Bid security forfeiture is improper where non-compliance with tender conditions is not attributable to the bidder.

The Respondent, NHLML, invited tenders for the development, operation, and maintenance of three ropeway projects: Dhosi Hill (Haryana), SDA Parking to Shankaracharya Temple (J&K), and Shankar Viman Mandapam to Triveeni Pushp (UP)

The Petitioner was issued Letters of Award (LOAs) on 14.03.2024 and 23.01.2024

Under the Request for Proposal (RFP), the Petitioner was required to enter into an agreement with an Original Equipment Manufacturer (OEM)

The Petitioner failed to comply with this requirement, alleging that European suppliers had formed a cartel, making them unavailable

Consequently, NHLML issued orders cancelling the LOAs and forfeiting the Bid Security for all three projects

The projects were subsequently re-tendered or, in one instance, scrapped

The Petitioner approached the High Court challenging the forfeiture of the Bid Security.

Whether the forfeiture of Bid Security is legally sustainable when the non-compliance with tender conditions (securing an OEM agreement) is not attributable to the bidder

The Court applied the principle of administrative fairness and equity in contractual matters.

It focused on the doctrine of "attributability," determining whether a default in tender obligations arises from a bidder's negligence or from external factors beyond their control

The Court also exercised its discretionary power under Article 226 of the Constitution to provide relief based on the specific facts of the case while ensuring the order does not constitute a binding legal precedent

The Court examined the Petitioner’s contention regarding the non-availability of European OEMs due to alleged cartelization

While the Respondent defended the forfeiture, the Court found that the failure to secure the required OEM agreement was not attributable to the Petitioner

The Court reasoned that since the non-availability of the OEM was an external factor, it was appropriate to direct the release of the Bid Security

To balance the equities between the parties, the Court integrated the Petitioner's undertaking to waive any claim to interest on the forfeited amounts, thereby mitigating the financial burden on the state agency while returning the principal security amount to the bidder

It directed the Respondent to consider and expedite the release of the Bid Security amounts for the respective projects

The Court recorded and accepted the Petitioner's undertaking to forego interest on the said amounts

Finally, the Court specified that this decision is fact-specific and shall not serve as a precedent in future cases

The petitions were disposed of accordingly