Patna High Court - Orders
Pks Infracon Private Limited vs The State Of Bihar on 26 September, 2024
Author: Rajiv Roy
Bench: Rajiv Roy
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.1791 of 2024
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PKS Infracon Private Limited
... ... Petitioner/s
Versus
The State of Bihar & Ors.
... ... Respondent/s
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Appearance :
For the Petitioner/s : Mr. Suraj Samdarshi, Advocate
For the Respondent/s : Mr. Government Advocate 2
For the Mines : Mr. Naresh Dikshit, Spl.P.P.
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CORAM: HONOURABLE MR. JUSTICE RAJIV ROY
ORAL ORDER
2 26-09-2024Heard the parties.
2. The present writ petition has been preferred for the grant of following relief/s:-
"i) To issue an appropriate writ, order or direction in the nature of certiorari for quashing order contained in memo no. 1141 dated 13.11.2023 (Annexure 9) issued by the Respondent Administrative Officer whereby the representation dated 12.01.2023 submitted in light of order dated 04.01.2023 passed by this Hon'ble Court in CWJC No. 17226/2022 has been dismissed and the prayer for refund of Earnest Money Deposit of Rs. 1,75,97,469/- has been rejected.
Patna High Court CWJC No.1791 of 2024(2) dt.26-09-2024 2/19
ii) To issue further appropriate writ, order or direction in the nature of certiorari for quashing letter no. 177 dated 17.01.2022 (Annexure 6) issued by the Respondent Administrative Officer, whereby the earnest money of Rs. 1,75,97,469/- deposited by the Petitioner for participating in e-auction of sand ghat Cluster 10 in the district of Rohtas in furtherance of Tender bearing reference no. 02/2021 - 22 dated 01.10.2021 floated by Bihar State Mining Corporation Limited, has been forfeited.
iii) Consequent to grant of relief no (i) and (ii), to issue a further writ, order or direction in the nature of mandamus commanding the Respondent Bihar State Mining Corporation to refund the earnest money of Rs. 1,75,97,469 /- deposited by the Petitioner for participating in e-auction of sand ghat Cluster 10 in the district of Rohtas in furtherance of Tender bearing reference no. 04/2021 - 22 dated 28.11.2021.
Patna High Court CWJC No.1791 of 2024(2) dt.26-09-2024 3/19
iv) To grant any other relief or reliefs which the Petitioner may be found entitled to in the facts and circumstances of the case."
3. The case of the petitioner is that it is a company registered under the Companies Act and its shareholder and directors reside within the jurisdiction of this Hon'ble Court. The fact giving rise to this case is that the Respondent Bihar State Mining Corporation Limited (hereinafter referred to as "BSMCL") published a tender for selection of contractors for the operation of the sand ghats/cluster in the District of Rohtas vide Short Notice Inviting Re-tender bearing reference no. 02/2021-22 dated 01.10.2021.
4. Further, the date of issuance of tender document was 29.11.2021 while the last date for submission of technical bids was 06.12.2021 till 01:00 pm and the date of opening of technical bid was 06.12.2021 at 03:00 pm. The date of uploading the of names of the successful bidders was 07.12.2021.
5. The Petitioner decided to participate in the auction of cluster 10 sand ghat in the district of Rohtas and deposited Rs. 1,75,97,469/- as the Earnest Money Deposit on 05.12.2021. This fact would be evident from the print out obtained from the Patna High Court CWJC No.1791 of 2024(2) dt.26-09-2024 4/19 e-procurement portal www.eproc2.bihar.gov.in and the RTGS statement issued by the bank dated 06.12.2021.
6. Unfortunately, on 05.12.2021 itself, the mother of the petitioner left for her heavenly abode and the certificate issued on 27.12.2021 is part of the record. As the petitioner had performed the last rites and had to participate in all the other rituals, he could not participate in the bidding process which took place on 10.12.2021.
7. Consequent thereto, the petitioner was issued show cause contained in letter no. 840 dated 11.12.2021 issued by the Authorised Officer, BSMCL and letter no. 865 dated 11.12.2021 issued by the Mineral Development Officer. Immediately vide letter dated 14.12.2021, the petitioner submitted a reply to the Respondents stating that since his mother died and he performed the rituals, could not participate in the tender. Thereafter no action was taken and nothing was communicated to the petitioner. The petitioner kept on following the matter with the Respondents regarding refund of the EMD. However, 'the BSMCL' on one pretext or the other delayed the matter and the officials said that the matter was under consideration and the EMD shall be refunded soon.
8. However, in the last week of September 2022, the Patna High Court CWJC No.1791 of 2024(2) dt.26-09-2024 5/19 petitioner came to know that the earnest money deposit of Rs. 1,75,97,469/- had been forfeited and he was handed over the letter no. 177 dated 17.01.2022 issued by the Administrative Officer of 'the BSMCL' by which the order for forfeiture of EMD was passed.
