R. S. Bansal v. M. P. Housing Board — 1998 DIGILAW 843 (MP)

ORDER Dipak Misra, J. 1. By this writ petition, preferred under Article 226 of the Constitution of India, the Petitioner has prayed for issue of writ in the nature of certiorari for quashment of the order dated 13.8.1996 contained in Annexure-P.13 whereby the earnest money deposited by the Petitioner has been forfeited by the M.P. Housing Board (hereinafter referred to as the Board'). 2. The facts as has been narrated in the petition are that the Petitioner is a 'A' Class contractor, and registered with the Board. According to the Petitioner the Executive Engineer of the Board, Respondent No. 2 herein, invited tenders on 2.3.1996 for construction of 72 Senior MIG (G+2) Flats and development work at Nehru Nagar Bhopal from the A-4 Class contractors. The estimated costs of the work was Rs. 165.81 lakhs and the cost of the tender was Rs. 2000/-and earnest money to be deposited by the intending tenderer was Rs. 1,24,400/-. The Petitioner after purchasing tender papers submitted tender on 2.3.1996 alongwith the earnest money. The Petitioner's tender was a conditional one. The special conditions as setforth by the Petitioner has been brought on record as Annexure-P.2. It is stated that in all, five contractors including the Petitioner submitted their tenders and all have incorporated certain conditions. The Respondents called a meeting on 11.3.1996 of all contractors and on 14.3.1996 communicated a letter vide Annexure-P.9 after drawing the common conditions for the tender, The Respondent directed the contractors including the Petitioner that they can submit their revised offers based on common conditions and the Respondent will be at liberty to accept any offer including the original. The Petitioner accordingly submitted revised tender increasing rate by 1 % and the same was done on 18.3.1996. All the tenders including original offers and revised offers were opened on 18.3.96. Petitioner's tender was opened first. When Petitioner's rates were read out, the Petitioner found that there were clerical mistakes in rates written in words relating to item No. 2.05 (Steel) at page 6 and item No. C/02 (Cement concreting) at page 59. In first case the rate mentioned in figure was Rs. 16,500/- per M.T. but in words "On thousand six hundred fifty". As far as item No. C/02 is concerned the rate was mentioned Rs. 700/- per Cum wherein words "Seventy only" was stated. In first case the rate mentioned in figure was Rs. 16,500/- per M.T. but in words "On thousand six hundred fifty". As far as item No. C/02 is concerned the rate was mentioned Rs. 700/- per Cum wherein words "Seventy only" was stated. It was pointed out by the Petitioner that the rates in figures were rightly stated but the words gave an incorrect reflection. According to the Petitioner he immediately submitted a letter to the Respondent No. 2 for correction on the rates in words and the said letter was accepted by the Executive Engineer and taken on record with the signatures of all the remaining contractors and 'no objections' from them were also taken on record. This was done before opining of the tenders of the other contractors and even before opening of the revised offer of the Petitioner. The aforesaid letter has been brought on record as Annexure-P.6. After opening of all the tenders, the Petitioner's offer was found to be the second after corrections were carried out. The Petitioner waited for acceptance of corrected rates by the Respondent but they did not communicate him till 7.6.1996 and as the Petitioner was not in a position to know the actual situation he did not want to remain in a dilemma and communicated to the Respondent by letter dated 7.6.1996 withdrawing the offer dated 2.3.1996 and 18.3.1996. Though the Petitioner sent the letter of withdrawal, the Respondent accepted the Petitioner's tender by letter dated 24.7.1996 on the basis of rates quoted in figures and asked him to execute the contract. Similar letter was sent to the Petitioner on 27.7.1996 contained in Annexure-P.9. It is averred in the petition that the validity of the period of offer of 120 days expired on 29.6.1996, and therefore, Respondents could not have accepted his earlier rate after expiry of the period. It is also put forth that there is reference to the letter dated 15.7.1996 where in it has been mentioned that the offer of the Petitioner was approved, but the Petitioner had not received that communication. It is averred that the Petitioner vide his letter dated 30.7.1996 had made it clear that he had not received the letter dated 15.7.1996. It is also put forth that as the Petitioner had withdrawn the offer on 7.6.1996 he cannot be compelled to execute the agreement. It is averred that the Petitioner vide his letter dated 30.7.1996 had made it clear that he had not received the letter dated 15.7.1996. It is also put forth that as the Petitioner had withdrawn the offer on 7.6.1996 he cannot be compelled to execute the agreement. However, ignoring the stand of the Petitioner the Respondents, vide letter dated 13.8.1996 forfeited the amount of earnest money. The said order of forfeiture has been brought on record as Annexure-P.13. It is averred in the writ petition that