w w w . L a w y e r S e r v i c e s . i n



M/s. Jagdish International Pvt. Ltd. v/s Food Corporation of India & Another

    W.P. No. 12313 of 2016

    Decided On, 12 August 2021

    At, High Court of Madhya Pradesh

    By, THE HONOURABLE CHIEF JUSTICE MR. MOHAMMAD RAFIQ & THE HONOURABLE MR. JUSTICE VIJAY KUMAR SHUKLA

    For the Appearing Parties: Prakash Upadhyay, Utkarsh Agrawal, Advocates.



Judgment Text

Vijay Kumar Shukla, J.

1. In the instant petition preferred under Article 226 of the Constitution of India, the petitioner has prayed for refund of Rs.82,15,000/- Earnest Money Deposit (EMD), which is forfeited by the respondents. Later on, an application for amendment was moved by the petitioner to further challenge the orders dated 28-12- 2015 and 22-4-2016, Annexure-P/7 and Annexure-P/9 respectively, whereby the revision/appeal filed by the petitioner under Clause 16 of the Instructions to Bidders and Terms and Conditions governing E-auction [hereinafter referred to as "the IBT"]/Model Tender Form (for brevity "MTF") was dismissed by the respondents.

2. The facts as have been uncurtained are that the petitioner is a private limited company and is a general merchant commission agent and supplier of wheat and it is based out of the Northern region.

3. On 20-10-2015 the respondents - Food Corporation of India (FCI), Regional Office at Bhopal, issued a tender for sale of wheat to bulk consumers/traders under OMSS (D) through eauction. The petitioner submitted its bid for 5 railway rakes of wheat from the Railway Stations, namely, (a) Narsinghpur - 1 rake (b) Gadarwara - 1 rake (c) Kachhpura - 3 rake; and as per Clause 6 of the tender document it deposited EMD which was credited to the designated FCI Bank account in compliance with the Clause 6(i) of the IBT. The bid was opened and the petitioner emerged as the highest bidder for all the five rakes and thus, it was declared to be the successful bidder.

4. In terms Clause 11-A of the MTF the petitioner deposited the entire bid amount with the respondents within 7 working days from the date of issuance of the acceptance letter by the respondents-FCI. The respondents invited bid for sale of wheat through dedicated movement laying at FCI/State agencies/depots. The said tender was for the M.P. region on "as is where is" basis only for bulk customers/traders of wheat already empanelled by the FCI. The petitioner was the successful bidder and as per Clause 11- A(viii) of the MTF, it has placed indent with the Railway within 14 working days. According to the petitioner, due to some unavoidable circumstances the said indent was cancelled and it was re-scheduled. Though the respondents are accepting the fact that it has not caused any financial loss to them, but despite that they proceeded for forfeiture of the EMD of Rs.41,07,500/- each for Kachhpura and Gadarwara. The indent was cancelled because of the non-availability expressed by the FCI contractor to load the railway rakes owing to Diwali festival and in these circumstances, forfeiture of the EMD is arbitrary.

5. As per Clause 11-A(iv) of the MTF the buyer has to complete the lifting within a period of 14 working days from the next date of communication of acceptance by the FCI. Clause 11- A(v) of the MTF stipulates that after 14 working days, on the request of buyer, the Area Manager of the FCI may allow extension of maximum period of another 21 working days for lifting stock from the FCI godown, on payment of storage charges at the rate of 50 paise per quintal per day, subject to total minimum of Rs.2000/-. The sub-clauses (iv), (v) and (viii) of Clause 11-A of the MTF, being relevant for the present purpose, are extracted hereunder :

"11. Payment of Cost & Delivery Schedule

A(i). xx xx xx

(iv). The buyer shall complete the lifting within free period of fourteen (14) working days from the next date of communication of acceptance by FCI.

