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2023 Supreme(MP) 980

IN THE HIGH COURT OF MADHYA PRADESH AT INDORE
S. A. Dharmadhikari, Pranay Verma, JJ.
Phaloudi Constructions And Infrastructure Pvt. Ltd. – Petitioner
Versus
Indore Smart City Development Ltd. And Another – Respondents
W. P. Nos. 15445 and 19451 of 2022
Decided On : 23-08-2023

Advocates:
Advocate Appeared:
For the Petitioner: Sunil Jain, Ayushman Choudhary, Sudhanshu Dixit
For the Respondent: Manoj Munshi

Headnote:(A) Constitution of India - Article 226 - Judicial review in contractual matters - Petitioner challenged cancellation of Notice Inviting Tender (NIT) and Letter of Acceptance (LOA) by respondent - Court emphasized need for restraint in judicial review, stating that no concluded contract existed without compliance with terms of LOA. (Paras 10, 21)

(B) Natural Justice - Principles of natural justice not followed as no opportunity of hearing was provided before cancellation - However, cancellation justified due to non-compliance by petitioner. (Paras 11, 21)

(C) Public Interest Litigation - Delays caused by ongoing PIL affecting timely execution of tender process - Valid grounds for cancellation of NIT. (Paras 20, 21)

Facts of the case:
Petitioner was awarded LOA for redevelopment project but failed to comply with bank guarantee submission within specified time. The NIT and LOA were subsequently cancelled amidst ongoing legal disputes affecting project site.

Findings of Court:
Cancellation of NIT and LOA was valid and reasonable given the circumstances, including delays and non-compliance.

Issues: Whether a concluded contract existed and whether cancellation was arbitrary or justified.

Ratio Decidendi: Court ruled that a binding contract was not formed without submission of conditions stipulated in the LOA; acts of respondent were rational, not arbitrary.

Result: Petitions dismissed.

Table of Content
1. petitioner challenges cancellation of tender. (Para 1 , 2 , 3)
2. petitioner's bid accepted but later cancelled. (Para 4 , 5 , 6)
3. respondent argues based on pending litigation. (Para 7 , 8)
4. judicial review in contractual matters discussed. (Para 9 , 10)
5. no binding contract established as per loa. (Para 11 , 12)
6. principle of natural justice not applicable. (Para 13 , 14 , 15)
7. valid reasons for cancellation of nit. (Para 19 , 20)
8. petitions dismissed for lack of merit. (Para 21 , 22)

ORDER :

PRANAY VERMA, J.

Since common questions of facts and law are involved in both the petitions, they have been heard together and are being decided by a common order. Facts are being taken from Writ Petition No. 15445 of 2022.

2. By this petition preferred under Article 226 of the Constitution of India, the petitioner has challenged the letter/order dated 29-6-2022 issued by respondent No. 1 whereby the Notice Inviting Tender dated 1-7-2020 has been cancelled and the earnest money deposited by the petitioner company has been directed to be refunded. The petitioner has also challenged the order dated 8-7-2022 passed by respondent No. 1 by which the Letter of Acceptance issued in favour of the petitioner has also been cancelled.

3. As per the petitioner, respondent No. 1/Indore Smart City Development Limited issued a notice inviting tender (For short ‘NIT’) dated 1-7-2020 for the work of – “Real Estate Mixed Use Redevelopment Projects at MOG Lines - Old Government Quarters Land Parcel for sale on freehold basis for construction of mixed used High Rise Towers, for plot No. 3” The last date for purchase of tender and its submission online was 4-8-2020 and the technical bid was to be opened online on 5-8-2020. The said dates were amended by respondent No. 1 from time to time by issuing various corrigendum and eventually the last date for purchase of tender form (online) and submission of tender online was 27-10-2020 up to 5:30 pm. The date for opening technical bid (online) was 28-7-2020. The petitioner Company submitted its application/bid along with all necessary requisites documents and details as required under the NIT on 12-10-2020 along with earnest money of Rs. 50,00,000/-. The financial bid of the petitioner was of Rs. 25,88,88,888/-.

4. After opening of the technical and financial bid the petitioner Company was orally informed by Officer of respondent No. 1 that its bid has been accepted and letter of acceptance (For short ‘LOA’) will be issued in its favour very soon. Thereafter, the petitioner Company acquired knowledge that residents of MOG lines have preferred a PIL bearing W. P. No. 14656 of 2020 before this Court against directions issued by the State Government for vacating their respective allotted units. In the petition, by order dated 3-3-2021 three months’ time was granted to the residents for vacating their allotted residential units. The said period was further extended by order dated 13-8-2021 and 12-11-2021 passed in Review Petition No. 425 of 2021 and Review Petition No. 659 of 2021 respectively. In the meanwhile, the application/bid submitted by the Petitioner Company was accepted by respondent No. 1 and LOA was communicated to the petitioner on 2-7-2021. The petitioner was asked to initiate process as directed in the LOA and was directed to submit bank guarantee of Rs. 2,58,88,889/- and to sign the contract agreement at stamp value of Rs. 2,58,889/- within thirty days.

5. Upon receiving the LOA, the petitioner vide its letter dated 3-7-2021 informed respondent No. 1 that in light of clarification/circular issued by office of Inspector General Registration and Superintendent of Stamp M. P., the Stamp Duty for Works Contract has been fixed at minimum Rs. 500/- and maximum Rs. 25,000/- subject to be calculated at the rate of 0.25% of contract amount. The petitioner requested respondent No. 1 to issue

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