action of the Respondents is contrary to the law governing contract as there was no acceptance of the offer given by the Petitioner, and hence question of forfeiture of earnest money does not arise. It is pleaded that the offer made by the Petitioner was corrected immediately after opening of the tender but acceptance by letter dated 27.7.1996 even after reminder has been served not in terms of corrected offer, but as per the previous one, and therefore, it cannot be regarded as due acceptance. It is also averred in the petition that in any case of the offer could remain valid for 120 days, and it cannot be extended by taking into consideration the date of revised offer. With these averments prayer has been made for quashing of Annexure-P.13 and for issue of a direction to Respondents to return the earnest money to the Petitioner. 3. Initially a return was filed by the Respondents contending, inter alia, that as the disputed questions of facts are involved the writ petition should not be entertained. A reference to Clause 4.7.1 of the notice inviting tenders was made to highlight that the Petitioner had withdrawn the offer before the expiry of the validity of the period of offer, and therefore, he has incurred the liability of forfeiting the amount deposited towards the earnest money. It is also stated that as per the terms and conditions in the tender notice no correction was envisaged, and therefore, the offer of the Petitioner was taken into consideration and, he being found the lowest amongst the tenders, was selected for awarding of the tendered work. It is also stated that by letter dated 24.7.1996 the Petitioner was only directed to execute the agreement within a period of 10 days and another letter was issued earlier accepting his offer. 4. It is also stated that by letter dated 24.7.1996 the Petitioner was only directed to execute the agreement within a period of 10 days and another letter was issued earlier accepting his offer. 4. A rejoinder had been filed by the Petitioner to the counter affidavit filed by the Respondents stating that the Board is an instrumentality of the State and cannot act arbitrarily contrary to the mandate enshrined under Article 14 of the Constitution of India. It is also putforth that there is no disputed questions of fact and the petition is entertainable against such action of the Board. It is highlighted by the Petitioner that the corrected offer made by the Petitioner was accepted by the Respondent and was taken on record with the signatures of the remaining tenders and that should have been considered as the real offer by the Petitioner. It is also highlighted that neither the Board nor any officer ever communicated that they had ignored the Petitioner's letter indicating the correction. 5. An additional return has been filed on behalf of the Respondents to the rejoinder filed by the Petitioner. In the said additional return emphasis is led on Clauses 2.3.3, 4.7.1. and 8.1.1. to justify the action of the Board. It is also highlighted that the amount quoted in words were accepted by the Respondent in accordance with Clause 2.3.3. It is also putforth that subsequent corrections were not permissible and that the Petitioner was bound by his previous offer. It is also stated that the Petitioner's offer was accepted by letter dated 15.7.1996 which was communicated to him. The postal receipt and the panchnama have been brought on record. It is also putforth that as the Petitioner could not have withdrawn the offer within the validity period he was called upon to enter Into agreement. As he failed to do so Clauses 4.7.1. and 8.1.1. were invoked and the earnest money was forfeited. 6. An additional rejoinder has been filed by the Petitioner highlighting the fact that the Petitioner's initial offer was unworkable. It is also putforth that the letter of correction was accepted by the competent authority without any objection. It is also pleaded that the Petitioner had not received letter of acceptance dated 15.7.96. 7.1 have heard Mr. A.K. Gohil, learned Counsel for the Petitioner and Mr. San jay Ram Tamrakar, learned Counsel for the Respondents. It is also putforth that the letter of correction was accepted by the competent authority without any objection. It is also pleaded that the Petitioner had not received letter of acceptance dated 15.7.96. 7.1 have heard Mr. A.K. Gohil, learned Counsel for the Petitioner and Mr. San jay Ram Tamrakar, learned Counsel for the Respondents. Impugning the action of the Board it is submitted by Mr. Gohil, learned Counsel for the Petitioner that the authority either could have accepted the letter indicating the corrections or rejected the offer of the Petitioner but they could not compel him to enter into agreement on the basis of the figures mentioned, moreso when the Petitioner pointed out the clerical error at the very threshold while the tender was opened. It is his further submission that the correction letter should be construed as an amended offer and as the same has not been accepted by the Respondents the acceptance which has been communicated by letter dated 15.7.96 would not amount acceptance of the offer of the Petitioner. It is further proponed by Mr. Gohil that an offer of the offered