null V. HPC

WP(C)/4877/2003

AI Insights

The case revolves around a dispute concerning the forfeiture of an Earnest Money Deposit (EMD) by the respondent Corporation following the petitioner's withdrawal from a contract for bamboo transportation, bundling, and feeding. Initially, the petitioner was issued a Letter of Intent (LOI) but later withdrew due to inability to submit fitness certificates for vehicles and concerns over unconsidered increases in POL and other statutory costs. The respondent Corporation, invoking Clause 8.3 of the tender conditions, forfeited the EMD after awarding the contract to another party at a higher rate. The petitioner challenged this decision through a writ petition, leading to a temporary suspension of the LOI and a subsequent appeal by the respondent Corporation, which resulted in the release of the EMD upon furnishing a Bank Guarantee. The court's decision focused on ensuring that the petitioner's representation regarding the EMD's release was addressed promptly by the competent authority.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 801596 (HC-ASSAM)
• Appeal Type: Others
• Pronouncement Date: 31-12-2012
• Assessment Year: misc
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M HAZARIKA; J ROY
• Assessee Lawyers: K N CHOUDHURY; R KAKATI
• Keywords: Earnest Money Deposit; Forfeiture; Letter of Intent; Bamboo Transportation Contract
• Section: 8(3)

Judgement Text

"WP(C) 4877/2003 BEFORE THE HON’BLE MR. JUSTICE B.K. SHARMA Heard Mr. K.N. Choudhury, learned senior counsel assisted by Ms. R. Kakati, lear ned counsel for the petitioner. I have also heard Mrs. M. Hazarika, learned seni or counsel assisted by Mr. J. Roy, learned counsel representing the respondent H PC. This writ petition has been filed challenging the Annexure-H LOI dated 30.4.2003 issued in favour of the respondent No.5. However, as submitted by Mr. Choudhury , learned counsel for the petitioner, the only dispute which requires adjudicati on is as to whether the petitioner is entitled to get back the Earnest Money Dep osit (EMD) of Rs. 5 lakhs from the respondent corporation. The said deposit was made in respect of the particular contract for bamboo transportation, bundling a nd feeding by Annexure-D letter dated 11.4.2003, the petitioner who should be th e LOI in respect of the work, inter alia, with the following condition :- 5.0 Please furnish a copy of your valid labour Licence, own P.F. Code, Updat ed Income tax and Sales tax Clearance Certificates, Attested copy of partnership Deed, Documentary proof of having 20(twenty) Nos. (Own/Hired) trucks will all f itness certificates as per Scope of Work within 15 days from the date of issue o f this Letter of Intent. As per the disclosure made in the counter affidavit filed by the respondent Corp oration, the petitioner had accepted the offers so made by his letter dated 16.4 .2003. however, by his Annexure-E letter dated 25.4.2003, he withdrew the offer for the following reasons :- 1. Fitness Certificates for vehicles as desired by you could not be submitted b efore 6(six) months. 2. POL increase has not been considered thou9gh incorporated in the Tender, i.e. any other statutory increase by Govt. will be borne by HPC. Invoking the provisions of clause 8.3 of the terms of the conditions of the tend er, the respondent Corporation having not released the EMD, the petitioner filed the writ petition. In the counter affidavit filed by the respondents, it has been stated that in te rms of Clause 8.3 of the general conditions of tender, the respondent Corporatio n is entitled to forfeit the EMD. It is their stand that the petitioner after ac ceptance of the LOI, having abandoned the work in question, the contract had to be awarded to the respondent No.5 at a higher rate. Be it stated here that the r ate at which the work order was issued to the petitioner was Rs. 60/- per MT (ne gotiated rate). However, the petitioner having abandoned the work, the responden t Corporation had to entrust the work to the respondent No.5 @ Rs. 66/- per MT ( negotiated rate). For a ready reference, Clause 8.3 of the general conditions of the tender is quoted below :- 8.3 In case of failure on the part of the contractor, the Corporation shall have the liberty to get the job done by engaging other Contractor, at his risk a nd cost, forfeit the EMD, claim compensation of lass, without prejudice to any o ther right to remedy. While according to Mr. Choudhury, learned counsel for the petitioner, the respon dents could not have taken recourse to forfeiture of the EMD without taking the composite action as contemplated in Clause 8.3, Mrs. M. Hazarika, learned counse l representing the respondent Corporation submits that it is one of the options reflected in the aforesaid clause to which the respondent Corporation is entitle d to take recourse. On perusal of the Annexure-H LOI dated 30.4.2003 and even otherwise also, it is an admitted fact that the contract was awarded to the respondent No.5 without an y risk and cost on the part of the petitioner. It is the stand of the respondent s that the contract was awarded to the respondent No.5 out of the same tender pr ocess and having regard to the aforesaid clause of the general conditions of con tract, the EMD submitted by the petitioner stands forfeited. While entertaining the writ petition by order dated 24.6.2003, the LOI dated 30. 4.2003 (Annexure-H) was suspended, making a grievance against which the responde nt Corporation had preferred an appeal being WA 41/2004. The appeal was disposed of on 27.2.2004 providing for release of the EMD. It is submitted that the EMD has been released upon furnishing Bank Guarantee. By now, more than 9 years have gone by since the dispute between the parties aro used. In the counter affidavit filed by the respondent Corporation, it has been stated that the representation made by the petitioner for release of the EMD is still pending consideration before the competent authority. Mrs. M. Hazarika, le arned counsel representing the respondent Corporation fairly submits that the co mpetent authority will pass an appropriate order on the basis of the representat ion made by the petitioner for release of EMD. In view of the above, the writ petition is disposed of directing the competent a uthority of the respondent Corporation to dispose of the representation taking n ote of all the attending facts and circumstances and consistently with the obser vations made above. Let the representation be disposed of as expeditiously as possible, preferably w ithin 31.12.2012. With the above directions and observations, the writ petition stands disposed of , without however, any order as to costs. "