Bombay High Court
Andhra Pradesh Paper Mills Ltd. vs The State Of Maharashtra, Through ... on 20 December, 2002
Equivalent citations: 2003(4)MHLJ760
Author: V.M. Kanade
Bench: R.K. Batta, V.M. Kanade
JUDGMENT V.M. Kanade, J.
1. The Petitioner has filed this petitioner under Article 226 of the Constitution of India and is seeking an appropriate writ, order or direction directing the respondent State of Maharashtra and the Conservator of Forest North and Chandrapur Circle to refund an amount of Rs.69,59,078/- with interest @ 20% p.a. from 15.8.1987 till realisation of the said amount. The Petitioner is also seeking an appropriate writ for quashing and setting aside the communications dtd. 23.9.1987 and 24.9.1987 which are annexed at Annexures I and J respectively to the Petition.
2.Respondent no.2 had issued a Tender Notice dtd. 8.6.1987 for sale of Bamboo Units in Vadasa (Unit No.7) and Gadchiroli Unit Nos.10,11,12 and 14). The respondent no.3 had also issued a Tender Sale Notice in respect of Bhamragarh (Unit No.5) Chandrapur Circle for the same purpose. The terms and conditions of both the tender notices were identical. The tender was to be submitted in the prescribed form on or before 15.7.87 and sealed tenders received from the bidders were to be opened on the same day and tenderers were to pay earnest money deposit @10% of the total royalty to be worked out on the basis of the total estimated yield of that Bamboo Unit. It was mentioned in the Tender Notice that the sealed tender should be accompanied with the treasury challan or demand draft indicating that earnest money has been deposited. It was further stated in the Tender Notice that in case of successful tenderers, the earnest money deposit would automatically stands appropriated towards the security deposit which is required to be furnished. It is the case of the petitioner that as per the conditions stipulated in the tender after the submission of the tender, the offer would be considered valid for the period of 45 days from the date of the Tender Sale.
3.It is the case of the petitioner that pursuant to the Tender Notices issued by the Respondents 2 and 3, the petitioner submitted tenders on 15.7.1987 and before submitting the Tender Notice the Petitioner had deposited the earnest money as required by the Tender Notice.
4.It is the case of the petitioner that as per clause 7 of the Tender, the final sale result was to be declared within 30 days for getting approval of the competent authority and since respondents 2 and 3 did not declare the final sale result even after the expiry of 30 days from the date of opening of the Tender i.e. 15.7.1987, the petitioner sent a telegram on 15.8.87 to Respondent no.2 and 3 in which it was stated that since the final sale had not been declared within 30 days as per Clause 7 of the Tender Notice, the Petitioner had withdrawn their offer and requested for return of the earnest money deposit. The petitioner also addressed letters to the Respondents 2 and 3 on the same date, in which message and telegram which had been sent earlier have been quoted.
5. It is further the case of the petitioner that on 17.8.87 the Petitioner addressed another communication reiterating their stand of withdrawing their offer and requesting for refund of the earnest money. It is further the case of the petitioner that the petitioner did not receive any reply to the telegram which was sent on 15.8.87 or to the letters sent on the same day addressed to the respondent no.2 and 3 and also to the communication dtd.17.8.87 which was addressed to respondents 2 and 3. It is the case of the petitioner that, therefore, on 2.9.87 a letter was addressed to the respondent no.2 stating therein that even after expiry of 45 days on 29.8.87 the final results had not been declared and,therefore, earnest money deposited by the petitioner should be refunded. It is the case of the petitioner that again on 16.9.87 they addressed letters to respondents 2 and 3 stating therein that final sale result had not been declared even after the expiry of 45 days and the petitioner had already withdrawn the offer and, therefore, the petitioner was entitled to the refund of the earnest money deposit.
6.It is an admitted position that the final sale result in respect of the tender opened on 15.7.87 was declared on 17.9.87 which was communicated to the petitioner on 21.9.87 in which it was mentioned that the highest offer of the petitioner was accepted.
7. It is the case of the petitioner that the request of the petitioner for refund of the earnest money deposit was rejected by Respondent No.3 by letter dtd. 24.9.87 rejecting the request of the petitioner for refund of the earnest money. The petitioner has filed this writ petition under Article 226 of the Constitution challenging the decisions of the respondents 2 and 3 dtd. 23.9.87 (Annexure I) and decision dtd. 24.9.87 (Annexure J) rejecting the request of the petitioner to refund of earnest money.