is complete when a communication should be sent and before such an act is done the offered is entitled to withdraw his offer. In the case at hand the Petitioner by his letter dated 7.6.1996 had withdrawn the offer prior to the issuance of letter of acceptance dated 15.7.1996, therefore, the forfeiture of the earnest money is untenable in the eyes of law. It is contended by Mr. Gohil that it is the right of a party to withdraw his offer under the provision of Section 5 of the Indian Contract Act which cannot be curtailed unless the tender conditions have statutory force. Lastly he has urged with vehemence that Board has acted in a arbitrary manner and has tried to cover its fault by contending that it had issued a letter dated 15.7.1996 accepting the offer of the Petitioner though in the first counter affidavit the relevant documents were not brought on record. 8. Mr. Sanjay Ram Tamrakar, learned Counsel for the Respondents, per contra, has submitted that the offer is deemed to be accepted, and therefore, intimation to the offerer does not arise. As per clause of the tender notice the validity period is 120 days and the Petitioner could have not withdrawn before expiry of that period. 8. Mr. Sanjay Ram Tamrakar, learned Counsel for the Respondents, per contra, has submitted that the offer is deemed to be accepted, and therefore, intimation to the offerer does not arise. As per clause of the tender notice the validity period is 120 days and the Petitioner could have not withdrawn before expiry of that period. Learned Counsel for the Respondents has further canvassed that the computation of 120 days has to be reckoned from the date of revised offer. 9. Before I advert to deal with the rival submissions raised at the Bar it is appropriate to refer to certain decisions which have been relied on by the learned Counsel for the Petitioner. Mr. Gohil has commended me to the decision rendered in the case of Rajendra Kumar Verma v. State of M.P. 1972 JU 345. In the aforesaid case of Respondents advertised for receiving tenders for sale of tendu patta from unit No. 7 Budni. The Petitioner gave a tender in pusuance of the under notice. The tenders were to be opened on 9th April, 1969 but before they were actually opened, the Petitioner made an application resiling from his tender and requested that since he had withdrawn his tender, it may not be opened at all. However, the tender was opened and accepted as that was the only tender and no other offer was received. The Petitioner did not execute the agreement and steps were taken for recovery on the allegation that the tendu leaves of the unit were sold to somebody else and the State suffered a loss, and hence the balance was recoverable from the Petitioner. In this backdrop this Court held as under: The reply on behalf of the Respondents is that under the tender condition No. 10 (b) (i) a tender may be allowed to withdraw his tender of any unit of a division before the commencement of the opening of tenders of that division on the condition that on opening the remaining tenders, there should be at least one valid tender complete in all respects available for consideration for that particular unit. In this case, since there was no other tender, the tender given by the Petitioner could not be withdrawn. We are unable to accept this contention. A person who makes an offer is entitled to withdraw his offer or tender before its acceptance is intimated to him. In this case, since there was no other tender, the tender given by the Petitioner could not be withdrawn. We are unable to accept this contention. A person who makes an offer is entitled to withdraw his offer or tender before its acceptance is intimated to him. The Government, merely by providing such a clause in tender notice could not take away that legal right of the Petitioner. The fact that the Petitioner had applied for witherawal oft he tender is not denied. It is therefore, quite clear that when the tenders were opened, there was really no offer by the Petitioner and, therefore, there could be no contract either impliedly or explicitly between the parties. It may be noted here that while dealing with the tenders under Section 12 of the M.P. Tendu Patta (Vyapar Vinryaman) Adhiniyam of 1964 and how the terms envisaged therein should be treated the Cound observed as follows: No rules have been framed for the disposal of the Tendu leaves. Section 12 of the M.P. Tendu Patta (Vyapar Vinyaman) Adhiniyam of 1964 only authorises the Government to dispose of Tendu leaves as is considered proper. The terms given in the tender notice are mere executive directions laid down for the purpose of receiving offers. From a perusal of the tender notice, it is clear that a tender notice cannot have the status of law and could not be enforced as such. The learned Counsel has also relied upon the decision rendered in the case of Karen Singh Chandan Singh v. Collector, Chhatarpur and others, 1980 MPLJ 231 wherein this Court has observed as follows: On the facts stated above it is clear that their was no formation of contract and the demand of lease money from the Petitioner is clearly unauthorised. Mere acceptance of the Petitioner's bid on the file by the Collector was not enough to convert