IN THE HIGH COURT OF JUDICATURE OF ANDHRA PRADESH AT HYDERABAD TUESDAY, THIS THE 15TH DAY OF SEPTEMBER, 2009 W.P.No.12523 of 2004 Between: M/s. Srinivasa Civil Works Pvt. Ltd., Flat No.112, Sri Ramakrishna Towers, Nagarjuna Nagar, Ameerpet, Hyderabad, rep. by its GPA Holder SriM.Srihari Raju ….PETITIONER and 1. Government of Andhra Pradesh, rep. by its Principal Secretary to Govt., Irrigation and CAD Department, Secretariat, Hyderabad and another. …RESPONDENTS HON'BLE MR JUSTICE R.SUBHASH REDDY W.P.No.12523 of 2004 ORDER: This writ petition is filed seeking to issue a Writ of Mandamus declaring the 2nd respondent’s letter dated 14.06.2004 forfeiting the earnest money deposit of the petitioner furnished in respect of Tender Notice No.12/2003-2004 dated 07.02.2004 as arbitrary and illegal and, consequently, to direct the 2nd respondent to return the earnest money deposit furnished by the Petitioner in the form of Bank Guarantee. The petitioner is a registered company engaged in the business of executing civil contracts. The 2nd respondent, by notification dated 07.02.2004, issued a Tender Notice No.12/2003-2004 for executing a work namely construction of Rachakatta Reservoir across Kudlair Vagu, Rayavaram village, Jagdevpur Mandal, Medak District. As per the terms of the said tender notice, the intending tenderers have to deposit earnest money deposit of Rs.1,93,000/-. Petitioner-company was one of the tenderers who also has deposited the earnest money deposit of Rs.1,93,000/- as per the tender conditions. As per the tender schedule notified, the bid submission closing date was 03.03.2004 and the tenders shall be valid for a period of 3 months from the date of closing. As such, the validity period of the tender was up to 03.06.2004. Though the petitioner had submitted all the certificates in support of his past experience, as required by the tender conditions, there was some delay on the part of the respondents in examining the correctness of the certificates produced by it. As such, the respondents have addressed a letter dated 15.05.2004 to the petitioner requesting to extend the validity of the tender for a period of two months more. Again another letter dated 31.05.2004 was also addressed to the petitioner requesting it to extend the validity period of the tender by two months more. In response to the said letters, the petitioner by its reply dated 01.06.2004 informed the 2nd respondent that it offered the rates in the tender for the work with the express presumption that the tenders will be finalized before the onset of monsoon and that, if awarded, it will be commissioning and executing substantial work before the onset of the monsoon and during early monsoon and as the situation prevailing is quite different, it is not interested in extending the validity of the tender beyond 90 days. In the said letter it was further informed that if the department is prepared to give price adjustment reckoning from one month preceding the date of receipt of tenders, it shall consider extending the validity. It was also made clear in the said letter that in case the condition of price adjustment is not acceptable to the respondents, they are not inclined to extend the validity and also made a request for refund of the earnest money deposit. Though the petitioner was not inclined to extend the validity period, the respondents have forfeited the earnest money deposit made by the petitioner by invoking the condition No.3.10 of the tender conditions. In the notice inviting tenders detailed tender conditions were notified. For the purpose of adjudication of the issue in the present writ petition, condition No.3.9 and 3.10 of the tender conditions are relevant which read as under: “3.9 -- Tenders shall be valid for a period of 3 months. Before expiry of validity, the authority competent to call for tender shall seek for further extension of validity from the Contractors and in case the validity is not extended his tender will not be considered and the E.M.D. shall be returned. 3.10 – In consideration of the Executive Engineer/ Superintending Engineer/ Chief Engineer/ Commissionarate of Tenders, undertake to investigate and to take into account each tender and in consideration of the work thereby involved, all earnest money 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 validity period of three months.” As per condition No.3.9, the authority competent is empowered to seek further extension of the validity of the tender period from the contractors. In case, the validity is not extended the tender of the contractor will not be considered and the earnest money deposit has to be returned. As per condition no.3.10, in case, the contractor modifies or withdraws his tender within the period of validity of the tender period, the earnest money deposit made by the tenderer will be forfeited by the Government. In this case, though the petitioner has, by letter dated 01.06.2004, refused to extend the validity of the tender period, order of forfeiture of its earnest money deposit was made on the ground that the condition imposed by the petitioner in the letter dated 01.06.2004 violates the terms and conditions of the tender and as such the earnest money deposit is forfeited by invoking the condition no.3.10. It is submitted by the learned counsel for petitioner that in this case there are absolutely no valid reasons for forfeiting the earnest money deposit as communicated by the orders dated 14.06.2004. As the petitioner, in its representation dated 01.06.2004, in clear terms, stated that it is not interested for extension of the validity period of the tender, it is