Tripura High Court
Sri Debashish Bhowmik Owner Of Jmc ... vs The State Of Tripura on 10 February, 2025
Page 1 of 8
HIGH COURT OF TRIPURA
_A_G_A_R_T_A_L_A_
WP(C) No.317 of 2023
Sri Debashish Bhowmik owner of JMC Bricks Industry, situated at
Santirbazar, Sub-division- Santirbazar, P.S. Santir Bazar, P.O. Santir Bazar,
South Tripura.
...... Petitioner(s)
VERSUS
1. The State of Tripura, represented by the Commissioner & Secretary,
Department of Industries & Commerce, Government of Tripura, having his
office at New Capital Complex, P.O. Kunjaban, P.S. New Capital Complex,
Sub-division-Agartala, District- West Tripura.
2. The Commissioner & Secretary, Department of Industries & Commerce,
Government of Tripura, having his office at New Capital Complex, P.O.
Kunjaban, P.S. New Capital Complex, Sub-division-Agartala, District- West
Tripura.
3. The Tripura Small Industries Corporation Limited, represented by its
Director, having his office at Kunjaban Colony, Agartala-799005, West
Tripura.
4. The Director, Tripura Small Industries Corporation Limited, having his
office at Kunjaban Colony, Agartala-799005, West Tripura.
5. The District Magistrate & Collector, having his office at Belonia, South
Tripura.
...... Respondent(s)
For Petitioner(s) : Mr. Somik Deb, Sr. Advocate,
Mr. Abir Baran, Advocate.
For Respondent(s) : Mr. Mangal Debbarma, Addl. G.A.
HON'BLE THE CHIEF JUSTICE MR. APARESH KUMAR SINGH
HON'BLE MR. JUSTICE S.D. PURKAYASTHA
Date of argument and delivery of Judgment & Order : 10th February, 2025.
Whether Fit for Reporting : YES
JUDGMENT & ORDER (ORAL)
Heard Mr. Somik Deb, learned senior counsel assisted by Mr.
Abir Baran, learned counsel appearing for the petitioner and also heard Mr.
Mangal Debbarma, learned Additional Government Advocate appearing for
the respondent-State.
[2] Reference is made to the order dated 29th May, 2023 which
encapsulates the grievance of the petitioner as under:
Mr. Somik Deb, learned senior counsel for the petitioner submits that the
notice dated 31st August, 2021 (Annexure-2) did not propose to forfeit the
lease rent for the period 2019-20 amounting to Rs.17,10,777/- for non-
execution of the lease deed in respect of Sonaicharri Brick Field allotted to
the petitioner through a tender process pursuant to the advertisement at
Annexure-1 bearing number File Ref. No. TSIC/ BRICK/ GEN/1(75)/VOL-
I/2000-2001/. Learned senior counsel for the petitioner further submits that
even if the plea of alternative remedy to approach the competent court of
civil jurisdiction may be held against the petitioner so far as the forfeiture of
D. call amount of Rs.3,00,000/- is concerned on failure to execute the lease
deed despite extensions but in the absence of any notice to forfeit the lease
rent deposited sans a proper lease agreement and with no reference thereof in
the impugned order dated 4th November, 2022 (Annexure-4) issued by the
Managing Director of the respondent Corporation, petitioner would be at a
loss to agitate the instant issue as it is still inchoate. As such, respondents
Nos.3 and 4 may be called upon to respond to this limited contention.
Issue notice upon respondents No.3 and 4.
Learned counsel for the petitioner undertakes to effect 'Dasti' service of
notice for which requisites be filed by Thursday (01.06.2023). Office to
issue notice by Saturday (03.06.2023). After effecting 'Dasti' service of
notice in the aforesaid mode, an affidavit containing proof of service of
notice be filed by 21st of June, 2023.
Notice is made returnable on 03.07.2023."
[3] Counter affidavit has been filed by the respondent-State.
