Karnataka High Court: Maintenance Of Auditable Electronic Trail Of Verification Attempts May Enhance Transparency & Assist In Dispute Resolution Process

The Karnataka High Court has emphasised that maintenance of an auditable electronic trail of verification attempts may enhance transparency and may also assist in vigilance, audit, and dispute resolution processes.

The Court emphasised thus in Writ Petitions seeking to quash the termination notice issued by the Chief Administrative Officer (Construction).

A Single Bench of Justice Suraj Govindaraj observed, “The maintenance of an auditable electronic trail of verification attempts, including the date, time, verifying authority, and outcome, may enhance transparency, accountability, and institutional oversight, and may also assist in vigilance, audit, and dispute resolution processes.”

The Bench said that standardisation of the minimum data fields, format, and verification parameters of bank guarantees across issuing banks may further facilitate automated verification and reduce ambiguity arising from divergent formats and practices.

Senior Advocates Devdatt Kamat and Vikram Huilgol appeared on behalf of the Petitioner, while ASGI Aravind Kamath appeared on behalf of the Respondents.

Brief Facts

The Petitioner-M/s DRN Infrastructure Pvt. Ltd. (company) sought a Writ of Certiorari for quashing the termination notice issued by the Chief Administrative Officer (Construction). The company further sought for quashing the letter issued by the Deputy Chief Engineer. It also sought a Writ of Mandamus directing CAO to refund the encashed bid security amounting to Rs. 2,00,00,000/-.

Court’s Observations

The High Court after hearing the arguments of the counsel, noted, “Without expressing any opinion on the modalities to be adopted, and without trenching upon the domain of policy formulation, I’am of the considered opinion that the availability of contemporary technological and institutional solutions may merit examination by the appropriate authorities with a view to strengthening safeguards against the furnishing and acceptance of fake bank guarantees.”

The Court added that the feasibility of secured electronic interfaces or application programming interfaces (APIs) enabling real-time or near real-time confirmation of bank guarantees between issuing banks and beneficiary authorities, particularly at the stages of tender evaluation, award, or contract administration, may likewise be examined, with a view to reducing discretion, delay, and scope for manipulation.

“For bank guarantees involving higher monetary thresholds, the requirement of direct issuer-side confirmation to the beneficiary authority, through secure electronic communication, may merit consideration as an additional safeguard against fraud”, it remarked.

The Court concluded that its observations are made only illustratively, without mandating the adoption of any particular mechanism, and solely to underscore the systemic importance of robust verification processes in safeguarding public interest, protecting public funds, maintaining financial discipline, and preserving confidence in public procurement and contractual frameworks.

Accordingly, the High Court allowed the Writ Petitions, issued the certiorari, and quashed the impugned notice.

Cause Title- M/s DRN Infrastructure Pvt. Ltd. v. Union of India (Neutral Citation: 2025:KHC:54420)

Appearance:

Petitioner: Senior Advocates Devdatt Kamat, Vikram Huilgol, and Advocate Aditya Bhat.

Respondents: ASGI Aravind Kamath and Advocate B.S. Venkatanaryana.

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