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2014 Supreme(UK) 464
IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
Alok Singh, J.
Dinesh Chandra Patni - Petitioner
Versus
State of Uttarakhand and others - Respondents
Writ Petition No. 2629 of 2013 (M/S)
Decided On : 9.5.2014
Advocate Appeared:
Mr. Rahul Consul, Advocate for the petitioner.
Mr. R.C. Arya, Standing Counsel for the State/respondents.
The communication of acceptance is complete when the letter of acceptance is posted, and failure to fulfill contractual obligations can lead to justified forfeiture of security.
Headnote:
Communication of Acceptance - Forfeiture of Security - Indian Contract Act, 1872, Section 4
Fact of the Case:
The petitioner submitted revised rates for a construction tender, which were accepted by the Department. However, the petitioner failed to furnish the required performance guarantee, leading to the forfeiture of the security amount by the Department.
Finding of the Court:
The court found that the communication of acceptance was complete when the letter of acceptance was posted by the Department, and since the petitioner failed to furnish the performance guarantee as required, the forfeiture of the security amount was justified.
Issues: The main issue was whether the communication of acceptance was complete and whether the forfeiture of the security amount was justified.
Ratio Decidendi: The court relied on Section 4 of the Indian Contract Act, 1872, which states that the communication of acceptance is complete when the letter of acceptance is posted. The court held that the petitioner's failure to furnish the performance guarantee justified the forfeiture of the security amount.
Final Decision: The writ petition was dismissed, and no costs were awarded.
Alok Singh, J.
Undisputedly, respondent invited e-tenders vide notification dated 13.5.2013 from the registered Ist Class contractors for construction of motor bridge; petitioner and other contractors submitted their respective tender; validity of tender was ninety days; last date of submission of tender was 27.5.2013, therefore, rates quoted in the tender were valid for ninety days i.e. till 27.8.2013; initially tender of one Lal Singh was accepted, however, he failed to commence the work, therefore, his security deposit amounting Rs. 2,90,000/- was forfeited and vide communication dated 31.7.2013, petitioner as well as another contractor Sri Harish Singh Aithani were called for negotiations and were requested to submit their respective rates on or before 12.8.2013; petitioner submitted his revised rates on 12.8.2013 with the letter that validity of the rates would be till 30.8.2013 only; revised rates of the tender submitted by the petitioner were accepted by the Department and acceptance letter dated 30.8.2013 was sent to the petitioner vide Registered Post AD as revealed from Annexure No. CA-1 and CA-4 to the counter affidavit; petitioner, vide acceptance letter dated 30.8.2013, was called upon to furnish performance guarantee of Rs. 6,90,000/- and additional performance guarantee of Rs. 10,35,000/- (total 17,25,000/-) in the shape of FDR/TDR or bank guarantee and to execute the formal contract within a week from 30.8.2013, failing which security of Rs. 2,90,000/- already deposited by the petitioner along with original tender would be forfeited in favour of the Department; petitioner did not deposit performance guarantee as well as additional performance guarantee as required by the Department vide letter dated 30.8.2013 nor reported to execute the formal agreement, therefore, vide impugned order dated 23.9.2013, petitioner was informed that his security amount of Rs. 2,90,000/- stood forfeited in favour of the Department. Feeling aggrieved, petitioner has approached this Court by way of filing present writ petition for quashing of the order dated 23.9.2012, Annexure No. 1 to the writ petition, forfeiting the amount of Rs. 2,90,000/-, and to issue Mandamus commanding the respondents to release the forfeited security amount of Rs. 2,90,000/- in favour of the petitioner.
2. I have heard Mr. Rahul Consul, learned counsel for the petitioner and Mr. R.C. Arya, learned Standing Counsel for the respondents, and have carefully perused the record.
3. Mr. Rahul Consul, learned counsel for the petitioner, does not dispute that as per condition No. 2.1 of the tender notice, security deposited by the contractor shall stand forfeited if bidder/contractor fails to furnish performance security within ten days after the acceptance. Mr. Rahul Consul, however, vehemently argued that although acceptance letter was said to be issued on 30.8.2013 vide postal receipt dated 30.8.2013, Annexure No. CA-4 to the counter affidavit, however, same was not served on the petitioner, therefore, petitioner is not bound by the acceptance. Consequently, it was not open to the Department to forfeit security amount of the petitioner. Mr. Rahul Consul, learned counsel for the petitioner, further contends that since validity of the rates quoted by the petitioner in the tender and in the negotiation was valid till 30.8.2013, therefore, acceptance ought to have been made and communicated to the petitioner on or before 30.8.2013 and, admittedly, letter dated 30.8.2013 was not tendered to the petitioner on or before 30.8.2013, therefore, it cannot be said that rates quoted by the petitioner were accepted on or before 30.8.2013, thus, forfeiture of the security amount is bad in law.
4. Undisputedly, revised rates quoted by the petitioner were held valid till 30.8.2013 and acceptance letter was issued by the Department accepting the rates quoted by the petitioner on 30.8.2013 vide postal receipt, Annexure No. CA-4 to the counter affidavit.
5. Section 4 along with i