8. Respondents 2 and 3 have filed their reply in which they denied the allegations and averments made by the petitioner in the petition in respect of their case for refund of earnest money deposit and the principal contention raised in the Return was that interpretation of clause 7 of the Tender Notice by the Petitioner company regarding the declaration of the final Sale Result within 30 days, was not correct. Respondents 2 and 3 tried to make out a specific case that the period and time limit of 30 days as envisaged in Clause 7 had to be counted with effect from the approval date of sale by the competent authority and not from the date of opening of tender dtd.15.7.1988. It is the case of the respondents 2 and 3 that since sale result of the tender sale of Bamboo Units held on 15.7.1987 was approved by the competent authority i.e. the State Government of Maharashtra, Revenue and Forest Department on 3.9.1987, the time limit for declaring the sale result was up to 2.10.1987. In para 3 of the reply it was contended by the respondents that in view of condition no.5 (iv) and 5(v), the petitioner was not entitled to withdraw their tender. The loss sustained in re-sale could be recovered from such person by the concerned Conservator of Forest and further it is submitted that since the petitioner had withdrawn their tender in violation of Condition No. 5(iv) and 5(v) before the declaration of the final sale result, it amounted to the violation of the terms and conditions of the Tender Sale Notice and, therefore, as per Clause 5(v) the earnest money deposit could not be refunded to the petitioner and the same was liable to be forfeited by the Government and accordingly the Government had forfeited the said earnest money deposit. The respondents have not denied the averments made in para 4 of the petition, in which petitioner had contended that the petitioner did not receive any reply to the letters they had sent for withdrawing their offer and request for refund of earnest money. This averment is uncontroverted and is admitted by the respondent.
9. The controversy in the present petition, therefore, is restricted to the interpretation of the conditions in the Tender and the question which falls for our consideration is as to whether the petitioner in the present case was entitled to withdraw its offer and ask for refund of the earnest money as per the terms and conditions of the Tender Notice.
10. This writ petition was admitted on 12.4.1988 and Rule was made returnable early. We have heard Shri V.R.Manohar, the learned Senior Counsel appearing on behalf of the petitioner and Shri Dhote, learned A.G.P. on behalf of the State at length. We have perused the copy of the petition and annexures thereto as also reply filed by the respondents and rejoinder filed by the petitioner.
11.In our view to resolve the impugned controversy raised in the petition, it will be necessary to take into consideration some of the relevant terms and conditions in the said Tender Notice which are reproduced hereinbelow.
Clause 3 of the Tender Notice deals with the Earnest Money Deposit which reads as follows;
"3. Earnest Money Deposit.
i)The Earnest Money Deposit shall be paid for each Tender, at the rate of 10 percent of the total Royalty to be worked out on the basis of total estimated yield of that Bamboo Unit and the same shall be calculated as per following formula.
Estimated yield in M.T. Rate quoted by of Bamboo Unit for X the Tenderer which Tender is filled. per Metric Tonne.(Earnest Money Deposit amount be rounded to nearest highest figure of rupee).
ii)The intending Tenderer, in token of having paid the Earnest Money Deposit shall enclose a Receipted Treasure Challan or Demand Draft or Deposit at Call, drawn in favour of the concerned Divisional Forest Officer on any branch of the Scheduled Banks which is payable at Chandrapur or in the form of National Saving Certificates duly pledged in the name of the concerned Divisional Forest Officer. However, cheques shall NOT be accepted towards Earnest Money Deposit.
iii)In case of successful tenderers, the Earnest Money shall automatically stand appropriated towards the Security Deposit required to be furnished.
iv)The Earnest Money Deposit of the unsuccessful Tenderer shall be refunded as early as possible after decision of the tenders.
v)No interest shall be payable in any case on the amount of Earnest Money."
Clause 5 deals with the submission of Tender. The relevant sub clauses which are important for deciding the present issue are Clause 5(iv) and 5(v) which are as under:
"iv)Once, a Tender is tendered, no changes can be made, nor can Tender be withdrawn. In case a Tenderer whose, tender is accepted, withdraws the tender, the loss sustained in the resale, as may be ordered by the concerned Conservator of Forests, shall be made good from him while considering the amount paid by him towards the Earnest Money Deposit.
v)Once a Tender is tendered the offer shall be considered valid for a period of 45 days from the date of Tender Sale in case of Tenders which are under consideration, or till the end of lease period in case of accepted Tenders, as the case may be. If the Tender is withdrawn prior to declaration of Final Sale Result, the amount of Earnest Money Deposit shall be forfeited to the Government."
12. It was submitted by the learned Senior Counsel Shri V.R.Manohar appearing on behalf of the petitioner that the provisions in the Tender Notice had to be construed as a whole. He further submitted that it was a very accepted principle that while interpreting the contents of the documents effect had to be given to all the terms harmoniously without picking and choosing a single clause & without rendering any clause redundant. He submitted that the perusal of the Tender Notice clearly establishes that the Tender Notice had made clear distinction between earnest money deposit and security deposit. Similarly, a clear distinction was made between Tender Sale and Tender Sale Result. He further submitted that from con-joint reading of the above mentioned clauses reproduced hereinabove the following conclusions would have to be drawn. viz.
A. An offer under the tender is valid for a period of 45 days from the date of tender sale in case of tenders which are under consideration i.e. only till 29.8.87.
B. The final sale result shall be declared within 30 days on getting the approval of the competent authority i.e. till 14.8.87.