(v). After fourteen (14) working days, on the request of buyer, Area Manager, FCI may allow the extension for a maximum period of another twenty one (21) working days for lifting the stock from FCI godown on payment of storage charges at the rate of 50 paise per qtl. per day subject to total minimum of Rs.2000/-. These storage charges shall be recovered in respect of the unlifted quantity of stocks during the extended period (actual period for which the stocks remain in the godown). After expiry of thirty five (35) working days, no further extension will be granted and an amount equivalent to value of the unlifted quantity or amount equivalent to EMD, whichever is lower, shall be recovered/forfeited and the balance amount, if any, to be refunded to the bidder.

(vi) xx xx xx

(viii) The successful bidder has to place the indent with railways within 14 working days from the next date of issue of the acceptance by the FCI."

6. Forfeiture of the EMD has been done as per Clause 6(iii) of the MTF, which reads thus :

"6. Earnest Money Deposit (EMD) :

(i) xx xx xx

(ii) xx xx xx

(iii) EMD furnished by the bidder shall be forfeited, if the bidder withdraws his offer or modifies the terms and conditions thereof, or does not keep his offer open for acceptance during the validity period or resiles from the offer or fails or neglects to observe/perform any of the obligation under the contract or violates any of the terms of contract except under Clause 11A(v) and 11(A) (ix)."

7. The petitioner after depositing the entire cost of wheat placed four indents, i.e. three indents at Kachhpura on 02-11-2015 and one indent at Gadarwara on 03-11-2015. As per terms of the contract the petitioner was required to pay the entire cost and place indent within 14 days from the date of receipt of the letter by it and hence, the petitioner has complied with the terms and conditions as stipulated in Clause 11-A(viii) of the MTF.

8. Out of three rakes booked at Kachhpura, two rakes were loaded on 3rd and 5th November, 2015. However, the 3rd rake from Kachhpura and the 4th rake from Gadarwara could not be loaded on 5-11-2015. It is alleged that the FCI contractor, who was responsible for loading the rakes, expressed his inability to load the same due to non-availability of manpower on account of ensuing Diwali festival. A copy of the letter written by the contractor has been appended as Annexure-P/2 to the writ petition. It is further asseverated that under these compelling circumstances, the petitioner was left with no other option, but to cancel the indent of the 3rd and 4th rakes. It informed the FCI with the request for extension of time and also transferred the amount of rent which was required to pay for such extension. Copies of the application and certificate issued by the Bank for transfer of amount to the FCI on 10-11-2015, have been filed as Annexure-P/3 and Annexure-P/4.

9. It is setforth that the indent was again placed at Gadarwara on 12-11-2015 and it was about to place the indent for Kachhpura on 13-11-2015. However, the petitioner was informed by communication dated 13-11-2015 by the FCI that extension of time is not permissible, as the stipulated 14 working days have elapsed on 10-11-2015 and the request of the petitioner for extension of time stood rejected for Gadawara and Kachhpura.

10. According to the petitioner the aforesaid order/decision of the respondents is contrary to Clause 11-A(v) of the MTF which permits for another 21 working days and on payment of the specified rent, the petitioner ought to have been permitted to lift the stocks until 01-12-2015 and for extension of time rent in advance was paid.

11. The petitioner has raised a grievance before the appropriate authority designated for the said purpose under the MTF. However, on 28-11-2015 the petitioner was informed that because of non-compliance of the terms of the contract its EMD amounting to Rs.82,15,000/- stood forfeited. The petitioner preferred an appeal against the said order as per Clause 16 of the MTF. By letter dated 26-4-2016 the petitioner was informed that the appeal has been dismissed on the ground that it has failed to lift the stock within the stipulated period of 14 working days. In the instant petition, the petitioner has assailed the aforesaid orders and forfeiture of the EMD.

