Judgment:
1. The petitioner has invoked the jurisdiction of this Court under Article 226 of the Constitution of India, with a prayer for issuance of a Writ, in the nature of Certiorari, to quash the order dated 22.05.2007, with a consequential prayer for issuance of a Writ of Mandamus, to refund Earnest Money Deposit of Rs.45,00,000/- (Rupees Fourty Five Lakhs only), as also writ in the nature of Prohibition, restraining the respondent from invoking the Bank Guarantee No.2004/6 valid upto 27.09.2008.
2. The prayer for Writ of Prohibition has been rendered infructuous, as the respondent was not successful in invoking the Bank Guarantee during the period of its validity, as no further action against the Bank was taken in refusing to honour the Bank Guarantee.
3. The admitted facts of the case, are that a Tender was issued by the respondent for acquiring 2 Nos. 10 MT. Bollard Pull (BP) Tugs on 05.01.2006. On 11.03.2006, the petitioner submitted an Offer for construction of Tugs at a price of Rs.10,91,60,000/- (Rupees Ten Crores Ninety One Lakhs and Sixty Thousand only) and furnished Earnest Money Deposit of Rs.40,00,000/- (Rupees Forty Lakhs only) by way of Demand Draft for Rs.20,00,000/- (Rupees Twenty Lakhs only) and Bank Guarantee for Rs.20,00,000/- (Rupees Twenty Lakhs only).
4. The respondent fixed 29.06.2006 as the date for opening the tender. On that date, negotiations were held with the petitioner for reduction of the price. The petitioner agreed to reduce the price to Rs.10,81,20,000/- (Rupees Ten Crores Eighty one Lakh and Twenty Thousand only) per Tug. There were further negotiations between the parties for further reducing of the price to Rs.10,65,82,000/- (Rupees Ten Crores Sixty Five Lakhs and Eighty Two Thousand only), per Tug, which was not accepted by the petitioner. Consequently, the tender was cancelled, which entitled the petitioner to refund of the EMD and also release of the Bank Guarantee, as per the terms of the Tender Document. It seems that neither the Bank Guarantee was released, nor EMD returned to the petitioner, in spite of the fact that the Tender was cancelled on 02.02.2007.
5. On 05.12.2007, M/s. Sethu Samudaram Corporation Limited called fresh tender for 2 Nos of 10 T.B.P. Tugs. The petitioner submitted its Offer along with EMD of Rs.40,00,000/- (Rupees Forty Lakhs only). This tender was not processed by M/s. Sethu Samudaram Corporation Limited and was cancelled.
6. On 30.03.2007, M/s. Sethu Samudaram Corporation Limited again floated a Tender for 2 Nos of 10 T.B.P. Tugs, which was again cancelled.
7. On 05.08.2008, M/s. Sethu Samudaram Corporation Limited again invited tender for 2 Nos of 10 T.B.P. Tugs. This was again cancelled by M/s. Sethu Samudaram Corporation Limited and the EMD was refunded to the petitioner.
8. On 05.12.2005, the respondent issued a Tender on behalf of M/s. Sethu Samudaram Corporation Limited to acquire 5 nos 30 MT B.P. Tugs, to which an Offer was again submitted by the petitioner for a sum of Rs.19,44,84,000/- (Rupees Nineteen Crores Forty Four lakhs and Eighty Four Thousand only) per Tug. The petitioner deposited EMD of Rs.1,00,00,000/- (Rupees One Crore only) i.e., by way of Demand Draft for Rs.25,00,000/- (Rupees Twenty Five Lakhs only) and Bank Guarantee for Rs.75,00,000/- (Rupees Seventy Five Lakhs only). The Offer was valid till 09.08.2006.
9. On 29.08.2006, the respondent requested the petitioner, to extend the validity of Offer and Bank Guarantee till 18.11.2006. The request was accepted, and the petitioner extended the Offer, and the Bank Guarantee for EMD upto 18.11.2006.
