IMPORTANT POINT
Tender terms are contractual and it is the privilege of the Government which invites its tenders and Courts did not have jurisdiction to judge as to how the tender terms would have to be framed.

Headnote:(i) Kerala Land Reforms Act, 1963 —Sections 81(3)(b), 83 and 87—Cancellation of Tender—Validity—State Government transferred 51.96 acres of land in favour of a Development Authority (GIDA), a non statutory State Government Undertaking to use the land for its development schemes—GIDA was authorized to sell the land in public auction in part or in full—Individual extent of plots which was accepted by the GIDA was less than the ceiling limit contemplated under Section 82(d) of the Act—Respondent, Venus International Hotel (Venus) was the successful bidder—GIDA accepted bids of Venus and confirmation letters were issued—However respondent did not furnish the bank guarantee insisting on an exemption notification being obtained by GIDA as a pre-condition to fulfill the tender terms and conditions—Appellant, second highest bidder agreed to pay the entire amount in a lump sum which was not accepted—Writ petitions—As the Venus failed to furnish the bank guarantee, GIDA issued letters of cancellation of letters of confirmation issued earlier—High Court allowed the writ petition filed by Venus holding that exemption Notification should have preceded the tender—Whether High Court was justified in applying Section 87 of the Act—(No)—High Court was not justified in directing modification of a vital term of the contract.
       Held : Section 87 deals with acquisition of title after the notified date. Section 87(1)(a) deals with action to be taken within a period of three months from the date of acquisition. The bank guarantee was to be furnished within a period of 10 days. The High Court held that the contract was un-enforceable in view of Section 87 of the Act is not correct. The High Court mis-construed the scope of Section 87 of the Act. The reason that the bank guarantee was not given is of no consequence. In fact as rightly submitted by learned counsel for the appellant, Venus itself being conscious that the exemption notification was not necessary before furnishing of bank guarantee, requested for immediate registration of the sale deed. The only reason indicated was that if it is done before a particular date considerable amount of stamp duty would be saved. At that stage, GIDA was never even intimated by Venus that it had no money or that it was awaiting for bank finances or that there was any necessity to obtain exemption notification. It appears even the stands regarding the availability of finances are different at different points of time.(Para 16)
       It is to be noted that there was no privity of contract between Government and the bidders. The tender conditions inter alia contained provisions relating to signing of contract and payment of money. There can be no implied terms so far as the Government is concerned. Terms can be claimed to be implied by the parties to the contract. Thus, it was open to the contracting parties to say that subject to obtaining exemption notification, the contract would be given effect to. It is not so in the present case. (Para 22)
       Government by a contract cannot be compelled to grant permission. The statutory parameters have to be kept in view. A condition may be there, as appears to be in present case, to take steps to obtain permission. An agreement may fail because of absence of permission. Then it becomes unenforceable. (Para 23)
       By observing that there was implied term which is not there in the tender, and postponing the time by which the bank guarantee has to be furnished, in essence the High Court directed modification of a vital term of the contract. (Para 27)
       The appellants had stated their willingness to match the amount offered by Venus and also to pay interest in terms of the contract. It has been stated that the whole amount shall be paid and they shall not give any bank guarantee. Let the amounts offered by Venus be paid by the appellants within a period of one month from today with interest @12% p.a. from the date of allotment. The amount, if any deposited by Venus will be refunded with interest @ 9% from the date of deposit within a period of six weeks.(Para 36)
       (ii) ADMINISTRATIVE LAW—Difference between administrative law and contractual law.(Paras 21 and 26)
       (iii) Contract Act, 1872—Section 23—Tender—Terms and conditions—Terms can be claimed to be implied by the parties to the contract when—Tender terms being contractual, Court do not have jurisdiction to judge as to how the tender terms would have to be framed.(Paras 22, 26 and 27)

JUDGMENT

Dr. Arijit Pasayat, J.—Challenge in these appeals is to the judgment of a Division Bench of the Kerala High Court holding that the order of cancellation dated 13.4.2005 passed by respondent No.2 was illegal and that respondent No.1 was entitled to further time to furnish the bank guarantee after the order granting exemption in terms of Section 81(3)(b) of the Kerala Land Reforms Act, 1963 (in short the ‘Act’) is issued.

