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2008 DIGILAW 1366 (PAT)

Bihar School Exam. Board v. Ganpati Distributors

2008-09-08

BARIN GHOSH, C.M.PRASAD

body2008
Judgment Barin Ghosh and C.M.Prasad JJ. 1. The Appellant issued a tender notice and thereby invited tender for supply of paper. in the tender notice it was mentioned that sales tax would be deducted from the bills of the supplier as per Bihar Government Sales Tax Rules. The writ petitioner-respondent, who carries on business outside the State of Bihar, gave an offer in response to the said tender. Subsequent thereto negotiations were held between the appellant and the writ petitioner-respondent. The offer given by the writ petitioner-respondent and subsequent negotiations resulted in issuance of an order by the appellant in favour of the writ petitioner-respondent. The said order mentioned that C-Form and road permit will be provided to the supplier by the Board by 13th January, 2001. There is no dispute that as and by way of earnest the writ petitioner-respondent submitted rupees two lacs to the appellant in connection with the said order. 2. The appellant did not provide C-Form and road permit to the writ petitioner-respondent by 13th January, 2001 or at all and instead by a letter dated 16th January, 2001, called upon the writ petitioner-respondent to state how the said clause, as mentioned above, has been inserted in contract and it was insinuated that the same had been inserted as a result of fraud perpetuated by the writ petitioner-respondent. In its show cause the writ petitioner-respondent explained that the same was inserted after negotiation by the parties and no fraud had been played by it. 3. Subsequent thereto by an order dated 24th January, 2001, while earnest money of the writ petitioner-respondent was forfeited, it was also black listed by the appellant. The said action was assailed by filing a writ petition. 4. In the writ petition it was contended by the appellant that C-Form can only be provided to a supplier by a dealer registered as such under the Bihar Finance Act, 1981, and since the appellant is not a registered dealer it could not supply C-Forms but despite that, by machination on the part of the writ petitioner-respondent, the obligation to supply C-Form was imposed upon the appellant. It was stated that the writ petitioner-respondent thereby played fraud upon by the appellant. 5. It was stated that the writ petitioner-respondent thereby played fraud upon by the appellant. 5. The writ court went into the definition of the word dealer as used in the Bihar Finance Act and held that the appellant is a dealer within the provisions of the said Act. The Court further found that the said clause was inserted in the order upon protracted negotiations between the parties and, accordingly, there was no fraud. The Court, accordingly, allowed the writ petition, quashed the decision contained in the order of the appellant dated 24th January, 2005, set aside the decision to forfeit the earnest money and directed refund of the same together with interest at the rate of 8% per annum. 6. Soon thereafter the amount of rupees two lacs deposited by the writ petitioner-respondent as earnest was returned to it by the appellant. Thereupon the present appeal was preferred. While the appeal was pending the appellant on its own volition passed an order and thereby lifted the blacklisting of the writ petitioner-respondent. However, despite doing all such thing, the appellant insists that its action was appropriate in the facts and circumstances of the case and accordingly pressed the appeal. 7. It has, however, not been disputed by the appellant that the clause contained in the order placed by it upon the respondent-petitioner that C-Form will be provided by it to the writ petitioner-respondent was inserted by it. Assuming the same was inserted because of misrepresentation by the writ petitioner-respondent or by reason of fraud committed by it, it was well within the competence of the appellant to avoid the contract and to put the same to an end. Having done so, the appellant, however, could not retain the earnest money deposited by the writ petitioner-respondent. The appellant could, however, take steps to recover such loss, if any, it suffered by reason of such misrepresentation or fraud. 8. Since it was not alleged that the clause contained in the contract that C-Form and road permit would be provided by the appellant to the writ petitioner-respondent was inserted by the writ petitioner-respondent, the case of fraud falls apart. A well knitted case of misrepresentation had also not been made out by the appellant either. The case, that had been made out, may be a mistake of fact or of law either mutual or on the part of the appellant alone. A well knitted case of misrepresentation had also not been made out by the appellant either. The case, that had been made out, may be a mistake of fact or of law either mutual or on the part of the appellant alone. In such circumstances, at the best the contract was avoidable at the instance of the appellant. 9. While avoiding the contract it was obligatory on the part of the appellant to restore back the writ petitioner-respondent in the position he was at the time when the contract was entered and, accordingly, was obliged to refund the earnest money. That having not been done in law, the writ petitioner-respondent became entitled to compensation, which can only be quantified in money and in relation to payment of money by interest thereon. In the instant case, such compensation has been awarded at 8% per annum by the writ court. No case has been made out in the appeal that awarding of compensation quantified at 8% interest is excessive. 10. Be that as. it may, there being nothing on record to suggest a not so perfect or reasonable parameter for assessing compensation by way of interest and having regard to the conduct of the appellant, as indicated above, we think that the rate of interest if reduced to 6% per annum instead of 8% per annum will meet ends of justice. 11. In the circumstances, the appeal is disposed of by modifying the judgment and order of the writ court by quantifying compensation at the rate of 6% interest per annum from 16th January, 2001, i.e., the date when the appellant realized the mistake committed by it in inserting the obligation on its part to supply C-Form, until the date of refund of the earnest money.