, the
submission on this aspect also is without any merit and is rejected.
18. That apart, learned Single Judge has also relied upon the
judgment of this Court in MSK Projects India Ltd. (supra) where the
Signature Not Verified
LPA 342/2025 Page 7 of 9
Digitally Signed
By:MADHU SARDANA
Signing Date:23.05.2025
16:07:13
same argument was repelled and held that the requirement of the bid
being accompanied by an additional Power of Attorney along with
Board Resolution was not a term of the Instructions to Bidders, let
alone an essential term. We could fathom a situation where the Power
of Attorney, which may be an essential requirement, is not submitted
along with the bid and consequently, such bid may be held to be non-
responsive. What cannot be countenanced is the fact that the essential
requirement being submission of the Power of Attorney, was in fact
submitted and yet, not only was the bid of the respondent declared as
non-responsive, it was also deemed to have empowered the appellant to
invoke the conditions of Clause 2.20.7 whereunder, the appellant could
forfeit the bid security to the extent of 5% of its value. This is
impermissible keeping in view the fact that submission of Board
Resolution was not a mandatory condition of the RFP.
19. It is also pertinent to note that the respondent had in fact
submitted the Board Resolution along with the RFQ. On a query,
learned counsel for the appellant does not dispute the fact that such
Board Resolution was in fact submitted at the time of RFQ and also
admits that the said Board Resolution actually conferred authorisation
on the person in favour of whom the Power of Attorney was executed,
which document was submitted along with the bid in response to the
RFP. The contention that the said Board Resolution was not submitted
in response to the RFP and thus violating conditions of the RFP are not
borne out from the records. In that view of the matter, this submission
too is unmerited and is rejected.
Signature Not Verified
LPA 342/2025 Page 8 of 9
Digitally Signed
By:MADHU SARDANA
Signing Date:23.05.2025
16:07:13
20. The resistance of the appellant to the imposition of interest too
cannot be countenanced. It is not disputed that the respondent had filed
an application in the underlying writ petition seeking 9% interest on the
amount so forfeited. We find from the records that learned Single Judge
has awarded a very reasonable and simple interest of 6% on Rs.48.50
lakhs directed to be refunded to the respondent. The power and
jurisdiction of a Court to grant interest cannot be questioned, more so
for the reason that the Courts are empowered under the provisions of
the Interest Act, 1978. Thus, in suitable cases, a Court can grant
reasonable interest. We find no reason, much less any cogent reason to
interfere with the direction to pay interest.
21. In view of the above, the appeal is bereft of any merits and is
dismissed.
TUSHAR RAO GEDELA, J
DEVENDRA KUMAR UPADHYAYA, CJ
MAY 21, 2025 / yrj/rl
Signature Not Verified
LPA 342/2025 Page 9 of 9
Digitally Signed
By:MADHU SARDANA
Signing Date:23.05.2025
16:07:13