9. Having come to know about forfeiture of its EMD, the petitioner challenged letter no. 177 dated 17.01.2022 before this Court by way of a writ application bearing CWJC No. 17226/2022. The said writ application was disposed of vide order dated 04.01.2023 with direction to the petitioner to file a representation before Respondent no. 7 which was directed to be disposed of within a period of four month.
10. Consequently thereto, the petitioner filed a representation dated 12.01.2023 before the Respondent no. 7 stating the facts and circumstances of the case and requested the authority to refund the EMD. The Respondent 7 i.e. the Authorised Officer, BSMCL vide order contained in memo no. 1141 dated 13.11.2023 rejected the representation of the petitioner holding that the earlier order of forfeiture of EMD does not require any interference.
11. It is the contention of the petitioner that he was not able to participate in the e-bidding process on valid reason Patna High Court CWJC No.1791 of 2024(2) dt.26-09-2024 6/19 as he had performed the last rites of his mother and had to participate in all the other rituals. There was no deliberate misconduct on his part.
12. Learned counsel submits that clause 18 of the tender document applies only if the bidder has committed any irregularity or indulged in any corrupt practice during the bidding process. However, here the petitioner never participated in the financial bidding process. Moreover, the petitioner has not committed any irregularity or indulged in any corrupt practice. Therefore, clause 18 does not apply to the petitioner and there was absolutely no justification for forfeiture of EMD.
13. So far as the observation in the impugned memo no. 1141 dated 13.11.2023 is concerned that the petitioner participated in the financial auction process but thereafter no bid was placed by the petitioner is concerned, it is submitted that the said report of the BELTRON was never provided to the petitioner and therefore the petitioner was not in a position to rebut the same.
14. Further, there is no provision in the tender document which authorizes 'the BSMCL' to forfeit the earnest money deposit of a bidder for not participating in the tender process. Thus the action of forfeiture of earnest money deposit Patna High Court CWJC No.1791 of 2024(2) dt.26-09-2024 7/19 is without any authority.
15. Learned counsel for the petitioner reiterates that clause 17 and 18 deals about different situation and there is no other clause which shows that in absence of appearing in the tender process, the amount paid will be forfeited.
16. It would be appropriate to incorporate paragraphs 17 and 18 of the tender document issued by the Department which read as follows:
17- bZ&uhykeh dh izfdz;k ds rgr cksyhnkrkvksa }kjk ;fn fdlh izdkj dh vfu;ferrk vFkok Hkz'V vkpj.k dk izek.k ik;k tkrk gS] rks mUgsa mPpre MkdoDrk ?kksf'kr gksus ds ckotwn Hkh muds Mkd dks jn~n dj tek jkf"k dks tIr dj fy;k tk,xk ,oa vxys ikWap o'kZ ds fy, uhykeh esa Hkkx ysus ls oafpr djrs gq, dkyh&lwph esa Mky fn;k tk,xkA 18- fufonknkrk }kjk fufonk esa mPpre cksyh yxkdj izfrHkwfr jkf"k ¼mPpre Mkd dh jkf"k dk 25 izfr"kr ,oa vx/ku jkf"k dks lek;ksftr djds ½ uhykeh dh frfFk ls 02 dk;Z fnol esa tek ugha djrs gS] rks oSls fufonknkrk dk tek vxz/ku jkf"k dks tIr djrs gq, dkyh lwph esa Mky fn;k tk,xk ,oa vkxkeh ikWap o'kksZa ds fy, fufonk esa Hkkx ysus ls oafpr dj fn;k tk,xkA
17. The petitioner has made out a case, the conditions nowhere incorporates that non participation in the tender process will result into forfeiture of the amount. Further, learned counsel has drawn attention of this Court to an order passed by a Coordinate Bench on 03.11.2023 in the case of M/s Swastik Patna High Court CWJC No.1791 of 2024(2) dt.26-09-2024 8/19 Traders vs The State of Bihar & Ors. (CWJC No. 7519 of 2022) with reference to paragraph-17 to 19 and 21 which read as follows:
17. Furthermore, the impugned order dated 28.04.2022 (anneuxre-15) passed by the respondent-Joint Secretary, BSMCL forfeiting the EMD has been passed after having found the petitioner guilty of committing irregularities and indulging in corrupt practice during the bid process under Clause 18 of the tender document. It would be proper to quote Clause 18 of the tender document, which reads as follows:
18- fufonknkrk }kjk fufonk esa mPpre cksyh yxkdj izfrHkwfr jkf"k ¼mPpre Mkd dh jkf"k dk 25 izfr"kr ,oa vx/ku jkf"k dks lek;ksftr djds½ uhykeh dh frfFk ls 02 dk;Z fnol esa tek ugha djrs gS] rks oSls fufonknkrk dk tek vxz/ku jkf"k dks tIr djrs gq, dkyh lwph esa Mky fn;k tk,xk ,oa vkxkeh ikWap o'kksZa ds fy, fufonk esa Hkkx ysus ls oafpr dj fn;k tk,xkA
18. It appears that Clause 18 shall apply only, if the bidder has committed any irregularity or indulged in corrupt practice Patna High Court CWJC No.1791 of 2024(2) dt.26-09-2024 9/19 during bidding process. This is the fact that the petitioner never participated in the financial bidding process as he had already shown his willingness to allow him to participate in the auction for Cluster-5 sand ghats and if the same is not possible then refund the EMD forthwith. At this stage, the fact cannot be ignored that the petitioner has never submitted the hard copy of the tender papers along with its seal and signature which was mandatorily required but despite that he has been declared technically qualified. This Court has also carefully gone through the tender document but did not find any provision authorizing the BSMCL to forfeit the EMD of a bidder for not participating in the tender process. The only contingency for forfeiting the EMD has been prescribed under clause 18 of the tender document and if the same is not made out the respondents are not authorized to forfeit the EMD on any other ground.
