Harish Chandra (India) Pvt. Ltd. vs The Corporation Bank And Others
1991 Latest Caselaw 337 Del

ORDER

1. I have heard arguments for deciding these three applications.

2. The suit has been brought seeking permanent injunction restraining the defendants from encashing the bank guarantee No. 17 of 1988 dated November 12, 1988, issued by defendant No. I in favor of defendant No. 2 and from forfeiting the amount of Rs. 9.42 lakhs under the said bank guarantee and also restraining defendants 2 and 3 from opening the second sealed enve lope under which the tender documents were submitted by the plaintiff except before the Hon'ble Court or in the presence of any officer to be appointed by this Court.

3. Defendant No. I is the Corporation Bank which had issued the bank guarantee. Defendant No. 2 is the Superintending Engineer of Andhra Pradesh, who had invited the tenders, and had opened the tenders and defendant No. 3 is the Government of Andhra Pradesh. In fact, the Superintending Engineer is not a legal entity for being imp leaded as a defendant and it is only defendant No 3, Government of Andhra Pradesh who is the real contesting party in this suit.

4. Along with the suit the plaintiff had moved I-A-1470/89 under S.80 of the Code of Civil Procedure, 1908, for permission to file the present suit without serving any notice under Section 80 of the Code of Civil Procedure, 1908, on the ground that defendant No. 2 has threatened to encash the bank guarantee and forfeit the sum of Rs. 9.42 lakhs vide telegram sent by defendant No. 2 dated February 20, 1989, and as an urgent relief of injunction was sought in the suit, therefore, the service of notice under S. 80 of the Code of Civil Procedure, 1908, would have frustrated the said relief. Hence, permission was sought for filing the suit without serving such a notice.

5. Application I.A.No. 1469/89 has been moved praying for interim injunction restraining defendants I and 2 from encashing the bank guarantee till the disposal of the suit and restraining defendants 2 and 3 from opening the second sealed envelope, I.A. No. 102/ 90 has been filed by defendants 2 and 3 under Order XXXIX, Rule 4 read. with Sections 90 and 151 of the Code of Civil Procedure, 1908, praying for vacation of the ex parte injunction order already granted by this Court on February 21, 1989, or in the alternative requiring the plaintiff to first deposit in court a sum of Rs. 9.42 lakhs along with interest which is Rs. 14,130/ - per month.

6. Facts of the case, in brief, are that an invitation to tender dated May 3, 1988, was issued by defendants 2 and 3, inviting tenders for excavation of canal, lining and construction of structures for the Srisailam Right Branch Canal Scheme in Kurnool . tract, near Nandyal in the State of Andhra pradesh. The plaintiff submitted its tender in duplicate as required under the tender conditions with defendant No. 2 on November 15, 1988. According to the plaintiff, he submitted the tenders along with a covering letter dated November 12, 1988, placed in both the sealed envelopes containing the original tender and the duplicate tender which stipulated that the payment of work done shall be made to the plaintiff monthly during the first week of every month for which rebate of 0.25% shall be given and the department shall provide land for plaintiff's camp purposes free of cost. It is stated that it was also mentioned in that letter that the bank guarantee of Rs. 9.42 lakhs was enclosed as earnest money deposited as per requirement of the tender.

7. The real dispute between the parties has arisen as to whether such a letter had been given along with the tender or not ? The case of the defendants 2 and 3 is that no such letter was found with the sealed covers containing original tender and the duplicate tender. As per clause 14 of volume I of the tender documents, a security in the amount of Rs. 9.42 lakhs was to be furnished which the plaintiff had furnished in the shape of bank guarantee. Clauses 14.5 and 14.6 of the said tender documents contemplated forfeiture of the said security in case bidder was to withdraw his bid during the period of bid validity or in the case of successful bidder, if the bidder failed within the specific limit either to sign the agreement or furnish the required performance security.

