Entrepreneur challenges PBG clause of WCL; knocks CVC’s door
Ranchi: Entrepreneur Sarvesh Kumar Singh challenged Performance Bank Guarantee (PBG) condition in Gem Tender floated by different areas of Western Coalfields Limited (WCL), a subsidiary of Coal India Limited saying it violates the provisions of the Coal India Limited Purchase Manual 2020 (Second Edition, updated up to 30.06.2025), which governs procurement activities of Coal India Limited and its subsidiaries.
Singh has written a letter to chief vigilance commissioner (CVC) of WCL seeking proper action into the matter. He said that the condition has the potential to restrict competition, discourage participation of MSMEs and genuine manufacturers. He said the condition may amount to adoption of restrictive tender conditions, contrary to the principles of transparency, fairness, and equal opportunity emphasized in vigilance guidelines.
“I respectfully submit this complaint in my capacity as a prospective bidder in the GeM tender for supply of LED Flood Lights (1650W) floated by Western Coalfields Limited (WCL), Wani North Area, bearing Tender No. GEM/2026/8/7109021. Ballarpur Area tender no. GEM/2026/8/7086038. Chandrapur Area tender no. GEM/2026/8/7067587. Wani Area tender no. GEM/2025/B/7029322 etc. Upon careful scrutiny of the tender documents, it is observed that Clause 9 (Performance Bank Guarantee) of the “General Terms and Conditions” (Page 10) stipulates submission of Performance Bank Guarantee (PBG) equivalent to 100% of the order value, valid for the entire warranty/guarantee period, with a further provision authorizing deduction of the PBG amount from running bills in case of non-submission. It is respectfully submitted that the aforementioned condition is prima facie non-conforming to the provisions of the Coal India Limited Purchase Manual 2020 (Second Edition, updated up to 30.06.2025), which governs procurement activities of Coal India Limited and its subsidiaries, including WCL,” Singh’s letter reads.
“As per Clause 10.3.11.1 of the Purchase Manual, the normal Performance Bank Guarantee is limited to 10% of the contract value to safeguard warranty/guarantee obligations. The Manual allows stipulation of 100% Bank Guarantee only in narrowly defined exceptional circumstances, namely: Trial or developmental orders (Clauses 22.5.1 & 22.5.2), or First-lot supply of unproven or upgraded equipment (Clause 2.8). The present tender pertains to routine procurement of standard and proven LED flood lights under an established GeM category. The tender documents do not disclose or justify that the procurement is being treated as a trial/developmental order or as first-lot supply of unproven equipment. In the absence of such classification or recorded justification, the stipulation of 100% PBG appears to be arbitrary, disproportionate, and beyond the scope of the extant Purchase Manual. It is further submitted that imposition of such an onerous and non-standard condition has the potential to restrict competition. It is likely to discourage participation of MSMEs and genuine manufacturers. It may amount to adoption of restrictive tender conditions, contrary to the principles of transparency, fairness, and equal opportunity emphasized in vigilance guidelines,” Singh’s letter further reads.
Singh’s letter demands action to uphold probity, transparency and uniforming in public procurement by public sector undertakings. “In view of the above, I respectfully submit this matter formal complaint for kind examination by the Hon’ble Commission. It is prayed that the Commission may be pleased to examine the deviation from prescribed procurement norms and take such action as deemed appropriate, so as to uphold probity, transparency, and uniformity in public procurement by Public Sector Undertakings,” the letter reads.
