# M/S Classic Enterprises v. N.H.A.I. Ministry of Road Transport & Highways & Ors

- **Citation:** (2025) 4 ILRA 493
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-04-17
- **Case number:** Writ C No. 386 of 2025
- **Bench:** Rajan Roy, Om Prakash Shukla
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-classic-enterprises-v-n-h-a-i-ministry-of-road-transport-highways-ors-53147
- **Pages:** 13

## Headnote

Civil Law -Constitution of India,1950Article
226-M/s
Classic
Enterprises
participated in a tender floated by NHAI
for construction of FOB-The petitioner
was declared the lowest bidder and was
issued a Letter of Acceptance(LOA) on
20.08.2024,
requiring
submission
of
Performance security within 10 daysWhile the performance Security was
submitted on time, there was an 8-day
delay
in
submitting
the
Additional
Performance security due to illness of
the firm's partner and festival-related
bank disruptions-The Regional officer
had orally allowed a 10 day extensionLater, the petitioner was served a
backdated letter cancelling the LOA and
forfeiting the bid security on grounds
that the competent authority did not
approve the delay-The court held that
NHAI's
conduct-demanding
and
accepting penalty, calling the petitioner
for signing the agreement, and later
cancelling the LOA was arbitrary and
unreasonable-The cancellation was not
in
public
interest
and
contradicted
earlier
communications
suggesting
condonation
of
delay-
Even
in
contractual matters involving statutory
authorities
like
NHAI,
fairness,
transparency and reasonableness are
imperative-The
court
quashed
the
cancellation of LOA and directed NHAI to
reconsider the petitioner's case within
15 days.(Para 1 to 42)

The writ petition is allowed. (E-6)

List of Cases cited:

## Text

_Characters 0–39,900 of 42,058. This is a partial read: ask again with offset=39900 for what follows._

4 All. M/S Classic Enterprises Vs. N.H.A.I. Ministry of Road Transport & Highways & Ors. 493
the longstanding entry of the plot in
question cannot be sustained in the eye of
law, as such, the impugned judgement
dated 23.4.1997 passed by respondent no.1,
Board of Revenue, U.P. Allahabad is liable
to be set aside and the same is hereby set
aside. Writ petition stands allowed and the
judgment/ decree of Trial Court dated
5.12.1987 dismissing the plaintiff's suit is
hereby affirmed. The entry of the plot in
question shall be corrected accordingly.

23. No order as to costs.
----------
(2025) 4 ILRA 493
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 17.04.2025

BEFORE

THE HON'BLE RAJAN ROY, J.
THE HON'BLE OM PRAKASH SHUKLA, J.

Writ C No. 386 of 2025

M/S Classic Enterprises ...Petitioner
Versus
N.H.A.I. Ministry of Road Transport &
Highways
&
Ors
...Respondents

Counsel for the Petitioner:
Chandra Shekhar Sinha, Akshat Sinha,
Gaurav Verma

Counsel for the Respondents:
Sarvesh Kumar Dubey, A.S.G.I., Abhishek
Pathak

Civil Law -Constitution of India,1950Article
226-M/s
Classic
Enterprises
participated in a tender floated by NHAI
for construction of FOB-The petitioner
was declared the lowest bidder and was
issued a Letter of Acceptance(LOA) on
20.08.2024,
requiring
submission
of
Performance security within 10 daysWhile the performance Security was
submitted on time, there was an 8-day
delay
in
submitting
the
Additional
Performance security due to illness of
the firm's partner and festival-related
bank disruptions-The Regional officer
had orally allowed a 10 day extensionLater, the petitioner was served a
backdated letter cancelling the LOA and
forfeiting the bid security on grounds
that the competent authority did not
approve the delay-The court held that
NHAI's
conduct-demanding
and
accepting penalty, calling the petitioner
for signing the agreement, and later
cancelling the LOA was arbitrary and
unreasonable-The cancellation was not
in
public
interest
and
contradicted
earlier
communications
suggesting
condonation
of
delay-
Even
in
contractual matters involving statutory
authorities
like
NHAI,
fairness,
transparency and reasonableness are
imperative-The
court
quashed
the
cancellation of LOA and directed NHAI to
reconsider the petitioner's case within
15 days.(Para 1 to 42)

The writ petition is allowed. (E-6)

List of Cases cited:

1. South Eastern Coal Fields Ltd & ors. Vs Ms
S. Kumars Assoicates (Appeal No. 4358/2016)

2. Raj. Coop. Dairy Fedn. Ltd. Vs Maha Laxmi
Mingrate Mktg. Services (P) Ltd (1996) 10
SCC 405

3. Global Energy Ltd. Vs Adani Exports
Ltd(2005) 4 SCC 435

(Delivered by Hon'ble Om Prakash Shukla,
J.)