the Petitioner's bid into contract. It is well settled that the general rule is that it is the acceptance of offer by the offeree and intimation of that acceptance to the offer or which result in a contract. Mere acceptance of the Petitioner's bid on the file by the Collector was not enough to convert the Petitioner's bid into contract. It is well settled that the general rule is that it is the acceptance of offer by the offeree and intimation of that acceptance to the offer or which result in a contract. One of the exceptions to this general rule is that when by agreement, course of conduct or usage of trade, acceptance by post or telegram is authorised, the bargain ,s struck and the contract is complete when the acceptance is put into a course of transmission by theofferee by posting a letter or dispatching a telegram: Bhagwandas v. Girdharilal & Co. AIR 1966 SC 543 , PP. 547, 548. But even insuch cases, where the intimation of acceptance does not reach the offeror, it has to be shown that the letter of telegram of acceptance was correctly addressed to the offeror otherwise it could not, although postaged or dispatched, be said to have been put in a course of transmission to him: Ramdas Chadrabati v. The Official Liquidator Cotton Ginning Co. Ltd., JILR 9 All 366 (DB) p. 385. Another exception to the general rule embraces those cases where acceptance of consideration offered or performance of considerations of the offer constitute acceptance. This class of cases is covered by Section 8 of the Contract Act and is illustrated by the well known case of Carllll v. Carbolic Smoke Ball Co., (1893) QB 256 which was applied in recent: years by the Privy Council in NZ Shipping Co. v. Satterhwalte (1974) I All ER 1015 (PC) p. 1020. The instant case is not covered by the exceptions to the general rule that the contract comes into existence on receipt of an intimation of acceptance by the offeror. The Petitioner's bid was an offer. The bid was no doubt accepted on the file. But as no intimation of acceptance was sent to the Petitioner and received by him there was no formation of contract. The demand of lease money from the Petitioner was clearly unauthorised. 10. Learned Counsel for the Petitioner has also referred to the decision rendered in the case of M/s Suraj Besan and Rice Mills v. Food Corporation of India, AIR 1980 Del 224 . In the aforesaid case, in pursuance of the tender notice the Plaintiff therein submitted tender in the prescribed form. 10. Learned Counsel for the Petitioner has also referred to the decision rendered in the case of M/s Suraj Besan and Rice Mills v. Food Corporation of India, AIR 1980 Del 224 . In the aforesaid case, in pursuance of the tender notice the Plaintiff therein submitted tender in the prescribed form. The tender submitted by the Plaintiff was not signed by all the partners of Plaintiff firm. Tenders were submitted and opened on June 29, 1983. It was alleged that tender of Plaintiff was neither valid nor the same could be deemed as valid for acceptance beyond the annual assessment capacity of 1500 MTS. of stocks, Plaintiff vide letter dated July 8,1983 informed the Defendant that offer was for 1500 M.T.s of stockssd and not over and above specific quantity. This, according to Plaintiff, amounted to amended offer which was received by the Defendant Corporation on July 11,1983. However, the tender of Plaintiff was accepted and an acceptance telegram was issued by Defendant on July 22, 1983 which was received by Plaintiff on July 24,1983. It was alleged in the plaint that Plaintiffs offer was only for 1500 M.T.S of stocks of damaged paddy but to the surprise of Plaintiff, telegram dated July 22, 1983 placed an order for stock of about 6200 M.T.S of damaged paddy for purchase. It was pleaded before the Court that the aforesaid acceptance did not bring about a valid, legal and binding contract between the parties to purchase 6200 M.T.S of stock. In any event, it was alleged that aforesaid acceptance was a counter offer as it did no conform to the offer of the Plaintiff. Considering the stand and after referring to the decision rendered in the case of Rajendra Kumar Verma (Supra) the Court ruled thus: In view of the law laid down by the Division Bench of this Court in R.F. A.24-D/1960 Union of India v. Sh. Rajendra Prasad Jain, I hold that under law Plaintiff was entitled to withdraw or modify their offer before the communication of the acceptance was complete as against the Plaintiff. Thus, the letter dated July 8, 1983, amounted to the modification of the offer. I accordingly hold that acceptance issued by telegram dated July 22,1983 did not result in a concluded agreement between the parties as there was no offer in existence at the time when Defendant accepted tender of Plaintiff. Thus, the letter dated July 8, 1983, amounted to the modification of the offer. I accordingly hold that acceptance issued by telegram dated July 22,1983 did not result in a concluded agreement between the parties as there was no offer in existence at the time when Defendant accepted tender of Plaintiff. After so holding the Court opined that the acceptance was not absolute and unconditional one and accordingly suit of the Plaintiff was decreed. 