M/S The Base Enterprises Having ... vs Heavy Engineering Corporation ...
2021 Latest Caselaw 834 Jhar

                          1

 IN THE HIGH COURT OF JHARKHAND AT RANCHI
                 L.P.A. No. 149 of 2020
                        With
                 I.A. No. 3106 of 2020
                        With
                 I.A. No. 902 of 2021
                        With
                 I.A. No. 903 of 2021
                          ------

M/s The Base Enterprises having its office at Ground Floor, Ram Janki Enclave, Obaria Road, Hatia, P.O Hatia, P.S. Hatia, District Ranchi, through its Proprietor Shri Amit Kumar Pandey, aged about 38 years, son of Dinesh Kumar Pandey, resident of Ramjanki Niwas, Dinkar Nagar, Station Road, Hatia, P.O. Hatia, P.S. Hatia, District Ranchi (Jharkhand).

..... Appellant

Versus

1.Heavy Engineering Corporation Limited through its Senior DGM (BCD & Disposal), having its office at Room No. 28, 1st Floor, Headquarter Building, HEC Limited, Dhurwa, P.O. Dhurwa, P.S. Dhurwa, District Ranchi (Jharkhand).

2.Chief of Township, Heavy Engineering Corporation Limited, having its Plant Plaza road, P.O. Dhurwa, P.S. Dhurwa, District Ranchi (Jharkhand).

3.Deputy General Manager, Town Administration Division, Heavy Engineering Corporation, having its Office at Plant Plaza Road, P.O. Dhurwa, P.S. Dhurwa, District Ranchi (Jharkhand). ... ... ... Respondents

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CORAM: HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE SUJIT NARAYAN PRASAD

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For the Appellant : Mr. P.N. Shahi, Sr. Advocate Mr. Indrajit Sinha, Advocate For the Respondents : Mr. Anil Kumar Sinha, Sr. Advocate Mr. Mukesh Kumar, Advocate

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Oral Judgment Order No. 04 : Dated 22nd February, 2021:

With consent of the parties, hearing of the matter

has been done through video conferencing and there is no

complaint whatsoever regarding audio and visual quality.

I.A. No. 3106 of 2020

2. Perused the Office Note.

3. Defect as pointed out by the office, regarding

legibility of Annexure-19 to I.A. No. 3106 of 2020, is

ignored.

L.P.A. No. 149 of 2020

4. The instant intra-court appeal has been preferred

against the order/judgment dated 25.02.2020 passed by

learned Single Judge in W.P. (C) No. 4445 of 2019, by

which the writ petition was dismissed. Learned Single

Bench declined to interfere with the letter as contained in

Ref. No. TA/REV/RB/2017/2019-338 dated 16.08.2019

issued under the signature of respondent no. 3-the

Deputy General Manager, T.A. division, Heavy

Engineering Corporation Ltd., (herein after referred to as

"HEC") whereby the Letter of Intent No. HQ/BDC &

Disp/NRB-NIT/2016-187 dated 31.10.2016 issued in

favour of the writ petitioner was terminated with

immediate effect and it was directed to vacate the

premises and to clear the pending dues as well as to

complete the formalities relating to handing over the

premises to the respondent-HEC on or before 14.09.2019.

Further, the writ Court had declined to issue any

direction upon the respondents to execute a formal

agreement/contract of lease for a period of ten years

commencing from 31.10.2016 with respect to Rajendra

Bhawan, Sector-II, HEC.

5. The brief facts of the case, which are required to be

enumerated herein for proper adjudication of the lis, are

as under:

The respondents-HEC had come out with a Notice

Inviting Tender ( in short 'NIT') dated 18.04.2016 inviting

applications from intended bidders for leasing out nine

buildings of diverse nature with associated land in HEC

Township. The writ petitioner participated in the said

tender and furnished the bid for three non-residential

buildings and it was declared technically qualified,

however, after opening of the price bids, the writ

petitioner was not allotted any non-residential building

on the ground that the price quoted by it did not match

the reserve price set by the respondents.

Thereafter, the respondents floated another tender

for leasing out six non-residential buildings with

associated land in the HEC Township vide Tender No.

HQ/BDC & Disp./NRB-NIT/2016/06 dated 05.09.2016.

The petitioner again participated in the second tender

process and quoted the bid only for one non-residential

building i.e. Rajendra Bhawan, Sector-II, HEC with its

associated land. The technical bid of the writ petitioner

was found responsive and thereafter when the financial

bid was opened, the writ petitioner was declared

successful with respect to its bid for Rajendra Bhawan,

Sector-II, HEC along with its associated land. The Senior

D.G.M. (BCD & Disposal) issued Letter of Intent (in short

'LOI') in favour of the petitioner vide letter as contained in

Reference No. HQ/BDC & Disp/NRB-NIT/2016-187 dated

31.10.2016 for a period of ten years, subject to renewal

for another period of ten years on the decisions and terms

and conditions of the management of the respondents-

HEC.

The respondents also handed over the possession of

the said building in favour of the writ petitioner vide letter

dated 20.03.2017. Pursuant to the tender notice and its

terms and conditions, the petitioner deposited a total

amount of Rs. 2,21,21,000/-and service tax of

Rs.33,18,150/-on 30.11.2016. It also paid a sum of

Rs.3,48,405/- on 30.03.2017 towards annual rent which

was accepted by the respondents-HEC. The writ

petitioner further paid the required rent for the financial

year 2018-19 and 2019-2020 to the respondents and the

same was also accepted. The writ petitioner invested Rs.

4.7 crores during the period between 29.11.2016 to

20.08.2019. The respondent no. 2 issued a notice vide

letter dated 20.10.2017 indicating inter alia that some

irregularities might have been done towards the allotment

of the said building i.e. Rajendra Bhawan, Sector-II, HEC,

in favour of the petitioner and as such it was advised not

to continue with any construction/activity in the said

building/complex as the investigation of matter was going

on at appropriate level.