12. The respondents have filed return and denied the assertion of the petitioner that there is no loss caused to them due to the default of the petitioner. It is putforth that the petitioner could not place the indent with the Railways within the stipulated period of 14 days, for one rake at Kachhpura and the other at Gadarwara and the contention of the petitioner that it could not place the indent for the aforesaid, due to fault of the FCI contractor, who has informed the petitioner that due to festival of Diwali, there will be shortage of workmen, has been negatived. It is further submitted that on 5-11-2015 when indent was withdrawn by the petitioner on the ground of insufficient workmen, during the same period, i.e. from 5-11-2015 to 11-11-2015, as many as 39 rakes under the dedicated movement were loaded from 17 different rail-heads of the M.P. region. One rake was loaded from Kachhpura on 8-11-2015 by the same contractor after cancellation of the petitioner's indent. The aforesaid fact is also recorded in the orders dated 28-12-2015 and 22-4-2016. It is urged that the petitioner suo moto withdrew the indent placed with Railway, without informing the respondents and thereafter placed it again on 12-11-2015, i.e. after expiration of 14 days time and, therefore, there is no question of any extension, as there was no such request by the petitioner before expiration of time period in which the indents are placed i.e. 10-11-2015.

13. The respondents heavily relied on Clause 11(F) of the MTF, which provides that the State Agencies shall supervise the issue of stock from Agencies godowns, loading in trucks, transport of stock from godown to rail-heads and loading to the rakes. Only in cases, when State agencies do not have any transport, then the transport is to be carried out under the supervision of the FCI. It is urged that there was no communication made to the answering respondents by the petitioner as regards incapacity of transport. Therefore, the stand of the petitioner in this regard is nothing but an afterthought. It is argued that there is clear violation of Clause 11- A(iii) of the IBT/MTF and in terms of Clause 6(iii) of the MTF the petitioner's EMD was rightly forfeited and the authorities have rightly rejected the representation of the petitioner made in that behalf.

14. The petitioner has filed rejoinder to the return filed by the respondents contending, inter alia, that the petitioner has paid full price of all 5 railway rakes of wheat, i.e. Rs.20,53,75,000/- within 7 working days, as per Clause 11-A of the MTF. Railway indent of all five rakes were placed within the stipulated period of 14 days as per Clause 11-A(viii) of the MTF and three rakes of wheat was successfully lifted. However, railway indent for two rakes was withdrawn by the petitioner and it was placed again after Diwali with the request to extend lifting schedule for 4 days and deposited rent for storage, i.e. Rs.53000/- and Rs.66250/- respectively for un-lifted quantity. The permission was denied, the order was cancelled, and the amount deposited by the petitioner was refunded after deducting the EMD for un-lifted quantity which comes to Rs.82,15,000/-.

15. It is setforth that the respondents have adopted hyper-technical approach and they are undue enriching themselves by forfeiting the amount of Rs.82,15,000/- from the EMD of the petitioner. It is put forth that in certain cases, under similar circumstances, the respondents have taken lenient view and forfeiture of EMD was considered to be harsh and direction was issued for refund of the same.

16. The respondents have filed additional return and reiterated that it was the fault of the petitioner that it could not place indent with Railways within the stipulated period of 14 days and refuted that because of the fault of the FCI contractor, the petitioner could not lift the quantity within the stipulated time. It is strenuously urged that when the indent was withdrawn by the petitioner on the ground of insufficient manpower, during the same period, i.e. from 05-11-2015 to 11-11-2015, as many as 39 rakes under the dedicated movement were loaded from 17 different rail-heads of M.P. Region. One rake was loaded from Kachhpura on 8- 11-2015 by the same contractor after cancellation of the petitioner's indent. Thus, it is vehemently urged that there is no force in the submission of the learned counsel for the petitioner that it is the fault of the respondents/FCI. The petitioner was not given extension in terms of Clause 11-A(v) of the MTF. The petitioner itself withdrew the indent placed with the Railways without informing the respondents and thereafter placed it again on 12-11-2015 after expiration of 14 days. There is no question of any extension, as there was no such request by the petitioner before expiry of the stipulated period in which the indents are placed, i.e. before 10-11- 2015.

17. According to the respondents there was clear violation of Clause 11-A(viii) of the MTF by the petitioner and hence, in terms of Clause 6(iii) of the MTF the EMD of the petitioner was rightly forfeited.

18. We have heard the learned counsel for the parties and bestowed our anxious consideration on the rival submissions raised at the Bar.