C. If the highest tender is not considered acceptable, the final sale result shall be declared within 45 days i.e. 21.8.87.
D. thus in either of the events, the outer limit for declaring the final sale result is either 14.8.87 or 30.8.87, as the case may be.
E. The only contingency for forfeiting the EMD is provided in clause 5(v) and it is to the effect that the EMD shall be forfeited if the tender is withdrawn prior to the declaration of the final sale result.
F. the date of the final sale result is certain and fixed by an outer limit and is not left to be any date at the whim and fancy of the respondents."
He, therefore, submitted that the interpretation made by respondents 2 and 3 was clearly erroneous as they had merely relied on clause 5(iv) and 5(v) and had wrongly interpreted Clause 7 to mean that the period of 30 days would expire after approval was given by the competent authority. He submitted that the interpretation was clearly contrary to the other clause in the said Tender Notice which clearly speaks of an outer limit for declaring the sale result as 45 days and since it was an admitted position that the sale result was declared after 45 days, the petitioner was entitled to get refund of the earnest money deposit.
13.The learned A.G.P. appearing on behalf of the Respondents vehemently opposed the submissions made by the learned counsel for petitioner. He submitted that Clauses 5(iv) and 5(v) of the Tender Notices were very clear and specifically mentioned that the earnest money deposit would stand forfeited to the Government if the Tender is withdrawn prior to the declaration of the final sale result. He submitted that the final sale result was declared on 17.9.87 and as such as per Clause 7 the Tender could not be withdrawn before 17.10.87. He submitted that, therefore, since the Tender was withdrawn before the declaration of the final sale result as per condition 5(v) the earnest money deposit would stand forfeited to the Government. He further submitted that as a result of the petitioner withdrawing the offer the Government had suffered an estimated financial loss of Rs.7 crorers on account of non execution of the Tender. He further submitted that as a result of non exploitation of Bamboo to the Tender 1,53,665 Metric Tonnes from the Forest Area it had resulted in a national loss.
14. We have heard the learned counsel appearing on behalf of the petitioner and respondents at length. We have read the copy of the petition, annexures thereto as also reply filed by the respondents. We have also gone through the Judgments relied upon by the petitioner. The petition was admitted on 12.4.1988 and Rule was made returnable early. However, the matter remained pending for almost 14 years and thereafter the matter was finally heard. It is an admitted position that there are no disputed questions on fact raised in the present petition. It is conceded by Shri Dhote, learned A.G.P. appearing on behalf of the State that the factual aspect in this case is not disputed and the short question pertains to interpretation of the terms and conditions of the Tender Notice. In this view of the matter, in our opinion, the Writ Petition under Article 226 of the Constitution of India would be maintainable though the present question pertains to the contractual matter it would still be amenable to the writ jurisdiction of the High Court under Article 226 of the Constitution of India. Though the earlier view was that under the normal circumstances, the petition under Article 226 of the Constitution relating to the contractual matters was not maintainable, law underwent a change by subsequent decisions and now it has been held that though the petition essentially pertains to the contractual matters, a writ petition under Article 226 of the Constitution of India is maintainable. This view has been reiterated in the case of The Chairman, Railway Board and others. v. Mrs. Chandrima Das & others, reported in 2000(1) Scale , 279. The Apex Court has observed in the said Judgment in para 9 as follows:
"Various aspects of the Public Law field were considered. It was found that though initially a petition under Article 226 of the Constitution relating to contractual matters was held not to lie, the law underwent a change by subsequent decisions and it was noticed that even though the petition may relates essentially to a contractual matter, it would still be amenable to the writ jurisdiction of the High Court under Article 226. The Public Law remedies have also been extended to the realm of tort. This Court, in its various decisions, has entertained petitions under Article 32 of the Constitution on a number of occasions and has awarded compensation to the petitioners who had suffered personal injuries at the hands of the officers of the government. The causing of injuries, which amounted to tortious act, was compensated by this Court in many of its decisions beginning from Rudul Sah vs. State of Bihar .(See also : Bhim Singh vs. State of Jammu & Kashmir :
Peoples Union for Democratic Rights vs. State of Bihar, : Peoples Union for Democratic Rights Thru. Its Secy. vs. Police Commissioner, Delhi Police Headquarters ; Saheli A Womans Resources Centre vs. Commissioner of Police, Delhi ; Arvinder Singh Bagga vs. State of U.P. : P. Rathinam vs. Union of India (1989) Supp. 2 SCC 716; In Re: Death of Sawinder Singh Grower (1995) Supp. (4) SCC 450 JT (1992) 6 SC 271 - 1992 (3) SCALE 34;
Inder Singh vs. State of Punjab ;
D.K.Basu vs. State of West Bengal ).