The respondent no. 2 thereafter issued a notice vide

letter dated 08.11.2017 mentioning inter alia that the

construction/renovation work of the said

building/complex was still going on in spite of the

direction to discontinue any construction/renovation

activities and thus the writ petitioner was again asked to

comply the directions as issued earlier. In response

thererto, the writ petitioner submitted its reply to both

the notices on 11.11.2017 stating that it had already

deposited the required amount as mentioned in the

tender document and thereafter invested huge amount of

money in order to fulfil the terms and conditions as

mentioned in the tender notice. The writ petitioner made

requests to the respondents to allow it to continue with

the construction/renovation work and thereafter to

execute the agreement with it as huge recurring loss was

being suffered every day, but the respondent no. 2 vide

letter dated 29.09.2018 again issued a notice directing

the writ petitioner to submit all the relevant documents

based upon which three affidavits were given in favour of

the petitioner. In response thereto, the writ petitioner

submitted its reply on 09.10.2018.

It is the case of the writ petitioner that the

respondent no. 3 again issued a show cause notice to it

on 22.10.2018 directing the writ petitioner to submit

reply on or before 22.11.2018 bringing on record all the

required documents failing which suitable action as per

the terms and conditions of the NIT/LOI and existing

laws/rules, would be initiated including cancellation of

LOI /allotment.

The aforesaid notice was responded by the writ

petitioner by submitting reply vide letter dated

21.11.2018 stating inter alia that it never breached any

terms and conditions as put forth by the respondents. It

was also stated that the petitioner had already submitted

all the documents as per the requirement of NIT. The

respondent no. 3 after lapse of nine months of submitting

reply, issued letter as contained in Ref. No.

TA/REV/RB/2017/2019-338 dated 16.08.2019 whereby

the Letter of Intent dated 31.10.2016 issued in favour of

the petitioner was terminated with immediate effect and it

was directed to vacate the premises, clear the dues and

complete the formalities relating to handing over the said

premises to the respondents on or before 14.09.2019.

The writ petitioner in the backdrop of these factual

aspects has approached the writ Court by invoking the

writ jurisdiction of this Court under Article 226 of the

Constitution of India, wherein ground has been agitated

that the writ petitioner was found to be successful bidder

after finding the writ petitioner eligible from all corner. It

was further submitted that it's bid was found to be

technically qualified twice and, therefore, direction of the

respondents-HEC to furnish the documents at such a

belated stage, which were not required at the time of

submission of bid, is nothing but a colorable exercise of

power. It was further submitted that it is settled position

of law that sole proprietorship firm has no separate legal

existence from its proprietor. Further submission was

made that after being fully satisfied with the documents

submitted by the writ petitioner, the respondents-HEC

issued Letter of Intent and pursuant thereto the writ

petitioner came in possession of the said building, on

which, the writ petitioner invested more than Rs.4.7

crores and as such the respondents-HEC cannot be

allowed to turn around and declare the writ petitioner as

ineligible as per the terms and conditions of the tender

notice. It was further submitted that the writ petitioner

used the said premises for the same purpose which was

mentioned by it in its vision and mission document as

submitted along with the tender.

The writ petitioner has further raised the issue that

when the Technical Evaluation Committee accepted the

documents as submitted by the writ petitioner and

consequent thereupon the LOI was issued, the same

cannot be terminated by the said Technical Evaluation

Committee as even accepting that the petitioner had not

submitted any documents as required in the tender

notice, the respondents during evaluation of the

documents could have issued show cause notice and

could have asked the writ petitioner for submission of the

required documents, but once the LOI has been issued it

became a concluded contract as such the respondents

cannot be allowed to violate the terms and conditions of

the LOI.

The respondents-HEC appeared and contested the

case by filing counter affidavit stating therein that the

tenderers had submitted affidavits with the tender

document claiming that all the information furnished by

it with respect to fulfilment of eligibility criteria and

information given in the tender were complete and true.

The respondent-HEC in order to verify the documents

had insisted upon the writ petitioner to submit certain

documents but such documents were never produced by

the writ petitioner and, therefore, even after issuance of

LOI, which is not a final document, as per the terms and

conditions mentioned therein that after issuance of LOI

an agreement has to be made in between the bidder and

the respondents within a period of 30 days but, since the

writ petitioner had not provided the required document,

the agreement could not be reached. It has further been

submitted that the stand of the writ petitioner that

once LOI has been issued, the same became the

concluded agreement, is absolutely incorrect and illegal.

The writ petitioner without entering into the agreement as

per the terms and conditions of the LOI/NIT has started

renovation of the building and further started

construction therein for the purpose of changing the

entire structure and to that effect several notices were

issued but it avail no effect, therefore, the respondents-

HEC after taking into consideration that without entering

into the agreement the writ petitioner has started

construction over the premises even by making addition,

had issued several notices/letters to stop the renovation

work but that was not given any heed to, therefore, the

respondents-HEC took a decision to terminate the

contract after following the principles of natural justice,

and as such the action of the respondents-HEC cannot be

said to be arbitrary and colorable exercise of power rather

the same has been done after following the principles of

natural justice and as per the terms and conditions of the

NIT/LOI.

The writ Court, after appreciating the submissions

advanced by learned counsel for the parties and

considering the power of writ Court in exercising judicial

review under Article 226 of the Constitution of India did

not interfere with the decision taken by the respondents-

authority in terminating the LOI of the writ petitioner and

dismissed the writ petition, which is the subject matter of

present intra-court appeal.

6. Mr. P.N. Shahi, learned senior counsel assisted by

Mr. Indrajit Sinha, learned counsel for the appellant-writ

petitioner assailed the impugned order by making

submission that the learned Single Judge has not

appreciated the fact that once the LOI has been issued

with the condition stipulated therein that the renovation

work will be carried out, it goes to suggest that the LOI

has not become simple LOI rather it gets the shape of

concluded contract.

The monthly rental has also been paid to the

respondents-HEC along with the requisite money

required to be paid as per the condition stipulated in the

NIT and the same has been accepted without any demur,

therefore, it is inaction on the part of the respondent-HEC

in not reaching out the agreement.

It has further been submitted that all required

documents were submitted with the bid document, which

were scrutinized by the Tender Evaluation Committee and

after being satisfied with the documents, the writ

petitioner was found technically qualified and it is only

thereafter the price bid documents of the writ petitioner

along with others were opened, in which, the writ

petitioner was found to be eligible and thereafter the LOI

was issued in favour of the writ petitioner but

subsequently the respondents-HEC terminated the LOI

which cannot be said to be justified action on the part of

the respondents-HEC.