entitled to get refund of the earnest money deposit as per condition no.3.9. It is further submitted that the request of the petitioner for price adjustment to consider the extension of validity cannot be considered as either modification or withdrawing his tender during the tender period so as to invoke the power under clause 3.10 of the tender conditions for forfeiting the earnest money deposit. On the other hand, it is submitted by the learned Government pleader for respondents that inasmuch as it is a contractual obligation between the respondents and the petitioner and as the earnest money deposit made by the petitioner is forfeited by invoking the tender conditions, it is for the petitioner to approach the competent Civil Court for the relief but it cannot seek any relief for the refund of the earnest money deposit in this petition under Article 226 of the Constitution of India. It is submitted that in view of the condition imposed in the letter addressed by the petitioner dated 01.06.2004 amounts to modifying the tender conditions which permits for forfeiting the earnest money deposit in terms of condition no.3.10 of the conditions. In this case, it is not in dispute that the validity of the tender for a period of 90 days from the closing date of submission of tenders. The last date for submission of tenders was 03.03.2004 and as admitted in the counter affidavit the validity period of the tender was only up to 02.06.2004. Within the said period there was no communication accepting the bid of the petitioner for award of the contract but as evident from the averments in the counter and as there was no confirmation on the experience certificates produced by the petitioner, respondents have addressed for extension of the validity of the tender period. On a perusal of the letter addressed by the petitioner dated 01.06.2004 issued in reply to the letter of the respondents dated 31.05.2004, it is very clear that the petitioner in clear terms has negatived the request of the respondents for extension of the validity of the tender beyond 90 days. Of-course, it was also stated in that letter that if the department is prepared to give price adjustment, it will consider the extension of validity. In the same letter, it was also made clear that if such request is not acceded to, it is not inclined to consider the request for extension of the validity period and requested for return of the earnest money deposit. In the impugned letter which ordered for forfeiture it was stated that the earnest money deposit is being forfeited by invoking the condition no.3.10. In fact, it is a case where the claim of the petitioner is governed by the condition no.3.9 which clearly says that when the extension is not accepted to by the contractor concerned his tender will not be considered but the contractor is entitled to the refund of the earnest money deposit. It is not understandable as to how the respondents have invoked the condition no.3.10 of the tender conditions in the absence of either modification or withdrawing his tender by the petitioner within the period of validity i.e. within 90 days. As is evident from the letters addressed by the respondents dated 15.05.2004 and 31.05.2004 it is clear that the validity period was expired by 02.06.2004 and as such they addressed the petitioner for extension of the validity period. In that event, from a bare reading of the contents of the letter addressed by the petitioner dated 01.06.2004 it cannot be said that it is a case of either modifying or withdrawing the tender of the petitioner within the period of 90 days. In the letter dated 01.06.2004 in clear terms the petitioner refused to accept for extension of the validity period. However, it also stated that it will consider for extension provided its request for price adjustment is considered by the respondents. Even if such a request is made, it makes no difference on the decision of the petitioner in not extending the validity period beyond 90 days in which event there is absolutely no justification in invoking the condition no.3.10 for forfeiting the earnest money deposit. The contention of the learned counsel for respondent is that inasmuch as the claim of the petitioner arises out of a contractual obligation, the petitioner has to seek remedy through a competent Civil Court but cannot seek remedy under Article 226 of the Constitution of India. Now, it is well settled that merely because the dispute arose from a contractual obligation that by itself is not a ground to reject the petition under Article 226 of the Constitution of India. From the averments made in the petition and in view of the undisputed facts, it is a clear case where the action of the respondents in forfeiting the earnest money deposit is not only illegal and arbitrary, but there is a violation of rights of the petitioner guaranteed under Article 14 of the Constitution of India. For the aforesaid reasons, as the respondents forfeited the earnest money deposit by wrongly invoking the condition no.3.10, the petitioner is entitled for refund of the said amount. Accordingly, the writ petition is allowed and the letter bearing no.T2/TS1B/712 dated 14.06.2004 addressed by the respondents to the petitioner ordering forfeiture of the earnest money deposit is hereby quashed with a direction to the respondents to refund the earnest money deposit made by the petitioner within a period of six weeks from the date of receipt of a copy of this order. No order as to costs. _______________________ R.SUBHASH REDDY, J Date: 15.09.2009 CVRK HON'BLE MR JUSTICE R.SUBHASH REDDY W.P.No.12523 of 2004 Date: 15.09.2009 CVRK