15. Thus, we have no hesitation in holding that the Writ Petition under Article 226 of the Constitution of India is maintainable and that the present petition can be entertained especially when the petition was admitted in 1988 and has remained pending for the last 14 years in this Court though alternate remedy was available to the petitioner of filing a suit or that by itself can not be a bar for entertaining the petition under Article 226 of the Constitution of India, the matter having been admitted it would not be open now for the respondents to say that the petitioner had an alternate remedy available when the petition was filed and, therefore, the petition should be dismissed on that count. The Apex Court has also now held in a case reported in A.I.R. 2001 SCW page 5069 that this objection could have been considered by the Court at the time of admission but now once the matter is admitted the petition should be decided on merits if it is otherwise maintainable under Article 226 of the Constitution of India. Similar view has been taken by the Apex Court in and AIR 1964 S.C. 1007.
16.The short question which falls for our consideration in the present petition is that as to whether there was a concluded contract between the parties and whether one of the party to the contract that is the Petitioner could withdraw his bid before the conclusion of the contract and claim refund of the earnest money which he had deposited.
17.In our view, the contract was not concluded and after the specified period as mentioned in the Tender Notice the Petitioner had withdrawn its bid and as a result the petitioner was entitled to get its earnest money back. If the terms and conditions of the Tender Notice were read as a whole, it is clear that the offer under the Tender was valid for the period of 45 days from the date of Tender sale and it was, thus, valid till 29.8.1987 as the last date of Tender Sale was on 15.7.1987. From the terms and conditions of the Contract, it is clear that the final sale result was to be declared within 30 days on getting approval of the competent authority that is to say till 14.8.1987 and if the highest tender was not considered acceptable in any case the final sale result was to be declared within 45 days i.e. 29.8.1987. Thus, in our view, in either case the outer limit for declaring final result was either on 14.8.1987 or 30.8.1987.
18.The respondents had a right to forfeit the earnest money deposit as provided in Clause 5(v) only if the tender was withdrawn prior to the declaration of the final sale result i.e. either 14.8.1987 or 30.8.1987. In our view, taking into consideration the relevant clauses of the Tender Notice viz. Clause 5(iv),(v),
(vi), (vii) and (ix), it will have to be held that the date of the final result was fixed by an outer limit and the said date did not depend upon the approval of the competent authority as submitted by the respondents. It is an admitted position that the petitioner has withdrawn its offer after expiry of 45 days when there was no communication from the respondents either of acceptance or rejection of its bid in the said auction. This being an admitted position the contention raised by the respondents that the period of final sale was to be calculated as 30 days after the approval of the competent authority can not be accepted. It is an accepted principle of interpretation of the documents that effect has to be given to all the terms and conditions by reading it as a whole and not by reading a particular clause independently by excluding the rest of the clauses. The submission made by the respondents that the approval was given by the competent authority on 3.9.1987 and, therefore, the time limit for declaring the final sale result was 2.10.1987 i.e. 30 days after the said period and that the tender was withdrawn by the petitioner before 2.10.1987 and,therefore, the money deposited was forfeited & the Government had a right to forfeit earnest money deposit as per the provisions contained in Clause 5 (iv) & (v), can not be accepted. If the said submission is accepted, it would mean that the Government would have a right to declare the final sale result at an indefinite period of time and that the final sale could be declared as per the sweet will of the competent authority. This is surely not the position as the provisions of Clause 5(iv),(v),(vi),(vii) and (ix) are absolutely very clear. In the instant case, the respondents had invited tenders and the petitioner and others gave their offer in the form of bid, the petitioner had every right to withdraw its offer after the period stipulated by the respondents was over. In our view, the period was over on 30.8.1987 and the after the said period was over, the petitioner had withdrawn its offer. Thus, there was no concluded contract between the parties. Since the offer was withdrawn before the conclusion of contract, the petitioner was entitled to get its earnest money deposit back.
