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Patna High Court

M/s Mavin Switchgears and Control Pvt. Ltd. and M/s GCKC Projects and Works Pvt. Ltd.versusThe State of Bihar

Decided
Disposal
PARTLY ALLOWED (DISPOSAL)

Holding

The three‑year debarment is unlawful because neither Clause 11.4.7 nor Clause 51 authorises such debarment in the present facts, and an order cannot be based on reasons not recorded in it.

Summary

The petitioner, a joint venture, was awarded a contract under NIT No. 02/PR/BSPTCL/2025 but failed to furnish the required performance security within the stipulated time. The employer issued Office Order No. 80 cancelling the award, forfeiting the earnest money and debarred the petitioner for three years, citing Clause 11.4.7 of the General Conditions of Contract. The petitioner challenged the debarment, arguing that Clause 11.4.7 only permits cancellation and forfeiture, not debarment, and that Clause 51, which deals with debarment, is inapplicable as no contract had been executed. The court held that the debarment was not authorized by either clause and that an administrative order cannot rely on reasons not recorded in it. Consequently, the court set aside the debarment portion of the order while leaving the cancellation and forfeiture untouched.

Issues considered

  • Whether Clause 11.4.7 of the General Conditions of Contract authorises debarment of a bidder for non‑submission of performance security
  • Whether Clause 51 of the Standard Bidding Document can be invoked to debar a bidder when no contract has been executed
  • Whether an administrative order can be sustained on reasons not recorded in the order itself
  • Whether the debarment is legally sustainable in the absence of an express provision

Subjects

  • tender
  • performance security
  • debarment
  • administrative order
  • standard bidding document
  • public procurement
  • contract law

Judgment

                      IN THE HIGH COURT OF JUDICATURE AT PATNA
                                Civil Writ Jurisdiction Case No.20831 of 2025
                 ======================================================
                 M/s Mavin Switchgears and Control Pvt. Ltd. and M/s GCKC Projects and
                 Works Pvt. Ltd. a joint venture of two Private Limited Companies, Regd.
                 Office of lead partner at Plot No. 9, N-11, CIDCO, Aurangabad, Maharashtra
                 431003 through its authorized signatory, namely, Pinkesh Jain, Male, aged
                 about 46 years, Son of Surendra Kumar, Resident of Daftariyon ki gali,
                 Nagaur, P.O. and P.S. Nagaur, Dist. Nagaur, Rajasthan.
                                                                            ... ... Petitioner
                                                      Versus
           1.     The State of Bihar through the Secretary, Department of Energy,
                  Government of Bihar, Patna.
           2.    The Bihar State Power Holding Company Limited, through its Chairman-
                 cum-Managing Director, Vidyut Bhawan, Bailey Road, Patna-800021.
           3.    Bihar State Power Transmission Company Limited (BSPTCL), through its
                 Managing Director, Vidyut Bhawan, Bailey Road, Patna-800021.
           4.    The Director (Project), Bihar State Power Transmission Company Limited,
                 Vidyut Bhawan, Bailey Road, Patna - 800021.
           5.    The Chief Engineer (Project-I), Bihar State Power Transmission Company
                 Limited, Vidyut Bhawan, Bailey Road, Patna - 800021.
           6.     The Electrical Superintendent Engineer, Bihar State Power Transmission
                  Company Limited, Vidyut Bhawan, Bailey Road, Patna-800021.
                                                                        ... ... Respondents
                 ======================================================
                 Appearance :
                 For the Petitioner       :    Mr. Lalit Kishore, Sr. Advocate with
                                               Mr. Ayush Kumar, Advocate
                                               Mr. Kanishka Shankar, Advocate
                                               Mr. Sanjeev Kumar, Advocate
                 For Respondent Nos2 to 6 :    Dr. Anand Kumar, Advocate
                 For the State            :    Mr. Manish Kumar, Advocate
                 ======================================================
                 CORAM: HONOURABLE MR. JUSTICE SUDHIR SINGH
                                            and
                         HONOURABLE MR. JUSTICE RAJESH KUMAR VERMA
                                       ORAL ORDER

                          (Per: HONOURABLE MR. JUSTICE SUDHIR SINGH)

