IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.5533 of 2009 M/S ALLIED INFRASTRUCTURE-AMBITION (JOINT VENTURE) having its Office at P-16, Bentick Sreet, 3rd Floor,A.C. Mansion, Kolkata – 700 001 through its Director, Rajiv Modi, son of Shri Shaligaram Modi, Resident of 103, Rajendra Enclave, Exhibition Road, P.S. Gandhi Maidan, District – Patna. Versus 1. THE EAST CENTRAL RAILWAY , Mahendru Ghat, Patna through its General Manager. 2. The Chief Engineer (Construction) (GB), Office of the Chief Administrative Officer (Construction) East Central Railway, Mahendru Ghat, Patna. with CWJC No.6397 of 2009 M/S ALLIED INFRASTRUCTURE-MSRPL (JV) having its Office at P-16, Bentick Sreet, 3rd Floor,A.C. Mansion, Kolkata – 700 001 through its Director, Rajiv Modi, son of Shri Shaligaram Modi, Resident of 103, Rajendra Enclave, Exhibition Road, P.S. Gandhi Maidan, District – Patna. Versus 1. THE EAST CENTRAL RAILWAY Mahendru Ghat, Patna through its General Manager. 2. The Chief Engineer (Construction) (GB), Office of the Chief Administrative Officer (Construction) East Central Railway, Mahendru Ghat, Patna. ----------- For the petitioners : M/S S D Sanjay & Gopal Prasad Gupta (in both the cases) For the respondent Railways : Mr. Anil Kumar Sinha(in CWJC No.5533/09) & Mr. Pravin Kumar Sinha (in CWJC No. 6397/09). ------ 06. 27.01.2010 Since in both the writ applications common questions of law are involved based on near identical facts, therefore they are being dealt together and disposed of with common order. The two tenders are Tender No.188 of 2007-08 and Tender No.26 of 2008-09, which came to be floated by the respondent E C Railway. Besides the notice inviting tender the 2 other terms and conditions which are going to bind the parties have been laid down in detail in annexure-1 to the writ application. Petitioner Company participated in the said tenders but certain differences arose between the railways and the petitioner based on the composition and structure of the so-called joint venture which had participated or went for the bids. Some clarifications were sought by the railways on the joint venture and it was offered in terms of communication dated 16.10.2008 (Annexure-4). The financial and other commitment which was required between the joint venture company is reflected from the communication dated 16.10.2008. It is recorded that the exchange of letters between the petitioner and the respondent railways was at the stage of participation in the tender. The final tenders were neither opened nor awarded. Since the petitioner Company failed to restructure the conditions of the joint venture company, the railways invoked the forfeiture clause contained in Clause v (a) which reads as follows: “It shall be understood that these documents have been issued to the tenderer(s) and the tenderer is permitted to tender in consideration of the stipulations on his part after submitting his tender, he will not resile from his offer or modify the rates, terms and conditions thereof in a manner not acceptable to the Railway. Should the Tenderer fail to observe or comply with the said stipulations full amount of Earnest Money shall be 3 forfeited by the Railway.” The respondent Railways in view of clause v(a) read with clause 14 decided to forfeit the earnest money of the petitioner. The relevant orders are annexure-5 and annexure -4 respectively to the two writ applications. The petitioner has decided to challenge the said action of the respondents in the present two writ applications. Submission of the learned counsel representing the petitioner is that it is a strange kind of action which has been taken against the petitioner unheard of in the annals of contracts based on notices inviting tender. The action of the respondents either shows lack of understanding of law and procedure or could be motivated but the net result is that decision cannot be sustained within the four corners of the law. In support of such contention it is urged that petitioner had only participated in the tender. If according to the respondents, petitioner did not fulfil the requirements or the terms of the notice inviting tender on any account including the nature of the composition of the joint venture the only corollary in such a situation would be disqualification of such a party from participation in the tender for lacking eligibility. If the authority of the railways were of the considered opinion that the agreement or the terms and conditions entered between the two joint venture companies did not meet the standards or requirement of the notice inviting tender, then it only means that the joint venture company did not have the eligibility to be considered for award of work. Strangely 4 in the present case even before the tender came to be finalized or awarded in favour of a successful bidder, relying on the so- called terms of clause v (a) read with clause 14 of the conditions of the tender the earnest money of the petitioner has been forfeited. It is generally well understood within the realm of contract that earnest money is to be forfeited only if there is a failure to fulfil or complete the work after the same comes to be awarded in favour of the successful bidder. Stand of the counsel representing the railways on the other hand is that terms and conditions of the tender paper categorically lays down that the tender papers have been issued to the petitioner or all such persons on their request on a basic condition that they agreed to abide by the conditions laid down hereinafter in the tender documents before submission of the tender. If despite such a categorical provision being available in clause 2.0 the petitioner company did not restructure their arrangement of the joint venture to make it at par with the condition of the notice inviting tender. If there is a failure on this count the case will be covered by the forfeiture clause quoted above. There is no wrong doing on the part of the respondents for forfeiting the earnest money. The Court has gone through clause 2.0 coupled with the forfeiture clause. A plain reading of the said clauses do not lead the Court to the interpretation sought to be given by the respondent railway, specially the clause relating to forfeiture. 5 Court is in agreement with the petitioner that the occasion or the stage for forfeiting the earnest money had never come or arisen because there was no concluded contract between the parties. It was open to the railways not to consider the joint venture in its present form and content and prevent the petitioner from participation in the tender by refusing to consider their technical bid on this score alone. But instead of doing so, an innovation of the kind has been embarked upon which does not come within the parameters of the law of contract or the offer and acceptance principle in this regard. Obviously there is an error on the part of the respondents in passing an order of forfeiture of the earnest money in the above mentioned circumstances which has been dealt with in earlier part of the order. The two impugned orders contained in annexure- 5 and annexure-4 respectively are per say arbitrary and de hors the forfeiture clause even according to the tender papers. The impugned orders stand quashed and the writ applications are allowed. Respondents are directed to refund the money immediately preferably within four weeks from the date of communication/production of a copy of this order. rkp ( Ajay Kumar Tripathi, J )