It has further been submitted that it is incorrect to

say that the writ petitioner has not entered into the

agreement rather it is the laches on the part of the

respondents-HEC in not entering into agreement, even

after the repeated requests made by the writ petitioner in

this regard. According to learned senior counsel all these

facts have not been taken into consideration by the

learned Single Judge while passing the impugned order

rather the learned Single Judge has gone into wrong

perception of fact of contract not being a concluded

contract and further violation of terms and conditions of

the LOI and dismissed the writ petition, which cannot be

said to be proper in the eyes of law.

7. Per contra, Mr. Anil Kumar Sinha, learned senior

counsel being assisted by Mr. Mukesh Kumar, learned

counsel for the respondents-HEC has submitted that

there is no error in the impugned order as in the terms

and conditions of the NIT, there is specific condition that

in order to verify the eligibility criteria the bidder has to

produce all documents for its scrutiny, however, the

Tender Evaluation Committee has found documents

produced by the writ petitioner to be satisfactory

whereupon the writ petitioner was found to be eligible

bidder and in consequence thereof LOI was issued but in

order to enter into the agreement, as per the condition of

the NIT as also LOI, the documents were sought for inn

order to verify about fulfillment of the eligibility criteria

and in response thereto affidavits sworn before the Notary

Public were filed but no document was filed to

substantiate the affidavits, more particularly about

requisite working experience in rendering such services

for which NIT was issued and therefore, the respondents-

HEC asked for the documents so that the agreement may

be entered into between the writ petitioner and

respondents-HEC but the writ petitioner failed to do so,

therefore, agreement could not be entered into rather it

came to the knowledge of the respondents-HEC that the

writ petitioner, by suppressing the fact, has managed to

get LOI in its favour and, therefore, show cause notices

were issued for termination the LOI, to which, though

writ petitioner replied but being found not satisfactory,

the respondents-HEC terminated the letter of Intent.

It has been submitted that the writ petitioner on

its own without entering into the agreement in utter

violation of terms of the NIT/LOI started renovation work

as also addition thereto over the premises, which cannot

be said to be justified on the part of the writ petitioner.

Even though the severe objection has been made by the

respondents but to avail no effect as the writ petitioner

continued to make such renovation work.

It has further been submitted, refuting the

contention of learned counsel for the writ petitioner that

money which was required to be deposited in terms and

conditions of the NIT as also the monthly rental has been

accepted, that acceptance of the rent is only on account

of the fact that possession of the premises having been

handed over to the writ petitioner subject to the condition

of entering into the agreement within a period of one

month from the date of issuance of LOI, however, since

the writ petitioner has not furnished the evidence to the

satisfaction of its eligibility, the agreement could not be

entered into. Therefore, in the absence of agreement the

carrying out of renovation work in the existing premises

is contrary to the terms and conditions of the NIT, as

such the decision of the respondents-HEC for termination

of the LOI cannot be said to be unjustified one.

Learned senior counsel for the respondents-HEC

has further submitted by referring to the documents

annexed with I.A. No. 3106 of 2020, with respect to

initiation of proceeding under Section 5-A of the Public

Premises (Eviction of Unauthorized Occupants) Act, 1971

[herein after referred to as 'Act, 1971'], whereby and

whereunder power has been conferred upon the authority

to remove unauthorized constructions etc. and Section 5-

A (2) of the Act, 1971 confers power to sell unauthorized

construction and in pursuance to the said provision,

proceeding has also been initiated and order has also

been passed by the Estate Officer but the writ petitioner

as on date has never questioned the said proceeding

before appropriate forum.

According to learned senior counsel the learned

Single Judge, after taking into consideration all these

aspects of the case, has rightly not interfered with the

decision of the respondents-HEC and as such the

impugned order/judgment may not be interfered with.

8. We, after having heard learned senior counsel for

the parties and on perusal of the materials available on

record along with the annexures appended thereto and

findings recorded by the learned Single Judge, are of the

view that for proper adjudication of the lis, following

issues are required to be decided:

(I).Whether mere issuance of LOI can be termed as

concluded contract without entering into an

agreement?

(II).Whether on the basis of LOI any right has been

accrued upon the bidder?

(III).Whether termination of LOI due to non-

compliance of the terms and conditions as stipulated

in the Notice Inviting Tender (NIT) as also LOI can be

said to be unjustified?

(IV).Whether non-furnishing of documents, that was

asked for to justify the eligibility, can be said to be

unjustified?

9. This Court, before proceeding to deal with the issue

and answering the same, deem it fit and proper to record

certain admitted facts, which is available on record.

Admittedly, herein the Notice Inviting Tender vide

Tender No. HQ/BDC & Disp./NRB-NIT/2016/06 dated

05.09.2016 was floated for leasing out six non-residential

buildings with associated lands of HEC Township. The

intent to leasing out of the premises was as an

opportunity to undertake commercial, innovative and new

projects meant for schools, educations purposes and skill

development. The subsistence of the period of lease

initially was for ten years, which was renewable for other

period of 10 years on the decision and terms & conditions

of the HEC management with a condition to deposit the

earnest money. It would be evident from Clause 7 (b) of

the 'Detailed Tender Notice' that the buildings and halls

will be offered on "as is where is" basis, with the further

stipulation that the successful bidder may make

premises/interiors suitable as per their requirement at

their own cost. Permanent structure(s) if constructed on

vacant land or renovated structure cannot be demolished

at the time of vacating these buildings.

Under clause 8 of 'Detailed Tender Notice', under

the caption 'Process of selection of lessee for lease

agreement', of NIT, it has been stated that:

"8.Process of selection of lessee for lease agreement

a.The bidders expressing interest against the notice inviting tender shall be selected based on:

-Fulfillment of Eligibility Criteria.

-Completeness and attractiveness of the proposal to develop and utilize the premise & buildings. Organization's Vision &Mission for the proposed premise/Building.