8. On January 16, 1989, defendant No. 2 had issued a letter accepting the bid of the plaintiff and required the plaintiff to furnish the performance security/ bank guarantee for Rs. 83,98,800/- for a period of 48 months from the date of execution of the contract and further extendibility for a period of one year on a stamp paper worth Rs. 30/- within 30 days from the receipt of the said letter and was required to be present at the office of defendant No. 2 for executing the contract documents. The letter of acceptance of tender dated January 16, 1989, did not refer to any letter of the plaintiff allegedly submitted along with the tenders.

9. It is pleaded by the plaintiff that this omission appearing in the acceptance letter dated January 16, 1989 notice of defendant No. 2 by plaintiff's for which the department shall arrange representatives in the first week of January foreign exchange at the prevailing bank rate 1989, on the visit of defendant No. 2 to Delhi against the machinery advance as admissible when he stayed at Andhra Pradesh Bhawan under the agreement/ tender clause and the and had called the plaintiff for discussion. So, according to the plaintiff, plaintiff's Managing Director and Directors in the said meeting had emphasised that conditions mentioned in plaintiff's letter dated November .12, 1988, were highlighted by the plaintiff's representative who was present at the time the tender was opened and the plaintiff's tender could not have been accepted without reference to conditions contained in letter dated November 12,1988. It was pleaded that on February 6, 1989, the plaintiff's Project Manager visited the office of defendant No. 2 and had taken along with him a performance guarantee worth Rs. 83,99,000/- for the purpose of execution of the contract and defendant No. 2 wanted the contract to be executed without reference to the conditions set out in the plaintiffs letter dated November 12, 1988, to which the plaintiff's representative was not agreeable and thus, he returned without executing the contract and thereafter plaintiff had sent letter dated February 9, 1989, by registered post pointing out these facts. Defendant No. 2 had sent a telegram in response asserting that no such letter dated November 12, 1988, had been received along with the tenders and no such discussion ever took place regarding conditions of any such alleged letter at anytime and directed the plaintiff to attend his office on or before February 20, 1989, along with the performance bank guarantee for executing the contract and otherwise threat was held out that the security already furnished shall stand forfeited. The telegram was dated February 14, 1989, which he received a cording to the plaintiff on February 16, 1989. It is averred that the plaintiff had also sent a reply telegram reiterating its pleas and had sent a registered letter dated February 19, 1989, reiterating the same pleas. So, it is pleaded by the plaintiff that in fact, no concluded contract came into existence between the parties, which could entitle defendants 2 & 3 to forfeit the security furnished by the plaintiff along with the tender documents. It is pleaded that the plaintiff had made a conditional tender and defendants 2 & 3 were not in law entitled to ignore the conditions contained in letter dated November 12, 1988, and accept the tender of the plaintiff. So, it is averred that as conditions of the plaintiff incorporated in letter dated November 12, 1988, sent with the tender were not accepted by the defendants 2 & 3, no contract came into existence between the parties entitling defendants 2 & 3 to forfeit the security amount.

10. Defendants 2 & 3 have contested the suit as well as the application in which pleas have been taken that Delhi Courts have no territorial jurisdiction to try this suit and without service of notice under Section 88 of the Code of Civil Procedure, 1908, no suit was maintainable and on merits, it has been pleaded that no such letter dated November 12, 1988, was found along with the tenders and tenders were opened in presence of representative of the plaintiff and representatives of other bidders and the minutes were prepared and at no point of time any conditions allegedly included in any letter dated November 12, 1988, had been highlighted. It is pleaded that the plaintiff, for reasons best known to the plaintiff, has set on a false case in order to wriggle out from the contract already concluded and the plaintiff having incurred the liability for forfeiture of the security furnished by the plaintiff. It is pleaded that the letter of acceptance is dated January 16, 1987, and only for the first time the plaintiff highlighted the existence of conditional letter along with the tender in his letter sent in February 1989. It is pleaded that on the visit to Delhi in the first week of January 1989, defendant No. 2 had not called any representative of the plaintiff but a representative of the plaintiff had met Aim but had not pointed out to any conditions sent along with the tender. In the written statement and also in the reply to the application it was not made clear as to what had happened in the sealed envelope containing the duplicate tender as to when it was opened. Later on, it was pointed out by the defendants I & 2 that in fact, both the sealed envelopes containing the original tender as well as duplicate tender were opened on November 15, 1988, itself. Although on the envelope containing the original tender defendant No. 2 had made an endorsement, that the same had been opened by him on November 19, 1988, but no such endorsement admittedly appeared on the envelope containing the duplicate tender.

