IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. C.W.P. No.13218 of 2010 Date of decision: 18.11.2010 M/s Ram Kumar Shyam Lal. -----Petitioner. Vs. Food Corporation of India & others. -----Respondents CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. N. S. Shekhawat, Advocate for the petitioner. Mr. K.K. Gupta, Advocate for the respondents/FCI. --- ADARSH KUMAR GOEL, J. 1. This petition seeks quashing of order dated 6.7.2010, Annexure P-10, passed by the Executive Director of the Food Corporation of India (FCI), forfeiting earnest money of `57.00 lacs, on the alleged ground of modification of offer by the petitioner contrary to tender conditions. 2. Case set out in the petition is that in pursuance of notice inviting tenders dated 7.8.2009 for disposal of Bajra crop, the petitioner filed tenders for four centres. However, it was unsuccessful in the process. It sought refund of earnest money C.W.P. No.13218 of 2010 of `57.00 lacs but was informed by letter dated 21.12.2009 that the earnest money stood forfeited under Clause F(v) of the Terms and Conditions. Against the said letter, the petitioner filed C.W.P. No.4676 of 2010 which was disposed of vide order dated 18.5.2010 on the statement made on behalf of the FCI that grievance of the petitioner could be looked into by a Grievance Committee. Thereafter, impugned order dated 6.7.2010 was passed, rejecting the claim of the petitioner for refund of earnest money, even though majority members of the Grievance Committee took a decision in favour of the petitioner. 3. In the reply filed on behalf of the FCI, the impugned order has been defended on the ground that after giving the offer, modification thereof by the petitioner amounted to withdrawal of the offer which was a valid ground for forfeiture of earnest money. Reference has been made to the judgment of the Hon’ble Supreme Court in State of Maharashtra and others v. A.P. Papers Mills AIR 2006 SC 1788. 4. We have heard learned counsel for the parties. 5. The clause in question is as under:- “v) The Earnest Money paid shall be liable for forfeiture, if the tenderer after submitting his tender, withdraws his offer or modifies the terms & conditions thereof in a manner not acceptable to FCI or does not keep his offer open during the validity period or resiles from the offer once accepted, it being understood that tender documents have been issued to him and he is 2 C.W.P. No.13218 of 2010 being permitted to tender in consideration of his agreement to this stipulation. xx xx xx xx xx” 6. The view taken by majority members of the Committee of the FCI in report dated 25.6.2010, Annexure P-9, is as under:- “(i)..........There were 138 tenders received and on scrutiny 9 were found disqualified. There were 129 valid bids and the rates/results were forwarded by R.O. Vide letter dated 24.8.2009 to SO/H.Q. for the final decision of HLC who is competent authority. On 27.8.09, there was HLC meeting and the approval of HLC conveyed by Headquarters New Delhi vide letter no.1-10/2009/Coarse grains/NZ/S.IV/Vol.III dated 28.8.09 by letter dated for accepting all highest shed wise valid bids received at the rate of Rs.800/- per qtl. and above, the acceptance of tenders conveyed to valid tenderers and acceptance letter issued by Regional Office Haryana on 29.8.09. All the parties whose offers were accepted by the Corporation had been successfully lifted the stocks by fulfilling all contractual obligation. (j) In this connection clause G(f) also relevant. The clause G(f) of tender says fresh tender will be invited upon failure of both the H-2 and H-3 bidder to accept the approved H-1 rate. Fresh tender if any will be at the risk & cost of H-1. Here only in two cases he is H- 3 but here the offer of the H-1 was accepted and H-1 successfully executed the contract. Thus, modification of party become irrelevant to attract penal provision of tender as there was no need to fall on his offer to 3 C.W.P. No.13218 of 2010 liquidate the stocks at the rate of highest bidder. This aspect will weaken our case if party approach to civil court for refund of EMD. (k) Another aspect of the case is that when rates were forwarded to HLC whatever role to be played by R.O. till decision of HLC is over. So when the party revised his offer it was incumbent upon the R.O. to reject it out rightly or intimate the new development to S.O./H.Q. This was not happened here. So it was not fair with the party.” xx xx xx xx xx (n)......... The processing note of Regional Office, Haryana reveals that instead of appreciating various tender provisions with an attitude to reduce unnecessary litigation rather RO (Haryana) taken sheltering apprehensions of vigilance and audit case. Therefore, the Clause F(v) is not applicable to M/s Ram Kumar Shyam Lal Bhuna. Further, it is also pertinent