Krishan Lal vs Food Corpn. Of India And Ors

2. On 12th November, 1999 the Food Corporation of India invited tenders for appointment of Handling and 1 Transportation Contracts at various depots including the depot at Dabwali in the State of Haryana. Several persons appear to have submitted their tenders in response to the said tender notice including M/s R.R.S. Chautala & Company who eventually bagged the contract in question having offered to undertake the contracted work in consideration of payment at 186% above the schedule of rates. The appellant questioned the said allotment in Writ Petition No.1368 of 2000, inter alia, alleging that he had been illegally prevented from submitting his tender by being denied the requisite form for submission of the tender. The appellant also asserted that he was ready to undertake the Handling and Transportation work at a much lower rate of 110% above the schedule of rates as against 186% offered by the successful tenderer mentioned above. The appellant even offered to deposit a sum of Rs.10 lakhs by way of security to show his bona fides. An affidavit to that effect was also, it appears, filed by the appellant.

4. In obedience to the above directions the respondent- Food Corporation of India (FCI) invited sealed tender for handling and transport contact for its Dabwali depot for a period of six months. The short term tender notice required the intending tenderers to submit their tenders along with complete documents and the earnest money prescribed in the form of a Demand Draft.

5. In response to the above tender notice, the appellant also submitted a tender offering to undertake the work @ 50% above the schedule of rates. This offer was accepted by the respondent-Corporation with a direction to the District Manager, FCI, Hissar that no amount towards security be demanded from the appellant as the security amount of Rs.3,09,500/- stood deposited in the Regional Office. Shortly after the allotment of the contract to the appellant, the appellant sent a fax message expressing his inability to undertake the handling and transport contract and withdrawing the offer made by him. By this time the appellant had already executed a formal agreement with the respondent-Corporation on 28th May, 2001. In response, the respondent-Corporation informed the appellant that any withdrawal after the execution of the formal agreement was tantamount to a breach of the terms and conditions of the contract and would attract action under Clause X(b) of the agreement. The appellant was requested to take up the handling and transport work within one week positively, failing which the respondent- Corporation proposed to take recourse to Clause X(b) of 4 the agreement to get the work done at the risk and cost of the appellant.

6. It is common ground that the appellant did not undertake the work. He cited some security problems which according to the appellant prevented him from discharging his contractual obligations. Not only that the appellant demanded the refund of Rs.10 lakhs which stood deposited with the respondent-Corporation pursuant to the direction issued by the High Court in the writ petition referred to earlier. Upon refusal of the respondent- Corporation to refund the amount in question the appellant filed Writ Petition No.2416 of 2002 in the High Court of Punjab and Haryana for a mandamus directing the respondent-Corporation to refund the same. The High Court dismissed the said petition holding that since the parties had entered into a written contract their mutual rights and obligations were governed by the terms and conditions of the said contract. The High Court observed:

14. That being the position, the respondent-Corporation would be entitled to retain a sum of Rs.3,09,500/ plus Rs.2,17,274/- = Rs.5,26,774/-. The balance amount of Rs.4,73,226/- ought to have been refunded to the appellant on the admitted factual and contractual premise.

15. In the result, we allow this appeal, set aside the order passed by the High Court and direct the respondent- Corporation to refund the balance amount of Rs.4,73,226/- to the appellant within a period of three months from today failing which the said amount shall start earning interest @ 10% p.a. from the date of expiry of the stipulated period of three months mentioned above. We are consciously making no order for payment of interest on the amount held refundable to the appellant, for we are of the opinion that the appellant had without any real intention to perform the work in question got the earlier contract terminated by a judicial order and put the Corporation through the unnecessary botheration and consequential prejudice of calling for fresh tenders. The appellant, it appears to us, was interested only in scoring a point over his rival for whatever reasons he had in view. The conduct of the 13 appellant has, therefore, dissuaded us from directing payment of any interest to him on the amount that is held refundable.

16. These appeals are, with above directions & observations, allowed and disposed of leaving the parties to bear their own costs.

...J. (GYAN SUDHA MISRA) New Delhi February 24, 2012 14