Facts
The Petitioner was issued a Letter of Acceptance (LoA) by Western Railways on 20.06.2025 for an IOT-based project
Source reference: para. 1The LoA required the Petitioner to submit a Performance Bank Guarantee (PBG) of ₹26,08,417.45 within a stipulated 60-day period ending on 18.08.2025
Source reference: para. 2 & 5The Petitioner purchased the PBG from ICICI Bank on 14.08.2025
Source reference: para. 3Due to a public holiday on 15.08.2025, the Petitioner dispatched the PBG via DTDC courier on 16.08.2025
Source reference: para. 4The courier reached the Railways on 20.08.2025, two days after the deadline
Source reference: para. 5Consequently, the Railways terminated the contract on 26.08.2025 and encashed the PBG on 15.09.2025
Source reference: para. 6The Petitioner challenged the termination and forfeiture
Source reference: para. 7Issues
1. Whether the termination of the contract and subsequent encashment of the Performance Bank Guarantee due to a two-day delay in delivery was legally sustainable given the Petitioner’s promptitude in dispatching the document
Source reference: para. 8-11Law Applied
The court assessed the principle of "deliberate fault" versus "promptitude" in contractual compliance.
Source reference: para. 9It referenced Section 27 of the General Clauses Act, which creates a presumption of service in the "ordinary course of post" when a document is properly addressed and posted
Source reference: para. 9The court further applied the principle that technical delays by third-party intermediaries (courier agencies) should not be attributed to a party that has otherwise exhibited due diligence and compliance with the spirit of the contract
Source reference: para. 12-14Reasoning
The Court observed that the Petitioner secured the PBG on 14.08.2025 and dispatched it on 16.08.2025 (the first working day after a public holiday), which was two days prior to the deadline of 18.08.2025
Source reference: para. 13This conduct demonstrated "promptitude"
Source reference: para. 13The Court reasoned that since the dispatch occurred well before the expiry date, the subsequent two-day delay by the courier agency in delivering the document on 20.08.2025 could not be attributed to the Petitioner as a "deliberate fault"
Source reference: para. 10, 14Thus, holding the Petitioner liable for a marginal delay caused by a third-party agency under these circumstances was deemed unjust
Source reference: para. 12Holding
The Court answered the issue in favor of the Petitioner, holding that the two-day delay should not result in termination
The Court quashed the termination notice and the order for encashment of the PBG
Source reference: para. 15The Railways were directed to execute the contract within four weeks and allow the Petitioner to complete the work; It was further ordered that the already encashed PBG amount be adjusted against the work to be executed
Source reference: para. 16, 17The Writ Petition was allowed
Source reference: para. 18Original Court PDF
M/S AVENIR TECH VENTURES PRIVATE LIMITED- GURGAONvsWESTERN RAILWAYS, RAJKOT DIVISION
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