The court held that forfeiture of earnest money without prior notice violates principles of natural justice, and a reasonable timeframe must be given for executing tender agreements.

ORDER :

Ananda Sen, J.

1. By filing this writ petition, petitioner has prayed to set aside the Memo No.2731 dated 17.11.2022, issued by the Block Development Officer (Annexure 4), whereby he has cancelled the Tender No.NIT/01-2022-23 allotted in favour of the petitioner and has forfeited the earnest money deposited by the petitioner. Further prayer has been made by the petitioner to set aside the fresh tender, which has been issued.

During course of argument, learned counsel for the petitioner submits that the petitioner is confining his prayer only to the extent of refund of the earnest money, deposited by the petitioner, which has been forfeited pursuant to Annexure 4.

2. Learned counsel for the petitioner argues that the petitioner participated in NIT No.01/2022-23, which was floated for repairing of Gram Panchayat Bhawan, Kashmar and Odia for Rs.685000/- and direction has been issued to deposit Rs.137000/- as Earnest Money. Tender of the petitioner was accepted after completion of all the formalities. One of the conditions of the tender was that the successful tenderer had to execute the contract within three days. He submits that the letters, informing that the petitioner’s offer has been accepted and the petitioner has to execute the agreement, which were issued on 15.10.2022 and 28.10.2022, were received on 29.10.2022. He submits that 30th October was Sunday and 31st October was local holiday for Chhath Puja, thus, the petitioner could not execute the agreement, as stipulated. He submits that the petitioner went to the Office of the Block Development Officer on 01.11.2022 for finalization of the agreement, when the Block Development Officer informed that since the period of three days have already lapsed, agreement cannot be allowed to be executed. Petitioner filed a representation, but nothing happened. Ultimately, the letter dated 17.11.2022 was issued, cancelling the tender and forfeiting the earnest money deposit. Learned counsel for the petitioner contends that no notice was issued before passing the order by which earnest money was forfeited. In violation of the principles of natural justice, the aforesaid order was passed. His further argument is that admittedly the notices were received during holidays, which prevented the petitioner from executing the agreement within three days, as stipulated, as such, the respondents could not penalize the petitioner by forfeiting the earnest money. He submits that now a fresh tender has been issued but he is not wreaking up the said issue relating to the fresh tender, rather is confining his prayer only with respect to the forfeiture of the earnest money, which is bad.

3. Learned counsel appearing for the State submits that Clause 16 of the Notice Inviting Tender clearly stipulates that on receipt of the allotment letter, within three days, agreement had to be executed and work had to commence and on failure of the same, earnest money deposited will be forfeited. The State submits that admittedly neither the agreement was executed within three days nor the work commenced in terms of the clause, the earnest money was forfeited.

4. After hearing the parties, we find that it is an admitted case that a tender was issued being NIT No.1/2022-23 which was floated for repairing of Gram Panchayat Bhawan, Kashmar and Odia for Rs.685000/-. Clause 16 of the said tender provides that within three days from receipt of the work order, the successful bidder had to enter into an agreement and start the work or else, the earnest money deposit will be forfeited. Annexure 2 is letter No.2581 dated 15th October, 2022, which intimated the petitioner that he is the successful bidder and