Allahabad High Court
M/S DS ENTERPRISESversusUNION OF INDIA AND 4 OTHERS
- Decided
Holding
The Court directed the petitioner to file a detailed representation and stayed forfeiture of earnest money, without deciding on the substantive validity of the additional performance guarantee.
Summary
M/s Ds Enterprises filed a writ petition challenging Condition No.2 in the Letter of Acceptance, which required it to furnish an additional performance guarantee of 15.01% of the estimated cost, alleging that the tender documents only mandated a 5% guarantee. The petitioner argued that the office memorandum imposing the higher guarantee was uploaded on the website after the bid submission deadline, thereby altering the contract terms mid‑stream and constituting an arbitrary exercise of power. The respondents contended that the timing of the memorandum is a factual issue for the competent authority and that the matter should be referred to that authority. The Court held that the dispute should be initially addressed through a detailed representation by the petitioner to the Chief Engineer‑Cum‑Executive Director, BHU Project, Varanasi, within two weeks. It further directed that the respondent consider the representation, give notice and a hearing within a month, and stay any forfeiture of earnest money for up to three months or until the representation is disposed.
Issues considered
- Whether the imposition of an additional performance guarantee of 15.01% after the bid submission deadline is valid under the tender conditions.
- Whether the timing of the office memorandum (uploaded after bid submission) renders the additional guarantee arbitrary and illegal.
- Whether the dispute is justiciable before the Court or should be referred to the competent authority for factual determination.
Subjects
- performance guarantee
- tender conditions
- additional guarantee
- arbitrariness
- writ petition
- representation
- stay of forfeiture
- contract law
Judgment
HIGH COURT OF JUDICATURE AT ALLAHABAD
WRIT - C No. - 18909 of 2026
M/S Ds Enterprises
.....Petitioner(s)
Versus
Union Of India And 4 Others
.....Respondent(s)
Counsel for Petitioner(s) : Anup Shukla, Devansh Misra
Counsel for Respondent(s) : A.S.G.I.
Court No. - 40
HON'BLE SARAL SRIVASTAVA, J.
HON'BLE GARIMA PRASHAD, J.
1. Heard Sri Devansh Misra, learned counsel for the petitioner and Sri Vivek
Kumar Singh, learned counsel for the respondents.
2. The petitioner being aggrieved by the Condition No.2 in the Letter of
Acceptance by which petitioner has been asked to furnish an Additional
Performance Guarantee @ 15.01% of the estimated cost as per O.M.
No.DG/CON/Construction 2023/20 dated 27.02.2026 has approached this
Court by means of present writ petition.
3. Challenge has been laid by the learned counsel for the petitioner on the
ground that as per the tender condition, the petitioner is to submit only 5% of
the bid amount as performance guarantee. To support the said argument,
learned counsel for the petitioner has placed reliance upon Clause 12 of the
General Conditions of the Contract and Schedule 'E' of Proforma of
Schedules (Major Component).
4. He contends that the last bid was submitted by the petitioner at 3:00 P.M.
on 27.02.2026, and as per Schedule 'E', the conditions of the contract could
have been altered before submission of last bid. It is submitted that office
memorandum which has been relied upon by the respondents while
incorporating the condition in Letter of Acceptance that the petitioner is
liable to be paid 15.01% as Additional Performance Guarantee has been
uploaded on the website at 4:57 P.M. The petitioner in this respect has filed
supplementary affidavit, which is taken on record. Accordingly, it is
submitted that the rules of the game cannot be changed in midway.
WRIC No. 18909 of 2026
2
5. He submits that in other cases where memorandum has been issued for
imposition of Additional Performance Guarantee, a corrigendum has been
issued by the competent authority extending the time for submitting bid.
Accordingly, it is contended that the imposition of Additional Performance
Guarantee @ 15.01% is illegal and amounts to arbitrary exercise of power
by the respondent-authority.
6. Per contra, learned counsel for the respondents would contend that the
question as to whether the memorandum has been uploaded on the website at
4:57 P.M. i.e. after submission of last date is the disputed question of fact
which can very well be looked into by the competent authority. Accordingly,
it is contended that the matter may be relegated to the competent authority.
7. In view of the submissions advanced by the learned counsel for the
parties, we dispose off the writ petition permitting the petitioner to file a
detailed representation before the respondent no.3-Chief Engineer-Cum-
Executive Director, BHU Project, Varanasi CPWD ventilating all his
grievances against the imposition of Additional Performance Guarantee @
15.01% within a period of two weeks from today. On submitting such
representation, the respondent no.3 shall consider and decide the same
strictly in accordance with law after giving due notice and opportunity of
hearing to the petitioner within a period of one month from the date he
receives the representation of the petitioner.
8. For a period of three months or till the disposal of representation of
petitioner by the respondent no.3, whichever is earlier, the respondent-
authority shall not forfeit the earnest money of the petitioner.
May 14, 2026
NS
(Garima Prashad,J.) (Saral Srivastava,J.)
Digitally signed by :-
NITIN KUMAR
High Court of Judicature at Allahabad
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