-The proposal for utilization of the proposed premises should be acceptable to HEC.

b.Bidders shall be required to participate in open tender proceeding involving financial criteria and other details. c.HEC will sign an agreement with the best evaluated party for each premise (based on tender) for a period of 10 years only.

It would be evident from definition clause, in

particular Clause 1.6 of the 'General terms and

conditions' of NIT, wherein definition of contract has been

given, which is quoted hereunder as:

'The "contract" shall mean the tender as accepted by the Lessor and the formal agreement executed between the Lessor and lessee together with the documents referred as contract document.'

Clause 1.9 of the 'General terms and conditions' of

NIT stipulates about Letter of Acceptance of Tender,

which says that:

"The Letter of Acceptance of Tender (LOA)" means letter giving intimation to the lessee that his/her/their tender has been accepted in accordance with the provisions contained in that letter.'

Clause 2 of the 'General terms and conditions' of

the 'Detailed Tender Notice' stipulates that "the Lessee

shall enter into & execute contract agreement in the

prescribed form. The cost of the required stamp papers for

the contract agreement shall be borne by the Lessee".

Clause 6 of the General Terms & Conditions under

the caption 'Cancellation of Contract', stipulates as

under:

"6.Cancellation of Contract:

HEC in addition to other remedial steps to be taken as provided in the conditions of contract, reserves the right to cancel the contract in full or in part, in the following cases:

a)If the Lessee commits default in proceeding with the services with due diligence and continues to do so even after a notice in writing from the Officer-in-Charge, then on the expiry of the period as specified in the notice.

Or

b)If the lessee commits default/breach in complying with any of the terms and conditions of the contract and do not remedy it or fails to take effective steps for the remedy to the satisfaction of the Officer-in-charge, then on the expiry of the periods as may be specified by the Officer-in-charge in a notice in writing.

Or

c)If the lessee obtains a contract with the Lessor as a result of ring tendering or other non-bonafide methods of competitive tendering.

Or

d)If the lessee shall offer or give or agree to give any person in the service of the Lessor or to any other person on his behalf any valuable gift or consideration of any kind as an inducement or reward for act/acts of favour or disfavor in relation to the obtaining or execution of this or any other contract of HEC.

Or

e)If the lessee transfers, sublets, assign the entire work or any portion thereof without the prior approval in writing from the Officer-in-charge HEC Ltd. The Officer-in-charge HEC Ltd. may be giving a writing notice, cancel the whole contract or portion of it which is in default.

Clause 7 speaks about cancellation of lease

agreement, which reads as under:

"7.Cancellation of Lease Agreement: The contract shall be cancelled under violation of any term and condition of lease agreement or any other general/special term & condition by giving one month notice in writing for eviction of premises otherwise legal action will be initiated as per the PP(EOUO) Act, 1971."

With the aforesaid terms and conditions, the writ

petitioner participated in the tender process by

submitting tender paper along with so-called documents.

The Technical Evaluation Committee had found the writ

petitioner eligible thereafter the bid was opened, in which,

the writ petitioner was found to be successful. In

consequence thereof, 'Letter of Intent' was issued on

31.10.2016 (Annexure 3 to the writ petition) for leasing

out Rajendra Bhawan, Sector II with the specific

condition as stipulated under Clause 6.

For the ready reference Clause 6 of the 'Letter of

Intent' is reproduced hereunder as:

"6.Terms & Conditions a.Period of Lease: 10 years.

(The period of the lease will be 10 years which is renewable for another 10 years on the decisions and terms and conditions of HEC Management.) b.The buildings and halls will be offered on "as is where is" basis. The Lessee can make premises/interiors suitable as per their requirement at their own cost.

c.Permanent structure(s) if constructed on vacant land or renovated structure cannot be demolished at the time of vacating these buildings. No claim for this on HEC shall be tenable at the time of vacating these building by the lessee. d.The lessees will be allowed to renovate the existing structures & maintain the halls and buildings properly. e.The lessee shall not sublease the premises and shall use it only for the purpose for which it has been granted. f.Cancellation of Contract: HEC reserves the right to cancel the contract in full or in part, in the following cases:

i)If the Lessee commits default in proceeding with the services with due diligence and continues to do so even after a notice in writing from the Officer-in-Charge, then on the expiry of the period as specified in the notice.

Or

ii)If the lessee commits default/breach in complying with any of the terms and conditions of the contract and do not remedy it or fails to take effective steps for the remedy to the satisfaction of the Officer-in-charge, then on the expiry of the periods as may be specified by the Officer-in-charge in a notice in writing.

Or

iii)If the lessee obtains a contract with the Lessor as a result of ring tendering or other non-bonafide methods of competitive tendering.

Or

iv)If the lessee shall offer or give or agree to give any person in the service of the Lessor or to any other person on his behalf any valuable gift or consideration of any kind as an inducement or reward for act/acts of favour or disfavor in relation to the obtaining or execution of this or any other contract of HEC.

Or

v)If the lessee transfers, sublets, assign the entire work or any portion thereof without the prior approval in writing from the Officer-in-charge HEC Ltd. The Officer- in-charge HEC Ltd. may be giving a writing notice,

cancel the whole contract or portion of it which is in default.

vi)Under violation of any term and condition of lease agreement or any other general/special term & condition by giving one month notice in writing for eviction of premises otherwise legal action will be initiated as per the PP(EOUO) Act, 1971."

g.Penalty & Compensaiton In case of delay in the lease rent payment, DPS (i.e. Delay payment surcharge) @ 2% per month of the due amount shall be imposed.

h.Agreement:

The Lessee shall enter into an agreement as per the "Proforma for Execution of Agreement" as per annexure - VI of the NIT within one month time from the date of issue of the LOI. All expenditure regarding the agreement will be borne by the Lessee.

i.All the terms and conditions will be as per General terms & conditions of NIT and GCC of HEC.

It is evident from Clause 6.(h) of the Terms &

Condition of the LOI that the Lessee shall enter into an

agreement within one month from the date of issuance of

the LOI and further all expenditure regarding the

agreement will be borne by the Lessee.

It further appears from Clause 6.(d) of the Terms &

Conditions of the LOI that the lessee will be allowed to

renovate the existing structures and maintain the halls

and buildings properly.