19. On 20-10-2015 the respondents/FCI issued a tender for sale of wheat to bulk consumers in which the petitioner has also submitted its bid. The petitioner has purchased 5 railway rakes of wheat, which comes around 13250 Metric Tonnes. On 23-10-2015 a communication was issued to the petitioner for payment of balance amount and lifting of foodgrains from the Warehouse of the FCI situated at Narsinghpur, Gadarwara and Kachhpura (railway siding). As per IBT/MTF the petitioner was also asked to deposit remaining price of wheat purchase within 7 days. Between the period 23-10- 2015 to 06-11-2015 as per Clause 11-A(ii) of the MTF the petitioner has deposited the cost of foodgrain/wheat which was about Rs.20,53,75,000/-, within stipulated time and also placed railway indent for all five rakes of purchased wheat, as per Clause 11-A(vii) of the MTF. Three rakes of wheat were also lifted between 4-11- 2015 to 6-11-2015. On 10-11-2015 the two rakes of wheat could not be lifted within free period of 14 days, due to non-availability of manpower owing to Diwali festival. Thus, on 5-11-2015 the railways indent for two rakes were cancelled by the petitioner and on 10-11-2015 the sum of Rs.53000/- and Rs.66200/- was deposited in the account of the FCI as warehousing rent, with the intend to take benefit of Clause 11-A(v) of the MTF and seek extension for lifting of foodgrain/wheat.

20. On 12-11-2015 the petitioner has placed fresh railway indent for two rakes, in order to initiate lifting of remaining quantity. On 13-11-2015 an application was made for extension of time for the period of another 4 days as per Clause 11-A(v) of the MTF. The said application was dismissed on the same day. The sole reason for denial is that the petitioner failed to make railway indent within 14 working days. The impugned order has been passed for forfeiture of the EMD as per Clause 6(iii) of the IBT/MTF. The petitioner has preferred an appeal as per Clause 16 of the MTF whereby even though the Grievance Redressal Committee (GRC) of the respondents/FCI has also neither doubted bonafide of the petitioner nor any loss has been caused to them due to the said delay, but has taken a hyper-technical approach that the petitioner has cancelled two railway indents without informing the FCI. The first submission of the learned counsel for the petitioner that withdrawal of railway indent is not withdrawal of offer and, therefore, the respondents could not have attracted the consequence of Clause 6(iii) of the MTF. For the aforesaid submissions, the following facts emerge for consideration in the present case :

(i) The petitioner has never shown either from its conduct or otherwise that it has any intention to withdraw from its offer. It paid full price of purchased foodgrain/wheat and has already completed the transaction of sale and has fully complied with other conditions.

(ii) The following conduct of the petitioner has shown its willingness to comply with all terms and conditions of the contract :

(a) The price of wheat was deposited within a period of 7 days, as required under Clause-11A(ii) of the MTF;

(b) Railway indent for all five rakes was placed within the stipulated period of 14 days as per Clause 11-A(viii) of the MTF. The petitioner has also successfully lifted three rakes load of foodgrain/wheat and hence, subsequent cancellation of railway indent for two rakes on 5th November and again placing it on 12th November, would not constitute any violation of the condition of the MTF.

(iii) Clauses 11-A(iv) to (ix) are required to be read harmoniously and they cannot be read in isolation.

(iv) The application for extension was rejected taking aid of Clause 11-A (viii) of the MTF on the ground that railway indent was not placed for these two rakes within 14 days. However, the clause relating to extension of time, neither stipulates that railway indents were to be placed within a period of 14 days, nor the bidder was required to make an application for extension before expiry of free period of 14 days.

(v) The bonafide of the petitioner is clear from the fact that along with an application for extension of time, the petitioner has also transferred warehouse charges for un-lifted quantity of foodgrain/wheat. The respondents rejected the application for extension of time arbitrarily.

21. We are not inclined to accept the argument advanced by the learned counsel for the respondents that the present petition involves disputed question of facts. The clauses of the IBT/MTF have to be interpreted harmoniously and liberal interpretation has to be given, for the reasons as have been discussed hereinabove.

