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2019 Supreme(Kar) 225
IN THE HIGH COURT OF KARNATAKA
H.T. NARENDRA PRASAD, J.
Eagle MPCC (JV), Tiruchengode - Appellant
Versus
South Western Railway, Bangalore - Respondent
Writ Petition No. 29575 of 2011, 33742 of 2011
Decided On : 25-01-2019
Ashok Haranapalli, Adv., K.S. Harish, Adv., Y.T. Abhinav, Adv., N.S. Sanjay Gowda, Adv.
Headnote:
Constitution of India,1950 - Article 226 - Arbitration and Conciliation Act - Sections 2(b) and 7 - Indian Contract Act, 1872 - Section 3 - Monies deducted - Refund Earnest Money Deposit deposited - minor bridges - respondent issued a letter of acceptance - Petitioner is a joint venture entity, well versed with works and constructions such as earth work, major and minor bridges, road under bridge, road over bridge, protective work, road works and other works related to railways. The respondent herein has floated the tender with regard to the earth work. Pursuant to that tender, the petitioner has submitted the response. Along with the tender documents, petitioner has submitted all relevant documents and quoted a price of 12.44% less than the price fixed by the respondent. Since the tender bid of the petitioner was the lowest, the tender submitted by the petitioner was accepted by the respondent. Subsequently, the respondent by letter sought for extension of validity of offer. Pursuant to that request - petitioner issued a letter their inability to extend the validity period - Respondent issued a letter of acceptance – Held, respect of claims in Other Contracts:- Any sum of money due and payable to the contractor under the contract may be withheld or retained by way of lien by the Railway, against any claim of this or any other Railway or any other Department of Central Government in respect of payment of a sum of money arising out of or under any other contract made by the contractor with this or any other Department or the Central Government - Contract sum of money so withheld or retained under this clause by the Railway will be kept withheld or retained as such by the Railway till the claim arising out of or under any other contract is either mutually settled or determined by arbitration, if the other contract is governed by arbitration clause or by the competent Court as the case may be and contractor shall have no claim for interest or damages whatsoever on this account or on any other ground in respect of any sum of money withheld or retained under this clause and duly notified as such to the contractor - Arbitration clause, it is very clear that all disputes and differences of any kind whatsoever arising out of or in connection with the contract, any other contract - Writ petitions are dismissed
H.T. NARENDRA PRASAD, J.
1. In these writ petitions, the petitioner has sought the following reliefs:
(a) Allow this Petition and pass an order directing the Respondent not to deduct monies towards security deposit, performance guarantee and any other damages or loss to the Respondent in relation to Tender Notice No.CAO/CN/BNC/041/10 Dt:29.09.2010 SCHS-225 (Ch.83000 to Ch.88000) vide Annexure- A, from Letter of Acceptance No.W.496/SCHS-222 dt: 30.11.2010 vide Annexure-K and LOA No. W.496/SCHS-224 dt : 28.02.2011, vide Annexure-K-1.
(b) Direct the Respondent to refund the monies deducted from Letter of Acceptance No.W.496/SCHS-222 dt.30.11.2010 vide Annexure-K and Letter of acceptance No.W.496/SCHS- 224 dt.28.02.2011, vide Annexure-K-1 towards Tender Notice No.CAO/CN/BNC/ 041 Dt:29.09.2010 SCHS-225 (Ch.83000 to Ch.88000) vide Annexure-A, and also direct the respondent to refund Earnest Money Deposit deposited along with the Tender notice No. CAO/CN/BNC/041 Dt.29.09.2010 SCHS-225.
2. The brief facts of the case are that the petitioner is a joint venture entity, well versed with works and constructions such as earth work, major and minor bridges, road under bridge, road over bridge, protective work, road works and other works related to railways. The respondent herein has floated the tender with regard to the earth work. Pursuant to that tender, the petitioner has submitted the response. Along with the tender documents, petitioner has submitted all relevant documents and quoted a price of 12.44% less than the price fixed by the respondent. Since the tender bid of the petitioner was the lowest, the tender submitted by the petitioner was accepted by the respondent. Subsequently, the respondent by letter dated 27.01.2011 (Annexure-C) sought for extension of validity of offer. Pursuant to that request, the petitioner issued a letter dated 04.02.2011 (Annexure-D) informing their inability to extend the validity period. The respondent issued a letter of acceptance dated 02.03.2011 produced as Annexure-F. Subsequently, by letter dated 15.04.2011 (Annexure-R1) the petitioner has informed the respondent that acceptance letter is received and they have started the work and requested for approval of the drawing. Thereafter the respondent has requested the petitioner to execute the agreement, but the petitioner has not executed the agreement in terms of the Tender. The respondent determined that petitioner has abandoned the contract and the respondent has forfeited the EMD amount and deducted the security deposit and performance guarantee from the other contracts which are entrusted to the petitioner.
3. Sri Ashok Harnahalli, learned Senior Counsel appearing for Sri K.S. Harish for the petitioner firstly submits that pursuant to the tender notification, petitioner has submitted the response. Pursuant to that, on 02.03.2011 (Annexure-F), the respondent has issued the letter of acceptance. The letter of acceptance issued by the respondent is not accepted by the petitioner and it has not entered into the agreement with the respondent. Therefore, there is no concluded contract between the parties which could be enforced in the Court of Law. In the absence of concluded contract the respondent cannot forfeit the EMD, security deposit and performance guarantee. He has relied on Tender document Clauses 10 and 10.1 in respect of execution of contract documents, Clause 18 in respect of earnest money deposit and clauses 4.2.3 and 4.3 in special conditions of contract in respect of security deposit and performance guarantee vide Annexure-A and contended that forfeiture of earnest money deposit or recovery of security deposit or performance guarantee can be done only if the parties have entered into the contract. Since there is no contract between the parties the respondent has no power to recover the amount from the petitioner. In support of his submissions, he has relied on paras 18 and 19 of the judgment of the Hon'ble Supreme Court reported in t
