ORDER
(Passed on 23rd February, 2010)
The following order of the Court was passed by Dhirendra Mishra, J.
1. The petitioner has filed this petition and prayed for quashing of the order of Annexure-P/12 passed by respondent No. 2 whereby earnest money of Rs. 8.75 lakhs deposited by the petitioner has been forfeited and the petitioner has prayed for a direction to respondent No. 2 to refund the above amount with interest @ 12% per annum.
2. Briefly stated facts of the case are that in response to the notice inviting tender of Annexure-P/1, the petitioner submitted his offer for the work of construction of 100 unit residential quarters for 2 × 250 MW TPF Korba East valued at Rs. 8.75 Crores. He also deposited a sum of Rs. 8.75 lakhs towards the Earnest Money Deposit (for short EMD). Respondent No. 2 vide his memo dated 26-2-2008 (Annexure-P/3) communicated to the petitioner that his tender for the aforesaid work has been accepted. By the aforesaid communication, the petitioner was further directed to deposit a sum of Rs. 10,68,250/- within 10 days of the receipt of the communication with the Senior Accounts Officer. The above amount and EMD was to form initial security deposit.
3. The petitioner was also directed to depute any authorized representative with proper and valid Power of Attorney to execute agreement within 10 days of the receipt of the letter failing which earnest money will be liable for forfeiture. The petitioner was called upon to convey his acceptance of the order. It was mentioned that if nothing is heard on the contrary within 10 days from the date of issue of the above order, it would be presumed that the petitioner has accepted the order.
4. The petitioner in his reply dated 1-3-2008 (Annexure-P/4) stated that there is difference between the item rate and list of Bill of Quantity (for short BOQ) annexed with the work order and the bill of quantity submitted with the tender and the same has been changed without his consent. He requested to make necessary amendment in the BOQ annexed with the work order in accordance with BOQ annexed with the tender so that agreement may be executed within time.
5. The respondents vide memo dated 4-3-2008 rejected the request of the petitioner. Referring to clause-16 of instructions to tenderers of tender document, the respondents stated that the quantities of the individual items of the work may vary or certain items may not be required to be executed at all so long as the overall value of contract does not vary beyond q 25% of the tender value.
6. On receipt of the above communication, the petitioner requested the respondents to close the work without any liability to any party and refund EMD as dispute had arisen between the parties vide Annexure-P/5 dated 15-3-2008. However, the respondents vide their memo dated 19-3-2008 informed the petitioner that his denial to execute agreement vide Annexure-P/6 is breach of condition of tender and the Board contemplates to take action against him including forfeiture of EMD. Finally the respondents vide memo dated 8th May, 2008 (Annexure-P/12) communicated the petitioner that EMD submitted by him with the tender has been forfeited and his request dated 28-5-2008 (Annexure-P/13) for constitution of committee as per clause 27 to settle the dispute was further rejected by the Chhattisgarh Electricity Board vide Annexure-P/14.
7. Learned counsel for the petitioner submitted that there was no concluded contract between the parties as the work order of Annexure-P/3 was only a counter offer with certain changes in the schedule of work. The petitioner was to convey his acceptance within 10 days of receipt of the above offer. The petitioner communicated his objection against the offer vide Annexure-P/4 within the stipulated period on 1-3-2008 and requested for modification, however, his request was rejected. The respondents had invited the petitioner for negotiation to resolve the issue on 5-4-2008 and only thereafter EMD was forfeited on 8-5-2008. Thus from the aforesaid correspondences between the parties, it is clear that there was no any unequivocal acceptance by the petitioner to the offer of the respondents and as such there was no binding contract and the respondents could not have forfeited EMD.
Reliance is placed in the matter of Rickmers Verwaltung Gmbh v. Indian Oil Corporation Ltd. {AIR 1999 SUPREME COURT 504}.
8. On the other hand, Shri Alok Bakshi, learned counsel for the respondents, submitted that the petitioner submitted his offer in response to NIT of Annexure-P/1. His offer was finally accepted after 2 rounds of negotiation vide memo dated 26-2-2008 (Annexure-P/3). The contract was governed by the general terms and conditions of the contract. In clause-16 of the instructions to tenderers of the tender document, it is specifically mentioned that any alteration in the quantities of the individual items of the work and dropping of certain items is permissible so long as overall value of the contract does not vary beyond q 25% of the tender value. In clause-12, it is mentioned that offer of the tenderer is valid for a period of 4 months from the date of acceptance and the tenderer cannot withdraw his offer in this period and withdrawal within that period entails forfeiture of the EMD. Since the petitioner did not execute agreement after depositing balance of security deposit as directed vide Annexure-P/3 and further denied to execute agreement and prayed for refund of EMD, he committed breach of conditions of contract and, therefore, EMD has been rightly forfeited (Annexure-P/12).
9. The contention of the petitioner that memo dated 26-2-2008 (Annexure-P/3) was not in absolute acceptance, but the same was a conditional counter offer is based on selective reading of the above memo. If the document is read in its entirety, then it leaves no room that the petitioner's offer was accepted in terms of conditions in the tender document.
10. We have heard learned counsel for the parties. We have perused the pleading of the respective parties and the documents annexed therewith.