(1) Heard Shri Chandra Shekhar
Sinha, learned Counsel for the petitioner,
Shri Abhishek Pathak, learned Counsel for
the opposite parties no.1 to 3 and learned
Counsel for the Union of India/opposite
party no.4.
494 INDIAN LAW REPORTS ALLAHABAD SERIES
(2) By means of the present writ
petition, the petitioner has invoked the
extraordinary jurisdiction of this Court
under Article 226 of the Constitution of
India, praying inter alia for the following
reliefs :-

 "(i) Issue a writ, order or
direction in the nature of certiorari
quashing
the
impugned
order
dated
20.12.2024 vide letter No. 23001 / 1 / RPW-UP / A-K / Pkg-IV / NH-34 / FOB /
25292 passed by the O.P. No.1 through the
Regional Officer (O.P. No.2), contained in
Annexure No.1 to the writ petition;

 (ii) Issue a writ, order or
direction in the nature of mandamus
commanding
the
opposite
parties
to
reinstate
the
tender
process
of the
petitioner firm from the stage it was
cancelled and proceed with transparency
and fairness;

 (iii) Issue writ, order or direction
in the nature of mandamus to stay on any
further tender process or decision-making
related to the project pending final
adjudication...."

(3) The factual matrix of the
present writ petition would reveal that the
National Highways Authority of India
(NHAI) had invited bids through etendering process for construction of Foot
Over Bridge (FOB) on Aligarh Kanpur
Section of National Highway-34 (91) in the
State of Uttar Pradesh having its tender
ID:2024_NHAI_194363_1, wherein the
petitioner firm had participated. The
technical bid was opened on 14.6.2024 and
although initially vide office order dated
9.7.2024, the petitioner firm was declared
"Non-Responsive"
and
the
bid
was
rejected, however, on an explanation and
representation dated 10.07.2024 of the said
firm, the competent authority of NHAI i.e.
DGM (Tech) RO-UP (West) with the
approval of Regional Officer declared the
bid of the firm as 'Responsive'. The
financial bid of the petitioner firm was
opened by NHAI on 9.8.2024 along with
other bidders and NHAI declared the
petitioner firm as the lowest bidder i.e 'L1'.
Thus, the Regional Officer UP (West) of
NHAI issued letter of Acceptance (LOA)
dated 20.8.2024 and notified the petitioner
firm that their bid for Construction of Foot
Over Bridge (FOB) for the quoted bid price
amounting to Rs.5,30,06,222.71 (Rupees
Five Crore Thirty Lakh Six Thousand Two
Hundred Twenty Two and Seventy One
Paisa) has been found to be the lowest
evaluated bid.

(4) As per the aforesaid Letter of
Acceptance (LOA), the petitioner firm was
required to furnish a Bank guarantee of Rs.
53,00,622/-
(Fifty
Three
Lakhs
Six
Hundred Twenty Two), which was 10% of
bid price, towards performance security for
a period of three years and as per the terms
of Request for Proposal (RFP) since the bid
amount was 26.97% below the estimated
cost, the petitioner firm was also required
to deposit an Additional Performance
Security of Rs.36,95,121/- as per Clause
33.1 of RFP valid up to completion of the
work, within 10 days of receipt of the
Letter of Acceptance. In case of failure, the
award was to be deemed to be cancelled
and the bid security would be forfeited as
per Clause 33.3 of RFP and the petitioner
firm would be debarred for a period as
specified in Clause 16.7 of RFP. The
petitioner firm was also asked to return
duplicate
of
the
LOA
as
an
acknowledgment and sign the Contract
Agreement within the period prescribed in
the bid document.
4 All. M/S Classic Enterprises Vs. N.H.A.I. Ministry of Road Transport & Highways & Ors. 495
(5) According to the petitioner,
there was some discrepancy in Clause 33.1
and Clause 47.1 of the RFP, therefore,
partner of the petitioner firm Shri Amit
Khatri approached the Regional Head
Office at Lucknow and pointed out the
same, whereupon the Regional Head asked
the petitioner firm to deposit ten per cent
and not three per cent of the bid amount.
From the document annexed as Annexure6, it appears that this happened on
27.08.2024/28.08.2024 and on the same
day as asserted in para-11 of the writ
petition,
as
Additional
Performance
Guarantee amounting to Rs.36,95,121/-
(Rupees Thirty Six Lakhs Ninety Five
Thousand One Hundred Twenty One) was
required to be deposited, but due to
disruption in banking services on account
of ongoing festival break and illness of the
signing authority, ten days further time was
prayed
for
depositing
the
additional
security, which, according to the petitioner
firm, was allowed by the Regional Head
orally. Thereafter, on the very next day i.e.
on
29.08.2024,
the
petitioner
firm
submitted
the
bank
guarantee
dated
29.08.2024 towards performance security
of Rs.53,00,622/- (Rupees Fifty Three
Lakhs Six Hundred Twenty Two) and
subsequently deposited the original bank
guarantee in the office of NHAI at
Lucknow. The petitioner firm sent a letter
dated 30.08.2024 by e-mail to the Regional
Office of NHAI narrating the entire
incident including the meeting which took
place with the Regional Officer in his
office on 28.08.2024 when he allowed the
petitioner
to
deposit
the
Additional
Performance Security within ten days.
Copy of the said letter dated 30.08.2024
sent
through
e-mail
is
annexed
as
Annexure-6 to the writ petition. On
07.09.2024, a communication was sent to
the
Chairman,
National
Highways
Authority of India, submitting the original
bank
guarantee
for
the
Additional
Performance Security to the tune of
Rs.3695121/-, copy of which has been
annexed as Annexure-7 to the writ petition.

