- (1.) This appeal is against the judgment of the High Court of Delhi dated 30th October, 1998.
(2.) Briefly stated, the facts are as follows: The appellant issued a tender notice calling for tenders for collection of toll on a portion of the highway running through Rajasthan. The last date of submission of bid was 31st July, 1997. It was also provided that toll plazas would be got completed by the authority and handed over to the selected enterprise. There were two types of securities to be furnished, one being a bid security in an amount of Rs. 50 lakhs (Rupees fifty lakhs only). The other was a performance security by way of a Bank guarantee of Rs. 2 Crores (Rupees Two crores only). Clause 7.1 to 8 deal with bid security. They read as under :- "7. Bid Security. 7. 1 The bidder shall furnish, as a part of his bid, a Bid Security in an amount of Rs. 50 Lakhs (Rupees Fifty Lakhs only), or an equivalent amount in a freely convertible currency. The Bid Security shall, at the bidders opinion, be in the form of a Bank Draft, or Guarantee from a Bank located in India. The Bank Guarantee shall be in the Form of Bank Guarantee for Bid Security included herein, valid of 150 days after the last date for submission of the bid. 7. 2 A bid not accompanied by an acceptable bid security shall be rejected by National Highway Authority of India as non-responsive. 7. 3 The Bid Security of unsuccessful bidders will be returned by National Highways Authority of India as promptly as possible but not later than 30 days after the expiration of the period of bid validity. 7. 4 The Bid Security of the successful bidders will be returned by National Highways Authority of India soon after the bidder has furnished the required Performance Security. 7. 5 The Bid Security may be forfeited. (a) if the bidder withdraws his bid during the period of bid validity; or (b) in case the successful bidder fails within the specified period to (i) furnish the required Performance Security; and (ii) sign the Agreement. 8. Bid Validity. Bid shall remain valid for a period of 120 days after the last date of bid submission." Thus, it is to be seen that the bid security of Rs. 50 lakhs was not for performance of the contract. It was in essence an earnest to be given to ensure that the bidder did not withdraw his bid during the period of bid validity and/or that after acceptance the performance security is furnished and the Agreement signed. The other terms pertained to the anticipated contract for collection of toll. It must be mentioned that the bid validity period was 120 days.
(3.) In terms of this tender document the Respondent gave his bid or offer. The offer/bid was in terms of the tender and thus it was also in two parts. The first part being an offer that the bid would not be withdrawn during the bid validity period and/or that on acceptance the performance security would be furnished and the agreement signed. The second part of the offer dealt with the terms and conditions pertaining to the performance of the contract of collection of tolls, if the offer was accepted. As earnest/security for performance (of the first part of the offer) the Respondent along with his bid furnished a Bank guarantee in a sum of Rs. 50 Lakhs as bid security. The Bank guarantee furnished was a "on demand guarantee" which specifically provided that the Bank guarantee could be enforced "on demand" if the bidder withdraws his bid during the period of bid validity or if the bidder, having been notified of the acceptance of his bids, falls to furnish the performance security or fails to sign the Agreement. The amount of the Bank Guarantee was to be paid by the Bank without demur on a written demand merely stating that one of these conditions had been fulfilled. The moment the Bank guarantee was given and accepted by the Appellants the first portion of the offer, regarding bid security, stood accepted. Of course, this did not mean that a competed contract in respect of the work of toll collection had come into existence.;