Effective acceptance occurs upon dispatch, making a concluded contract binding; additional penalty clauses imposed post-acceptance invalidate forfeiture claims without proof of actual loss.

JUDGMENT :

C.PRATHEEP KUMAR, J.

Cochin International Airport Limited, the defendant in OS. No.306 of 2004, on the file of the Additional Sub Court, North Paravur, is the appellant. (For the purpose of convenience, the parties are hereafter referred to, as per their rank before the trial court).

2. The plaintiff filed this suit for realisation of a sum of Rs.5,00,000/- deposited with the defendant as earnest money. The defendant issued Exhibit A1 tender notification dated 24.02.2003 inviting tenders for grant of license for the management of the car park in front of Kochi Domestic and International Airport, for a period of three years. The plaintiff submitted his tender along with a demand draft for Rs.5,00,000/- drawn in favour of the defendant. Since the plaintiff was the highest bidder, his tender was accepted by the defendant and as per Exhibit A2 letter dated 19.03.2003, the plaintiff was further directed to deposit interest-free deposit equivalent to six month's license fee for the first year amounting to Rs.90,18,000/- within a period of 30 days. As per Exhibit A3 letter dated 29.03.2003, the plaintiff intimated confirmation of acceptance of the award of work. When the plaintiff approached his bank for financial assistance to make the deposit, the bank pointed out condition No.4 in Exhibit A2 award letter dated 19.3.2003, which stipulates that in case of relinquishment of the contract by the plaintiff within 2 years from the date of effective date of commencement of the contract, a penalty of Rs.1,00,000/- per month for the remaining period of the contract will be recovered from the security deposit. It was an additional condition imposed by the defendant after the acceptance of the tender. If the plaintiff was aware of such a condition, he would not have sent Exhibit A3 letter of acceptance. In the light of the above additional condition imposed by the defendant, the plaintiff's bankers refused to advance loan to him, and therefore, the plaintiff by Exhibit A4 letter dated 16.04.2003 intimated the defendant that in the light of the unilateral variation of the intended conditions, he is not willing to make the deposit and also demanded the defendant to refund the earnest money deposit of Rs.5,00,000/-. The plaintiff would further contend that there was no breach of contract or lapse or default on his part and that the defendant has not sustained any loss in connection with the above contract. The contract did not materialise due to the unilateral alteration of the position by the defendant and therefore, the plaintiff is entitled to get back the earnest money deposited by him.

3. In the written statement filed by the defendant, they have admitted that the plaintiff was the highest bidder and as such, his offer was accepted and also that, as directed by the defendant, the plaintiff deposited an amount of Rs.5,00,000/- towards earnest money deposit. As per Exhibit A3 letter dated 29.03.2003, the plaintiff has confirmed his acceptance of the work and also intimated that he is in the process of arranging necessary security deposit from the bank. Since the plaintiff accepted the proposal without any objection, he is bound by the penalty clause including forfeiture of the earnest money deposit of Rs.5,00,000/-. As per clause (21) of the tender not