It appears that occupation of Rajendra Bhawan, the

premises in question, was handed over to the writ

petitioner, as would appear from 'Occupation Report'

dated 20.03.2017, Annexure 5 to the writ petition, with

the terms and conditions as mentioned in Letter of Intent,

but, when it came to the knowledge of the respondents-

HEC that some irregularities have been committed in

allotment of Rajendra Bhawan, the building in question, a

notice was served upon the writ petitioner vide letter

dated 20.10.2017 mentioning therein that "It is

gathered/noticed that some irregularities might have been

done towards allotment of Rajendra Bhawan, Sector-2 in

your favour. Since, the matter is being investigated at

appropriate level, you are, therefore advised not to

continue with any construction/activity in Rajendra

Bhawan Complex."

It further appears from letter dated 08.11.2017 that

in spite of direction as contained in letter/notice dated

20.10.2017 since the writ petitioner continued with

construction work in the premises in question, the

respondents-HEC intimated the writ petitioner, if the

direction as contained in letter/notice dated 20.10.2017

is not complied with, they will be constrained to take

stern action including cancellation of the allotment.

It further appears that the respondents-HEC in

order to verify the eligibility of the writ petitioner directed

the writ petitioner to submit relevant documents vide

letter dated 29.09.2018 based on which three affidavits

were submitted by it's three associates, to which though

the writ petitioner replied but the same was found not

satisfactory and thereafter, the respondents taking into

consideration all the correspondences made between

them as also the terms and conditions of the LOI,

directed vide letter dated 22.10.2018 to submit written

submission as to why process of cancellation of

contract/allotment should not be initiated and by way of

last opportunity, he was directed to furnish certain

documents showing his experience in the relevant

field/activities, which were supposed to do in Rajendra

Bhawan; all supporting documents showing the nature

and extent of its association with the concerned firms. In

response thereof, the writ petitioner submitted detailed

reply vide letter dated 21.11.2018 but being dissatisfied

with the reply submitted by the writ petitioner the

respondents-HEC vide letter dated 16.08.2019 terminated

the Letter of Intent dated 31.10.2016 with immediate

effect and was directed to complete the formalities related

to handing over the premises in question on or before

14.09.2019.

However, in the meanwhile, the writ petitioner has

started construction work as also started earning income

from the said premises by giving it on rent for its

purposes. When the writ petitioner has not acted in

pursuance to the notices given on administrative side to

the writ petitioner for stopping of the construction work

in the premises, the respondents-HEC resorted to the

provision of Section 5 (A) of the Act, 1971 for eviction of

the premises in question.

10. In the backdrop of these facts, submission has

been made by the writ petitioner that it is the

respondents-HEC who has failed to enter into the

agreement in spite of repeated requests being made by

the writ petitioner and, therefore, termination of LOI by

the respondents-HEC is absolutely illegal. Such argument

has been advanced on the ground that when the

Technical Evaluation Committee has already found the

writ petitioner technically fit there was no occasion for

the respondents-HEC to ask for the documents to

substantiate it's eligibility.

11. Here, the question would arise that if the Technical

Evaluation Committee, which was though constituted by

the respondents-HEC, has found writ petitioner eligible at

the time of consideration of technical bid, can it preclude

the respondents-HEC not to review its own decision by

calling upon the documents to substantiate the eligibility

criteria as provided under the terms and conditions of the

NIT/LOI and resorting to the said provision on the

principle that if anybody is not eligible, even if the

successful bidder has been technically qualified, and

such decision if is based upon incorrect fact can always

be reviewed and, therefore, letters were issued to the writ

petitioner to substantiate the eligibility as also the

supporting documents, based on which three affidavits

were furnished by the firms showing their association

with the writ petitioner and in response thereto to which

though the writ petitioner replied but the same was found

not satisfactory.

It is further evident from NIT/LOI that experience of

five years was required to assess the eligibility of one or

the other bidders and in order to substantiate on this

count the respondents-HEC directed to adduce evidence

regarding any registered deed for partnership or any

other mode of legal association to prove eligibility

substantiating the decision of the tender evaluation

committee.

But, the contention has been raised by the writ

petitioner that Technical Evaluation Committee has found

the writ petitioner eligible, therefore, such decision

cannot be reviewed whereas, the respondents-HEC has

made submission that if wrong has been committed since

its inception, the same has to be rectified and if any

decision has been taken to assess the eligibility of the

bidder same cannot be said to be unjust decision of the

respondents-HEC.

In these backgrounds, the agreement could not be

entered into even after lapse of period, as specified from

the date of issuance of LOI while the LOI reflects that the

agreement has to be entered into in between the

respondents and the writ petitioner within one month

from the date of issuance of LOI.

In these backdrop of aforesaid facts, since issue no.

(I).Whether more issuance of LOI can be termed as

concluded contract without entering into an agreement?

and Issue No. (II).Whether on the basis of LOI any right

has been accrued to the bidder?, are inter-connected, they

are taken together.

12. There is no dispute about the fact that the LOI

merely indicates the party's intention to enter into the

agreement with other party in future. Further, LOI is not

intended to bind either party ultimately to enter into any

contract.

The Hon'ble Apex Court in Rajasthan Cooperative

Dairy Federation Ltd. Vs. Maha Laxmi Mingrate

Marketing Service Pvt. Ltd & Ors, [ (1996) 10 SCC

405], has held that the Letter of Intent merely expresses

an intention to enter into a contract. If the conditions

stipulated in the Letter of Intent were not fulfilled, the

appellant shall be entitled to withdraw the Letter of

Intent.

In the said judgment, consideration has also been

made about applicability of doctrine of audi alteram

partem at paragraph 7, which reads as under:

"7.The High Court was also not right in importing the doctrine of audi alteram partem in these circumstances. If the conduct of Respondent 1 was such that it did not inspire any confidence in the appellant, the appellant was entitled to decline entering into any legal relationship with Respondent 1 as its selling agent. The Letter of Intent merely expressed an intention to enter into a contract. If the conditions stipulated in the Letter of Intent were not fulfilled by Respondent 1, and if the conduct of Respondent 1 was otherwise not such as would generate confidence, the appellant was entitled to withdraw the Letter of Intent. There was no binding legal relationship between the appellant and Respondent 1 at this stage and the appellant was entitled to look at the totality of circumstances in deciding whether to enter into a binding contract with Respondent 1 or not."

