TaxTMI 
TaxTMI 
TaxTMI 
2015 (2) TMI 1422
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....spondents has been allowed and order dated 19/09/2013 passed by the appellant-corporation declining refund of the earnest money quashed with a direction to the corporation to refund to the respondents the amount deposited by them. 3. The appellant-corporation floated two tenders one dated 17/10/2012 and the other dated 19/11/2012 for construction of a shed and a boundary wall. The respondent-contractor submitted two separate tenders in response to the said tender notices enclosing therewith an amount of Rs.4,41,000/- and Rs.3,34,000/- respectively towards earnest money deposit. The tenders were in two parts, one technical and the other commercial. While the technical bids were opened and found compliant, the financial bids had yet to be ....
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....he impugned order dated 19/9/2013 and direct the NTPC to refund the earnest money. Writ petition, thus, stands disposed of." 4. The present appeal assails the correctness of the above order as noticed earlier. 5. Appearing on behalf of the appellant-corporation Mr. S.K. Dhingra argued that the High Court was in error in directing refund of the earnest money deposited by the respondent. It was contended that in terms of condition No. 2 of the Special Conditions of Contract revocation of tender was by itself sufficient to call for forfeiture of the earnest money. Inasmuch as the High Court had held that the respondent's case was not covered under condition No. 2, it committed a palpable error. 6. Condition No. 2 of Special C....
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....ithdrawal/cancellation/ recall of the bid or tender submitted by the bidder. In any such event, the earnest money deposited by the bidder would be liable to the forfeited is the plain and the simple meaning of the Condition No. 2 extracted above. The High Court was in manifest error in holding that the forfeiture did not fall within the purview of Condition No. 2. 8. It was next argued on behalf of the respondent that the provision empowering the appellant to forfeit earnest money upon withdrawal of offer even before such offer was opened/accepted by the authority inviting the same will be impermissible in law. The financial bid in the instant case, it was contended, had not been opened by the appellant-corporation although the technical....
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....t contention this Court held that while a person may have a right to withdraw his offer at any time before the acceptance is conveyed to him if the offer is itself subject to the condition that the earnest money will be forfeited for not entering into contract or if some other act is not performed, then, even though he may have a right to withdraw his offer he will have no right to claim the refund of the earnest money. Forfeiture of the earnest money, in any such case, does not, observed this Court, infringe any statutory right under the Contract Act, 1872 for earnest/security is given and taken in such cases only to ensure that a contract comes into existence. What is important is that this Court recognised that absence of any term stipul....
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....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 forfeiture was not permitted." 11. In A.P. Paper Mills (supra) this Court was dealing with almost similar situation where according to Clause 5 of the tender notice the tenderer would withdraw the tender only on the pain of forfeiture of the earnest money. While refusing to interfere with the forfeiture of the earnest money this Court observed: "... ... ...But it is a case of withdrawal of tender and the effect of it is to be consider....
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....r of the provisions contained in Section 5 of the Act, the respondent cannot escape from the obligations and liabilities under the agreements contained in its offer/bid. The right to withdraw an offer before its acceptance cannot nullify the agreement to suffer any penalty for the withdrawal of the offer against the terms of agreement. A person may have a right to withdraw his offer, but if he has made his offer on a condition that the bid security amount can be forfeited in case he withdraws the offer during the period of bid validity, he has no right to claim that the bid security should not be forfeited and it should be returned to him. Forfeiture of such bid security amount does not, in any way, affect any statutory right under....