19.The Apex Court in the catena of cases has held that there is no concluded contract till the bid is accepted and that it was open for the bidder, before there was a concluded contract, to withdraw its bid and that by merely giving bids the bidders had not acquired any vested rights and that merely because the Government was seller, it did not change the legal position, once its exclusive right to deal with the goods was conceded. The apex Court in the case of Union of India and others v. Messrs. Bhim Sen Walaiti Ram, held that the contract of sale was not complete till the bid was confirmed by the Chief Commissioner and till such confirmation, the person whose bid has been provisionally accepted is entitled to withdraw his bid. The apex Court has observed in para no.4 as follows;
"On behalf of the appellants it was contended by Dr. Syid Muhammad that the respondent was under a legal obligation to pay one sixth of the annual fee within seven days of the auction under Clause 21 of Rule 5.34 and it was due to his default that a re-sale of the excise shop was ordered. Under Clause 22 of Rule 5.34 the respondent was liable for the deficiency in price and all expenses of such re-sale which was caused by his default. We are unable to accept this argument. The first portion of Clause 21 requires the "person to whom the shop has been sold" to deposit one sixth of the total annual fee within seven days. But, the sale is deemed to have been made in favour of the highest bidder only on the completion of the formalities before the conclusion of the sale. Clause 16 of Rule 5.34 states that " all sales are open to revision by the Chief Commissioner". Under Clause 18, the Collector has to make a report to the Chief Commissioner where in his discretion he is accepting a lower bid. Clause 33 of the Conditions, Ex. D-28, states that "all final bids will be made subject to the confirmation by the Chief Commissioner who may reject any bid without assigning any reasons". It is, therefore, clear that the contract of sale was not complete till the bid was confirmed by the Chief commissioner and till such confirmation the person whose bid has been provisionally accepted is entitled to withdraws his bid. When the bid is so withdrawn before the confirmation of the Chief Commissioner the bidder will not be liable for damages on account of any breach of contract or for the shortfall on the re-sale. An acceptance of an offer may be either absolute or conditional. If the acceptance is conditional the offer can be withdrawn at any moment until absolute acceptance has taken place. This view is borne out by the decision of the Court of Appeal in Hussey v. Hornepayne. In that case V offered land to P and P accepted subject to the title being approved by my solicitors. V later refused to go on with the contract and the Court of Appeal held that the acceptance was conditional and there was no binding contract and that V could withdraw at any time until Ps solicitors had approved the title. Jossel M.R., observed at p 626 of the report as follows:
"The offer made to the plaintiff of the estate at that price was a simple offer containing no reference whatever to title. The alleged acceptance was an acceptance of the offer, so far as price was concerned, subject to the title being approved by our solicitors. There was no acceptance of that additional term, and the only question which we are called upon to decide is, whether that additional term so expressed amounts in law to an additional terms or whether it amounts, as was very fairly admitted by the counsel for the respondents, to nothing at all, that is, whether it merely expresses what the law would otherwise have implied. The expression subject to the title being approved by our solicitors appear to me to be plainly an additional term. The law does not give a right to the purchaser to say that the title shall be approved by any one, either by his solicitor or his conveyancing counsel, or any one else. All that he is entitled to require is what is called a marketable title, or , as it is sometimes called, a good title. Therefore, when he puts in subject to the title being approved by our solicitors, he must be taken to mean what he says, that is, to make a condition that solicitors of his own selection shall approve of the title."
It was submitted on behalf of the appellant that the phrase, " person to whom a shop has been sold" in Clause 21 of Rule 5.34 means a "person whose bid has been provisionally accepted". It is not possible to accept this argument. As we have already shown the first part of clause 21 deals with a completed sale and the second part deals with a situation where the auction is conducted by an officer lower in rank than the Collector. In the latter case the rule makes it clear that if any person whose bid has been accepted by the officer presiding at the auction fails to make the deposit of one sixth of the annual fee, or if he refuses to accept the licence, the Collector may resale the licence, either by public auction or by private contract and any deficiency in price and all expenses of such re-sale shall be recoverable from the defaulting bidder. In the present case the first part of clause 21 applies. It is not disputed that the chief Commissioner has disapproved the bid offered by the respondent. If the Chief Commissioner had granted sanction under Clause 33 of Ex. D-23 the auction sale in favour of the respondent would have been a completed transaction and he would have been liable for any shortfall on the re-sale. As the essential pre-requisites of a completed sale are missing in this case there is no liability imposed on the respondent for payment of the deficiency in the price."
20.The apex Court thereafter in the case of P.R.Quenim v. M. K. Tandel and others , has reiterated that there was no concluded contract till the bid was accepted and that before there was a concluded contract it was open to the bidder to withdraw the bid. The Apex Court observed as follows;
".................................. .....Even apart from the power conferred on the Government under Sections 22 and 29, we fail to see how the power retained by the Government under clause (6) of its order, dated January 6, 1971, can be considered as unconstitutional. As held by this Court in Cooverjee B. Bharuchas case, one of the important purposes of selling the exclusive right to sell liquor in whole sale or retain is to raise revenue. Excise revenue forms an important part of every States revenue. The Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. Hence, quite naturally, the Legislature has empowered the Government to see that there is no leakage in its revenue. It is for the Government to decide whether the price offered in an auction sale is adequate. While accepting or rejecting a bid, it is merely performing an executive function. The correctness of its conclusion is not open to judicia review. We fail to see how the plea of contravention of Article 19(1)(g) or Article 14 can arise in these cases. The Governments power to sell the exclusive privilege set out in Section 22 was not denied. It was also not disputed that those privileges could be sold by public auction. Public auctions are held to get the best possible price. Once these aspects are recognised, there appears to be no basis for contending that the owner of the privileges in question who had offered to sell them cannot decline to accept the highest bid if he thinks that the price offered is inadequate. There is no concluded contract till the bid is accepted. Before there was a concluded contract, it was open to the bidders to withdraw their bids--see Union of India v. Bhimsen Walaiti Ram, . By merely giving bids, the bidders had not acquired any vested rights. The fact that the government was the seller does not change the legal position once its exclusive right to deal with those privileges is conceded. If the government is the exclusive owner of those privileges, reliance on Article 19(1)(g) or Article 14 becomes irrelevant".