(6) As the petitioner firm did not
receive any communication for signing of
the agreement, therefore, it sent a letter
dated 26.09.2024 to the Regional Office of
NHAI, mentioning the bank guarantee
submitted by the petitioner firm and also
detailing the events which took place prior
to such deposits including the meeting held
on 28.08.2024 in which as claimed ten days
further time was granted orally for
submission of Additional Performance
Security.

(7) On 01.10.2024, for the first
time, the D.G.M. (Technical) refuted the
claim in the letter dated 26.9.2024
regarding acceptance of any such claim of
the petitioner for deposit of Additional
Performance Security within an extended
period as claimed clearly stating that
proposal of consideration of eight days'
delay
in
submission
of
Additional
Performance Security having been sent to
the competent authority NHAI Headquarter
and on receipt of the same, the petitioner
would be intimated accordingly.

(8)
Thereafter,
the
petitioner
submitted
a
letter
dated
19.11.2024
addressed to the Regional Office, NHAI
mentioning
therein
about
the
hospitalization of the partner of the
petitioner
firm
from
26.08.2024
to
05.09.2024
with
medical
certificate
annexed in support thereof and that after
discharge from hospital, the Additional
Performance Guarantee was submitted on
07.09.2024 and accordingly a request was
made
for
condoning
the
delay
in
496 INDIAN LAW REPORTS ALLAHABAD SERIES
submission of the Additional Performance
Guarantee with a further recital that the
petitioner was ready to accept and furnish
the financial penalty for the delay.

(9) On 26.11.2024, the D.G.M.
(Technical) Regional Office U.P. (West)
sent a letter to the petitioner firm requesting
it to deposit Rs.42,405/- (Rupees Forty
Two Thousand Four Hundred and Five)as
damages
for
eight
days'
delay
in
submission of Additional Performance
Security in the bank account mentioned
therein.
Further,
the
petitioner
was
requested to submit original bid document
and to attend the office for signing of the
agreement after deposition of the damaged
mentioned above. In this letter dated
26.11.2024, there was no such mention that
the delay was not liable to be condoned or
that the matter was still pending, instead
the petitioner was asked to act upon the
said letter dated 26.11.2024 and deposit
damages for the delay of eight days to the
tune of Rs.42,405/- (Rupees Forty Two
Thousand Four Hundred Five) and also to
submit the original bid document and to
attend the office for signing of agreement
after depositing the damages mentioned
therein.

(10) Acting upon the said letter, the
petitioner deposited the aforesaid damages
on 26.11.2024 itself as is mentioned in
paragraph-20 of the writ petition.

(11) On 12.12.2024, the D.G.M.
(Technical) Regional Office U.P. (West)
again wrote to the petitioner firm referring
to
the
LAO
dated
20.08.2024
and
requesting the petitioner to submit original
bid and to attend the office for signing of
the agreement on 24.12.2024.
(12) Pursuant to the aforesaid letter
dated 12.12.2024 of the NHAI, the signing
authority of the petitioner firm reached the
office of NHAI on 24.12.2024, whereupon
for the first time they were verbally
informed that the tender granted to them
was cancelled. On being confronted that no
such cancellation was received by the
petitioner firm, the Officer asked the
petitioner's representative to wait and
thereafter the petitioner firm received an
email on 24.12.2024 at 3:50 PM in which
letter No. 23001/1/RO-W-UP/A-K/PkgIV/NH-34/FOB/25292 dated 20.12.2024
signed by the Regional Officer UP (west)
stated that the 8 days' delay in submission
of the additional performance security with
damage amounting to Rs. 42,405/- (Rupees
Forty Two Thousand Four Hundred Five)
was sent to competent authority for
approval of delay period but the same has
not been agreed. The letter stated that LOA
issued vide office letter No. 23820 dated
20.8.2024 has been cancelled due to delay
in submission of additional performance
security and further that the bid security
amounting
to
Rs.14,51,629
(Rupees
Fourteen Lakhs Fifty One Thousand Six
Hundred Twenty Nine) submitted with the
bid has been forfeited in terms of RFP
Clause 33.3.

(13)
It
is
this
letter
dated
20.12.2024, which has been sought to be
challenged by the petitioner before this
Court in the present proceedings.