to mention that Shri A K Gupta GM (Haryana) in his noting dated 18 Sep. 2009 stated that “the past experience in the Corporation indicate that in such financial matters even if an anonymous complaint is made against the authorities or the matter is enquired by Vigilance or Audit Wing of higher offices, they normally tend to go by the instructions without going into the spirit of the instructions and hence, it is felt that if the recommendations of all Divisions like Operations, Finance and Legal are over ruled by the undersigned, it will be alleged that the undersigned has caused a loss of Rs.57 Lakh to the Corporation despite the instructions. Hence I am constrained to approve the recommendations of the Operations, Legal and 4 C.W.P. No.13218 of 2010 Finance Division in the matter.” The noting clearly indicates that there is apprehension and premonition on the part of GM (Haryana) while taking decision on the ground of facing enquiry thus find convenient to reject the representation of the party rather going into the merit of the case. GM (Haryana) in his noting also mentions that Clause F(v) is not applicable to the party therefore his action of forfeiture of security deposit clearly spells that the Security Deposit be refunded to the party on the instruction/directions of higher offices so as to absolve himself from any enquiry which is unfortunate. Therefore, Clause F(v) is not applicable to the party and also there has been no loss caused to the Corporation by the action of the party.” 7. Inspite of above, the impugned order was passed to the following effect:- “10. If the revised offer of M/s Ram Kumar Shyam Lal is examined in the context of the provisions of Clause F(v) of the MTF, as analysed in the para (9) above, it is seen that M/s Ram Kumar Shyam Lal has withdrawn his offer for lot no.29, 44, 50 & 51 [ground (i)], and M/s Ram Kumar Shyam Lal has not kept his offer open during the validity period [ground (iii)]. The validity period was 30 days from the date of opening of tenders i.e. up to 15.9.09 subject to further extension of 15 days which was binding on the tenderer. In the instant case, M/s Ram Kumar Shyam Lal on 25.8.09 within the validity period withdrew the original offer for lot nos.29, 44, 50 & 51.” 5 C.W.P. No.13218 of 2010 8. Learned counsel for the petitioner submits that there is nothing to show that the petitioner withdrew or modified the offer for the centres for which the said offer was earlier given. Nor any loss was caused to the FCI as successful tenderers completed the work as held in the report, Annexure P-9. In these circumstances, forfeiture of earnest money was clearly arbitrary and unjust. 9. Learned counsel for the respondents, however, submits that vide letter, Annexure P-2, received on 25.8.2009, after the tender process had been finalised, the petitioner gave letter which is as under:- “It is submitted that our firm had filled the rate of Rs.851/- for Sr.No.29 and the rate of Rs.841/- for Sr. No.44, 50 and 51 in the tender form of Bajra on 17.8.2009. Now instead of this, we are ready to lift Bajra of Sr. No.47 and 48 @ Rs.880/- and our DD No.783961 dated 13.8.09 SBP of Rs.57,00,000/- is attached with the form. So kindly give us the Bajra mentioned at Sr.No.47 and 48. We shall be highly thankful.” He submits that the above letter amounted to withdrawal of offer whch was required to be kept alive so that if the highest tenderer failed to execute the work, the petitioner could have been required to do the work under Clause G(ii)(a). 10. After considering rival submissions, we are of the view that the petition must succeed. 6 C.W.P. No.13218 of 2010 11. In the present case, neither the successful tenderer failed to perform the job nor the petitioner was ever required to execute the work at the rates offered by it. Moreover, there is no justification for interpretation sought to be placed on behalf of the respondents on the letter relied upon as withdrawal of offer. The said letter was written after rates were finalised for the centres for which tenders were issued. The petitioner sought to submit rates for other centres instead of centres for which bids were given, which had already been finalised. In any case, at best, there was power to forfeit the earnest money, which power should have been fairly exercised by the respondents. Once two out of three members of the Grievance Committee constituted by the FCI itself after due consideration held that forfeiture of earnest money was not fair, the impugned decision was arbitrary and cannot be sustained. 12. Accordingly, we allow this petition and direct refund of the earnest money with interest @ 9% per annum within three months from the date of receipt of a copy of this order. (ADARSH KUMAR GOEL) JUDGE November 18, 2010 (AJAY KUMAR MITTAL) ashwani JUDGE 7