In the aforesaid judgment, the Hon'ble Apex Court

has also considered the fact of incurring heavy expenses

and by laying down the principles at paragraphs 8, it has

been held that the statement of the respondent-bidder

has to be established on evidence and admittedly in the

case at the hand, the writ petitioner has not filed any

appropriate case claiming for damages.

For ready reference, paragraph 8 of the judgment is

quoted hereunder as:

"8.Respondent 1 contends that in anticipation of entering into a contract with the appellant, Respondent 1 incurred heavy expenses. This statement of Respondent 1 has to be established on evidence. A writ petition is not an appropriate proceeding if any claim for damages based on disputed facts is required to be established. We do not wish to pronounce on the question whether, in anticipation of entering into a contract, a party which incurs expenses, can recover them from the other party if that other party ultimately, rightly declines to enter into a contract."

Likewise, the Hon'ble Apex Court in Bhushan

Power Steel Limited Vs. S.L. Seal, Additional

Secretary (Steel and Mines), State of Orissa & Ors

[(2017) 2 SCC 125] at paragraph 24 held as under:

"24.No doubt, having regard to the words "by whatever name called", the expression "letter of intent" is to be given wider connotation. It means that nomenclature of the letter would not be the determinative factor. It is the substantive nature of the letter in question that would determine as to whether it can be treated as the letter of intent. For this purpose, it is first necessary to find the meaning that has to be attributed to the term "letter of intent". As per the legal dictionary, "letter of intent" is a document that described the preliminary understanding between the parties who intend to make a contract or join together in another action. This term has come up for interpretation on few occasions before this Court."

In the aforesaid case, the Hon'ble Apex by making

reference of the case rendered in Rishi Kiran Logistics

(P) Ltd. v. Kandla Port Trust, Board of Trustees of

Kandla Port Trust & Ors (2015) 13 SCC 233 has held

that the letter of intent merely indicates a party's

intention to enter into a contract with other party in

future.

The relevant paragraph 25 of the judgment

rendered in aforesaid case is quoted hereunder as:

"25. In Rishi Kiran Logistics (P) Ltd. v. Kandla Port Trust [Rishi Kiran Logistics (P) Ltd. v. Kandla Port Trust, (2015) 13 SCC 233 : (2016) 1 SCC (Civ) 680] , relying upon an earlier decision, this Court held that a letter of intent merely indicates a party's intention to enter into a contract with other party in future, as can be seen from the following para 43 thereof, which reads as under: (SCC pp. 255-56) "43.At this juncture, while keeping the aforesaid pertinent features of the case in mind, we would take note of "the Rules and Procedure for Allotment of Plots" in question issued by Kandla Port Trust. As per Clause 12 thereof the Port Trust had reserved with itself right of acceptance or rejection of any bid with specific stipulation that mere payment of EMD and offering of premium will not confer any right or interest in favour of the bidder for allotment of land. Such a right to reject the bid could be exercised "at any time without assigning any reasons thereto". Clause 13 relates to "approvals from statutory authorities", with unequivocal assertion therein that the allottees will have to obtain all approvals from different authorities and these included approvals from CRZ as well. As per Clause 16, the allotment was to be made subject to the approval of Kandla Port Trust Board/competent authority. In view of this material on record and factual position noted in earlier paragraphs we are of the opinion that observations in Dresser Rand S.A. v. Bindal Agro Chem Ltd. [Dresser Rand S.A. v. Bindal Agro Chem Ltd., (2006) 1 SCC 751] would be squarely available in the present case, wherein the Court held that: (SCC p. 773, paras 39-40) '39. ... a letter of intent merely indicates a party's intention to enter into a contract with the other party in future. A letter of intent is not intended to bind either party ultimately to enter into any contract. ...

40.It is no doubt true that a letter of intent may be construed as a letter of acceptance if such intention is evident from its terms. It is not uncommon in contracts involving detailed procedure, in order to save time, to issue a letter of intent communicating the acceptance of the offer and asking the contractor to start the work with a stipulation that the detailed contract would be drawn up later. If such a letter is issued to the contractor, though it may be termed as a letter of intent, it may amount to acceptance of the offer resulting in a concluded contract between the parties. But the question whether the letter of intent is merely an expression of an intention to place an order in future or whether it is a final acceptance of the offer thereby leading to a contract, is a matter that has to be decided with reference to the terms of the letter.' When the LOI is itself hedged with the condition that the final allotment would be made later after obtaining CRZ and other clearances, it may depict an intention to enter into contract at a later stage. Thus, we find that on the facts of this case it appears that a letter with intention to enter into a contract which could take place after all other formalities are completed. However, when the completion of these formalities had taken undue long time and the prices of land, in the interregnum, shot up sharply, the respondent had a right to cancel the process which had not resulted in a concluded contract."

Thus, it is evident from the judgments, referred

hereinabove that the Letter of Intent merely indicates a

party's intention to enter into a contract with other party

in future and respondents had right to cancel the LOI

which had not resulted in a concluded contract.

In the case in hand, the Letter of Intent clearly

stipulates for entering into agreement within a period of

one month from the date of issuance of Letter of Intent.

Thus, when there is specific stipulation about entering

into contract/agreement within a period of one month,

admittedly agreement could not be arrived at within such

period of time, therefore, merely on the basis of Letter of

Intent the writ petitioner cannot claim that the said Letter

of Intent has taken the shape of concluded contract. The

Letter of Intent cannot be said to have taken the shape of

concluded contract. It is settled position of law that in the

absence of any agreement, the Letter of Intent would only

be an intention of the parties to enter into the contract

with the other party. As such, no right can be said to

have accrued to the writ petitioner in the absence of the

agreement.

In this regard, it would be relevant to mention the

meaning of vested/accrued right, as has been discussed

by Hon'ble Apex Court in MGB Gramin Bank Vs.