3   24-02-2026                  The present writ application has been filed seeking the

                   following relief(s):-

                                          “(i) For issuance of a writ in the nature of
                                          certiorari for quashing the Office Order No. 80
                                          dated 15/10/2025 issued by Respondent No. 5,
                                          the Chief Engineer (Project-1), Bihar State
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                                    Power Transmission Company Limited, wherein
                                    and whereby the Notification of Award issued to
                                    the Petitioner in reference to Tender Notice
                                    (NIT)   No.    02/PR/BSPTCL/2025       has   been
                                    cancelled, the Earnest Money Deposit (E.M.D.)
                                    has been forfeited, and the Petitioner has been
                                    debarred for a period of 03 (three) years.
                                    (ii) For issuance of a writ in the nature of
                                    mandamus directing the Respondent authorities
                                    to accept the Bank Guarantee for Performance
                                    Security from the Petitioner and allow the
                                    Petitioner to execute the work awarded under
                                    NIT No. 02/PR/BSPTCL/2025.
                                    (iii) For issuance of a writ in the nature of
                                    mandamus       for    staying   the    operation,
                                    implementation, and execution of the Office
                                    Order No. 80 dated 15/10/2025 issued by
                                    Respondent No. 5, the Chief Engineer (Project-
                                    I), Bihar State Power Transmission Company
                                    Limited during pendency of the instant writ
                                    application.
                                    (iv) For any other relief or reliefs for which the
                                    Petitioner may be deemed entitled to in the facts
                                    and circumstances of the case.”


                      2. The brief facts of the case are that the petitioner is a

          Joint Venture comprising M/s Mavin Switchgears and Control

          Pvt. Ltd. (Lead Partner) and M/s GCKC Projects and Works Pvt.

          Ltd.     The      Joint      Venture     participated     in    NIT     No.

          02/PR/BSPTCL/2025 dated 07.01.2025 issued by BSPTCL for

          construction of three 132 KV D/C Transmission Lines. Upon
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          being declared L-1, Notification of Award (NOA) Nos. 09 and

          10 dated 01.07.2025 were issued in favour of the petitioner,

          which were duly accepted. In terms of the General Conditions

          of Contract, the petitioner was required to furnish Performance

          Security equivalent to 10% of the contract value and execute the

          agreement within 30 days. It is the case of the petitioner that due

          to internal compliance requirements and technical issues faced

          by its bank in issuing the Performance Bank Guarantee in the

          name of the Joint Venture entity, there was delay in submission

          of the same. The petitioner communicated its difficulty to the

          respondents vide letters dated 29.08.2025, 02.09.2025 and

          10.09.2025, seeking short accommodation of time. Since the

          Performance Security was not furnished within the stipulated

          period, the employer issued Letter No. 1046 dated 18.09.2025

          (Annexure–P/5) referring to GCC Clause 11.4.7 of Standard

          Bidding Document (SBD) directing submission of the

          Performance Security within seven days, failing which

          cancellation of award, forfeiture of Earnest Money, and

          subsequent debarment were proposed. Despite the petitioner

          seeking short extension vide letter dated 25.09.2025 and

          reiterating its readiness and willingness to execute the work, the

          respondent invoking Clause 11.4.7 of Section IV (General

          Conditions of Contract) of the Standard Bidding Document,

          passed the impugned Office Order No. 80 dated 15.10.2025
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          (Annexure–P/7), which reads as follows:-

                                  “In light of the above, on account of non-
                                  submission of Performance Security Bank
                                  Guarantee by the L-1 bidder M/s Mavin
                                  Switchgears and Control Pvt. Ltd. in JV with
                                  M/s GCKC Projects and Works Pvt. Ltd. as per
                                  the terms & conditions as specified in the
                                  Clause 11.4.7 of Sec-IV: General Condition of
                                  Contract of the Standard Bidding Document,
                                  the14 following decisions have been taken by
                                  BSPTCL:
                                  (a) Cancellation of notification of award issued
                                  to firm vide BSPTCL Notification of Award
                                  (NOA) No: 09 & 10 both dated 01.07.2025.
                                  (b) Forfeiture of Earnest Money/bid guarantee
                                  submitted by the bidder M/s Mavin Switchgears
                                  and Control Pvt. Ltd. in JV with M/s GCKC
                                  Projects and Works Pvt. Ltd. against NIT No.
                                  02/PR.BSPTCL/2025 and
                                  (c) Debarment of firm M/s Mavin Switchgears
                                  and      Control        Pvt.   Ltd.,   Aurangabad
                                  (Maharastra) in JV with M/s GCKC Projects
                                  and Works Pvt. Ltd., Jaipur (Rajasthan) from all
                                  future tenders of BSPTCL and other subsidiary
                                  companies of BSPHCL for next 03 (Three) years
                                  from the date of issue of this Order.”


                      3. Thereafter, the employer cancelled the tender and

          issued a fresh tender for the same project, bearing NIT

          No.69/PR/BSPTCL/2026.

                      4. Learned counsel for the petitioner submits that the

          challenge is confined only to that portion of the impugned order
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          whereby the petitioner has been debarred from participating in

          future tenders for a period of three years.