Counter affidavit has also been filed by the respondents No.3 and 4. The
response of the State and the TSICL in their counter affidavit on facts is on
similar lines. It is averred that petitioner though made a deposit of
Rs.17,10,777/- after being selected in the advertisement at (Annexure-1) for
operation of the brick field of TSICL at Sonaichari, South Tripura from the
financial year 2019-20 onwards on the basis of payment of yearly lease-rent
in advance to TSICL in 1st week of April of every year (lease period of four
years initially subject to extension as per needs of TSICL) but petitioner
never entered into an agreement despite repeated notices. The lease amount
of Rs.17,10,777/- was deposited after 90 days instead of 7 days on 19th
February, 2020. The work order was issued on 17th November, 2019. Further
opportunities for signing of the agreement were offered vide letter dated 16th
November, 2020 which the petitioner did not reply to. He was reminded on
several occasions not only over phone but through letters dated 02.01.2021,
03.03.2021 and 16.06.2021. However, petitioner sought for extension of
time which was provided till 31st September, 2021. Evidently, he was
avoiding signing of lease agreement. Petitioner never informed TSICL nor
met the authorities to avoid signing of the lease agreement which has
resulted in cancellation of tender and forfeiture of his D. Call amount since
the tender could not be kept pending for indefinite period.
[4] In the process the Corporation has incurred huge loss of
Rs.18,81,854/- (Rs.17,10,777 + 10% on account of lease rent from
19.02.2020 to 18.02.2021) and Rs.20,70,039/- (Rs.18,81,854/- + 10% on
account of lease rent from 19.02.2021 to 18.02.2022) for non-compliance on
his part in performing the formalities which is recoverable from the
petitioner. The total recoverable lease rent is Rs.39,51,893/- from the
petitioner along with 24% panel interest + administrative and legal cost. At
paragraph 14 of the State's counter affidavit, the respondents have furnished
a tabular chart of the total losses and damages to TSICL amounting to
Rs.1,07,85,520/- recoverable from the petitioner. The respondents have
further stated that at least 100 workers per day were deprived from the works
for last 3 years from 2020 to 2022. Local people are depended on such brick
field and earn their livelihood out of that. The same stand is taken in the
counter affidavit of the respondent-TSICL.
[5] The learned counsel for the State has referred to Clause (xiv)
under Part-I and Clause (iii) under the heading 'Award of contract, signing
of agreement and take up the assignment of the NIT' at Annexure-R/1. He
submits that as per sub-clause (iii) for non-acceptance of letter of
award/offer within the stipulated period of time, the EMD in the form of D.
Call will be forfeited. Learned counsel for the State has however not pointed
out any other terms of the NIT under which the lease rent amount can be
forfeited.
[6] It is not in dispute that no lease agreement was executed
between the petitioner and the TSICL apparently as petitioner did not come
forward to sign it despite repeated reminders. In the wake of such factual
and legal position, the forfeiture of the D. Call amount of Rs.3,00,000/-
which is essentially an earnest money deposit at the time of participation in
the tender cannot be faulted since the petitioner did not execute the lease
deed. It is in conformity with the terms of the NIT. However, it is rightly
pointed out by learned senior counsel for the petitioner that forfeiture of the
lease rent deposited for 2019-2020 to the tune of Rs.17,10,777/- cannot be
made as there was no executed agreement between the parties under which
such forfeiture can be made in the nature of a penalty. As observed in the
forgoing paragraph, learned senior counsel for the petitioner has also not
pressed the forfeiture of the D. Call amount i.e. the earnest money deposit as
captured in the order dated 29.05.2024.
[7] Mr. Somik Deb, learned senior counsel for the petitioner has
placed reliance upon a recent decision of the Apex Court in case of South
Eastern Coalfields Limited and others versus S. Kumar Associates AKM
(JV), reported in (2021) 9 SCC 166. He submitted that since there has been
no formal agreement between the parties and there is no subsisting contract
inter se parties to attract such general terms and conditions as are applicable
to the contract, as such an agreement could have been entered into only upon
completion of certain formalities by the tenderer-petitioner, which was never
completed, the forfeiture of the lease rent amount deposited cannot be
upheld in the eye of law. The letters issued upon the petitioner which are at
Annexure-R/2 dated 17th December, 2019, letter dated 16th November, 2020,
Annexure-R/3, letter dated 2nd January, 2021, Annexure-R/4 and letter dated
31st August, 2021, Annexure-2 all of them indicate that the respondent-
authorities of TSICL also were conscious that only the D. Call amount or
EMD could be forfeited for failure to execute the lease agreement. However,
neither has any notice being issued for forfeiture of the lease deposit amount
of Rs.17,10,777/- nor such order has been passed. The impugned order dated
4th November, 2022 also refers to cancellation of the work order and
forfeiture of the D. Call amount. In such circumstances, the impugned action
of the respondent-TSICL to forfeit the amount deposited as lease rent for the
year 2019-20 is unsustainable in law and on facts. The respondents have
failed to justify it on any valid legal grounds. The respondents may be
directed to refund the said amount to the petitioner.