(14)
The
contention
of
the
petitioner's Counsel was that the bank
guarantee
pertaining
to
performance
security was deposited within time and as
in a meeting with the Regional Officer, ten
days further time had been granted to the
petitioner
orally
for
depositing
the
Additional Performance Security on the
request of the petitioner, therefore, the
same was also subsequently deposited and
4 All. M/S Classic Enterprises Vs. N.H.A.I. Ministry of Road Transport & Highways & Ors. 497
the entire scenario was intimated to the
concerned opposite parties vide letter dated
30.08.2024 sent by e-mail including the
factum of the oral permission granted on
28.08.2024 by the Regional Officer and the
opposite parties themselves asked the
petitioner to deposit damages to the tune of
Rs.42,000/- (Rupees Forty Two Thousand)
and odd for the eight days' delay vide letter
dated
26.11.2024,
which
was
also
deposited and vide another letter dated
12.12.2024, the petitioner was also asked to
appear for signing of the agreement and
completion
of
other
formalities
on
24.12.2024, therefore, the impugned action
of cancellation of LOA and forfeiture of
security money on the ground that approval
was not granted by the competent authority
for condoning the delay of eight days of the
aforesaid
deposit,
is
absolutely
unreasonable and unfair. He also submitted
that in another case, the delay had been
condoned, therefore, there was a precedent
for the same and the petitioner acted on the
permission granted by the Regional Officer
vide
letter
dated
26.11.2024
and
12.12.2024, therefore, merely on account of
delay of eight days in submitting the
Additional
Performance
Security,
cancellation
of
LOA
is
absolutely
unjustified.

(15) Learned Counsel for the
petitioner also submitted that the delay was
not inordinate and the petitioner furnished
the Additional Performance Guarantee as
allowed by the Regional Officer vide letter
dated 26.11.2024. In any case, according to
him, there was no damage or loss incurred
by the respondent authority for the said
delay as penalty for the delay, as calculated
and demanded by NHAI being an amount
of
Rs.
42,405/-(Rupees
Forty
Two
Thousand Four Hundred Five), was paid to
them immediately on the same day and
there was no occasion for them for
cancellation of the said bid and forfeiture of
the guarantee furnished to them. As per
RFP, the only competent authority is the
Regional Officer, who had approved the
delay and got deposited the penalty for the
same, however, the Bid was subsequently
sought to be rejected on the plea that the
competent authority has not given approval
and NHAI did not even bother to annex the
order of the said competent authority.
Learned Counsel also highlighted the
timing and manner in which the LOA has
been sought to be cancelled inasmuch as,
according to him, although the petitioner
was called for signing of the contract on
24.12.2024, however, the same very day,
they were communicated the impugned
letter predated 20.12.2024, which cancelled
the LOA vide e-mail dated 24.12.2024. He
further submitted that cancellation of the
tender would disrupt the procurement
process, potentially delaying the public
project for which the tender was issued,
which would be detrimental to public
interest and as such calls for judicial
intervention.

(16) On the other hand, learned
Counsel appearing for NHAI submitted that
admittedly there had been a delay in
providing Bank Guarantee in lieu of
additional performance security within the
stipulated time and there had been a delay
of 8 days. According to him, the reasons
appended by the petitioner's firm of illhealth of one of the partner was highly
unprofessional owing to the gravity of
work proposed to be undertaken by them.
He submitted that the proposal to condone
the delay was conveyed to the competent
Authority in good faith by the RO (West),
Uttar Pradesh. According to him, the
competent authority as per the policy
decision of NHAI dated 21.08.2017 for
498 INDIAN LAW REPORTS ALLAHABAD SERIES
condoning delay was the CGM (HG),
NHAI and in any case, the petitioner firm
was duly conveyed of the said aspect vide
letter dated 01.10.2024. He has further
submitted that letter dated 26.11.2024
relating to deposit of damages to the tune
of Rs. 42,405/- (Rupees Forty Two
Thousand Four Hundred Five) was sent by
NHAI on the request of the petitioner's
firm and nowhere meant acceptance of the
delay and even the letter dated 12.12.2024,
whereby the petitioner was directed to be
ready with the formalities on 24.12.2024
was merely tentative in nature and the same
was subject to the orders of competent
authority. He, thus, submits that these
communications were issued in the nature
of pre-emptive letters only, that too, in
good faith.

(17)
Learned
Counsel
has
submitted
that
pursuant
to
the
instruction/clarification dated 13.12.2024
received from the competent authority, the
issue was sent to the evaluation committee,
which proposed for cancellation of LOA
and forfeiture of additional performance
security amount of Rs. 36,95,121/- (Rupees
Thirty Six Lakhs Ninety Five Thousand
One Hundred Twenty One) and return the
balance Bank guarantee and refund the
deposited damages of Rs. 42,405/- (Rupees
Forty Two Thousand Four Hundred Five).
Additionally,
learned
Counsel
has
questioned the financial capability of the
petitioner in executing the work as
allegedly the delay in depositing the
additional performance security had been
due to delay in availing short-term loan by
the petitioner. He submitted that the order
of cancellation of LOA is passed for
violation
of
mandatory
terms
and
conditions of LOA and RFP and there was
not a concluded contract between the
parties. It is also submitted that no right is
created by mere issuance of letter of
acceptance
as
there
is
no
binding
relationship between the parties. In this
regard, he has relied on the judgement of
Apex Court in South Eastern Coal Fields
Limited and other Vs Ms S. Kumars
Associates (Civil Appeal No. 4358/2016
decided on 23.07.2021) and Rajasthan
Cooperative Dairy Federation Ltd. Vs
Maha
Laxmi
Mingrate
Marketing
Services (P) Ltd. : (1996) 10 SCC 405.