10. On 28.09.2006, in the negotiations held between the respondent and the petitioner, the petitioner offered to reduce the price to Rs.19,18,84,000/- (Rupees Nineteen Crores Eighteen Lakhs and Eighty Four Thousand only) per Tug.
11. On 07.11.2006, M/s. Sethu Samudaram Corporation Limited requested the petitioner to extend the Offer and Bank Guarantee till 15.12.2006. It was on 08.11.2006, that the petitioner informed the respondent, that they will revert on extending the validity of the Offer, after confirming with the equipment suppliers.
12. On 15.11.2006, again a request was made by M/s. Sethu Samudaram Corporation Limited, to extend the Offer upto 18.12.2006. The petitioner, accordingly, extended the validity of the Tender upto 15.12.2006. On 20.11.2006, the petitioner agreed for a further reduction of price to Rs.18,99,48,000/- (Rupees Eighteen Crores Ninety Nine Lakhs and Forty Eight Thousand only) per Tug. Vide letter dated 07.12.2006, the petitioner was directed to be present at Tuticorin on 10.12.2006 to receive the Work Order from the Honourable Minister.
13. The stand of the respondent, is that in pursuance to the letter dated 07.12.2006, the petitioner did not come to accept the work order, whereas the stand of the petitioner, is that the petitioner was informed to ignore the letter dated 07.12.2006, as the work order was not to be issued on that date. The validity of the petitioner's Offer expired on 15.12.2006.
14. The case of the petitioner, is that it was on 16.12.2006, that a letter was received from the respondent, accepting the Offer, whereas the stand of the respondent, is that the order accepting the Offer was faxed to the petitioner on 15.12.2006 itself, i.e., during the validity period.
15. On 22.12.2006, a request was made to the petitioner, for extending the Bank Guarantee for EMD and the request was re-iterated on 29.01.2007. In response to it, on 19.02.2007, the petitioner asked for the return of EMD in terms of Clause 31.1(b) of the Tender.
16. On 30.03.2007, M/s. Sethu Samudaram Corporation Limited, again issued a Tender for 4 Nos 30 T.B.P. Tugs, but the said tender was cancelled on administrative grounds. On 03.05.2007, M/s. Sethu Samudaram Corporation Limited refused to issue the Tender documents to the petitioner, on the ground that the petitioner's company had been black listed.
17. By way of the impugned order, the respondent invoked the general lien to forfeit EMD of Rs.25,00,000/- (Rupees Twenty Five Lakhs) deposited for the Tender on 05.12.2005; EMD of Rs.20,00,000/- (Rupees Twenty Lakhs) paid for Tender dated 15.12.2007 and to encash Bank Guarantee given for Performance of Contract dated 23.09.2004.
18. On 11.09.2007, M/s. Sethu Samudaram Corporation Limited revoked the order, black listing the petitioner Company, as the order of black listing was stayed by this Court. The tender floated by M/s. Sethu Samudaram Corporation Limited on 01.11.2007 was subsequently cancelled. The subsequent tender dated 11.02.2008 was also cancelled.
19. Learned counsel for the petitioner challenged the impugned order passed by the respondent, on the ground that the order is prima facie without jurisdiction, as the respondent has no right under Section 171 of the Indian Contract Act, 1872, to invoke the general lien, as it is neither a Banker, factor, wharfinger, attorney of a High Court or policy broker.
20. This contention of the learned counsel for the petitioner was rebutted by the learned counsel for the respondent, by placing reliance on the Judgment of the Hon'ble Supreme Court in THE BOARD OF TRUSTEES OF THE PORT OF BOMBAY AND OTHERS ..VS.. M/S. SRIYANESH KNITTERS (A.I.R. 1999 S.C. 2947), wherein the Hon'ble Supreme Court has been pleased to lay down, that the Port Trust constituted under the Major Port Trust Act is a wharfinger, and can exercise general lien under Section 171 of the Contract Act. The Hon'ble Supreme Court has laid down, that no restricted meaning can be given to Section 171 of the Contract Act.