21.The Apex Court has further held in the case of State of Orissa and others. v. Harinarayan Jaiswal and others, that in the said case the respondents were the highest bidders at an auction held by the Orissa Government through the Excise Commissioner, for the exclusive privilege of selling by retail the country liquor in some shops. The Government of Orissa had reserved the right either to accept or reject the highest bid and had actually rejected the bids of the Respondents and later on the privilege was sold by negotiation to some others. The respondents filed a writ in the High Court, which quashed the order of the Government as violative of Articles 19(1)(g) and 14. The Apex Court has observed as follows in para 13;
"Even apart from the power conferred on the Government under Sections 22 and 29, we fail to see how the power retained by the Government under clause (6) of its order, dated January 6, 1971, can be considered as unconstitutional. As held by this Court in Cooverjee B. Bharuchas case (supra), one of the important purpose of selling the exclusive right to sell liquor in wholesale or retail is to raise revenue. Excise revenue forms an important part of every States revenue. The Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. Hence, quite naturally, the Legislature has empowered the Government to see that there is no leakage in its revenue. It is for the Government to decide whether the price offered in an auction sale is adequate. While accepting or rejecting a bid, it is merely performing an executive function. The correctness of its conclusion is not open to judicial review. We fail to see how the plea of contravention of Article 19(1)(g) or Article 14 can arise in these cases. The Governments power to sell the exclusive privileges set out in Section 22 was not denied. It was also not disputed that those privileges could be sold by public auction. Public auctions are held to get the best possible price. Once these aspects are recognized, there appears to be no basis for contending that the owner of the privileges in question who had offered to sell them cannot decline to accept the highest bid if he thinks that the price offered is inadequate. There is no concluded contract till the bid is accepted. Before there was a concluded contract, it was open to the bidders to withdraw their bids-see Union of India and Others v. M/s Bhimsen Walaiti Ram. By merely giving bids, the bidders had not acquired any vested rights. The fact that the Government was the seller does not change the legal position once its exclusive right to deal with those privileges is conceded. If the Government is the exclusive owner of those privileges, reliance on Article 19(1)(g) or Article 14 becomes irrelevant. Citizens cannot have any fundamental right to trade or carry on business in the properties or rights belonging to the Government-- nor can there be any infringement of Article 14, if the Government tries to get the best available price for its valuable rights. The High Court was wholly wrong in thinking that purpose of Sections 22 and 29 of the Act was not to raise revenue. Raising revenue as held by this Court in Cooverjee B. Bharuchas case (supra) was one of the important purposes of such provisions. The fact that the price fetched by the sale of country liquor is an excise revenue does not change the nature of the right. The sale in question is but a mode of raising revenue. Assuming that the question of arbitrary or unguided power can arise in a case of his nature, it should not be forgotten that the power to accept or reject the highest bid is given to the highest authority in the State i.e. the Government which is expected to safeguard the finances of the State. Such a power cannot be considered as an arbitrary power. If that power is exercised for any collateral purposes, the exercise of the power will be struck down. It may also be remembered that herein we are not dealing with a delegated power but with a power conferred by the Legislature.
The High Court erroneously thought that the Government was bound to satisfy the Court that there was collusion between the bidders. The High Court was not sitting on appeal against the order made by the Government. The inference of the government that there was a collusion among the bidders may be right or wrong. But that was not open to judicial review so long as it is not proved that it was a make believe one. The real opinion formed by the Government was that the price fetched was not adequate. That conclusion is taken on the basis of Government expectations. The conclusion reached by the Government does not affect any ones rights. Hence, in our opinion, the High Court misapplied the ratio of the decision of this Court in Barium Chemicals Ltd., and another v. Company Law Board and Others, and Rohtas Industries Ltd. v. S.T.Agarwal."
22.The Apex Court also took a similar view in the case of Haridwar Singh .v. Bagun Sumbrui and others, wherein in paras 6,7 and 8 the Apex Court has observed as follows:
"Counsel for the appellant contended that there was a conditional acceptance of the offer of the appellant by the Divisional Forest Officer, that on confirmation by the Government, that acceptance became unconditional and, therefore, there was a concluded contract when the Government confirmed the acceptance, even though the confirmation was not communicated to the appellant. In support of this, he relied on The Rajanagaram Village Co-operative Society v. Veerasami Mudaly. There it was held that in the case of a conditional acceptance in the presence of a bidder, the condition being that it is subject to approval or confirmation by some other person, the acceptance, though conditional, has to be communicated and when that is communicated, there is no further need to communicate the approval of confirmation which is the fulfillment of the condition. It was further held that a conditional acceptance has the effect of binding the highest bidder to the contract if there is subsequent approval or confirmation by the person indicated, that he cannot resile from the contract or withdraw the offer, and if there is approval or confirmation, the contract becomes concluded and enforceable. This decision was considered in Samasundaram Pillai v. Provincial Government of Madras, where Chief Justice Leach, speaking for the court said that, to have an enforceable contract, there must be an offer and an unconditional acceptance and that a person who makes an offer has the right to withdraw it before acceptance, in the absence of a condition to the contrary supported by consideration. He further said the fact that there has been a provisional or conditional acceptance would not make any difference as a provisional or conditional acceptance cannot in itself make a binding contract.