(18) Learned Counsel has also
submitted that the order of cancellation of
LOA is passed on account of violation of
mandatory terms and conditions of the RFP
as mentioned in clause 33.3 of the RFP and
that NHAI has performed its statutory duty
in utmost fairness and have no personal
interest in the matter in dispute. He also
submitted that the cancellation is as per the
terms of RFP and that the terms of RFP are
not amenable to Judicial scrutiny and relies
on the judgment of the Apex court in the
case of Global Energy Ltd. Vs. Adani
Exports Ltd : (2005) 4 SCC 435. He, thus,
submitted that cancellation of LOA was
permissible before signing of agreement
between the parties and the same has been
rightly done by NHAI and, as such, the
present matter does not call for any
interference by this Court.

(19) Having heard the learned
counsel for the parties and after perusing
the material on records, the first thing,
which crops up is as to whether in the facts
of this case the impugned action cancelling
the LOA is a fair and reasonable exercise
of power. Even in contractual matters,
especially where contract has not been
concluded, statutory authority such as
NHAI is obliged to act fairly and
reasonably keeping in mind the object
sought to be achieved by the contract and
4 All. M/S Classic Enterprises Vs. N.H.A.I. Ministry of Road Transport & Highways & Ors. 499
such matters are amenable to judicial
review
under
Article
226
of
the
Constitution of India on the ground of
being apparently unreasonable and unfair.

(20) Clause 33 of the RFP relating
to performance security based on which
LOA has been cancelled reads as under :-

 "33. Performance Security

 33.1 Within 10 (ten) days after
receipt of the letter of Acceptance the
successful bidder shall deliver to the
Employer a Performance Security of Ten
percent of the Contract Price, valid for the
period of 28 days after expiry of defect
liability of 3 year plus additional security
for unbalanced bids in accordance with
Clause 28.3 of ITB and sign the contract.
The validity shall account for additional 3
months'
time
to
account
for
BG
verification, signing of contract and start
date.

 33.2
The
Performance
Security/additional security shall be in the
form of a Bank Guarantee, in the name of
the Employer, from a Bank as specified in
case of bid security.

 33.3 Failure of the successful
bidder to comply with the requirement of
sub-clause 33.1 shall constitute sufficient
ground for cancellation of the award and
for feature of the bid security and
debarment for a period as specified in
Clause 16.7. "

(21) The letter of acceptance dated
20.08.2024 was received by the petitioner
on
21.08.2024
as
is
evident
from
Annexure-8 to the petition. The letter of
acceptance dated 20.08.2024 required the
petitioner to deposit Performance Security
plus Additional Security within ten days of
its receipt. According to the petitioner,
there was some discrepancy in the
requirement as contained in Clause 33.1 of
the RFP vis-a-vis Clause 47.1 of the same
document. While the former referred to ten
percent of the contract price to be
deposited, the later referred to only three
per cent of the contract price and additional
security
for
unbalanced
bids
to
be
deposited. Accordingly, on 28.08.2024, a
partner of the petitioner firm approached
the Regional Head Office at Lucknow and
pointed out the aforesaid discrepancy and
enquired whether three per cent or ten per
cent of the contract price was to be
deposited, whereupon the Regional Head
asked the petitioner firm to deposit ten per
cent and not three per cent of the bid
amount. On the same day, partner of the
petitioner firm requested the Regional
Officer
at
Lucknow
that
since
an
Additional
Performance
Guarantee
amounting
to
Rs.36,95,121/-
(Rupees
Thirty Six Lakhs Ninety Five Thousand
One Hundred Twenty One) had been
imposed,
which
was
an
additional
requirement and for which application had
been submitted to a bank but due to
disruption in banking services on account
of ongoing festival break and illness of the
signing authority, additional ten days time
be
granted
for
depositing
the
said
additional
security
of
Rs.36,95,121/-
(Rupees Thirty Six Lakhs Ninety Five
Thousand One Hundred Twenty One). The
Regional Head, according to the petitioner,
orally allowed the petitioner firm to deposit
the additional security amount within
further ten days.

(22) On the very next day i.e. on
29.8.2024, the petitioner firm got a bank
guarantee
prepared
amounting
to
Rs.53,00,622/- (Rupees Fifty Three Lakhs
500 INDIAN LAW REPORTS ALLAHABAD SERIES
Six Hundred Twenty Two) i.e. towards the
performance security and deposited it on
the same day in original in the office of
NHAI at Lucknow.