Chakrawarti Singh [(2014) 13 SCC 583] at paragraph

11, 12 and 13, which read under as:

"11. The word "vested" is defined in Black's Law Dictionary (6th Edn.) at p. 1563, as:

"Vested.--fixed; accrued; settled; absolute; complete. Having the character or given in the rights of absolute ownership; not contingent; not subject to be defeated by a condition precedent. Rights are 'vested' when right to enjoyment, present or prospective, has become property of some particular person or persons as present interest; mere expectancy of future benefits, or contingent interest in

property founded on anticipated continuance of existing laws, does not constitute 'vested rights'."

12.In Webster's Comprehensive Dictionary (International Edition) at p. 1397, "vested" is defined as law held by a tenure subject to no contingency; complete; established by law as a permanent right; vested interest.

13. Thus, vested right is a right independent of any contingency and it cannot be taken away without consent of the person concerned. Vested right can arise from contract, statute or by operation of law. Unless an accrued or vested right has been derived by a party, the policy decision/scheme could be changed.

It is, thus, evident that vested right is a right

independent of any contingency and it cannot be taken

away without consent of the person concerned. Vested

right can arise from contract, statute or by operation of

law. Unless an accrued or vested right has been derived

by a party, the policy decision/scheme could be changed.

Admitted fact of the present case is that as yet no

agreement has been arrived out in between the parties

and, therefore, the question of vested or accrued right

does not arise.

Accordingly, Issue Nos. I and II are answered

against the appellant.

13. So far issue no. (iii).Whether termination of LOI due

to non-compliance of the terms and conditions as

stipulated in the Notice Inviting Tender (NIT) as also LOI

can be said to be unjustified? and (IV).Whether non-

furnishing of documents that was asked for to justify the

eligibility can be said to be unjustified?, are concerned

since both the issues are intertwined , they are being

considered together.

It is settled position of law that condition stipulated

in NIT is strictly to be adhered to, as has been held by

Hon'ble Apex Court in AIR India Ltd Vs. Cochin

International Airport Ltd & Ors. [(2000) 2 SCC 617]

that State can fix its own terms of invitation of tender and

that is not open to judicial scrutiny.

Likewise, in Directorate of Education & Ors Vs.

Educomp Datamatics Ltd. & Ors [(2004) 4 SCC 19], it

has been held by Hon'ble Apex Court that the Court

should not interfere with the terms of the Notice Inviting

Tender unless it is shown to be either arbitrary or

discriminatory or actuated by malice. It has further been

held that while exercising power of judicial review of the

terms of the tender notice, the court cannot order for

change in them, unless it is of the opinion that the terms

stipulated were either arbitrary or discriminatory or

actuated by malice.

In the case of Kanhaiya Lal Agrawal-Vs.-Union of

India and Others [(2002) 6 SCC 315], it has been held

therein at paragraph 6 by taking note of the judgment

rendered by the Hon'ble Apex Court in the case of G.J.

Fernandez-Vs.-State of Karnataka and Ors. reported

in (1990) 2 SCC 488 as under:

"6.It is settled law that when an essential condition of tender is not complied with, it is open to the person inviting tender to reject the same. Whether a condition is essential or collateral could be ascertained by reference to the consequence of non- compliance thereto. If non-fulfilment of the requirement results in rejection of the tender, then it would be an essential part of the tender otherwise it is only a collateral term. This legal position has been well explained in G.J. Fernandez v. State of Karnataka."

The fact of the case is that admittedly the writ

petitioner was declared qualified in the technical bid and

pursuant thereto, Letter of Intent was issued with the

specific stipulation to enter into agreement within a

period of one month from the date of issuance of Letter of

Intent.

The respondents-HEC has also made

communication to the writ petitioner to justify about the

eligibility as per the condition stipulated in the NIT, upon

which though affidavits sworn before Notary Public was

submitted showing association with other firms, but, that

has been found to be insufficient compliance to

substantiate the eligibility as because the writ petitioner

has failed to place on record before the respondents-HEC

about the nature of association with other so-called

partners as to whether it was partnership firm or what is

the nature of the association etc. such document was

repeatedly asked by the respondents-HEC as would

appear from the materials available on record but no

such document was provided and as such the agreement

could not have been entered into.

Contention has been raised that at the belated

stage the respondents-HEC cannot again go into the

question of eligibility of the writ petitioner since the

eligibility condition has already been decided, but we are

not impressed with such argument as until and unless a

right is accrued such question cannot be agitated and

that right will be said to have accrued only after entering

into the agreement. Thus, in the case in hand, since no

agreement has been entered into, if any doubt has arisen

in the mind of the respondents-HEC about eligibility part

of the writ petitioner, which is a mandatory condition as

stipulated in the NIT and which is required to be adhered

to by the bidder, and if such document has been asked to

be submitted for assessing the eligibility, the same cannot

be said to be unjustified decision of the respondents-

HEC.

The matter would have been different if the writ

petitioner had valid documents in this regard but

admittedly no such document has been placed. Neither

such submission has been made before the writ Court

nor before this Court substantiating the eligibility

condition save and except the statement having been

made that after issuance of Letter of Intent since

possession has been handed over and the writ petitioner

has paid rental to the respondents-HEC, the said Letter of

Intent has taken the shape of concluded contract.

Therefore according to our considered view, since the writ

petitioner has failed to substantiate about eligibility

criteria, which is mandatory one, it cannot be allowed to

take such plea on account of the fact that the rental was

being paid to the respondents-HEC due to the possession

having been handed over to the writ petitioner with the

condition as enshrined in the Letter of Intent, i.e., within

a period of one month agreement is to be entered. Merely,

since possession has been handed over and the rental

has been paid, the Letter of intent, which is intention to

enter into the agreement in future with other party, such

Letter of Intent cannot take the shape of concluded

contract as per the ratio laid down by Hon'ble Apex Court

in the case of Rajasthan Cooperative Dairy Federation

Ltd. (Supra).

Accordingly, issue Nos. III and IV are also

answered against the appellant.

14. The learned Single Judge, after taking into

consideration the implication of the Letter of Intent and

the same being not by way of accrual of any right and if

there is violation of instruction as also activities that

pertains to the construction/renovation of such without

entering into the agreement, which is contrary to the

terms and conditions of the Letter of Intent, refused to

interfere with the order of termination of Letter of Intent.