The question whether by an acceptance which is conditional upon the occurrence of a future event a contract will become concluded was considered by Williston, and this is what he says:
A nice distinction may be taken here between: (1) a so-called acceptance by which the acceptor agrees to become immediately bound on a condition not named in the offer, and (2) an acceptance which adopts unequivocally the terms of the offer but states that it will not be effective until a certain contingency happens or fails to happen. In the first case, there is a counter offer and rejection of the original offer; in the second case there is no counter offer, since there is no assent to enter into an immediate bargain. There is, so to speak, an acceptance in escrow, which is not to take effect until the future. In the meantime, of course, neither party is bound and either may withdrawn. Moreover, if the time at which the acceptance was to become effectual is unreasonably remote, the offer may lapse before the acceptance becomes effective. But if neither party withdraws and the delay is not unreasonable a contract will arise when the contingency happens or stipulated event occurs. In this case, it is not the want of communication of the confirmation by the Government to the appellant that really stands in the way of there being a concluded contract, but rather the want of confirmation by the Government of the conditional acceptance by the divisional Forest Officer. The appellants bid was for Rs. 92,001/-. The acceptance of the bid by the Divisional Forest Officer was, therefore, subject to confirmation by Government. The proceedings of the Minister, dated November 27, 1970, would show that he did not confirm the acceptance of the offer by the Divisional Forest Officer. What the Minister did was not to confirm the acceptance made by the Divisional Forest Officer, but to accept the offer made by the appellant in his communication, dated October 26, 1970, that he would take the coup for the reserved price of Rs.95,000/-. There was, therefore, no confirmation of the acceptance of the bid to take the coup in settlement for the amount of Rs. 92,001/-. If the offer that was accepted was the offer contained in the communication of the appellant, dated October 26, 1970, we do not think that there was any communication of the acceptance of that offer to the appellant. The telegram sent to the Conservator of Forest, Hazaribagh by the Government on November 28, 1970 cannot be considered as a communication of the acceptance of that offer to the appellant. The acceptance of the offer was not even put in the course of transmission to the appellant; and so even assuming that an acceptance need not come to the knowledge of the offeror, the appellant cannot contend that there was a concluded contract on the basis of his offer contained in his communication, dated October 26, 1970, as the acceptance of that offer was not put in the course of transmission. Quite apart from that, the appellant himself revoked the offer made by him on October 26, 1970, by his letter dated November 3, 1970, in which he stated that the coup may be settled upon him at the highest bid made by him in the auction. We are, therefore, of the opinion that there was no concluded contract between the appellant and the Government."
23.The Apex Court has reiterated this position in the recent Judgment in the case of Riya Travel and Tours (India) Pvt. Ltd., v. C.U.Chengappa and others . The Apex Court held that the offer of the appellant was a qualified one and that the bid was not open for acceptance for an indefinite period. Para no. 6 reads as follows:
" From the facts enumerated hereinabove, it is evidently clear that the offer of the appellant was a qualified one. The bid was not open for acceptance for an indefinite period. In the offer made by the appellant, it was clearly stated that the acceptance should be conveyed within three months which was subsequently extended up to July 1999. When, admittedly, there was delay in the acceptance of the bid, the appellant was at liberty to ask for the refund of money already paid and to withdraw from the bid at least after 9.7.1999."
It would be profitable to see the ratio laid down way back in the case of Somasundaram Pillai .v. Provincial Government of Madras, reported in A.I.R. (34) 1947 Madras 366. The question raised in the said para was pertaining to the question with regard to the conditions prescribed by the Board of Revenue for the conduct of auction of liquor shop licences. The question which the Court had to decide was whether a bid made at such an auction and provisionally accepted could be enforced, notwithstanding that the maker withdraws it before acceptance by the Collector. The Division Bench observed as follows:
" To have an enforceable contract there must be an offer and an unconditional acceptance. A person who make an offer has the right of withdrawing it before acceptance, in the absence of a condition to the contrary supported by consideration. Does the fact that there has been a provisional acceptance, make any difference? We can see no reason why it should. A provisional acceptance cannot in itself make a binding contract. There must be a definite acceptance or the fulfillment of the condition on which a provisional acceptance is based. Our attention has been drawn to an observation made by Muttuswami Aiyar J. in 14 Mad. 235 where it was also held that it was competent for a bidder at a court auction to withdraw his bid. In the course of his judgment, Muttuswami Aiyar J. said:
"It appears that, in the case under reference, it was not one of the conditions of sale that bidders were not at liberty to withdraw their bids."
