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IN THE HIGH COURT OF JHARKHAND AT RANCHI
RONGON MUKHOPADHYAY, DEEPAK ROSHAN
XIPHIAS Software Technologies Private Limited – Appellant
Versus
State of Jharkhand, through the Chief Secretary – Respondent
JUDGMENT :
The present adjudication arises under the extraordinary writ jurisdiction, wherein M/s. XIPHIAS Software Technologies Private Limited ("Petitioner") is seeking a Writ of Certiorari to quash an order of forfeiture issued by the Jharkhand Bijli Vitran Nigam Limited (referred to as "JBVNL" or "Respondent No. 2").
2. At its core, this case raises the question whether a state instrumentality can invoke the mechanism of security forfeiture to compel a contractor into providing services beyond a mutually agreed contractual term, and whether it is permissible in exceptional circumstances. An offshoot issue involved is whether such action of extension beyond contract tenure and forfeiture of security deposit require adherence to principles of natural justice.
Background Facts:
3. The relationship between the Petitioner and the Respondent State utility is not a transient one; it is a decade-long professional contract. The Petitioner is a manufacturer and provider of “Any Time Payment” (ATP) machines, which serve as the primary interface for utility bill collection without human intervention.
4. The Petitioner’s journey with the Respondent began in 2011- 2012, following NIT No. 591/PR/1
A state instrumentality cannot extend a contract unilaterally without mutual consent, and forfeiture of security deposits requires proof of loss and compliance with natural justice principles.
The court affirmed that failure to demonstrate actual loss precludes the forfeiture of security deposits, underscoring the principle that a breach must cause substantial damages to warrant penalties.
Point of law: Not only is the writ jurisdiction of this Court invoked in a purely contractual matter, having no colour of public law and the writ remedy is thus not maintainable.
A party's entitlement to damages in breach of contract cases must correlate with actual damages suffered; security deposits can be refunded when no loss is incurred by the other party.
Forfeiture of earnest money is valid before contract execution if tenderer provides false information, without invoking Sections 73 and 74 of the Contract Act.
The authority can forfeit a mining lease security deposit for non-payment of lease installments under the terms established in the lease agreement, affirming contractual obligations.
Blacklisting a contractor without a fair hearing violates principles of natural justice, rendering such actions invalid, while the termination of the contract for non-compliance with security require....
The court established that retention of a forfeited bank guarantee is unjustified when the basis for forfeiture is invalidated by subsequent findings, underlining the jurisdiction of courts in contra....
The action of forfeiture was clearly ultra vires, manifestly arbitrary and thus cannot be sustained.
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