11. I, vide by order dated November 16, 1990, required defendant No. 3 to file an affidavit of any competent officer of defendant No. 3 who has been dealing with the opening of tenders of similar nature indicating the procedure followed generally with regard to the opening of the original sealed tender and the copy of the tender and also an affidavit of the person present at the time of the opening of the tenders to give the facts as to how the tenders were opened, whether both the sealed envelopes were opened at one time or at different times and in whose presence.

12. Mr. T. Narayan Reddy, who was working as Superintending Engineer at the relevant time and who has since retired and Mr. M. Kondiah, who was working as Draftsman Grade 11 and was stated to be present at the time of opening of tenders have filed a joint affidavit dated December 3, 1990, in which they have deposed that the general procedure followed in respect of the bid was not to open the sealed envelope containing the copies of the bids unless any discrepancies or overwriting in the original bids were detected which justified a counter check of the corresponding items or parts in the copy of the renders. They have pointed out that either bidders/ representatives at the bid opening had a right to object to any discrepancies and over writings appearing on the original bid which could necessitate the opening of the sealed cover containing the copy in order to see whether copy contained the same figures as the original.

13. They have stated that when the tenders of the plaintiff were opened it was found that in some items there were over writings and discrepancies and thus, sealed envelope containing the copy of the tender documents was opened. They have stated that in case of another bidder M / s. Ramchandra Reddy & Company only original envelope was opened and the envelope containing the copy of the tender was not opened and was still lying intact. They have stated that in case there had been any conditional letter accompanying the bid the same would have been read out for the information of all the bidders and representatives present at the time of opening of the bid. They have mentioned that M/ s. Ramchandra Reddy and Company had enclosed an additional letter offering rebate which was read out at the time of the opening of the bid. Photo copy of the original tender as well as the copy of the tender submitted by the plaintiff have been filed which show that in the original tender there were cuttings made regarding the totals although no cutting is made regarding the rates and similar cuttings appear in totals in the copy of the tender. Plaintiff had got filed affidavits of Mr. Ashok Gupta, Managing Director of the Plaintiff, Mr. Tilak Raj Puri. Accountant of the Plaintiff and Mr. Phool Chand, Director of the Plaintiff, in which they have reiterated the pleas of the plaintiff that in fact, conditional letter dated November 12, 1988, was placed not only in the envelope containing the original tender but also in the envelope containing copy of the tender and that they have also highlighted this fact to defendant No. 2 in the first week of January, 1989, when he visited Delhi and Tilak Raj h mentioned that he had pointed out the contents of conditional letter to defendant No. 2 when the bids were opened.

14. The learned counsel for the plaintiff has vehemently argued that there was no occasion for defendant No. 2 to have opened the sealed envelope containing the copy of the tender and that a shifting stand appears to have been taken by defend ants 2 & 3 with regard to the attempt of opening of the said sealed envelope containing the copy of the tender. He has pointed out to the pleas taken in the written statement which do not at all indicate that the sealed envelope containing the copy of the tender stood opened. He has urged that this Court has on February 21, 1989, given a direction that defendants 2 & 3 were not to open the sealed cover containing the copy of the tender and was directed to bring the same in Court on the next date of hearing. On March 16, 1989, counsel for defendants 2 & 3 had informed the Court that both the sealed envelopes had been opened earlier. Although this fact was not disclosed on March 13, 1989, but defendant No. 2 had appeared in person before the Deputy Registrar. Be that as it may, the crucial question which needs decision is whether Court can prima facie come to the conclusion or not that the letter dated November 12, 1988, was submitted by the plaintiff along with the tenders? The whole case of the plaintiff hinges on this point.

