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2011 DIGILAW 948 (GAU)

Santosh Kumar Agarwalla v. Union of India

2011-12-02

UJJAL BHUYAN

body2011
JUDGMENT Ujjal Bhuyan, J. 1. A Notice Inviting Bid (NIB) dated 31.01.2008 was floated by the Hindustan Paper Corporation Ltd., Nagaon Paper Mill, Jagiroad (briefly "the Corporation" hereafter) for procurement of 20,000 Metric Tonne Green (MTG) of home grown bamboo by road from and beyond the areas of Baihata Chariali of Lower Assam for the period 2007-08. Pursuant to the said NIB, altogether six parties participated including the petitioner. The techno-commercial bids were opened on 29.02.2008 and the price bids were thereafter opened on 15.03.2008. The petitioner was the lowest bidder for supply of 5000 MTG home grown bamboo at the rate of Rs. 1386/- per MTG, excluding VAT. Though the exact rate of the offer made by the Corporation is not available, the petitioner accepted the offer on 28-4-2008. Thereafter he deposited the earnest money deposit of Rs. 1,00,000/-, following which the supply order was issued on 13-5-2008 in duplicate for supply of the aforesaid quantity of bamboo by road from and beyond the areas of Baihata Chariali. The petitioner received the supply order on 14-5-2008. As per the said order, the period of contract was for 12 months from 14-5-2008 to 13-5-2009. Clause 5 of the terms and conditions of the tender provided that the bamboo was to be supplied exclusively from and beyond the areas of Baihata Chariali of Lower Assam through the Baihata-Guwahati-Jagiroad route. Clause 10 of the terms and conditions provided for security deposit by the successful bidder at the rate of Rs. 20/- per MTG for the contracted quantity to be retained by the Corporation till completion of the contract. As per the said clause, the earnest money deposit would be automatically converted into security deposit of the successful bidder on placement of the work order which would be as per the aforesaid rate. Clause 12 of the terms and conditions provides for release/forfeiture of security deposit. Clause 16 of the said terms and conditions provided for execution of agreement between the successful bidder and the Corporation. Clause 12 of the terms and conditions provides for release/forfeiture of security deposit. Clause 16 of the said terms and conditions provided for execution of agreement between the successful bidder and the Corporation. The petitioner was requested to return the duplicate copy of the supply order within 7(seven) days from the date of receipt of the same, duly signed by him indicating acceptance of the terms and conditions stipulated in the supply order along with all the terms and conditions of the NIB, failing which it was provided that the work may be cancelled and that the petitioner would have no claim of any nature on the supply order including forfeiture of the earnest money deposit. According to the petitioner, after receiving the supply order he visited the starting point i.e. Baihata Chariali to start the mobilization process for procurement of bamboo and for transportation of the same to Jagiroad by road. But he was obstructed by some unidentified youths who claimed to belong to that area and threatened the petitioner not to procure and transport bamboo from Baihata Chariali. The petitioner was further threatened that if he acted in defiance of their diktat, he would have to face serious consequences. Faced with such a situation, the petitioner wrote to the Deputy General Manager (Forest) of the Corporation on 6-6-2008 stating that he was not accepting the work order as he was not in a position to execute the work for the reasons indicated above. The Corporation wrote back to the petitioner by its letter dated 23-6-2008. In the said letter, the Corporation stated that as per the terms and conditions of the supply order, the petitioner was supposed to return the duplicate copy of the same duly signed by him within 7(seven) days from its receipt but in stead the petitioner returned it after 23 days. It was further stated that the reasons given for the petitioner's inability to execute the work did not fall within the purview of the terms and conditions of the NIB and the work order, observing that the petitioner could have taken up the matter with the civil administration of Kamrup district. It was further stated that the reasons given for the petitioner's inability to execute the work did not fall within the purview of the terms and conditions of the NIB and the work order, observing that the petitioner could have taken up the matter with the civil administration of Kamrup district. The petitioner replied back by his letter dated 15-7-2008 stating that the duplicate copy was returned only after 23 days because initially he wanted to execute the work and went to Baihata Chariali to start the work but the local youth association did not allow him to do so, which was the reason for the delay. He requested the Corporation authority to shift the loading point from Baihata Chariali to Jalukbari referring to a previous instance where such shifting was permitted from Doboka to Kothiatoli Chariali. It appears that the said request of the petitioner was not accepted and ultimately the petitioner wrote to the Corporation by his letter dated 17-1-2011 requesting the authority to refund the earnest money deposit. As there was no response, the petitioner has approached this Court by filing the present writ petition seeking a direction to the corporation to refund the earnest money deposit of Rs. 1,00,000/-. The Corporation has filed its counter affidavit. Corporation has stated that the petitioner returned the supply order after a period of 23 days showing his inability to accept the same contending that the difficulties expressed by the petitioner was beyond the control of the Corporation and that the petitioner should have taken up the matter with the civil administration. According to the Corporation, the petitioner failed to send the duplicate copy of the supply order within the stipulated period of 7(seven) days and in stead took 23 days to return the same, therefore, the claim of the petitioner for refund of the earnest money deposit cannot be accepted and that the petitioner is not entitled to the same. 2. I have heard Mr. M. Rahman, learned counsel appearing for the petitioner as well as Mr. J. Roy, learned standing counsel appearing for the Corporation. 