                      5. Learned counsel for the petitioner further submits

          that    Clause 11.4.7 of the General Conditions of Contract

          (GCC), does not provide for debarment and is not applicable in

          the petitioner’s case. Clause 11.4.7 reads as follows:

                                  “11.4.7. The successful bidder, after receipt of
                                  LOA, shall execute the agreement within 30
                                  days of award of the contract after duly
                                  furnishing the 10% bank guarantee. If there is
                                  delay beyond the specified period in submission
                                  of contract performance BG, 15 days’ notice
                                  will be given to the successful bidder and after
                                  which the Employer may entail cancellation of
                                  letter of award after giving another 15 days
                                  final notice and forfeiting of Earnest Money/bid
                                  guarantee as also detailed under Earnest Money
                                  Clause.”


                      6. Learned counsel for the petitioner submits that

          Clause 11.4.7 contemplates only cancellation of the Letter of

          Award and forfeiture of Earnest Money, but does not provide for

          debarment. Hence, the debarment of the petitioner is bad in the

          eye of law.

                      7. Per contra, learned counsel for the respondent

          submits that the order of debarment has been passed in

          pursuance of Clause 51 of the SBD, which reads as follows:

                                  “51.     DEBARMENT         FROM       FUTURE
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                                  TENDERS:-
                                  51.1 In the event of non-completion of 80% of
                                  any mile stone during contract period for any
                                  reason     other     than   those     attributable    to
                                  Employer       and      Force   Majeure,    then     the
                                  Employer       may      debar   the    contractor     to
                                  participate in the future tenders of BSPHCL and
                                  its subsidiary companies till whole project is
                                  completed by the contractor.”
                      8. Upon perusal of the impugned Office Order dated

          15.10.2025, it is evident that the action has been taken “as per

          the terms & conditions as specified in Clause 11.4.7 of Sec-IV:

          General Condition of Contract of the Standard Bidding

          Document.” Thus, the foundation of the impugned order, on its

          own showing, is Clause 11.4.7 of the GCC.

                      9. Clause 11.4.7, as quoted hereinabove, provides that

          in case of delay in submission of the Performance Security Bank

          Guarantee, the employer may, after issuance of notice, cancel

          the Letter of Award and forfeit the Earnest Money. The

          consequences contemplated under the said clause are specific

          and limited. The provision does not stipulate debarment, much

          less debarment for a fixed tenure of three years.

                      10. However, in the supplementary counter affidavit

          filed before this Court, the respondent-authority has sought to

          justify the order of debarment by placing reliance upon Clause

          51 of the Standard Bidding Document.
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                      11. At this stage, it becomes necessary to observe that

          the validity of an administrative order must be tested on the

          reasons recorded in the order itself and cannot be supplemented

          by fresh reasons assigned in an affidavit. An order must stand or

          fall on the reasons contained therein. The respondents cannot be

          permitted to improve or substitute the basis of the impugned

          order through pleadings filed before this Court.

                      12. Even otherwise, upon bare perusal of Clause 51, it

          is evident that the same deals with debarment in respect of an

          ongoing work after execution of a formal agreement between

          the employer and the contractor. The provision is attracted in a

          situation where milestones are not completed during the contract

          period. In the present case, admittedly only a Notification Of

          Award was issued. Due to non-deposit of the Performance

          Security, no agreement could be executed between the parties.

          Thus, the stage of commencement of contractual performance

          never arose.

                      13. In such circumstances, Clause 51 of the SBD,

          which presupposes existence of a subsisting contract and failure

          to complete milestones during the contract period, cannot be

          invoked.

                      14. In view of the above, the position that emerges is

          twofold, firstly, Clause 11.4.7, which forms the basis of the

          impugned order, does not provide for debarment as a
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          consequence of non-submission of Performance Security i.e.

          Bank Guarantee. Secondly, Clause 51, now sought to be relied

          upon in the supplementary counter affidavit, neither finds

          mention in the impugned order nor is attracted on facts in the

          present case.

                      15. Debarment, which results in serious civil

          consequences by restricting future commercial participation,

          must necessarily be founded upon an express provision in the

          applicable terms and conditions of the tender, or under any

          statutory rule or regulation governing the tender. In the absence

          of such enabling provision, the action of debarment cannot be

          legally sustained.

                      16. Considering the facts referred to above, this Court

          is of the considered view that the order of debarment for a

          period of three years, issued by the employer, is unjustified and

          the same cannot be sustained in the eyes of law.

                      17. Accordingly, the impugned Office Order No. 80

          dated 15.10.2025 is set aside only to the extent it debars the

          petitioner from participating in future tenders for a period of

          three years. The cancellation of Notification Of Award and

          forfeiture of Earnest Money are not interfered with.

                      18.The present writ application is, therefore, allowed

          in part to the extent indicated above.

                      19. Pending application(s), if any, shall also stands
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                       disposed of.


                                                              (Sudhir Singh, J.)


                                                         (Rajesh Kumar Verma, J.)

Gaurav Kumar,
Ibrar/ A.F.R.-

U


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