15. Counsel for the defendants has drawn my attention to General Conditions of the Contract Volumes I to III pertaining to tenders in question. There is clear require ment of these tender documents that in case any machine was liable to be imported and foreign exchange was required, the bidder was bound to mention the same in the prescribed forms 7.1 Schedule 1, 7.2, 7.3 and he has pointed out that other bidders had mentioned such requirements in their bids whereas the plaintiff had not filled any such forms at all. He has urged that, in case the plaintiff needed to import the machinery and required foreign exchange it was incumbent upon the plaintiff to have indicated the same in form 7.1 Schedule I to the tender documents. He has urged that in case the plaintiff had thought of giving such requirement by a separate letter the plaintiff ought to have indicated in the tender documents itself that such requirement is mentioned in the attached letter. He has vehemently argued that the plaintiff is trying to wriggle out of the commitment made by the plaintiff by giving the bid which was accepted by defendants 2 &3. He has pointed out that in case any such conditional letter had been found along with the tender defendant No. 2 would not have failed to read out those conditions for the benefit of the other bidders who were present and the minutes prepared by defendant No. 2 of opening of the bids which have been filed in this case do not make any reference to such conditional letter found along with the tender of the plaintiff. He has also referred to the contents of the letter dated February 19, 1989 of the plaintiff which reproduces the contents of the telegram allegedly given by the. plaintiff which telegram is not stated to have been received by defendants 2 & 3 and has urged that the contents show that even plaintiff mentioned that conditional letter enclosed in the original tender envel ope and copy not received by defendants 2 & 3 and the plaintiff has expressed surprise over it. So, he has pointed out that even at that time it was understood by the parties that both the envelopes stand opened whereas the case of defendants 2 & 3 was that no such conditional letter was found in both the envelopes whereas the plaintiff took up the stand belatedly that such letter was there in both the envelopes.

16. Counsel for defendants 2 & 3 has also urged that assuming for the sake of arguments that in the envelope containing copy of the tender the plaintiff had placed a copy of letter containing conditions and if the Court was to give a prima facie finding that said envelope was not opened at the time of opening of the bids even then the same would have no relevancy as the plaintiff's original tender had been accepted which did not contain any conditional letter. He has pointed out that if such a stand is allowed to be taken that there was a conditional letter in the envelope containing the copy of the tender then unscrupulous bidder can always play fraud by not keeping a conditional letter in the original tender and by keeping a copy of the condi tional letter in the envelope containing copy of the tender and after his original tender is accepted he could easily wriggle out from the contract by requiring the opening of copy of the tender which may contain a conditional letter. He has argued that it was incumbent upon the plaintiff to have indicated in the original tender documents itself that any conditional letter had been attached with the tender documents.

17. Counsel for the plaintiff has vehemently argued that there was no occasion for the defendants to have opened the second sealed envelope and as a matter of fact, the same had been opened only during the pendency of the suit. It is true that there remains a lingering doubt as to exact time when the second envelope was opened by defendants 2 & 3. However, the telegram given by the plaintiff, referred to above, indicated that both the envelopes stood opened before the filing of the suit. Even otherwise I am of the prima facie view that there could be no occasion for the plaintiff to have placed a letter containing the conditions without indicating in the tender papers that such letter has been also submitted along with the tenders. I find force in the contention of the counsel for the defendants that a-mischief could be played by unscrupulous bidder by not placing any such letter containing conditions with the original tender and after the original tender is accepted, to come up with the fraudulent plea that he had placed such a copy of the letter in the duplicate sealed envelope and take a plea that such a letter must have been placed also with the original tender. It is significant to mention that representative of the plaintiff was present when the tenders were opened. It is unimaginable that if any such letter containing the conditions had been found along with tender of the plaintiff the same would have escaped-the notice of defendant No. 2. After all he was to prepare the minutes of all the tenders opened by him for being placed -before the authorities which were to accept or reject the tenders. It is not possible to believe prima facie that defendant No. 2 did not tabulate the tenders after opening them in the presence of representatives of all the bidders. In case any such letter containing the conditions had been found along with the tender of the plaintiff the representative of the plaintiff would have seen that letter containing conditions is also recorded in the minutes containing particulars of all the tenders being tabulated by defendant No.2.