The Hon'ble Apex Court in Rajasthan Cooperative

Dairy Federation Ltd. (Supra) has held that, while

terminating the Letter of Intent, it is not required to follow

the principles to audi alter partem, which also suggest

that merely by issuance of Letter of Intent no right

accrues to the party in whose favour Letter of Intent has

been issued. However, in the case in hand, notices were

issued to the writ petitioner, to which the writ petitioner

had replied and only thereafter Letter of Intent was

terminated.

15. Learned Single Judge has also discussed the power

of judicial review in the matter of contract and, upon

such legal position as also discussion by the learned

Single Judge, we are in agreement with the learned Single

Bench on the basis of settled position of law that in the

contractual matter, power of writ Court is least to be

exercised and it is only to be exercised if there is violation

of Article 14 of the Constitution of India or any error in

the decision making process.

In this regard, reference may be made to the

judgment rendered by Hon'ble Apex Court in Syed TA

Naqshbandi and Ors. vs. State of J&K and Ors.,

[(2003) 9SCC 592], wherein the Hon'ble Supreme Court

has observed as under: ―

"Judicial review is permissible only to the extent of finding whether the process in reaching the decision has been observed correctly and not the decision itself, as such. Critical or independent analysis or appraisal of the materials by the Courts exercising powers of judicial review unlike the case of an appellate court, would neither be permissible nor conducive to the interests of either the officers concerned or the system and institutions......‖

The Hon'ble Apex Court further in Tata Cellular

Vs. Union of India, (1994) 6 SCC 651 has been pleased

to hold that so far as the judicial review is concerned,

with reviewing not the merit of the decision in support of

which application for judicial review is made but the

decision making process itself. It is thus different from

an appeal with hearing an appeal, the court of concerned

within the merits of the decision under appeal since

before all judicial review is not an appeal from the

decision, the court cannot substitute its own decision. It

has further been held that it is not for the court to

determine whether a particular policy or particular

decision taken in the fulfillment of that policy is fair.

The Hon'ble Apex Court therefore, has laid down

the following principles:-

i.The modern trend points to judicial restraint in administrative action.

ii.The Court does not sit as a court of appeal but merely reviews the manner in which the decision was made. iii.The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. iv.The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tires. More often than not, such decisions are made qualitatively by experts. v.The Government must have freedom of contract. In other words a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of wednesbury principle of reasonableness but must be free from arbitrariness not affected by bias or actuated by mala fides vi.Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.

Likewise in Raunaq International Ltd. Vrs. I.V.R.

Construction Ltd. & Ors. (1999)1 SCC 492 the scope

of judicial review has been laid down by holding therein

that the decision making process suffers from bias of

arbitrariness, the same will be scrutinized under the

power of judicial review.

In the case of Jagdish Mandal Vrs. State of

Orissa &Ors. reported in (2007) 14 SCC 517, it has

been laid down that the power of judicial review in the

contractual matters is permissible only if (i) Whether the

process adopted or decision made is mala fide or

intended to favour someone or the same is so arbitrary

and irrational that the court can say: the decision is

such that no responsible authority acting reasonably

and in accordance with law could have reached.

(ii) Whether public interest is affected.

Judgment rendered in the case of Ramana

Dayaram Shetty Vrs. International Airport Authority

of India & Ors., reported in (1979) 3 SCC 489, the

Hon'ble Apex Court observed as under in Paragraph-10

thereof:-

"10.It is a well settled rule of administrative law that an executive authority must be rigorously held to the standards by which it professes its actions to be judged and it must [21] scrupulously observe those standards on pain of invalidation of an act in violation of them."

16. It requires to refer herein that the writ petitioner

took a plea that as per the condition stipulated in the

LOI, the construction/renovation work has been

commenced but the same cannot be acceptable to this

Court for the reason that if any document is under

construction the same has to be considered in its entirety

and not the part which suits a party will be accepted and

the part that does not suit will not be accepted i.e. on the

basis of principle that one cannot be allowed to approbate

and reprobate. Herein, LOI consists certain conditions.

One of the conditions authorizes the writ petitioner to

carry out renovation work but another condition

stipulates that within a month from the date of issuance

of LOI, the agreement has to be entered into but the writ

petitioner is only placing reliance upon the condition

which authorizes the writ petitioner to carry out

renovation work leaving apart the condition that binds

the party to enter into agreement within a month from

the date of issuance of LOI.

In that view of the matter, according to our

considered view, it is not a case where any error has been

committed by the respondents-HEC in its decision

making process, therefore, as per the ratio laid down in

the judgments, as referred herein above, we are of the

view that the power conferred under Article 226 of the

Constitution of India is not fit to be exercised in the facts

and circumstances of the present case.

17. In the case at hand, the learned senior counsel for

the writ petitioner has failed to show any illegality having

been committed by the respondents, which pertains to

the decision making process rather according to our

considered view, based on appreciation of factual aspects

it appears that there is no error in the decision making

process.

Further, the writ petitioner had not brought to the

notice to the learned Single Judge about initiation of

proceeding under the Act of 1971 but before this Court,

by filing Interlocutory Application, being I.A. No. 3106 of

2020, a prayer has been made for stay of Case No. PP

Act/Rev/Evic./2019-02 initiated by the respondents in

the Court of Estate Officer, H.E.C., resorting to the

provision of sub-section (1) of Section 5-A of the Act,

1971 and further it appears that said notice has never

been questioned by the writ petitioner even though the

said notice has been issued by the respondents during

pendency of the writ petition, which is nothing but a

suppression of material fact.

18. It further appears from the impugned order that

learned Single Judge, while dismissing the writ petition

granted liberty to the writ petitioner to approach

the appropriate forum claiming damages from the

respondents, if so advised. Thus, we are of the considered

view that the case does not require any interference by

this Court.

19. Accordingly, the present intra-court appeal fails

and, is dismissed.

20. In view of the dismissal of the instant intra-court

appeal, all Interlocutory Applications, being I.A. No. 3106

of 2020, I.A. No. 902 of 2021 and I.A. No. 903 of 2021

stand disposed of.

(Dr. Ravi Ranjan, C.J.)

(Sujit Narayan Prasad, J.) Alankar/ -

A.F.R