The main legal point established is that in contractual matters, the court may intervene to prevent arbitrariness or favoritism by the government bodies, especially if the actions violate the equality clause contained in Article 14 of the Constitution of India.

[Hearing convened through video conferencing] ORDER VIJAY KUMAR SHUKLA, J. – In the instant petition preferred under Article 226 of the Constitution of India, the petitioner has prayed for refund of Rs. 82,15,000/- Earnest Money Deposit (EMD), which is forfeited by the respondents. Later on, an application for amendment was moved by the petitioner to further challenge the orders dated 28-12-2015 and 22-4-2016, Annexure-P/7 and Annexure-P/9 respectively, whereby the revision/appeal filed by the petitioner under Clause 16 of the Instructions to Bidders and Terms and Conditions governing E-auction [hereinafter referred to as “the IBT”]/Model Tender Form (for brevity “MTF”) was dismissed by the respondents.

2. The facts as have been uncurtained are that the petitioner is a private limited company and is a general merchant commission agent and supplier of wheat and it is based out of the Northern region.

3. On 20-10-2015 the respondents – Food Corporation of India (FCI), Regional Office at Bhopal, issued a tender for sale of wheat to bulk consumers/traders under OMSS (D) through e-auction. The petitioner submitted its bid for 5 railway rakes of wheat from the Railway Stations, namely, (a) Narsinghpur – 1 rake (b) Gadarwara – 1 rake (c) Kachhpura – 3 rake; and as per Clause 6 of the tender document it deposited EMD which was credited to the designated FCI Bank account in compliance with the Clause 6(i) of the IBT. The bid was opened and the petitioner emerged as the highest bidder for all the five rakes and thus, it was declared to be the successful bidder.

4. In terms Clause 11-A of the MTF the petitioner deposited the entire bid amount with the respondents within 7 working days from the date of issuance of the acceptance letter by the respondents-FCI. The respondents invited bid for sale of wheat through dedicated movement laying at FCI/State agencies/depots. The said tender was for the M.P. region on “as is where is” basis only for bulk customers/traders of wheat already empanelled by the FCI. The petitioner was the successful bidder and as per Clause 11-A(viii) of the MTF, it has placed indent with the Railway within 14 working days. According to the petitioner, due to some unavoidable circumstances the said indent was cancelled and it was re-scheduled. Though the respondents are accepting the fact that it has not caused any financial loss to them, but despite that they proceeded for forfeiture of the EMD of Rs. 41,07,500/- each for Kachhpura and Gadarwara. The indent was cancelled because of the non-availability expressed by the FCI contractor to load the railway rakes owing to Diwali festival and in these circumstances, forfeiture of the EMD is arbitrary.

5. As per Clause 11-A(iv) of the MTF the buyer has to complete the lifting within a period of 14 working days from the next date of communication of acceptance by the FCI. Clause 11-A(v) of the MTF stipulates that after 14 working days, on the request of buyer, the Area Manager of the FCI may allow extension of maximum period of another 21 working days for lifting stock from the FCI godown, on payment of storage charges at the rate of 50 paise per quintal per day, subject to total minimum of Rs. 2000/-. The sub-clauses (iv), (v) and (viii) of Clause 11-A of the MTF, being relevant for the present purpose, are extracted hereunder :

“11. Payment of Cost and Delivery Schedule A(i). xx xx xx (iv). The buyer shall complete the lifting within free period of fourteen (14) working days from the next date of communication of acceptance by FCI. (v). After fourteen (14) working days, on the request of buyer, Area Manager, FCI may allow the extension for a maximum period of another twenty one (21) working days for lifting the stock from FCI godown on payment of storage charges at the rate of 50 paise per qtl. per day subject to total minimum of Rs. 2000/-. These storage charges shall be recovered in respect of the unlifted quantity of stocks during the extended period (actual period for