Forfeiture for non-performance is valid post-bid acceptance, but blacklisting requires specific show-cause notice.

The Petitioner participated in a Notice Inviting Tender (NIT) issued by the respondents for the procurement and supply of food items to the District Hospital, Morena, for the year 2019-20

In its financial bid, the petitioner quoted rates for Moong Dal at Rs. 80/- per quintal and Tuar Dal at Rs. 90/- per quintal, and was subsequently declared the successful L-1 bidder on 27.12.2019

On 02.01.2020, the petitioner sought to correct these rates to Rs. 8,000/- and Rs. 9,000/- per quintal respectively, claiming a typographical error

The respondents rejected this request, issued a purchase order on 10.01.2020 at the approved (lower) rates, and called for the execution of an agreement

Upon the petitioner’s failure to supply the items or execute the agreement, the respondents issued the impugned order dated 20.02.2020, forfeiting the petitioner’s earnest money and blacklisting the firm indefinitely

1. Whether the respondents were justified in forfeiting the earnest money deposit for non-performance when no formal contract agreement had been executed

2. Whether the order of blacklisting was legally sustainable in the absence of a specific show-cause notice and a defined duration

The court primarily applied the terms and conditions of the NIT, specifically Clause 8 (authorizing forfeiture and blacklisting for supply failure) and Clause 10 (prohibiting alteration of sanctioned rates)

It relied on the Supreme Court precedent in Prakash Asphaltings and Toll Highways (India) Ltd. vs. Mandeepa Enterprises, which establishes that bidders cannot rectify "inadvertent" mistakes after the finalization of financial bids

Regarding blacklisting, the court applied the principles of natural justice as articulated in Gorkha Security Services vs. Government of NCT of Delhi, which mandates a prior show-cause notice specifically mentioning the intent to blacklist

The court rejected the petitioner's argument that forfeiture was unlawful without a signed contract.

It held that once the petitioner was declared L-1 and rates were approved, Clause 8 of the NIT empowered the authority to forfeit earnest money upon failure to supply

Following the Prakash Asphaltings ratio, the court determined that permitting a bidder to resile from quoted rates due to a self-inflicted typographical error would unsettle the tender process and harm public interest

Regarding blacklisting, the court found the respondents failed to issue a specific show-cause notice regarding the proposed blacklisting

Furthermore, the court noted that the impugned order was legally flawed because it failed to specify the duration of the blacklisting, contrary to established law

It upheld the forfeiture of the earnest money deposit, dismissing the petitioner’s challenge in that regard

However, the court quashed the order dated 20.02.2020 to the extent it directed the blacklisting of the petitioner due to the lack of procedural compliance and the absence of a specified time limit

The court reserved liberty for the respondents to initiate fresh blacklisting proceedings in accordance with the law