We do not regard this statement as a definite acceptance of the proposition that where there is such a condition a bid cannot be withdrawn. If Muttuswami Aiyar J.
intended so to hold, we can only express our dissent. The learned Advocate-General has suggested that the decision of this Court in 28 M.L.J. 617 recognises that there can be in law a conditional acceptance which will constitute a contract. We have already indicated that where there is a conditional acceptance and the condition is subsequently fulfilled there is a contract and that was all that was said in that case. Certain occupancy rights in jeroyiti lands had been put for sale by public auction by the amin of the Maharaja of Vizianagaram. The amin accepted a bid subject to the approval of the special agent. The special agent gave his approval whereupon the sale became irrevocable.
In the present case there was a provisional acceptance by the Sub Collector of the appellants bids, but the Collector refused to confirm the acceptance and directed the sale to continue. He changed his mind at a later stage and accepted the bids, but before this happened, the appellant had withdrawn them, which he was entitled to do in law as there was no consideration to support his implied acceptance of the condition that once a bid had been made it could not be withdrawn.
If the conditions of sale had statutory force, the position would of course be different but they had not statutory force. They were merely conditions which the Board of Revenue had directed should be imposed in respect of auctions of liquor shop licences. We are firmly of the opinion that the appellant was entitled to withdraw his bids because the prohibition against withdrawal had not the force of law and there was no consideration to bind him down to the condition. For these reasons, we allow the appeal and decree the suit with costs throughout."
The ratio mentioned in the aforesaid case, has been affirmed in the cases and , where the Apex Court directed the respondents to refund the amount with interest.
24.In the light of the ratio laid down in the aforesaid Judgment, we have no hesitation in holding that the petitioner had withdrawn its bid before the conclusion of the contract and, therefore, the petitioner is entitled to get the refund of the earnest money deposited which it had paid to the respondents at the time of making its offer in the form of a bid to the Tender Notice issued by the Respondents. In the result, the impugned communication at Annexure I, dated 23.9.1987 informing the petitioner that its earnest money deposit was forfeited on account of withdrawal of tender and communication at Annexure J dated 24.9.1987 informing the petitioner that the earnest money deposit could not be refunded because the State Government had accepted the tender on 17.9.1987, will have to be quashed and set aside. In the present case that the acceptance by respondents of the offer made by the petitioner was on 17.9.1987 which was communicated much after the last date of declaration of final sale result which was 30.8.1987 as per the relevant clauses of the Tender Notice, viz. Clauses (vi), (vii) and (ix) had before the communication of acceptance by the respondents, the petitioner had already withdrawn its offer after the period of 45 days as stipulated by clauses as above.
25. It is submitted by the learned counsel appearing on behalf of the petitioner that the petitioner is entitled to get interest @ 18% p.a. from the date on which it had withdrawn its offer till the date of the realisation of the said amount. Shri Manohar, the learned Senior Counsel appearing on behalf of the petitioner relied upon the judgment in the case of Ghaziabad Development Authority .v. Union of India and another, reported in AIR 2000 Supreme Court, 2003 wherein the Apex Court had granted interest @15% p.a.. The Apex Court has observed in para 10 as under:
"We are, therefore, of the opinion that interest on equitable grounds can be awarded in appropriate cases. In Sovintorg (India) Ltd.s case the rate of 15 per cent per annum was considered adequate to serve the ends of justice. The Court was apparently influenced by the fact that the claimant had to suffer winding up proceedings under the Companies Act and the defendant must be made to share part of the blame. However, in the cases before us, the parties have not tendered any evidence enabling formation of opinion on the rate of interest which can be considered ideal to be adopted. The rate of interest awarded in equity should neither be too high nor too low. In our opinion awarding interest at the rate of 12 per cent per annum would be just and proper and meet the ends of justice in the cases under consideration. The provision contained in the brochure issued by the Development Authority that it shall not be liable to pay any interest in the event of an occasion arising for return of the amount should be held to be applicable only to such cases in which the claimant is itself responsible for creating circumstances providing occasion for the refund. In the cases under appeal the fault has been found with the Authority. The Authority does not therefore have any jurisdiction for resisting refund of the claimants amount with interest."
Similarly, in the case of M/s Shyam Biri Works Pvt. Ltd. .v. U.P. Forest Corporation and another, , the Court had awarded interest @ 15% p.a..
26.In our view, the petitioner would be entitled to get interest @ 6% p.a. from the date on which it had withdrawn its offer till the date the payment of earnest money is made.
27.The Writ Petition is, therefore, allowed. The impugned communications at Annexure I and J are quashed and set aside. The respondents are directed to refund the earnest money deposit made by the petitioner with interest @6% p.a. from the date on which the petitioner has withdrawn its offer till the date of payment of the earnest money. The respondents are directed to refund the said amount within a period of 8 weeks. Under the circumstances, there shall be no order as to costs.