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 ... Acceptance must be unconditional - ambiguity in tender/BoQ as vitiating acceptance - writ jurisdiction to examine arbitrariness in contractual action - rearrangement of work at contractor's risk and cost - forfeiture and refund of earnest money depositAmbiguity in tender/BoQ as vitiating acceptance - acceptance must be unconditional - Validity of respondents' acceptance of the petitioner's bid and consequent termination at his risk and cost in view of BoQ indicating bid 'without taxes' while acceptance purportedly treated the price as inclusive of taxes. - HELD THAT: - The Court analysed the published bidding documents and the BoQ which, as uploaded, required the bidder to state the total amount 'without taxes'. Although the notice inviting tender contained a clause that the price shall include all duties, taxes and levies, the BoQ as actually presented to bidders contained an erroneous insertion of the phrase 'without taxes', and the petitioner accordingly submitted a bid without incorporating taxes. A contract arises only upon acceptance of the bid; acceptance must mirror the terms of the offer and be unconditional. Where the department's acceptance sought to treat the same quoted figure as inclusive of taxes (the word 'without taxes' having been deleted in the acceptance document), there was a material mismatch between offer and acceptance. In these circumstances the respondents' action in cancelling the contract and treating the petitioner as liable to have the work rearranged at his risk and cost was arbitrary and unsustainable. The Court also noted that writ jurisdiction is available to examine arbitrariness in governmental contractual actions where no substantial factual dispute prevents such review. [Paras 11, 12, 13]Respondents' termination of the contract and imposition of risk-and-cost liability on the petitioner for having submitted a bid pursuant to the BoQ specifying 'without taxes' was illegal and arbitrary; acceptance was not in terms of the tender.Forfeiture and refund of earnest money deposit - Entitlement of the petitioner to refund of the Earnest Money Deposit (EMD) and interest consequent to setting aside the termination and cancellation. - HELD THAT: - Having held the termination and the risk-and-cost consequence to be illegal, the Court directed restitutionary relief. The respondents were ordered to refund the EMD to the petitioner within one month from receipt of the judgment. To ensure timely compliance, the Court directed payment of interest at the specified rate if there is delay in refunding the EMD. [Paras 14]EMD to be refunded to the petitioner with interest for any delay, and Ext. P13 (termination/rearrangement order) set aside.Final Conclusion: The appeal is allowed: the termination of the contract and the order to rearrange the work at the petitioner's risk and cost are set aside; the respondents are directed to refund the petitioner's EMD within one month, with interest in case of delay. 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.