TaxTMI 
TaxTMI 
2003 (8) TMI 546
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....1997. It was also provided that toll plazas would be got completed by the authority and handed over to the selected enterprise. There was two types of securities to be furnished, one being a bid security in an amount of Rs. 50 lakhs (Rupees fifty lakhs only). The other was a performance security by way of a bank guarantee of Rs. 2 Crores (Rupees Two crores only). Clauses 7.1 to 8 deal with bid security. They read as under :- "7. Bid Security. 7.1. The bidder shall furnish, as a part of his bid, a Bid Security in an amount of Rs. 50 Lakhs (Rupees Fifty Lakhs only), or an equivalent amount in a freely convertible currency. The Bid Security shall, at the bidder's opinion, be in the form of a Bank Draf, or Guarantee from a Bank located ....
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....ned that the bid validity period was 120 days. In terms of this tender document the Respondent gave his bid or offer. The offer/bid was in terms of the tender and thus it was also in two parts. The first part being an offer that the bid would not be withdrawn during the bid validity period and/or that on acceptance the performance security would be furnished and the Agreement signed. The second part of the offer dealt with the terms and conditions pertaining to the performance of the contract of collection of tolls, if the offer was accepted. As earnest/security for performance (of the first part of the offer) the Respondent along with his bid furnished a bank guarantee in a sum of Rs. 50 Lakhs as bid security. The bank guarantee furnished....
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....igh Court raised two questions viz. (a) whether the forfeiture of security deposit is without authority of law and without any binding contract between the parties and also contrary to Section 5 of the Contract Act and (b) whether the writ petition is maintainable in a claim arising out of a breach of contract. Question (b) should have been first answered as it would go to the root of the matter. The High Court instead considered question (a) and then chose not to answer question (b). In our view, the answer to question (b) is clear. It is settled law that disputes relating to contracts cannot be agitated under Article 226 of the Constitution of India. It has been so held in the cases of Kerala State Electricity Board v. Kurien E. Kalathil ....
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....ontract Act. Any clause in so far as it is contrary of comes in conflict with the provisions of the Indian Contract Act is inoperative and void and connot be enforced. To have an enforceable contract there must be an offer and unconditional acceptance. A person who makes an offer has the right of withdrawing it before acceptance. Until the offer is accepted unconditionally it creates no legal right and the bid can be withdrawn at any time. Once it is held that there is no completed contract between the parties no further question can arise. There can be no breach of contract. There is no statutory rule or an act whenunder the security deposit in the form of a bank guarantee could be claimed by the respondent No. 2. The position may, however....
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....statutory right under the Indian Contract Act. Such earnest/security is given and taken to ensure that a contract comes into existence. It would be an anomalous situation that a person who, by his own conduct, precludes the coming into existence of the contract is then given advantage or benefit of his own wrong by not allowing forfeiture. It must be remembered that, particularly in government contracts, such a term is always included in order to ensure that only a genuine party makes a bid. If such a term was not there even a person who does not have the capacity or a person who has no intention of entering into the contract will make a bid. The whole purpose of such a clause i.e. to see that only genuine bids are received would be lost if....
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....er as the Appellants had not completed the toll plazas. He pointed out that the period of the contract was to be from 1st October, 1997 to 30th September, 1999. He submitted that even though the contract, if accepted, was to commence from 1st October 1997, the Appellants had not accepted the offer till 20th November, 1997 and thus Respondent had to withdraw his offer. He submitted that it has come on record that the toll plazas were not completed till March, 1998. He submitted that the Respondent was forced to withdraw his offer because of the inaction/ negligence on the part of the Appellant. He submitted that under these circumstances Respondent shold not be penalized by forfeiture of his deposit. We are unable to accept this submission. ....