3. Mr. Rahman, learned counsel appearing for the petitioner referring to the averments made in the writ petition and the documents annexed thereto submits that because of circumstances beyond the control of the petitioner, he could not start the work. J. Roy, learned standing counsel appearing for the Corporation. 3. Mr. Rahman, learned counsel appearing for the petitioner referring to the averments made in the writ petition and the documents annexed thereto submits that because of circumstances beyond the control of the petitioner, he could not start the work. He further submits that though there was some delay in informing the Corporation authority, the same was because he tried his best to execute the work but when he found that the same was not possible because of grave threat, he wrote to the Corporation authority on 6-6-2008 clearly stating that he did not accept the supply order as he was not in a position to execute the same. He further submits that as the agreement was not executed, it cannot be said that the contract had been concluded. Asserting that the problem faced by him was a genuine one which is a common problem faced by the contractors in the State in recent times, he, therefore, submits that the Corporation should release the earnest money deposit to him. 4. Resisting the said submission made on behalf of the petitioner, Mr. J. Roy, learned standing counsel submits that the offer made by the Corporation was accepted by the petitioner and only thereafter the supply order was issued. He has asserted that the contract is complete and that the petitioner is not entitled to the refund of the earnest money deposit. Expressing doubt about the genuineness of the grievance expressed by the petitioner, he submits that the petitioner did not file any complaint either before the police authority or before the district authority despite being reminded by the Corporation. Asserting that such prayer is not maintainable, he submits that if such relief is granted it will lead to chaos. In support of his submissions, Mr. Roy, learned standing counsel refers to and relies on the following decisions : (1) 1995 Supp (4) SCC 726, Bhanwar Lal (Dead) Now His LRS. And Others. v. State of Rajasthan and Another.; (2) (2003) 7 SCC 410 , National Highways Authority of India v. Ganga Enterprises and another, and (3) 2006 (Supp) GLT 867, Ranjit Kumar Saha v. State of Tripura and Ors. 5. Mr. And Others. v. State of Rajasthan and Another.; (2) (2003) 7 SCC 410 , National Highways Authority of India v. Ganga Enterprises and another, and (3) 2006 (Supp) GLT 867, Ranjit Kumar Saha v. State of Tripura and Ors. 5. Mr. Rahman, learned counsel for the petitioner in his reply referred to Clause 12(b) of the terms and conditions of the tender and submits that since agreement was not executed between the petitioner and the Corporation, the earnest money deposit cannot be forfeited. He further submits that the petitioner is a businessman and his predicament has to be seen and understood from the perspective of a businessman. Perhaps considering his long term business prospects, the petitioner did not deem it appropriate to take up the issue with the concerned police or civil authority. 6. I have considered the rival submissions made at the bar. For a better appreciation of the controversy arising out of the present proceeding, it would be appropriate to consider the relevant provisions of the terms and conditions which formed part of the work order at the very out set. As per clause 10, the earnest money deposited by the successful bidder would be converted into security deposit on placement of the work order. The conversion would be at the rate of Rs. 20/- per MTG from the earnest money deposit for the contracted quantity. It would, however, not bear any interest. Clause 12 deals with release/forfeiture of the security deposit. As per sub-clause (a) of Clause 12, after successful completion of the contractual obligations, the full amount of security deposit would be refunded to the contractor after 60(sixty) days. Sub-clause (b) of Clause 12 is very relevant for the purpose of the present case and the same is quoted hereunder : (b) In the event party accepts our offer and also execute an agreement for the contract and fails to supply any quantity, the total amount of security deposit adjusted from EMD, shall be forfeited. Clause 16 as indicated in the earlier part of this judgment provides for execution of an agreement. As per the said clause, an agreement has to be executed by the successful bidder with the Corporation within 15 days from the date of receipt of the supply order. Clause 16 as indicated in the earlier part of this judgment provides for execution of an agreement. As per the said clause, an agreement has to be executed by the successful bidder with the Corporation within 15 days from the date of receipt of the supply order. The agreement has to be executed in the office of the DGM (Forest) NPM, Jagiroad, wherein the contractor has to be present himself along with his witness. Thus, from a conjoint reading of the aforesaid provisions, it is clear that three conditions must be satisfied before the earnest money deposit can be forfeited, namely : (1) the