19. In order to forfeit the sum deposited by the tenderers as earnest money or security, it is necessary that the tender document must Patna High Court CWJC No.1791 of 2024(2) dt.26-09-2024 10/19 contain stipulation of forfeiture, in case of non participation in bidding process. If there is no such stipulation in the tender document, there is no right available to the party to forfeit the same. It would be useful to quote paragraphs no. 21-29 and 37 of the judgment of the Hon'ble Apex Court in the case of Suresh Kumar Wadhwa (supra).
"21. These questions need to be answered keeping in view the provisions of Section 74 of the Contract Act, 1872 (hereinafter referred to as "the Act") and some settled legal principles relating to law of contract.
22. Section 74 of the Act reads as under:
"74. Compensation for breach of contract where penalty stipulated for. When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, Patna High Court CWJC No.1791 of 2024(2) dt.26-09-2024 11/19 whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.
Explanation. A stipulation for increased interest from the date of default may be a stipulation by way of penalty.
Exception. When any person enters into any bail-bond, recognizance or other instrument of the same nature or, under the provisions of any law, or under the orders of the Central Government or of any State Government gives any bond for the performance of any public duty or act in which the public are interested, he shall be liable, upon breach of any condition of any such instrument, to pay the whole sum mentioned therein.
Explanation. A person who enters into a contract with Government does not necessarily thereby undertake any public Patna High Court CWJC No.1791 of 2024(2) dt.26-09-2024 12/19 duty, or promise to do an act in which the public are interested."
23. Reading of Section 74 would go to show that in order to forfeit the sum deposited by the contracting party as "earnest money" or "security" for the due performance of the contract, it is necessary that the contract must contain a stipulation of forfeiture. In other words, a right to forfeit being a contractual right and penal in nature, the parties to a contract must agree to stipulate a term in the contract in that behalf. A fortiori, if there is no stipulation in the contract of forfeiture, there is no such right available to the party to forfeit the sum.
24. The learned author Sir Kim Lewison in his book The Interpretation of Contracts (6th Edn.) while dealing with subject "Penalties, Termination and Forfeiture Clauses in the Contract"
explained the meaning of the expression "forfeiture" in these words:
"A forfeiture clause is a clause Patna High Court CWJC No.1791 of 2024(2) dt.26-09-2024 13/19 which brings an interest to a premature end by reason of a breach of covenant or condition, and the court will penetrate the disguise of a forfeiture clause dressed up to look like something else. A forfeiture clause is not to be construed strictly, but is to receive a fair construction."
25. The author then quoted the apt observations of Lord Tenterden from an old case reported in Doe d Davis v.
Elsam [Doe d Davis v. Elsam, 1828 M&M 189: 173 ER 1126] wherein the learned Lord while dealing with the case of forfeiture held as under: (ER p. 1127) "... I do not think provisos of this sort are to be construed with the strictness of conditions at common law. These are matters of contract between the parties, and should, in my opinion, be construed as other contracts."
26. Equally well-settled principle of law relating to contract is that a party to the contract can insist for performance of Patna High Court CWJC No.1791 of 2024(2) dt.26-09-2024 14/19 only those terms/conditions, which are part of the contract. Likewise, a party to the contract has no right to unilaterally "alter" the terms and conditions of the contract and nor they have a right to "add" any additional terms/conditions in the contract unless both the parties agree to add/alter any such terms/conditions in the contract.
