Page No.# 1/8 vs Union Of India And 2 Ors
2021 Latest Caselaw 1183 Gua

                                                                Page No.# 1/8

GAHC010001862020




                        THE GAUHATI HIGH COURT
  (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

                            Case No. : WP(C)/155/2020

         M/S. AR-ALLIED SUBHADRA (JV) AND 6 ORS.
         HAVING ITS PRINCIPAL PLACE OF BUSINESS AT CHANDANA PARK,
         MAHANANDA PARA, DIST- DARJEELING, SILIGURI- 734001, WEST
         BENGAL

         2: M/S AIPL-RIC (JV)
          HAVING ITS PRINCIPAL PLACE OF BUSINESS AT 201
          NEW PARK STREET
          KOLKATA- 700017
         WEST BENGAL

         3: M/S SUBHADRA CONSTRUCTION
         A PARTNERSHIP FIRM HAVING ITS PRINCIPAL PLACE OF BUSINESS AT
         CHANDANA PARK
          MAHANANDA PARA
          DIST- DARJEELING
          SILIGURI 734001
         WEST BENGAL

         4: SHASHIPAL MEHTA
          S/O- LATE RAM IQBAL MEHTA
          R/O- FLAT NO. B-2
          BLOCK NO.1
          GREEN VISTA RESIDENCY
         APPAR BHANU NAGAR
          SEVAK ROAD
          P.O AND P.S- SILIGURI- 734001
          DIST- DARJEELING
         WEST BENGAL

         5: AJAY KR SRIVASTAV
          S/O- LATE RAM SHANKAR PRASAD SRIVASTAVA
          BIDYA APARTMENT
          FLAT NO. L-2
                                                                      Page No.# 2/8

             DANGIPARA
             SILIGURI- 734001

            6: MD. ISLAMUDDIN
             S/O- LATE MD. NOIMUDDIN
             BIDYA APARTMENT
             FLAT NO. N-2
             DANGIPARA
             SILIGURI- 734001

            7: M/S ALLIED INFRASTRUCTURES AND PROJECTS PVT LIMITED
             HAVING ITS REGD OFFICE AT 1
             GANESH CHANDRA AVENUE
             2ND FLOOR
             KOLKATA- 700013
            WEST BENGA

            VERSUS

            UNION OF INDIA AND 2 ORS
            REP. BY THE GENERAL MANAGER, NF RAILWAY, MALIGAON, GUWAHATI-
            781011

            2:THE GENERAL MANAGER (CONS)
             N F RAILWAY
             MALIGAON
             GUWAHATI- 781011

            3:THE CHIEF ENGINEER/ CONSTRUCTION- III
             N F RAILWAY
             MALIGAON
             GUWAHATI- 78101

Advocate for the Petitioner   : MR. R HUSSAIN

Advocate for the Respondent : SC, NF RLY
                                                                                    Page No.# 3/8




                                   BEFORE
                  HONOURABLE MR. JUSTICE SANJAY KUMAR MEDHI

                                            ORDER

25-03-2021 Heard Shri R. Hussain, learned counsel for the petitioners. Also heard Ms. G. Sarma, learned Standing Counsel, NF Railway.

2. This case has been listed today as per an earlier order dated 17.03.2021 when it was observed that the matter can be disposed of at the admission stage itself.

3. The brief facts of this case is in connection with an order dated 02.05.2019 issued by the NF Railway by which a contract purportedly entered into with the petitioner No. 1 has been cancelled and the Earnest Money Deposit (EMD) for an amount of Rs.51,51,870/- has been sought to be forfeited.

4. The projected case of the petitioner is that a tender notice was floated by the Railways for the work of Earthwork in forming embankment including Pawakhali station yard, construction of minor bridges including RUB/LHS [Total 44 Nos], including other miscellaneous ancillary works from Chainage 83.50 Km. to 106.837 Km. between station Pawakhali to Thakurganj in connection with construction of New BG line from arariya to Galgalia of NF Railway (Construction).The approximate value of the work was Rs.1000373270.52/- and the Earnest Money to be deposited was worked out to be Rs.51,51,870/-. It is the case of the petitioner that pursuant to the said notice, the petitioners who had formed a joint venture had participated in the said tender process by depositing the Earnest Money of Rs.51,51,870/-. While the petitioner was waiting for acceptance of his bid and completion of the formalities to conclude the contract in question, the communication dated 02.05.2019 was issued from which the petitioners could learn that not only the contract in question which was purportedly entered into the petitioners was cancelled, the EMD of Rs.51,51,870/- was also forfeited.

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5. Shri Hussain, the learned counsel for the petitioners submits that though there is a clause in the tender papers which enables the employer to forfeit the EMD, the same pertains to giving of wrong information only which is not applicable in the present case. The learned counsel has also drawn the attention of this Court to the part of the tender document which stipulates certain other documents to be a part of the contract which includes the NF Railway General Conditions of Contracts and Standard Special Conditions of Contracts, 2013. Under the General Conditions of Contract, all communications are to be made in writing and delivered. Shri Hussain, the learned counsel submits that subsequently the petitioners could learn that an acceptance letter dated 18.01.2019 by the Railways was issued to the petitioners by which their bids was accepted. However the categorical case of the petitioners is that the said letter had never reached or was delivered to the petitioners and this fact is also admitted by the Railway authorities. The learned counsel goes a step further by referring to the said communication dated 18.01.2019 which also stipulates that the letter also annexes an additional copy which was to be returned after being duly signed in all the pages for a binding contract. For ready reference, the aforesaid conditions in the letter dated 18.01.2019 is extracted herein below:-

"An additional copy of this acceptance letter is also enclosed herewith which may be returned duly signed in all pages for binding contract."

