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IN THE HIGH COURT OF JUDICATURE AT MADRAS
Honourable Mr Justice D.BHARATHA CHAKRAVARTHY
P.S.T. Engineering Construction – Appellant
Versus
HSCC (India) Limited – Respondent
ORDER :
A. The Writ Petition:
1. This Writ Petition is filed by PST Engineering Construction, represented by its Managing Partner (hereinafter 'PST'), for the issuance of a Certiorari to call for the records relating to the impugned order dated 07.02.2025 in Ref.No.HSCC/DMER-MHA/MPGIMER/NASHIK/EPC/PST, passed by the first respondent, HSCC (India) Limited (hereinafter 'HSCC'), and the consequential letter dated 07.02.2025 in Ref.No.HSCC/Banking/BG-2025. By the first impugned order dated 07.02.2025, HSCC declared that PST had submitted false information while making its bid, thereby violating the undertaking submitted by it. Consequently, it ordered the forfeiture of the earnest money deposit (EMD) amounting to Rs. 3,28,40,000/- and invoked the bank guarantee, stating that steps would be taken for the encashment of the bank guarantee. By the second impugned order, a letter was issued to the bank for the encashment of the bank guarantee.
B. The Factual Background:
2. The brief facts under which this Writ Petition arises are that the second respondent, namely the Department of Medicine, Government of Maharashtra, sought to establish a Medical College and Hospital in Nasik, Maharashtra. The
Forfeiture of earnest money is justified for willful suppression of material facts in tender process; disclosure obligations extend beyond quality-related matters; Section 74 of Indian Contract Act d....
Forfeiture of earnest money is valid before contract execution if tenderer provides false information, without invoking Sections 73 and 74 of the Contract Act.
Effective acceptance occurs upon dispatch, making a concluded contract binding; additional penalty clauses imposed post-acceptance invalidate forfeiture claims without proof of actual loss.
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.
Forfeiture of Earnest Money requires intent to mislead; accidental clerical errors should not disqualify bidders nor invoke punitive measures, affirming principles of natural justice.
Forfeiture of earnest money is justified due to bidder's misrepresentation and breach of tender conditions.
The Liquidator's authority to forfeit EMD in liquidation auctions is valid if terms specified in the Auction Memorandum are clear and accepted by bidders; forfeiture must comply with applicable regul....
A successful bidder cannot be penalized for inadvertent documentation errors, and forfeiture of earnest money requires proof of intent to mislead, reflecting principles of natural justice.
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