Andhra HC (Pre-Telangana)
M/S. Krishnaveni Constructions vs The Executive Engineer, Panchayat Raj, ... on 20 April, 1995
Equivalent citations: AIR1995AP362, AIR 1995 ANDHRA PRADESH 362, (1996) 2 CURCC 237
ORDER
1. The petitioner in this writ petition challenges the letter issued by the 1st respondent on 15-7-1993, by which the 1st respondent forfeited and recovered a sum of Rs. 1,12,800/- of the petitioner-firm, which had been deposited by it as earnest money with the 5th respondent-Bank. The petitioner also prays for the refund of Rupees 1,12,800/- with interest.
2. In answer to the tender notice issued by the 1st respondent on 1-2-1993, the petitioner-firm submitted its tender on 17-3-1993 for construction of a summer storage tank at Darsi, a segment of Comprehensive Protected Water Supply Scheme to Kanigiri and 18 other villages. The estimated value of the summer storage tank was Rs. 80,00,000/-. The petitioner-firm, along with its tender, deposited a term deposit receipt No. 372206 for Rs. 1,12,800/- towards the earnest money deposit. In presence of the partner of the petitioner-firm the tender was opened at 4.15 p.m. The tender of the petitioner-firm was the lowest. The petitioner-firm at about 6.30 p.m., submitted a letter to the 1st respondent requesting therein not to consider its tender on the ground that it was misguided by the standard schedule of rates and the statement itself was not clear.
3. The relevant clause of tender reads as follows:
"The tender document envisages the tenders received will be decided within a period of three months after the expiry of the last date prescribed for the receipt of tenders and the decision regarding the disposals of the tenders will be indicated at any time within the said period. During the above mentioned period no plea by the tenderer or any sort of modifications of the tender based upon or arising out of any alleged misunderstanding or misconception Or mistake or for any reason will be entertained. In consideration of the Executive Engineer/Superintending Engineer, Chief Engineer undertaking to investigate and to take into account each tender and in consideration of the work thereby involved all earnest monies deposited by the tenderer will be forfeited to the Government in the event of such tenderer either modifying or withdrawing his tender at his instance within the said period of three months."
4. The only point urged by the learned Counsel of the petitioner-firm is that in spite of the provision made in the relevant clause of tender in question that the tender received will be decided within a period of three months, after expiry of the last date prescribed for the receipt of tenders, and the decision regarding the disposal of the tenders will be indicated at any time within that period and in the event of such tenderer either modifying or withdraw-ing his tender at his instance within the period of three months the earnest money is for-feited, the petitioner-firm is entitled to with-draw its offer before it was accepted by respondents Nos. 1 to 4 because it was not a concluded contract.
5. Relying on Champalal v. Ghansham-das, AIR 1922 Mad 486, it has been held in Somasundaram Pillai v. Prov. Govt. AIR 1947 Mad 366 as follows:
"To have an enforceable contract there must be an offer and an unconditional acceptance. A person who makes an offer has the right of withdrawing it before acceptance, in the absence of a condition to the contrary supported by consideration. The fact that there has been a provisional acceptance makes no difference. A provisional acceptance cannot in itself make a binding contract. There must be a definite acceptance or the fulfilment of the condition on which a provisional acceptance is based."
6. It has been further held in this case that the prohibition clause against withdrawal has no force of law if there is no consideration to bind the offerer down to the condition.
7. Quoting with approval the case of Somasundaram Pillai v. Prov. Govt., AIR 1947 Mad 366 (supra), it has been held in Rghunandhan v. State of Hyderabad, as follows:
"It is a well established principle of law that only when an offer is accepted that the contract is concluded and binds the parties. It is equally well settled that before an offer is accepted, the offerer can withdraw his offer, but if the acceptance is conditional or is not final, then there is no concluded contract. Section 5 of the Indian Contract Act states that a proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. Similarly, an acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.
Generally, in a sale by auction, the auctioneer is the agent of the person whose property or rights are being auctioned. The agent invites offers and every bid is an offer and it is only binding on either side when it is assented to, that is, when the hammer falls at the third bid. Sometimes the owner reserves a right as part of the conditions of auction and even though the bid is the highest it need not necessarily conclude the agreement. Before the final acceptance of the bid or before the hammer falls, it is always open to the bidder to withdraw his bid and the condition to the contrary in auction that the bid shall not be retracted has been held to be invalid."
8. From the above observations, I can deduce that an offer made containing a promise not to revoke it and keep it open does not prevent the offerer from revoking the offer, for normally such a promise is unsupported by any consideration. But, if a promise to kee.p the offer open is supported by consideration, the offerer is bound by the promise and cannot revoke the offer: (See Chitty on Contracts Vol. 1, 24th Edition, paragraph 209). It is on this principle that a condition in the tender that the tender cannot be withdrawn before it is accepted is invalid and does not prevent a tenderer to withdraw his bid before its acceptance.
9. On facts stated above, it is crystal clear that the tenderer, that is to say, the petitioner-firm was bound by its offer till the orders of the Government accepting or rejecting its offer was communicated to it within three months therefrom as per the relevant clause of the tender in question. But, there is no material on record to infer that the promise to keep the offer open till the stipulated period was supported by any consideration and, therefore, the aforementioned condition appears to be invalid and the clause of forfeiture is unenforceable. It is pertinent to note that the petitioner-firm had withdrawn the offer through the letter on the same day at about 6.30 p.m., before it was accepted by the Government and, therefore, it was not a concluded contract. As noted above, the prohibition clause, being invalid, cannot be enforced into service. Actually the consideration mentioned in the clause in question of the tender is no consideration in the eye of law.
10. For the foregoing reasons, I reach to the conclusion that the act of respondents Nos. 1 to 4 forfeiting the earnest money was unauthorised as there was no formation of contract and the clause of the' tender in question was inoperative and invalid.
11. True, that the earnest money of the petitioner-firm has been unnecessarily blocked up by respondents Nos. 1 to 4; it is equally true that the Government had to do the same exercise in inviting tenders and the money of the Government and labour of its officers had been wasted on accouat of the act of the petitioner-firm resulting in loss to the Government and, therefore, in my opinion, interest of justice could be met if the petitioner-firm is awarded interest at the rate of 12% per annum on the amount of Rs. 1,12,800/- from the date of this petition.
12. In result, the writ petition is allowed. The letter dated 15-7-1993 and the order of forfeiture of respondents Nos. 1 to 4 are quashed and the respondents Nos. 1 to 4 are directed to refund the amount of Rupees 1,12,800/- (Rupees one lakh twelve thousand and eight hundred only with interest @ 12% p.a. to the petitioner-firm from the date of institution of the writ petition, that is to say, 26-7-1993, till the payment or recovery. There shall be no order as to costs.
13. Petition allowed.