Union Of India vs Rmi Metals Pvt. Ltd.
2011 Latest Caselaw 465 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI


%                               Date of Judgment: 27.01.2011


+                        RSA No.192/2010


UNION OF INDIA                             ...........Appellant
                         Through:     Mr.V.S.R. Krishna, Advocate.

                   Versus

RMI METALS PVT. LTD.                            ..........Respondent
                   Through:           Mr. Amar Khera Adv.


CORAM:
HON'BLE MS. JUSTICE INDERMEET KAUR

     1. Whether the Reporters of local papers may be allowed to
        see the judgment?

     2. To be referred to the Reporter or not?                  Yes

     3. Whether the judgment should be reported in the Digest?
                                                          Yes

INDERMEET KAUR, J. (Oral)

CM No.18933/2010 (delay in filing) & CM No.18934.2010 (delay in filing)

There is no substantial opposition to these applications. In

view thereof the delay of 25 days in filing the apapeal as well as

the delay of 644 days in re-filing the appeal is condoned.

Applications are disposed of.

RSA No.192/2010

1. This appeal has been directed against the impugned

judgment and decree dated 7.4.2008 whereby the suit filed by the

plaintiff M/s RMI Metals Pvt. Ltd. seeking a refund of his earnest

money which had been deposited with the defendant i.e. the

Ordnance Factory, Ministry of Defence, Muradnagar, District

Ghaziabad had been decreed in his favour.

2. Plaintiff vide his letter dated 30.12.2002 had submitted his

bid against the tender which had been floated by the defendant.

This was for the supply of 4000 kg of FM Low Carbon Lumbs (the

Bid Product). The plaintiff while submitting his offer had made an

error in the price which he had quoted; instead of `369/- per kg.

inadvertently due to typographical mistake he had quoted the

price of `269 per kg. On 04.1.2003 vide fax message plaintiff

informed this error to the defendant. On 7.1.2003 defendants

confirmed two facts (i) plaintiff's offer was under consideration; (ii)

payment condition stipulated by the plaintiff in the bid was

unacceptable to the defendant. Further the plaintiff was directed

either to accept the defendant's normal payment conditions of

100% payment to be made within 30 to 45 days as also to submit

the company profile. The plaintiff did not accede to this advice.

Earnest money which had been deposited by the plaintiff along

with the tender document stood forfeited by the defendant by

relying upon clause 9 of the tender document. Present suit was

filed praying for a refund of the said amount.

3. The defendant had contested the suit. His defence was that

a contract stood completed at the time when the plaintiff had

submitted his offer; the defendant was yet within its rights to

forfeit the earnest money. It was even otherwise not a

precondition to the conclusion of the contract.

4. Trial judge had framed the following issues: they read as

follows:

"1. Whether the plaint discloses no cause of action against Defendant? OPD

2. Whether suit is not maintainable for non service of statutory notice U/S 80 CPC? OPD

3. Whether plaintiff has concealed material facts before the court

and has come with uncleaned hands? OPD

4. Whether plaintiff is entitled to the relief of refund as prayed for? OPP

5. Whether the plaintiff is entitled to any interest if so from which period and at what rate? OPP

6. Relief."

5. On the basis of the oral and documentary evidence led by the

respective parties, the suit of the plaintiff was decreed. The trial

judge had held that the earnest money deposited by the plaintiff

was not liable to be forfeited as a contract had not come into

existence between the parties; the oral and the documentary

evidence which included the correspondence exchanged between

the parties as also the fax messages dated 4.1.2003 and 7.1.2003

had been adverted to. Suit of the plaintiff was decreed.

6. This was affirmed by the first appellate Court.

7. This is a second. It is yet at the stage of admission. On

behalf of the appellant, it has been urged that the findings in the

impugned judgment are perverse and call for interference; the

defendant was well within its right to forfeit the earnest money.

Heavy reliance has been placed upon Clause 9 of the agreement.

8. Arguments have been countered.

9. On the perusal of the record, it is noted that the tender

document had been proved before the Court as Ex.PW-1/2. Clause

6 is relevant; it reads as follows:

"The successful tenderer will be notified on IAFZ-2124 of

acceptance of his tender in whole or in part. Till then no tenderer

has any right to assume that his tender has been accepted, in

whole or in part and if any tenderer disregards this warning and

makes any arrangement or incurs any expenditure in anticipation

of receipt of notice of acceptance, he will have no claim for

compensation."

Perusal of this Clause shows that the successful tenderer had

to be notified of the acceptance of his tender either in whole or in

part before the tenderer would not have any right in terms of this

tender document.

Clause 9 reads as follows:

"The tenderer shall hold the offer open up to and

including............ it is understood that the tender document have

been sold/issued to the tenderer and the tenderer is being

permitted to tender in consideration of the stipulation on his part

that after submitting his render he will not resile from his offer or

modify the terms and conditions thereof. Should the tender fail to

observe and comply with the foregoing stipulation, the earnest

money shall be forfeited to the Government without prejudice to

any other rights of the Government under this contract and the

law. The earnest money shall also be liable to be forfeited in full,

if the tenderer fails to furnish security deposit by the due date. No

interest will be payable on the amount of the earnest money in any

case.

No cognizance will be taken of any communication relating to

withdrawal revocation or amendment to the tender already submitted

except when it is in the form of a letter duly signed by the tenderer, if the

tenderer, is an individual, by all the partners of the firm of tenderers of

this duly accredited attorney, if the tenderers are a partnership firm and

by a person having express authority in the case of a limited company."

It is clear from a reading of the aforenoted Clauses of Ex.PW-

1/2 that at the time when the plaintiff submitted his tender it was

only an offer which was made by him to the company. The offer

was yet to be accepted. On 4.1.2003, a correction was made in the

offer. On 7.1.2003 vide fax message he was informed that this

correction will not be permitted. Further, his offer was yet under

consideration. It is thus clear that up to 7.1.2003 the contract

between the parties had not come into existence. The further

conditions stipulated in the fax message dated 7.1.2003 that the

full amount should be paid by the plaintiff within 30 to 40 days had

also admittedly not been accepted by the plaintiff. Clause 6 of

Ex.PW-1/2 was also specific. Admittedly the acceptance of the

offer of the plaintiff had not been notified by the defendant to the

plaintiff; this has been elicited in the version of DW-1. A contract

not having been come into existence between the parties, the

Courts below had rightly given concurrent findings in favour of the

plaintiff. Clause 9 could not be resorted to by the defendant;

earnest money could not have been forfeited. The plaintiff was

rightly entitled to refund of the said money.

10. Substantial questions of law have been embodied on page 6

of the memorandum of appeal.

11. No such substantial question of law having arisen either from

the pleadings or from the arguments urged before this Court, the

appeal is dismissed in limine.

INDERMEET KAUR, J.

JANUARY 27, 2011 nandan