2019 (12) TMI 1655 - HC - Indian Laws

Court sets aside judgment, orders refund of EMD with interest. Emphasizes clarity in tender conditions.

The Court allowed the appeal, setting aside the previous judgment and directing the respondents to refund the Earnest Money Deposit (EMD) to the ... Seeking for a writ of certiorari to quash Ext. P14 to the extent of rearranging the work done by the petitioner at his risk and cost - seeking writ of mandamus directing the respondents to release the Earnest Money Deposit (EMD) - HELD THAT:- The PWD authorities have no dispute regarding the fact that in the bill of quantities, petitioner was asked to give a bid 'without taxes'. Therefore, there is justification on the petitioner to have given a rate without taxes. In fact, the Chief Engineer's office of PWD was apprehensive about the low rate quoted by the petitioner and therefore, petitioner had given a clarification of the rate analysis. Petitioner was called upon to execute the agreement based on Ext. P9. Therefore, it is clear that there is ambiguity in the tender (BoQ) as a result of which petitioner had given a quote without taxes. But when he was called upon to submit an undertaking as per Ext. P6 format, the format included the value inclusive of all taxes, levies statutory fees etc at which time, he had objected to the same stating that his rate did not include any taxes. But without considering the same, Ext. P8 letter of acceptance had been issued calling upon him to undertake the work for an amount, ₹ 7,99,99,990/-, inclusive of taxes. Since the petitioner was not agreeable, the work was cancelled at his risk and cost and his EMD became liable to be adjusted. Though the issue projected in the writ petition comes within the realm of a contract, if there is an arbitrary action on the part of the authorities and the issue projected does not involve substantial questions of fact, it is always open for a writ Court to consider whether there is any arbitrariness or illegality in the act of the Governmental authorities. It could be seen that the acceptance of the offer made by the petitioner was not in terms with the tender. His quoted price was without taxes and he cannot be called upon to undertake the work inclusive of all taxes. Under such circumstances, we have no hesitation to hold that the 3rd respondent was not justified in terminating the contract at the risk and cost of the contractor. It is also settled law that when an offer is made in a tender, acceptance has to be unconditional. If any conditions are imposed in the acceptance letter, it does not become valid as such. The termination of the contract is therefore totally illegal and arbitrary. The respondents shall refund to the petitioner the EMD of ₹ 22,60,000/- within a period of one month from the date of receipt of a copy of the judgment - Appeal allowed. Issues:Challenge to judgment dismissing writ petition, Quashing of work rearrangement and EMD release, Interpretation of tender conditions, Justification for contract termination, Arbitrariness in governmental action.Analysis:1. The petitioner filed an appeal challenging the dismissal of the writ petition seeking to quash the rearrangement of work and release of Earnest Money Deposit (EMD). The petitioner, a registered contractor, was awarded a road improvement project by the Public Works Department (PWD) but faced issues regarding taxes in the bid. The petitioner quoted a rate without taxes, leading to disputes with PWD authorities regarding the acceptance of the tender.2. The counter affidavit by the 3rd respondent argued that the petitioner, being an experienced contractor, should have been aware of the requirement to quote prices inclusive of taxes. The bidding document specified that the total price should include all duties, taxes, and levies, creating a dispute over the interpretation of tender conditions.3. The Single Judge observed that the petitioner, as an A class contractor, should have known to quote prices with taxes. However, the appellant contended that the bidding documents specifically mentioned the price should be without taxes, leading to ambiguity in the tender process.4. The Court noted that the bidding document instructed bidders to enter prices without taxes, and the petitioner's bid was accepted based on this condition. The acceptance letter did not mention taxes, leading to the conclusion that the termination of the contract and forfeiture of EMD were unjustified and arbitrary.5. Citing legal precedent, the Court emphasized that the acceptance of an offer in a tender must be unconditional, and any conditions imposed later render the acceptance invalid. The termination of the contract was deemed illegal and arbitrary, leading to the allowance of the appeal.6. The judgment set aside the earlier decision, directing the respondents to refund the EMD to the petitioner with interest if there is a delay. The Court highlighted the importance of clarity in tender conditions and the need for unconditional acceptance of offers in such contracts.By thoroughly analyzing the issues raised in the judgment, the Court clarified the interpretation of tender conditions, addressed the arbitrariness in governmental actions, and upheld the principles of fairness and legality in contract terminations.