IN THE HIGH COURT AT CALCUTTA
Arijit Banerjee, Kausik Chanda, JJ.
Essem Enterprise - Appellant
Versus
Kolkata Municipal Corporation & Ors. – Respondents
A.P.O. No. 67 of 2021 With WPO/619/2018
Decided On : 05-04-2023
Constitution of India,1950 - Article 14 and 226 - Contract Act – Sections 5 and 74 - Proprietorship concern is not a legal entity - Sole proprietorship - permits rectification - Writ petition was filed in name of Esssem Enterprise which has been described as petitioner in cause title of writ petition - Writ petition it is stated that petitioner is a sole proprietorship - In affidavit affirmed in support of writ petition – Held, Corporation has not established a case to demonstrate any losses suffered - Corporation's approach to tender process cannot be condoned - Following the relevant tender, it received appellant's lowest bid, accepted earnest money deposited by appellant yet failed to take any further action for approximately two and a half years - Corporation neglected to respond to any of the appellant's letters - It was only when appellant filed a writ petition to reclaim earnest money, Corporation forfeited same. is evident that only the appellant has suffered losses and damages due to procrastination of Corporation - I am inclined to allow the appeal and direct the Corporation to refund the earnest money together with an interest – Ordered Accordingly
JUDGMENT :
Arijit Banerjee, J.
1. This appeal is directed against the Judgment and order dated June 22, 2022 whereby the appellant’s writ petition being W.P. 619 of 2018 was dismissed. The writ petitioner had challenged the refusal on the part of Kolkata Municipal Corporation (in short, ‘KMC’) to refund the Earnest Money Deposit (in short, ‘EMD’) on the ground that the same stood forfeited in terms of Clause 13 of the notice inviting the tender in question.
2. Although a point of law was not argued by the parties either before the learned Single Judge or before us, for the sake of completeness, I wish to briefly discuss the same. The writ petition was filed in the name of Esssem Enterprise which has been described as the petitioner in the cause title of the writ petition. In paragraph 1 of the writ petition it is stated that the petitioner is a sole proprietorship. In the affidavit affirmed in support of the writ petition, the deponent, Santanu Mukherjee, has stated that he carries on business in the name and style of ‘Essem Enterprise’.
3. It is settled law that a proprietorship concern is not a legal entity. No legal proceeding is maintainable in the name of such a concern. Any legal proceeding has to be instituted in the name of the proprietor of the business. In this connection one may refer to the following decisions:
(i) Svapn Constructions v. IDPL Employees Co-operative Group Housing Society Ltd. & Ors.; reported at 2005 SCC OnLine Del 1392.
(ii) Miraj Marketing Corporation v. Vishaka Engineering and Anr.; reported at 2005 (79) DRJ 209 (DB).
(iii) Bhagvan Manaji Marwadi v. Hiraji Premaji Marwadi.; reported at (1932) 34 BOM LR 1112.
(iv) Neogi Ghosh & Co. v. Sardar Nehal Singh & Anr., reported at (1930-31) 35 CWN 432.
(v) Jamunadhar Poddar Firm v. Jamunaram Bhakat & Ors., reported at (1943-44) 48 CWN 203.
(vi) Samrathrai Khetsidas v. Kasturbhai Jagabhai, AIR 1930 Bom 216.
Learned Advocate for the appellant relied on a decision of the Hon’ble Supreme Court in the case of Jai Jai Ram Manohar Lal v. National Building Material Supply, Gurgaon, reported at 1969 (1) SCC 869. In that case the plaintiff had sued in his individual name. Subsequently he sought leave to amend the plaint to sue as proprietor of a Hindu Joint Family business. The Trial Court allowed the amendment. The High Court reversed such order. The matter having been carried to the Supreme Court, setting aside the order of the High Court, the Hon’ble Apex Court held:
(ii) There is no rule that unless in an application for amendment of the plaint, it is expressly averred that the error, omission or misdescription is due to a bona fide mistake, the Court has no power to grant leave to amend the plaint.
(iii) Since the name in which the plaintiff instituted the action was merely a misdescription of the original plaintiff, no question of limitation arises and the plaint must be deemed on amendment to have been instituted in the name of the real plaintiff, on the date on which it was originally instituted.
Learned Counsel also relied on the decision of a learned Judge of this Court in the case of J.D. Singh and Ors. v. Calcutta Port Trust repo
H.U.D.A & Anr. v. Kewal Krishan Goel & Ors.
J.D. Singh and Ors. v. Calcutta Port Trust
Jai Jai Ram Manohar Lal v. National Building Material Supply, Gurgaon
Kailash Nath Associates v. Delhi Development Authority
MBL Infrastructure Limited v. Rites Limited & Ors.
Meerut Development Authority v. Association of Management Studies & Anr.
Michigan Rubber (India) Ltd. v. State of Karnataka & Ors.
Miraj Marketing Corporation v. Vishaka Engineering and Anr.
National Highways Authority of India v. Ganga Enterprises & Anr.
The NIT stipulated that tenderers who resile before the validity period shall be liable for forfeiture of EMD. The action of the respondents in seeking change of the rate offered bid amounted to resi....
Point of law: doctrine of forfeiture in the case of earnest money is based on a principle completely independent of the consideration that are laid down in Section 74 of the Contract Act.
The main legal point established in the judgment is that the contract stood concluded upon acceptance of the bid, and the subsequent signing of documents was only for formal documentation. The court ....
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