[8] We have considered the submissions of learned counsel for the
parties and also taken note of the relevant material facts referred to from the
pleadings on record. We have also perused the judgment in case of South
Eastern Coalfields Limited (supra) relied upon by learned senior counsel for
the petitioner. It is evident from the narration of facts recorded above that no
lease agreement was executed between the parties despite the fact that
petitioner had deposited the lease amount of Rs.17,10,777/- on 19.02.2020
for the year 2019-2020 and despite reminders to that effect by the
Corporation from time to time. Forfeiture of the earnest money deposit of
Rs.3,00,000/- called as D. Call amount is permissible as petitioner failed to
sign the agreement in terms of Clause (iii) under the head of 'Award of
contract, signing of agreement and take up the assignment,' as per NIT at
(Annnexure-1). However, since admittedly no lease agreement was entered
into between the parties, forfeiture of the amount of Rs.17,10,777/- on the
part of the Corporation cannot be sustained. The lease agreement remained
unexecuted till the work order was cancelled and communicated to the
petitioner by the impugned order dated 4th November, 2022 i.e. over a period
of three years since the award of work. However, if the Corporation is
aggrieved by such act for omission on the part of the tenderer, the remedy to
recover any losses, damages lies elsewhere.
[9] The Apex Court in case of South Eastern Coalfields Limited
(supra) was in seisin of such a situation where though LOI was issued in
favour of the respondent for commencement of work by the appellant-South
Eastern Coalfield Limited but no agreement was entered. The appellant,
therefore, asked the agency to show-cause as to why penal action be not
initiated for (a) termination of work; (b) blacklisting of the respondent
company; and (c) award of execution of work to other contractor at the cost
and risk of the respondent. The appellant being dissatisfied with the reply
issued a letter upon the respondent seeking an amount of Rs.78,07,573/-
being the differential in the contract value between the respondent and the
new contractor which was challenged in a writ petition before Chhattisgarh
High Court. The Division Bench of the Chhattisgarh High Court opined that
there was no subsisting contract inter se the parties to attract the general
terms and conditions as applicable to the contract. Various clauses of the
NIT were referred to and opined that there could not be a valid contract inter
se the parties as it was subject to completion of certain formalities by the
respondent, which were never completed. As a consequence, the appellants
were within their rights to cancel the award of work and forfeit the bid
security. Thus, only forfeiture of bid security was upheld while the
endeavour of the appellants to recover the additional amount in award of
contract to another contractor as compared to the respondent-agency was
held not recoverable.
[10] This was taken up to the Apex Court in Civil Appeal No.4358
of 2016 decided on 23.07.2021. The Apex Court after discussing the facts of
the case, the terms of the NIT and certain decisions rendered earlier
concluded at paragraph Nos.20 to 27 that the failure of the successful bidder
to comply with the requirement constitutes a sufficient grounds for
cancellation of the award of work and forfeiture of the bid security but since
there was no executed agreement nor even integrity pack was signed the
appellants could not seek to recover the additional amount in award of
contract to another contractor as was rightly held by the Chhattisgarh High
Court.
[11] The case at hand stands on similar footing as no agreement has
been executed between the parties on failure of the writ petitioner to
undertake the formalities for signing of the agreement despite deposit of
lease rent amount for the year 2019-20 to the tune of Rs.17,10,777/- and
despite reminders thereto. The respondents, therefore, could not have
forfeited the lease rent amount as in the absence of an executed agreement
there were no such terms and conditions which could be invoked for
forfeiture of the said amount whether be in the nature of a penalty or
liquidated damages etc. As such, the respondent-Corporation is bound to
refund the said amount to the petitioner within a period of four weeks from
the date of receipt of copy of this order. We leave it open for the respondent-
Corporation to invoke any other remedy as may be permissible in law for the
alleged loss and damage said to have sustained on account of non-execution
of the lease agreement by the petitioner before the appropriate forum subject
to just limitations as per law.
[12] Accordingly, the writ petition stands disposed of.
Pending application(s), if any, also stands disposed of.
(S.D. PURKAYASTHA), J (APARESH KUMAR SINGH), CJ
DIPESH DEB Date: 2025.02.13 19:41:53