27. Similarly, it is also a settled law that if any party adds any additional terms/conditions in the contract without the consent of the other contracting party then such addition is not binding on the other party. Similarly, a party, which adds any such term/condition, has no right to insist on the other party to comply with such additional terms/conditions and nor such party has a right to cancel the contract on the ground that the other party has failed to comply with such additional terms/conditions.
28. Keeping in view the Patna High Court CWJC No.1791 of 2024(2) dt.26-09-2024 15/19 aforementioned principle of law, when we examine the facts of the case at hand then we find that the public notice (advertisement), extracted above, only stipulated a term for deposit of the security amount of Rs 3 lakhs by the bidder (appellant) but it did not publish any stipulation that the security amount deposited by the bidder (appellant herein) is liable for forfeiture by the State and, if so, in what contingencies. 29. In our opinion, a stipulation for deposit of security amount ought to have been qualified by a specific stipulation providing therein a right of forfeiture to the State. Similarly, it should have also provided the contingencies in which such right of forfeiture could be exercised by the State against the bidder. It is only then the State would have got a right to forfeit. It was, however, not so in this case.
29. In our opinion, a stipulation for deposit of security amount ought to have Patna High Court CWJC No.1791 of 2024(2) dt.26-09-2024 16/19 been qualified by a specific stipulation providing therein a right of forfeiture to the State. Similarly, it should have also provided the contingencies in which such right of forfeiture would be exercised by the State against the bidder. It is only then the State would have got a right to forfeit. It was, however, not so in this case.
37. Our reasoning is supported by a recent decision of this Court in Union of India v. Vertex Broadcasting Co. (P) Ltd. [Union of India v. Vertex Broadcasting Co. (P) Ltd., (2015) 16 SCC 198: (2016) 3 SCC (Civ) 657] wherein their Lordships held inter alia that in the absence of any power in the contract to forfeit the licence money deposited by the licensee, the action of the Union to forfeit the licence fees is held illegal. This is what was held: (SCC p. 203, para 10) "10. Coming to the aforesaid question of availability of a power to order forfeiture, a reading of the relevant Patna High Court CWJC No.1791 of 2024(2) dt.26-09-2024 17/19 clauses i.e. Clauses 8(f), 10(d) and 12 extracted above would go to show that the Union had not protected/empowered itself to forfeit the licence fee. The forfeiture contemplated by the aforesaid clauses are altogether in different contexts and situations. In the absence of any such power, the forfeiture that has taken place in this case will have to be adjudged as null and void. ""
21. It would be worth noting here that a proposal may be revoked at any time before communication of its acceptance is complete as against the proposal but not afterwards, unless there is provision otherwise. There is no denial with respect to the fact that the petitioner had been continuously representing through e-mail for revocation of his submission of his application for technical bid. The right to withdraw an offer before its acceptance cannot nullify the agreement to suffer any penalty for withdrawal of the offer against the terms of the agreement. A person may have right to withdraw his offer but Patna High Court CWJC No.1791 of 2024(2) dt.26-09-2024 18/19 undoubtedly if he has made his offer on a condition that the bids security amount can be forfeited in case he withdraws the offer during the period of bid validity, he has no right to claim that the bids security should not be forfeited and it should be returned to him. Forfeiture of such bid security amount does not in any way affect the statutory right under Section 5 of the Indian Contract Act but in absence of any such stipulation/condition in the tender documents, the petitioner who had no intention to enter into the contract nor he had fulfilled the mandatory requirements of submitting mandatory documents, thus in the opinion of this Court, the forfeiture is not permissible if the offer to withdraw does not vitiate the terms of the agreement.
18. The Coordinate Bench having come to the conclusion that unless the provision has been incorporated, any forfeiture is bad and in that background, the direction was issued to Bihar State Mining Corporation Limited to refund the earnest amount of Rs. 3,83,93,977/-.
19. The aforesaid case squarely covers the present case. Learned counsel for the petitioner submits that this order Patna High Court CWJC No.1791 of 2024(2) dt.26-09-2024 19/19 of the learned Single Judge has not been challenged by the respondents.
20. At this stage, learned Spl.P.P. Mines, Mr. Naresh Dikshit submits that he will be filing counter-affidavit within a week.
21. Learned counsel for the petitioner, Mr. Suraj Samdarshi submits that he will also filing a supplementary affidavit bringing on record the new clause that has now been incorporated in their documents having realised the mistake earlier regarding absence of clause relating to petitioner's matter which however can be applied only prospectively. He will be filing the supplementary affidavit within a weeks.
22. As prayed for, list this case on 03.10.2024 and failure by the respondents to file affidavit will entail cost of Rs. 3,000/- to be deposited with the Patna High Court Legal Services Committee.
(Rajiv Roy, J) Adnan/-
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