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2018 Supreme(P&H) 2492
IN THE HIGH COURT OF PUNJAB AND HARYANA
KRISHNA MURARI, ANIL KSHETARPAL, JJ.
Sabroop Feed and Dairy Farm Village - Appellant
Versus
Punjab State Cooperative Supply and Marketing Federation Ltd - Respondent
Civil Writ Petition No. 7399 of 2018
Decided On : 03-10-2018
Shiv Kumar, Adv., Anhad S. Miglani, Adv.
The main legal point established in the judgment is that forfeiture of earnest money is valid when a bidder seeks to withdraw the offer against the terms of the agreement, as supported by the Contract Act, 1872 and relevant case law.
Headnote:
Forfeiture - Tender Contract - Contract Act, 1872 - Section 5, National Highways Authority of India v. Ganga Enterprises (2003) 7 SCC 410, State of Haryana and Others v. Malik Traders (2011) 13 SCC 200
Fact of the Case:
The petitioner, a sole proprietorship firm, participated in a tender for the purchase of damaged wheat. After submitting the bid, the petitioner sought to withdraw the offer, but the respondent accepted the bid and later forfeited the earnest money when the petitioner failed to deposit the balance security amount.
Finding of the Court:
The court found that the forfeiture of the earnest money was legally justified based on the terms and conditions of the tender notice and the Contract Act, 1872. The court referred to the decisions in National Highways Authority of India v. Ganga Enterprises and State of Haryana and Others v. Malik Traders to support its finding.
Issues: The main issue was whether the forfeiture of the earnest money was justified when the petitioner sought to withdraw the bid before its acceptance.
Ratio Decidendi: The court relied on Section 5 of the Contract Act, 1872 and the precedent set by the cases of National Highways Authority of India v. Ganga Enterprises and State of Haryana and Others v. Malik Traders to conclude that the forfeiture of earnest money was valid when the bidder sought to withdraw the offer against the terms of the agreement.
Final Decision: The court dismissed the writ petition, upholding the forfeiture of the earnest money and finding no illegality in the respondent's action.
KRISHNA MURARI, J.
1. Petitioner a sole proprietorship firm engaged in the business of manufacturing of Benola Khal, Dalia and cattle feed etc. has filed the instant writ petition seeking a writ of certiorari to quash the order dated 10.11.2017 forfeiting the earnest money deposited against the tender.
2. We have heard Shri Shiv Kumar, learned counsel for the petitioner and Shri Anhad S. Miglani, learned counsel appearing for the respondent.
3. The facts relevant for the purpose of adjudicating the issue raised herein in brief can be summarized as under:-
Respondent- Punjab State Cooperative Supply & Marketing Federation Ltd. (hereinafter referred to as 'the MARKFED') invited e-tenders for purchase of lot wise damaged wheat which was unfit for human consumption. The bids were closed on 22.03.2017. The terms and conditions enumerated in the Notice Inviting Tender (NIT) stipulate that the tenderers were required to quote the rates in the financial bid and were at liberty to quote for any or all the lots put together separately for lot wise.
The condition further stipulated that the rates offered will be valid up to 30 days further extendable to another 15 days from the date of opening of the tenders. As per Clause 12, the tenderers were required to pay the earnest money through RTGS/NEFT. NIT also contained a condition that the tenderer after submitting his tender in case does not keep his offer open or does not deposit the requisite security within a week's time from the date of acceptance of the offer or modify the terms and conditions thereof in a manner not acceptable to the MARKFED, then the same shall be rejected and the earnest money shall be forfeited. It may be relevant to quote the relevant clauses of the NIT which read as under:-
"10. The tenderer shall quote the rates in the Financial Bid (Annexure-B). The tenderer is at liberty to quote for any or all the lots put together separately, lot wise. The tenderer is to quote for the total quantity in each lot in the Bids in which rates have not been offered for the total quantity of the lot are liable to be rejected. The rates offered will be valid upto 30 (Thirty) days extendable to another 15 (fifteen) days from the date of opening of tenders.
11. The Punjab State Cooperative Supply and Marketing Federation Ltd. Chandigarh reserves the right to accept or reject any or all the tenders, without assigning any reason. All tenders shall be irrevocable and remain open for acceptance for a period of thirty days from the date of opening tenders. If the said date is declared to be a closed holiday for Markfed, office, the tender shall be deemed to remain open for acceptance upto the following working day. The Managing Director, "The Punjab State Cooperative Supply and Marketing Federation Ltd., Chandigarh will have the discretion to extend this date of validity by another fifteen days".
12. Earnest Money:
The tenderer shall pay to the Punjab State Cooperative Supply and Marketing Federation Ltd., Chandigarh an amount as mentioned in "Annexure G" as Earnest Money for the due performance of stipulations to keep the offer open. The earnest money shall be deposited in Markfed account through RTGS/NEFT Transaction. Tenders not accompanied by the required amount of earnest money shall be out rightly rejected. If the tenderer after submitting his tender does not keep his offer open or does not deposit requisite security within a week's time from the date of acceptance of his/her/their offer or modifies the terms and conditions thereof in a manner not acceptable to "The Punjab State Cooperative Supply & Marketing Federation Ltd., Chandigarh, then the same will be rejected and the earnest money will be forfeited in such event. The Punjab State Cooperative Supply and Marketing Federation Ltd. Chandigarh shall be within its rights to recommend to FCI/Department of Food and Civil Supplies, Punjab for blacklisting the said tenderer/firm for one year. Subject as aforesaid, the earnest money of