11. The acceptance of offer of the petitioner was communicated by the Chief Engineer vide his memo dated 26-2-2008; along with letter of acceptance latest amendment up to the due date of submission of tender and base rates for Non SOR items, as per schedule enclosed was also forwarded. By Clause-4 of the memo, the petitioner was directed to execute the contract agreement through its authorized representative within 10 days of the receipt of memo. In case of his failure to execute agreement within specified time, EMD with the tender was liable for forfeiture. Para-9 of the memo reads as under:-
“The maintenance period of work shall be 12 (Twelve) months.
Please convey your acceptance of this order. If nothing is heard on the contrary within 10 (Ten) days from the date of issue of this order, it will be presumed that you have accepted the order.”
12. In reply to the above memo dated 1st March, 2008, the petitioner objected to certain alteration made in item rates and BOQ annexed with the work order without his consent. The petitioner requested to make necessary alteration in BOQ forwarded with the work order, according to BOQ, which was given with NIT, however, the aforesaid request was rejected vide Annexure-P/5 on the ground that under clause-16 of instructions to tenderers of tender document, alteration in the quantities of the individual items of the work may vary or certain items may not be required to be executed at all so long as the overall value of contract does not vary beyond q 25% of tender value. The tender document has been filed by the respondents as Annexure-R/1.
13. We have carefully examined the tender document of Annexure-R/1 annexed with the return, however, we did not find any condition in the document of Annexure-R/1 which allows the respondents to unilaterally change the quantity of the items in the tender work to the extent that value of the contract does not vary beyond q 25% of the tender value, as mentioned in the document of Annexure-P/5.
14. From perusal of the memo of Annexure-P/9 written by respondent No. 2 to the petitioner, we further notice that the petitioner was called in his office on 5-4-2008 to resolve the issue failing which action deemed fit was contemplated.
15. Thus after going through the entire correspondences between the parties, particularly memo of the Chief Engineer Annexure-P/3 dated 26-2-2008, the petitioner's reply dated 4-3-2008 and Annexure-P/9 dated 28-3-2008, we find that no concluded contract had been reached between the parties and they were making efforts to resolve the dispute through negotiations.
16. In the matter of M/s Rickmers Verwaltung Gimb H. (Supra), the Hon'ble Supreme Court in para-12 of the judgment held thus:-
“In this connection the cardinal principle to remember is that it is the duty of the Court to construe correspondence with a view to arrive at a conclusion whether there was any meeting of mind between the parties, which could create a binding contract between them but the Court is not empowered to create a contract for the parties by going outside the clear language used in the correspondence, except insofar as there are some appropriate implications of law to be drawn. Unless from the correspondence it can unequivocally and clearly emerge that the parties were ad idem to the terms, it cannot be said that an agreement had come into existence between them through correspondence. The Court is required to review what the parties wrote and how they acted and from that material to infer whether the intention as expressed in the correspondence was to bring into existence a mutually binding contract. The intention of the parties is to be gathered only from the expressions used in the correspondence and the meaning it conveys and in case it shows that there had been meeting of mind between the parties and they had actually reached an agreement, upon all material terms, then and then alone can it be said that a binding contract was capable of being spelt out from the correspondence.”
17. In the matter of Shin Satellite Public Co. Ltd. v. Jain Studios Ltd.. {(2006) 2 SCC 628}, the Hon'ble Supreme Court, while considering the question of legality, validity and enforceability of an arbitration agreement, dealt with the severability of illegal and void provisions in the agreement, referring to Halsbury's Laws of England, para-430 and various judgments of the English Courts and the judgment of the Supreme Court, held that in the facts of the cited case, the said objectionable part is clearly severable as it is independent of the dispute being referred to and resolved by an arbitrator and the Court does not need to re-write contract or do something that is not contemplated by the parties and to that extent agreement is legal and the offending part can be separated and severed by using a “blue pencil”.
18. In the matter of Beed District Central Coop. Bank Ltd., v. State of Maharashtra and others {(2006) 8 SCC 514}, “the doctrine of blue pencil” evolved by the English and American Courts, has been discussed in para-10 to 12 and it has been observed that this doctrine holds that if Courts can render an unreasonable restraint reasonable by scratching out the offensive portions of the covenant, they should do so and then enforce the remainder. The doctrine is applicable only if the covenant in question is applicable, so that the unreasonable portions may be separated.
19. However, in the instant case, we are of the opinion that the above doctrine has no application whatsoever. While accepting the offer and issuing work order, respondent No. 2 also enclosed and forwarded base rates for non SOR items as per schedule and directed the petitioner to communicate his acceptance within 10 days. The petitioner communicated his objection against the proposed changes within time and further requested to adhere to the item rates and list of BOQ given in the work order and then only agreement could be executed. From correspondences between the parties, it also appears that the department was making efforts to resolve the dispute through negotiations.
20. Thus after considering the entire correspondence, we are of the opinion that there is no concluded contract between the parties.
21. In view of the aforesaid discussion, we allow this petition and quash the impugned order of Annexure-P/12 and direct the respondents to refund earnest money of Rs. 8.75 lakhs to the petitioner together with simple interest at the rate of 6% per annum from the date of filing of the petition.
JUDGE JUDGE