(23) Further, the petitioner sent an
e-mail on 30.08.2024 referring to the
meeting held with the Regional Officer in
his office on 28.08.2024, wherein it is said
that he acceded to the request of the
petitioner for additional ten days to deposit
the Additional Performance Security. Copy
of the mail is annexed as Annexure-6 to the
writ petition. Thereafter, as per the
commitment,
bank
guarantee
towards
Additional
Performance
Security
amounting
to
Rs.36,95,121/-
(Rupees
Thirty Six Lakhs Ninety Five Thousand
One Hundred Twenty One) was deposited
on 07.09.2024 i.e. within the ten days
granted by the said officer. This fact was
communicated to NHAI vide an e-mail sent
to it on 07.09.2024 itself. Thus, according
to the petitioner, there was no delay in
furnishing the Additional Performance
Security in view of the facts noticed
hereinabove. Till then there was no rebuttal
of the facts as stated in the communication
dated 30.08.2024.

(24) As no response was received
even after sufficient time having lapsed for
signing of agreement by the petitioner, the
competent authority was contacted, who
conveyed it to the petitioner that it had not
deposited the
Additional
Performance
Security
within
the
stipulated
time,
therefore, additional penalty will have to
be imposed. The petitioner firm agreed to
deposit the penalty as desired but even
this was not communicated to it and, as
such, the petitioner firm sent a letter
dated 26.09.2024 to the Regional Office,
NHAI mentioning the events which had
occurred right from the beginning. Copy
of it is annexed as Annexure-8 to the
petition.

(25) In response, a communique
dated 01.10.2024 was received from the
D.G.M. (Technical) with approval of
Regional Officer UP (West) that the
proposal for considering eight days'
delay
in
submission
of
Additional
Performance Security had been sent to
the
competent
authority
at
NHAI
Headquarter
for
approval
and
also
denying any acceptance of the claim of
the petitioner in its letter datd 26.09.2024
regarding acceptance of agreement and
performance
security
etc.
The
said
document is Annexure-9 to the petition.

(26) Thereafter, on 19.11.2024,
the petitioner firm sent a letter to the
Regional Head enclosings the Medical
Certificate of the signing authority/
partner of the petitioner firm certifying
that he was hospitalized from 26.08.2024
to 05.09.2024 and prayed for condoning
the delay in submission of additional
performance
guarantee
and
an
undertaking that the petitioner would
furnish financial penalty, if any, for the
delay, was also given. This document is
annexed as Annexure-10 to the writ
petition.

(27) In response to the aforesaid,
the D.G.M. (Technical) with approval of
Regional Officer (West), U.P., sent an email containing a letter dated 26.11.2024
asking the petitioner firm to deposit
Rs.42,405/- (Rupees Forty Two Thousand
Four Hundred Five) as damages/penalty
for eight days' delay in submission of
Additional Performance Security and to
submit original bid documents and to
attend the office for signing of agreement
after depositing the damages as demanded.
4 All. M/S Classic Enterprises Vs. N.H.A.I. Ministry of Road Transport & Highways & Ors. 501
This document is Annexure-11 to the writ
petition. The letter dated 26.11.2024 sent
by NHAI to the petitioner reads as under :-

"To,
 The Authorized Signatory
M/s. Classic Enterprises,
 9/82,
Arya
Nagar,
Kanpur200002
 Email
:
classickanpur982@gmail.com

 Sub.: Construction of Foot Over
Bridge (FOB) on Aligarh-Kanpur section
of NH-34 (91) in the State of Uttar Pradesh,
FOB at Km. 358.650 & FOB at Km.
368.320.

 Ref
:
1.
Tender
ID
:
2024_NHAI_194363_1
 2. This Offic LOA N. 23820
dated 20.08.2024
 3. Your letter dated 29.08.2024
 4. Your letter dated 07.09.2024.

 Sir,

In reference to subject Bid
and LOA issued vide this office letter dated
20.08.2024, you are hereby requested to
deposit Rs.42,405/- as damages for 8 days
delay
in
submission
of
Additional
Performance Security in the following
Bank Account :-
Particulars

Details
Account Holder
Name

NHAI Regional Office
Account
Number

84811010002035

Bank Name
Canara Bank

IFSC Code

CNRB0018481

 Further you are requested to
submit Original Bid Document and attend
the office for signing of the agreement after
deposition of the damages mentioned
above.

 This issue with the approval of
RO-UP (West).

Sd/-
 (N.P. Singh)
 DGM (Tech)
 Regional Office-UP (West)"

(28) In this letter dated 26.11.2024,
there is no reference to the delay in
submission of the Additional Performance
Security or that this was subject to any
decision to be taken by the competent
authority in this regard. The petitioner firm
immediately complied the letter dated
26.11.2024
and
deposited
Rs.42,405/-
(Rupees
Forty
Two
Thousand
Four
Hundred Five) on 26.11.2024 itself. A copy
of the NEFT Transaction Slip is annexed as
Annexure-12 to the writ petition.