21. The other ground of challenge by the learned counsel for the petitioner, is that the action of the respondent is totally arbitrary, and violative of Article 14 of the Constitution of India, in as much as, there is no reason, whatsoever, with the respondent to invoke the general lien or forfeit the EMD deposit of the petitioner, once the Offer was not accepted during validity period. The contention of the learned counsel for the petitioner is based on the fact, that admittedly, the previous Offer of the petitioner in response to tender was not accepted, and the Tender itself was cancelled, and therefore, there is no justification, whatsoever, for the respondent to have retain the EMD or Bank Guarantee.
22. The contention of the learned counsel for the respondent, is that under general lien, they could retain that amount, and adjust towards forfeiture of EMD, on failure of the petitioner, to execute the contract and comply with the security after its Offer was accepted.
23. However, the learned counsel for the petitioner contends, that this could only be done, if there is a valid contract, or Offer of the petitioner was accepted during validity period and not otherwise.
24. It is also the contention of the learned counsel for the petitioner that admittedly, the Offer of the petitioner was valid initially upto 09.08.2006, which was extended upto 18.11.2006 in terms of the Tender documents by extending the Bank Guarantee. The request was again made on 07.11.2006 to extend the Offer. However, the validity was extended only upto 15.12.2006. This cannot be valid extension, as admittedly, the request of the respondent to extend the validity was not acceded to. In any case, there was no justification with the respondent, to accept incomplete Offer, that too after the last date of validity.
25. In response to the contention of the learned counsel for the petitioner, the learned counsel for the respondent, contended, that there was no reason for the petitioner to feel, that their Offer was not accepted, as it was on 07.12.2006 itself, that the petitioner was informed, that he could collect the work order on 10.12.2006, and it is the petitioner, who failed to come and collect the work order.
26. It is also the contention of the learned counsel for the respondent, that in any case, the Offer was accepted by the respondent on 15.12.2006 itself, by way of a fax message, therefore, as per clause 5 of the work order, the respondent was entitled to forfeit the EMD, on failure of the tenderer to execute the work after acceptance, as the petitioner failed to deposit the performance security.
27. On consideration, I find force in the contentions of the learned counsel for the petitioner.
28. Clause 29 of the Tender Document provided that any notice or other document of any description under this contract was to be given or sent to the contractor by leaving the same with it or sending it by post, at their works or last known place of business.
29. It is not in dispute, that the letter of acceptance dated 15.12.2006 was received by the petitioner only on 16.12.2006 i.e., after the expiry period of Offer. If this is true, then the stand of the learned counsel for the respondent, that the Offer was accepted, and the work order was ready on 07.11.2006 cannot be accepted, because, if the work order was ready on 07.11.2006 itself, where was the occasion to issue a second work order dated 15.12.2006.
30. According to the provisions of the Contract Act, acceptance is only complete when it is received by the Offerer. Therefore, there was no valid Offer on the date, when the letter of acceptance was received, which could bind the petitioner to execute the contract.
31. The conduct of the respondent, that the sending of work order by Fax on 15.12.2006, and issuing work order without insisting on extension of validity of two Bank Guarantee, only shows that it was attempt to forfeiting EMD, which cannot be said to be bona fide act, as it was not disputed even by the learned counsel for the respondent, that an Offer without valid EMD cannot be accepted in the normal course.
32. The State Authorities are expected to act fairly. The facts of this case show, that an attempt has been made to penalise the petitioner, for no fault. Once it is held, that there is no valid Offer, then the respondent had no right either to withhold EMD or forfeit EMD or claim any general lien on the amount lying with the respondent.
33. The action of the respondent therefore, on the face of it, is arbitrary, and amounts to colourable exercise of power, which is hit by Article 14 of the Constitution of India.
34. Consequently, this writ petition is allowed, the impugned order is set aside, and Writ in the nature of mandamus is issued, directing the respondent to refund the EMD of the petitioner within one month of receipt of a certified copy of this order.
No costs.