2. The background facts in a nutshell are as follows:

The State Government transferred 51.96 acres of land in favour of Goshree Island Development Authority (in short the ‘GIDA) a non statutory State Government Undertaking to enable it to sell it and to use the proceeds for its developmental schemes. GIDA was authorized to sell the land in public auction in part or in full. GIDA invited tenders on several occasions but the tenders were cancelled. Finally, as per Notification dated 10.1.2005 fresh tenders were invited and pre bid meeting was held on 10.2.2005. Tenders were submitted, which were opened on 16.2.2005. In the tender documents four options were indicated. The individual extent of plots mentioned in option IV which was accepted by the GIDA was less than the ceiling limit contemplated under Section 82(d) of the Act i.e. 15 acres.

3. Respondent No.1 i.e. M/s Hotel Venus International (hereinafter referred to as the ‘Venus’) was the successful bidder in respect of plot Nos. D3, D4 and D5 and its sister concerns were successful in respect of plots B, C3, C4 and C5 under Option IV. Appellant M/s Puravankara Projects Ltd. was the second highest bidder in respect of plot Nos. D3, D4 and D5 measuring about 8.78 acres each. In the pre bid meeting held on 10.2.2005 one of the queries raised by one of the participants was as to when exemption notification under Section 81(3)(b) of the Act would be obtained. The reply by the Secretary, GIDA forms the foundation of several stands in the present appeals. The Secretary admittedly replied as follows:

“GIDA had moved for general exemption under Section 81(3)(b) of the Kerala Land Reforms Act from the Government and the same will be obtained in a few days”.

On 28.2.2005 the General Council of GIDA accepted bids of Venus for plot Nos. D3, D4 and D5 and confirmation letters of the said acceptance were issued on 1.4.2005 from Cochin addressed to the addressees in terms of Clause 19 of the tender. The addressees were in Trivandrum (Thiruvananthapuram).

4. By letter dated 31.3.2005 Venus insisted on an exemption notification being obtained by GIDA as a pre condition to fulfill the tender terms and conditions, more particularly relating to furnishing of bank guarantee in terms of Clause 10 of the tender. There is some dispute as to whether the bidders had received the letters because the postal endorsements indicate that on account of oral instructions of the owner of Venus, the letters were delivered on 28.4.2005 i.e. much after the normal period of delivery of letters. Appellant knowing that Venus had not furnished the bank guarantee in terms of Clause 10 of Tender Terms and Conditions vide its letter dated 19.4.2005 matched the highest offer in respect of the concerned plots and agreed to pay the entire amount in a lump sum. When GIDA did not respond to the offer, the appellant moved the High Court of Kerala by a Writ Petition (C) No.13735 of 2005 which relates to C.A. 7561 of 2005. Prayer in the writ petition inter alia was for a declaration that the tender of Venus in relation to plot Nos D3, D4 and D5 was to be treated as cancelled as the requisite bank guarantee was not furnished. A consequential prayer was made not to extend the time for furnishing bank guarantee and for a direction to GIDA to consider the appellant’s tender which till then was not accepted.

5. Learned Single Judge of the High Court passed an interim order restraining the alteration of the terms and conditions contained in the tender until further orders. In the meantime, Venus failed

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2007 Supreme(SC) 118

IMPORTANT POINTTender terms are contractual and it is the privilege of the Government which invites its tenders and Courts did not have jurisdiction to judge as to how the tender terms would have to be framed.

Cases Referred (6)

IMPORTANT POINT
Tender terms are contractual and it is the privilege of the Government which invites its tenders and Courts did not have jurisdiction to judge as to how the tender terms would have to be framed.