(29) On 12.12.2024, the petitioner
received
a
letter
from
the
D.G.M.
(Technical) with approval of Regional
Office,
U.P.
(West)
through
e-mail
requesting the petitioner firm to submit the
original bid document and to attend the
office for signing of the agreement on
24.12.2024. This letter dated 12.12.2024
also did not express any reservations
regarding
delay
in
submission
of
Additional
Performance
Security
by
petitioner rather it gave reasonable basis for
the petitioner to believe that the same had
been waived.
502 INDIAN LAW REPORTS ALLAHABAD SERIES
(30) Thus, apparently, the issue
relating to right of NHAI under Clause 33.3
of RFP document regarding delayed
furnishing
of
Additional
Performance
Security had been waived of with the
demand of penalty amount of Rs.42,405/-
(Rupees
Forty
Two
Thousand
Four
Hundred Five) from the petitioner. The said
fact is fortified from the subsequent letter
of NHAI dated 12.12.2024, wherein the
petitioner was called upon to submit the
original Bid document and attend the office
for signing of the agreement on 24.12.2024
which was also issued with approval of
Regional Office-UP (West).

(31) In response, the signing
authority of the petitioner firm and an
another partner reached the office of
N.H.A.I. at Gomti Nagar, Lucknow in the
afternoon at 03:30 p.m. on 24.12.2024 and
met the Regional Head but to their utter
surprise, they were informed that LOA
issued to the petitioner firm had been
cancelled and security money had been
forfeited. A letter dated 20.12.2024 was
served on 24.12.2024 by e-mail, as already
discussed which inter alia stated as follows
:-

 "2.
Bidder
has
submitted
Performance Security of Rs.53,00,677/-
vide banker letter dated 29.08.2024 BG
bearing
No.00417241PG014967
dated
07.09.2024 which is 08 days' delay after
the schedule date of 30.08.2024.

 3. But bidder vide letter dated
07.09.2024
submitted
Additional
Performance amounting to Rs.36,95,121/-
BG Bearing No. 00417241PG014 967
dated 07.09.2024 which is 08 days delay
after the schedule date of 30.08.2024.

 4. As the bidder has submitted
additional performance security with 08
days delay, the proposal for consideration
of 08 days delay with damages -
5,30,06,222 x 0.01% x 8 = 42,405/- was
sent to Competent Authority for approval
of delay period. But same has not been
agreed.

 5. Therefore, LOA issued vide
this office letter no.23820 dated 20.08.2024
is hereby cancelled due to delay in
submission of Additional Performance
Security and bid security amounting to
Rs.14,51,629/- submitted with the bid
hereby forfeited in terms of RFP Clause
33.3."

(32) This action is apparently
contrary to the communication dated
26.11.2024 and 12.12.2024 by the Regional
Officer NHAI, as already discussed.

(33) The opposite parties have not
denied the fact that the petitioner was asked
to deposit a penalty amount of Rs.42405/-
(Rupees
Forty
Two
Thousand
Four
Hundred Five) vide letter dated 26.11.2024,
which it did on the asking of the concerned
opposite parties nor that the petitioner was
asked vide letter dated 12.12.2024 to come
for signing of the agreement all of which
indicated that the eight days' delay
referred, had been waived.

(34) It is the case of the opposite
parties in para-11 of the counter affidavit
that as per N.H.A.I. Policy/Guidelines
dated 21.08.2017, issues pertaining to such
condonation of delay were to be dealt with
by C.G.M. (Headquarter), N.H.A.I., who
was the competent authority, however, in
para-14 and 15 of the counter affidavit, the
opposite parties categorically admit that
considering the request made by the
4 All. M/S Classic Enterprises Vs. N.H.A.I. Ministry of Road Transport & Highways & Ors. 503
petitioner firm, a letter dated 26.11.2024
was issued by the N.H.A.I. asking the
petitioner
firm
to
deposit
damages
amounting to Rs.42405/-(Rupees Forty
Two Thousand Four Hundred Five) for the
eight
days'
delay.
However,
the
explanation offered for it is that the said
amount was demanded only to substantiate
the bona fide intention and willingness of
the petitioner firm and it nowhere meant
acceptance of the way. We fail to
understand as to what this averment means.
This is nothing but an attempt by the
opposite parties to wriggle out of the
quagmire in which they find themselves on
account of their own conduct where they
themselves asked the petitioner to deposit
the damages which it did and then
subsequently cancelled the LOA as alleged
arbitrarily.

(35) In para-14, it is also admitted
that the damages were calculated in a
synonymous manner i.e. the calculation/
formulation of the said amount was done as
the same is done in likewise RFPs, wherein
the clause of condonation of delay in its
calculation exist. In paragraph 15 of the
counter affidavit, they also admit to have
given a tentative date to the petitioner i.e.
24.12.2024 to be ready with the formalities
by the said date. However, it has been
further stated that after much deliberation
as delay could not be condoned, the same
was intimated vide letter dated 20.12.2024
to the petitioner firm, which is impugned in
the writ petition. It is said that the
communication regarding disapproval of
delay was received from the competent
authority on 13.12.2024. Copy of the
internal correspondence is annexed as
Annexure-CA-3. Thereafter, the matter was
considered by a Committee which decided
to propose cancellation of LA etc. as
mentioned in para-17 of the counter
affidavit and ultimately, after approval of
the said recommendations by the Regional
Officer, the same was communicated to the
petitioner on 20.12.2024.