22. We are of the considered view, that the act of the respondents in rejecting the application for extension of time suffers from arbitrariness, because of the following reasons :

(I) The petitioner was a successful bidder for five railway rakes of wheat. It has paid full price of all five rakes of wheat, i.e. Rs.20,53,75,000/- within 7 working days, as per Clause 11-A of the IBT.

(II) Railway indent of all five rakes were placed within a period of 14 days, as stipulated in Clause 11-A of the MTF and three rakes of wheat was successfully lifted. However, the railway indent for two rakes was withdrawn by the petitioner and it was again placed after Diwali with the request to extend the lifting schedule for 4 days and it deposited rent of storage, i.e. Rs.53000/- and Rs.66,200/- respectively for the un-lifted quantity.

(III) The respondents have adopted literal and strict interpretation of Clause 11-A(viii) of the MTF. Whereas the petitioner has taken recourse to Clause 11-A(v) of the MTF.

(IV) The explanation furnished by the petitioner for withdrawal of railway indent is not very much material, as it is an admitted position on record that the railway indent of all five rakes were placed within the stipulated period of 14 working days, however, two rakes indent was withdrawn and intended to be placed after 3-4 days, taking aid of Clause 11- A(v) of the MTF. Thus, the respondents have adopted hyper-technical approach by forfeiting the amount of Rs.82,15,000/- from the EMD of the petitioner.

23. In view of our preceding analysis, we are of the considered view that the petitioner has deposited entire cost of 13250 Metric Tonnes of foodgrain/wheat amounting to Rs.20,53,75,000/-. However, the petitioner could not lift the contracted quantity of wheat within 14 days, but lifted the same within 4 days, after 14 days available to the petitioner. For default of 4 days on the part of the petitioner, forfeiture of the EMD of Rs.41,07,500/- each, in respect of Kachhpura and Gadarwara centres is harsh and unreasonable.

24. We are not oblivious of the scope of interference in contractual matters under Article 226 of the Constitution of India. The enunciation of law made by the Apex Court in the cases ofTata Celular vs. Union of India, (1994) 6 SCC 651;A.B.L. International Ltd. and ano

Please Login To View The Full Judgment!

ther vs. Export Credit Guarantee Corporation of India Ltd. and others, (2004) 3 SCC 553; andNoble Resources Ltd. vs. State of Orissa and another, (2006) 10 SCC 236are taken note of. The Apex Court after surveying its various judgments dealing with different situations/aspects relating to contract entered into by the State/public authority with private parties ruled that there is no absolute bar to the maintainability of the writ petition, even in the contractual matters. At this juncture, it is profitable to reproduce para 15 of the judgment rendered in the case of Noble Resources Ltd. (supra) : "15. It is trite that if an action on the part of the State is violative of the equality clause contained in Article 14 of the Constitution of India, a writ petition would be maintainable even in the contractual field. A distinction indisputably must be made between a matter which is at the threshold of a contract and a breach of contract; whereas in the former the court's scrutiny would be more intrusive, in the latter the Court may not ordinarily exercise its discretionary jurisdiction of judicial review, unless it is found to be violative of Article 14 of the Constitution. While exercising contractual powers also, the government bodies may be subjected to judicial review in order to prevent arbitrariness or favouritism on their part. Indisputably, inherent limitations exist, but it would be correct to opine that under no circumstances a writ will lie only because it involves a contractual matter." 25. In view of the aforesaid enunciation of law and taking into consideration the facts and circumstances of the case in proper perspective and the documents brought on record and the reasoning ascribed hereinabove, the impugned orders passed by the respondents rejecting the application moved by the petitioner for extension of time and forfeiture of the EMD, suffer from vice of arbitrariness. Hence, we quash the impugned orders dated 28-12- 2015 and 22-4-2016 contained in Annexure-P/7 and Annexure-P/9 respectively, and direct the respondents to refund the EMD of the petitioner accruing prevalent interest thereon, within a period of 60 days from today. 26. Ex-Consequenti, the writ petition is allowed. No order as to costs.
O R