successful bidder accepts the offer, (2) the agreement for the contract is executed and (3) the successful bidder fails to supply any quantity. Clause 16 says that the agreement has to be executed within 15 days from the date of receipt of the supply order. In the instant case, though the petitioner had accepted the offer of the Corporation, there was no execution of any agreement as contemplated under Clause 12(b) and 16 of the terms and conditions of the supply order. Therefore, it cannot be said that the contract had been concluded. As the agreement was not executed, the Corporation could not have refused the prayer of the petitioner for release of the earnest money deposit. The argument advanced by Mr. Roy, learned standing counsel for the Corporation that the duplicate copy of the supply order was returned after 23 days of the receipt of the work order and not within 7(seven) days because of which the petitioner is not entitled to the refund claim does not hold good. A reading of the penultimate paragraph of the supply order clearly shows that the duplicate copy of the supply order has to be returned within 7(seven) days from the date of receipt of the same duly signed by the successful bidder indicating acceptance of the terms and conditions stipulated therein and in the NIB. So the aforesaid provision envisages a situation where the successful bidder returns the duly signed duplicate copy of the supply order within seven days to indicate acceptance of the same. If the successful bidder fails to return the duplicate copy, the supply/work order may be cancelled, in which case, the bidder will have no claim of any nature including forfeiture of the earnest money deposit. If the successful bidder fails to return the duplicate copy, the supply/work order may be cancelled, in which case, the bidder will have no claim of any nature including forfeiture of the earnest money deposit. In the instant case, the petitioner did not return the signed duplicate copy either within 7(seven) days or thereafter which indicates that he did not accept the supply order. This position was made more explicit by the petitioner's letter to the Corporation dated 6-6-2008 where he categorically stated that he had not accepted the work order. There is no averment in the counter affidavit filed by the Corporation that the supply order was cancelled by the Corporation. Therefore, the Corporation was not justified in refusing to release the earnest money deposit to the petitioner. 7. Now, coming to the cases relied upon by Mr. Roy the learned standing counsel for the Corporation, I find that those decisions were rendered in altogether different situations and are quite distinguishable from the facts and circumstances of the present case. In the case of Bhanwar Lal (supra), the relevant clause stipulated that the tenderer would have no right to withdraw his tender, otherwise the earnest money would be forfeited. It was an absolute condition, which had to be given by way of an undertaking by the tenderer. In the face of such a clear undertaking given, the Apex Court held that the tenderer had no right to claim refund of the earnest money. In the case of National Highways Authority of India (supra), the primary question dealt with by the Apex Court was as to whether disputes relating to contracts could be agitated under Article 226 of the Constitution of India. But even on merit, in the context of the tender conditions which were considered In that case, the Apex Court held in para-9 of the said judgment that a person may have a right to withdraw his offer but if he has made his offer on a condition that some earnest money will be forfeited for not entering into the contract or if some act is not performed, then even though he may have a right to withdraw his offer, he has no right to claim that the earnest/security money be returned to him. But the same is not the situation in the present case. But the same is not the situation in the present case. Even in the case of Ranjit Kumar Saha (supra), there was a clause, viz, Clause 8 in the NTT, which provided that no tenderer would be allowed to surrender his rate before finalisation of the tender and that if any tenderer surrendered the rate offered by him before finalisation of the tender in question, the earnest money deposited by him would be liable to be forfeited. It was in that context that this Court held that since the petitioner had withdrawn his bid before finalisation of the tender in question, he obviously violated the conditions of the NIT and, therefore, the authorities were justified in forfeiting his earnest money by invoking Clause 8 of the NIT. 8. As seen above, all the above three cases were decided in different fact situations. It is a settled proposition that each case has to be decided in the facts and circumstances of that case. As pointed earlier, the sine qua non to forfeit the earnest money deposit in the present case is that the authority must be satisfied regarding fulfillment of three conditions, namely, (1) acceptance of offer, (2) execution of agreement and (3) failure to supply any quantity. If any of the above three conditions are not satisfied, it would not be open for the Corporation to forfeit the earnest money deposit. In the present case, since no agreement was executed as is the requirement, the contract could not be said to have been completed. Therefore, there was no breach of contract committed by the petitioner and since there was no breach of contract, the Corporation cannot retain or forfeit the earnest money deposited by the petitioner. For all the aforesaid reasons, this writ petition is allowed. The Corporation is directed to refund the earnest money deposit of Rs. 1,00,000/- to the petitioner within a period of 6(six) weeks from today. No cost. Petition allowed.