18. Counsel for the plaintiff has contended that defendant No. 2 was to perform only a ministerial act of opening the tenders and thus, had no power to open the second sealed envelope. I do not agree. After all, if certain discrepancies were noticed with the original tender, there was no harm in opening the duplicate tender as well in order to see whether both the tenders were in conformity or not. There could be no reason for defendant No. 2 to have suppressed the letter containing the conditions if the same had been found along with the tender of the plaintiff. The plaintiff had not bothered to fill in a requisite form, which is part of the tender, showing the requirement of foreign exchange for importing any machines. It is really surprising -that without filling the said in formation in the requisite form the plaintiff adopted this novel method of giving the said information in a separate letter ind without indicating in the tender documents that such a letter stands annexed with them.

19. I may mention that the plaintiff had received the acceptance of tender letter dated November 16, 1989, -but for reasons best known to the plaintiff', the plaintiff slept over the matter. It is not prima facie credible that the plaintiff would only verbally highlight to defendant No. 2 regarding existence of conditional letter when plaintiff had clearly received letter dated January 16, 1989, which did not make reference to any conditional letter of the' plaintiff. Plaintiff would have im mediately sent some communication to defendants 2 & 3 that they were not right in accepting the tender of the plaintiff ignoring the conditional letter. The very fact that the plaintiff did not take any steps till February 9, 1989, should lead the Court to hold prima facie that there was no such conditional letter found with the tenders submitted by the' plaintiff. Hence, the plaintiff has no prima facie case and thus, is not entitled to have interim injunction.

20. Counsel for the defendants has con tended that as no leave has been obtained under Section 80(2) of the Code of Civil Procedure, 1908, the suit was not maintain able before serving the notice under Section 80 of the Code of Civil Procedure, 1908. It is obvious that the suit of the plaintiff would have been frustrated if notice under Section 80 had been served because by the time the period fixed under Section 80 lapsed the bank guarantee in question would have been encashed by defendants 2 & 3. So, it Was a fit case where Court could grant the liberty to file the suit without serving the notice. Such an application was moved and the court had directed issuance of a notice in that application.

21. Counsel for defendants 2 & 3 has made reference to Girdhari Lal Chadna v. Union of India, 2nd (1983) 1 Delhi 630, in which it was held that no suit can be instituted without the leave of the Court under Section 80 of the Code of Civil Procedure, 1908, where notice under Section 80 is required to be served. It was mentioned that grant of leave to institute the suit without notice has to be distinctly sought and obtained. The contention raised is that although leave was distinctly sought but the Court has not granted the leave. The question of grant of leave can be, in my opinion, gone into by the Court after serving the notice of the application seeking such leave. So, nothing said in this judgment is fatal to the case of the plaintiff who had moved an application seeking the leave of the Court as required by law along with the suit. In N.V. Ashar v. State of Gujarat, 1984 (2) Gujarat Law Reporter 1333, it was held that it is the urgency or immediate nature of the relief which would be relevant for deciding whether leave should be granted or not and not whether the plaintiff has good case for obtaining such immediate and urgent relief by way of interim order.

22. Counsel for defendants 2 & 3 has also made reference to Bihari Chowdhary v. State of Bihar, , which lays down the well-known proposition of law that that where prior notice under Section 80 of the Code of Civil Procedure, 1908, is required, the suit instituted without such notice is not maintainable. The Supreme Court was not dealing with the provisions of Section 80(2) as in this case. In the present case, I hold that it was a fit case for grant of leave as prayed by the plaintiff and the application moved by the plaintiff in that respect is liable to be allowed. The application of defendants 2 & 3 is also Liable to be allowed and the injunction already granted is liable to be vacated.

23. I allow the application 1. A. No. 1470/89 and grant the necessary permission.

24. I dismiss the application I.A. 1469/89 and allow the application I.A. 102/90 and vacate the injunction already granted. Nothing said in my judgment shall have any effect on the merits of the case.

25. Order accordingly.