6. The learned counsel submits that in view of the fact that there was no concluded contract between the parties, the question of termination of the said would not arise at all. Though the present challenge is not with regard to the termination, the petitioners are aggrieved by the action of the Railways in forfeiting the EMD of Rs.51,51,870/- which according to the petitioners has been done in a most unreasonable, arbitrary and unfair manner causing wrongful loss to the petitioners. In support of his contentions, Shri Hussain, the learned counsel for the petitioners has relied upon the following judgments of the Hon'ble Supreme Court:-

1.Yogesh Mehta Vs Custodian Appointed Under The Special Court and Ors. reported in (2007) 2 SCC 624.

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2. Vedanta Limited ([Formerly Known as SESA Sterlite Limited and Successor in Interest of Erstwhile Sterlite Industries (India) limited] Vs Emirates Trading Agency LLC. reported in (2017) 13 SCC 243.

7. In the case of Yogesh Mehta (supra) it has been laid down that forfeiture of earnest money can be done only by taking into account the provisions of the Contract Act of 1872 and the same is permissible only when there is a concluded contract between the parties. For ready reference, paragraph 32 of the said judgment is extracted herein below:-

"32. While directing forfeiture of the "earnest money" the provisions of the Contract Act, 1872 are to be kept in mind. Forfeiture is permissible only when a concluded contract has come into being and not prior thereto."

8. In the case of Vedanta (supra) a similar proposition of law has been settled wherein concluded contract has been held to be a pre-condition for action to be taken under Section 73 of the Contract Act. The relevant observations in the said case is extracted herein below:-

"15. In the absence of a concluded contract between the parties having been established by the respondent, the claim under Section 73 of the Act was not maintainable. The impugned orders are, therefore, held to be unsustainable and are set aside."

9. Shri Hussain, the learned counsel accordingly submits that the present is a fit case for interference by this Court by directing the Railway authorities to refund the EMD of Rs.51,51,870/-.

10. Ms. G. Sarma, learned Standing Counsel, Railways however vehemently opposes the claim made in the present writ petition. The learned Standing Counsel submits that it is not a case where the petitioners were not aware about the acceptance of the contract intimated vide communication dated 18.01.2019 and as per repot of the postal authorities, though the said letter was attempted to be delivered on three occasions, the Office of the petitioners was found closed. The above conduct of the petitioners would demonstrate that they were evading the said letter of acceptance for reasons/known to them. The learned Standing Counsel further Page No.# 6/8

submits that apart from the hard copy of the letter dated 18.01.2019, the same was also issued by E-mail and the petitioners have not projected that the soft version of the communication sent through E-mail was not received by them. In that view of the matter the learned Standing Counsel submits that the termination order dated 02.05.2019 is fully justified and forfeiture of the earnest money deposit being a consequential action, this Court would be loath in interfering with such termination.

11. The learned counsel further submits that in contractual matters, a writ Court would otherwise be reluctant in interfering as the same includes factual aspects which may not be gone into by this Court exercising jurisdiction under Article 226 of the Constitution of India.

12. The rival contentions of the learned counsel for the parties have been duly considered and the materials before this Court have been carefully examined.

13. The tender papers though stipulate a condition for forfeiture of EMD i.e. for furnishing of wrong information, the impugned forfeiture in the instant case is not on account of the said condition. The forfeiture of the instant case is a consequence of the termination of the contract vide the impugned order dated 02.05.2019. The issue which requires to be determined is as to whether there was a concluded contract between the parties that could have been terminated. To come to a conclusion, one has to take recourse to the language of the tender and the documents connected thereto. There is a clear stipulation that the General Conditions of Contract would be a part of the tender documents and as per the same, though other modes of communications could be available, all communications are required to be in writing and delivered. In the instant case, though it appears that there was an acceptance letter dated 18.01.2019, there is no material to come to a conclusion that the said letter was delivered to the petitioners in writing. The endorsement of the postal department is not "refused" but the endorsement is "closed". Though an endorsement of refusal would have had a different connotation, when the non-delivery because of "closed", there is no scope of drawing a presumption of service and delivery of the letter dated 18.01.2019. That apart, this Court also finds force in the argument made on behalf of the petitioners that the stipulation in the Page No.# 7/8

acceptance letter dated 18.01.2019 regarding returning of a duly signed duplicate copy in all pages to come to a binding contract is also a relevant consideration which admittedly has not been done in the instant case. Though the learned Standing Counsel for the Railways may be correct in contending that e-mail of the acceptance letter has been accepted by the petitioners, that mode of communication is not enough to bring this Court to a conclusion that the parties have arrived into a concluded contract.

14. At this stage, it would be relevant to refer to the celebrated decision of the Privy Council in the case Nazir Ahmad Vs The King Emperor reported in AIR 1936 PC 253 (II) wherein it has been laid down that when a mode is prescribed to do a particular thing in a particular way, that mode has to be followed and all other modes are necessarily forbidden. The relevant extract of the said case is quoted herein below:-

"The rule which applies is a different and not less well recognized rule-namely, that where a power is given to do a certain thing in a certain way the thing must be done in that way or not at all. Other methods of performance are necessarily forbidden."

15. In view of the conclusion raised above that there was no concluded contract between the parties, the question of termination of the contract would not arise. However, since the termination is not the subject matter of this writ petition, this Court would refrain from making further comments on the said termination. However, the consequence of the termination which is forfeiture of the EMD of an amount of Rs.51,51,870/- is interfered with and the same is hereby set aside.

16. As a consequence thereof, the Railway authorities are directed to refund the EMD of Rs.51,51,870/- to the petitioners within a period of 6 (six) weeks from today.

17. The petitioners may also obtain a certified copy of this order and furnish the same to the appropriate authority for compliance thereof.

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18. Writ petition is accordingly allowed.

JUDGE

Comparing Assistant