(36) The tender process in question
was floated in June, 2024. It was in respect
of construction of a foot over bridge on
Aligarh-Kanpur section of NH-34 (91) in
the State of U.P., meaning thereby it was to
sub-serve a greater public cause, but on
account of the aforesaid action, merely on
account of alleged delay of eight days and
nothing else, the said cause obviously
remains frustrated even after lapse of more
than seven months and how far the
impugned action has furthered the cause of
the opposite parties or that of the public at
large, who would have benefitted by
construction of the foot over bridge, is any
body's guess, as, there is nothing on record
to show that any fresh tender process had
been initiated.

(37) Looking into the facts as
noticed hereinabove, we fail to understand
as to what purpose is served by cancellation
of the LOA purely in the facts in this case
and how far the greater public cause with
the tender process sought to serve is
furthered. In fact, it appears that it has been
frustrated. It is not the case that the
petitioner firm was not qualified or was
technically deficient in any manner. It is
also not the case of the opposite parties that
the performance security of Rs.52 Lakhs
and odd was not deposited within the
stipulated period in terms of the RFP
clause. The only issue is regarding eight
days' delay in depositing the additional
performance security regarding which the
petitioner has some explanation to offer, as
already discussed. But even without it,
there are instances of condonation of such
delay in other matters, for whatever reason.
504 INDIAN LAW REPORTS ALLAHABAD SERIES
Most importent, the Regional Office itself
asked the petitioner to deposit penalty
amounting to Rs.42405/- (Rupees Forty
Two Thousand Four Hundred Five) which
was duly deposited by the petitioner,
obviously in anticipation of condonation of
mere eight days delay in submission of
Additional
Performance
Security
but
thereafter
the
competent
authority
disapproved the condonation of delay,
consequently, LOA has been cancelled and
the security money deposited by the
petitioner has been forfeited. In the counter
affidavit, there is no denial of the fact that
the Additional Performance Security had
also been deposited as claimed by the
petitioner within the ten days further time
as desired.

(38) Although in their counter
affidavit, the opposite parties have denied
any meeting and oral permission to the
petitioner on 20.08.2024 to deposit the
Additional Performance Security within the
next ten days but neither the receipt of the
e-mail dated 30.08.2024 nor any specific
denial of the said meeting and permission
in response thereto, has been made, except
for refuting the claim raised on 28.09.2024
vide letter dated 01.10.2024 vaguely. Even
thereafter vide letter dated 26.11.2024
petitioner was asked to deposit damages for
the delay. It is also not denied that in fact
the Additional Performance Security was
deposited
and
communicated
to
the
opposite parties and at that point of time,
the concerned opposite parties of the
Regional
Office
never
informed
the
petitioner that the same was absolutely
illegal and that no such time had been
granted
rather
the
Regional
Office
forwarded the request for condonation of
delay and thereafter asked the petitioner
vide letter dated 26.11.2024 to deposit the
damages to the tune of Rs.42405/- (Forty
Two Thousand Four Hundred Five), which
was done by the petitioner on the same day.

(39)
Annexure-CA3
sent
by
D.G.M., U.P. (West), which mentions
about similar delay of seven days in
submission of performance security having
been condoned and approved in a similar
case during 309th meeting and the
agreement was entered into by the N.H.A.I.
these were prior precedents in this regard as
such, and even otherwise, purely on the
facts of this case, there was no justification
for cancelling the LOA and forfeiting the
security amount as referred hearinabove.

(40) Looking into the overall facts
and circumstances of the case, the reason
for cancellation of LOA appears to be
unreasonable. It appears that the opposite
parties could not muster courage to take a
pragmatic decision which would have
furthered the object for which the tender
was issued and the larger public interest
which was implied on it, without causing
any prejudice financial or otherwise to
them but choose to tread a safer route by
following the letter of the RFP clause
ignoring the spirit and the cause which the
tender process sought to achieve.

(41) We, therefore, quash the
impugned action of cancellation of LOA
and direct the opposite parties to reconsider
the matter in the light of the aforesaid,
specially the larger public good which is
sought to be served by the proposed
construction of foot over bridge which in
any case stands delayed and also taking
into consideration the fact that any fresh
tender may result in further delay and
possibly increased cost. Let the competent
authority
of
the
National
Highway
Authority of India take a considered
decision as aforesaid in the matter
4 All. M/S SDS Infracon Pvt. Ltd. & Anr. Vs. State of U.P. & Ors.
505
positively within fifteen days from
the date of receipt of a certified copy of this
order.

(42) The writ petition is allowed.
Howerver, there shall be no order as to
cost.
----------
(2025) 4 ILRA 505
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 28.04.2025

BEFORE

THE HON'BLE PIYUSH AGARWAL, J.

Writ C No. 1920 of 2018
With
Writ C No. 30283 of 2018

M/S SDS Infracon Pvt. Ltd. & Anr.
 ...Petitioners
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioners:
Sri Nisheeth Yadav

Counsel for the Respondents:
Sri Aditya Bhushan Singhal, C.S.C., Sri
Pramod Jain (Sr. Adv.)