11. At this juncture it is opposite to refer to the decision rendered in the case of T. Linga Gowder v. The State of Madras, AIR 1971 Mad. 28 wherein it has been held as follows: In an auction sale, a condition stipulating that a bid shall not be retracted, has no force unless it is supported by consideration or is founded on statutory authority. Every bid is an offer. It binds both parties only when the offer is accepted. Quite often, the auctioneer reserves a right to refuse highest bid, at his discretion. Similarly, before final acceptance of the bid or falling of the hammer, it is always open to the bidder to withdraw his bid. It has been further held therein: To conclude a contract and to bring about contractual relationship between the parties, the acceptance must be communicated in some perceptible form. A mere resolve on the part of offeree to accept an offer, when there is no external manifestation by speech, writing or other act, of the intention to do so, cannot result in an enforceable or a concluded contract. Both offer and acceptance much be absolute, unqualified and unconditional. If it is conditional, parties can withdraw at any moment until absolute acceptance takes place. The position may, however, be different if there is a statutory rule having force of law precluding withdrawal of a bid in an auction sale before its acceptance or refusal is communicated to the bidder." 12. In this context I may profitably refer to the decision rendered in the case of Bhanwarlal v. The State of Rajasthan and others, AIR 1976 Raj. In this context I may profitably refer to the decision rendered in the case of Bhanwarlal v. The State of Rajasthan and others, AIR 1976 Raj. 215 wherein the Court considering the applicability of Sections 5 and 6 of the Contract Act to attract Rajasthan Excise Rules 1966 registered the view as under: The whole procedure of tender and acceptance is provided by these statutory rules and conditions and the person having given their tender subject to those conditions is bound by them. If in law the tender has not been rejected it is immaterial that the excise authorities attempted to auction the individual shops when the tender is for group shops. Thus, in view of aforesaid pronouncement of law if the terms and conditions of the tender and procedure enjoined therein are provided by a set of statutory rules the tenderer cannot withdraw his offer and cannot claim that unless acceptance is intimated, the offer can be withdrawn. In absence of any statutory force in terms and conditions of the tender as has been held by the two Division Bench decisions of this Court as well as by Rajsthan High Court the offerer can withdraw the offer. Admittedly in the case at hand the terms and conditions stipulated in the tender notice have no statutory force. The validity period stipulated therein cannot curtail the right of the offerer to withdraw the offer before its acceptance. It is to be seen whether there was acceptance of the offer. As the fact situation has been exposited the Petitioner vide Annexure-P-6, letter of rectification dated 18.3.96, after opening of the tender had submitted for certain clerical corrections. In fact the following corrections was sought: .............in words of item No. 2.05 (Steel) at page 6, the rate was written in figures Rs. 16,500/- per M.T. but in words "One thousand Six hundred fifty" and in item No. C/02 (Cement concreting) at page 59 in figures Rs. 700/-. The stand of the Petitioner is that correction was carried out. The same has been controverted. It is the stand of the Respondents that allowing of correction did not arise as per terms and conditions of the tender. It is their further stand the amount mentioned in words were accepted. It is not a case where the Petitioner had not taken steps to rectify. It was submitted immediately after opening of the tender. It is the stand of the Respondents that allowing of correction did not arise as per terms and conditions of the tender. It is their further stand the amount mentioned in words were accepted. It is not a case where the Petitioner had not taken steps to rectify. It was submitted immediately after opening of the tender. In fact it was an amended offer. In view of this obtaining fact situation, the Petitioner cannot be held to have incurred the liability by which his earnest money could be forfeited. 13. The next submission of Mr. Gohil is that the validity period as enjoined under the terms and conditions of the tender notice had already expired. It is to be appreciated that the letter of withdrawal of the offer was sent on 7.6.96. The Board accepted the offer of the Petitioner on 15.7.96. Whether the same is within the validity period or not melts into insignificance as the Petitioner was entitled to withdraw his offer as no contractual relationship had been established between the parties by 7.5.96. 14. In view of the foregoing discussion the petition deserves to be allowed and is hereby allowed. Accordingly, Annexure-P-13 Is quashed. It is directed that the earnest money shall be returned to the Petitioner within a period of 3 months from the date of receipt of this order. However, in the peculiar facts and circumstances of the case, there shall be no order as to costs.