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State of Bihar v/s Bhawani Industries

    L.P.A. 33 of 2007

    Decided On, 05 February 2008

    At, High Court of Bihar

    By, THE HONOURABLE CHIEF JUSTICE MR. RAJESH BALIA & THE HONOURABLE MR. JUSTICE BARIN GHOSH

    For the Appearing Parties: Abhay Shankar Jha, Shailendra Kr. Jha, Sia Ram Sahi, Advocates.



Judgment Text

(1.) HEARD learned counsel for the parties.

(2.) THIS appeal is directed against the order of the learned single Judge dated 25th september, 2006 allowing the writ petition filed by the petitioner and quashing the impugned orders contained in Annexure-10 series and Annexure-12 forfeiting the earnest money deposited by the petitioner.

(3.) THE Annexure-10 is dated 10th of april, 2006 by which the petitioner was informed that the earnest money deposited by him in respect of three tenders is forfeited and vide Annexure 12 he was informed that due to his failure to execute the agreement in respect of the tenders awarded to him, he is blacklisted.

(4.) THE turn of events, which led to these orders, reveals that on 25th of November, 2005 the Engineer-in-Chief-cum-Special secretary, Public Health Engineering Department, had issued three tender notices inviting tenders for procurement of galvanized Steel Pipes of different diameters in respect of which the petitioner had submitted his tenders on 27th December, 2005. The petitioner's offer about the rate of supply having been found lowest his tenders, three in number, were accepted on 13th March,

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2006 by issuing order for supply of g. S. pipe passed for total quantity under all the three tenders at different places was of 7,569 meters as against BOQ (Bill of Quantity)quantity 12,111 meter in length of 80 mm diameter galvanized steel pipes. This supply was to be made by 31st of March, 2006 with further stipulations that the balance supply may be made as per tender every fortnightly, as per Schedule.

(5.) WITH the tender offer earnest money was deposited at the rate of 2% of the amount of offer.

(6.) THE awardee of tender was further to enter into an agreement within fifteen days of the receiving firm order for supply and deposit 5% of the value of the supply order as security through investments in specified securities deposits. Failure to comply with this term as per the terms and conditions of tender was to entail forfeiture of earnest money.

(7.) IN response to the supply order dated 13th March, 2006 petitioner communicated vide his letter dated 21st March, 2006, annexure-3, in which he raised first objection that delivery period mentioned in the b. O. Q. is 60 days whereas in the supply order deliver period has been reduced. He also raised objections to appointment of inspection agency and also made overture about the steep rise in the rates of iron and steel during the last three months that is to say after submission of the tender offer and expressed his difficulty to accept the supply order unless the inspection agencies is reinstated as per B. O. Q. and delivery schedule should also be as held out. Unless the inspecting Agents are replaced the delivery will be affected and demanded the reinstatement of two conditions as per B. O. Q. so that he can enter into an agreement and start the supply.

(8.) ON 25th of March, 2006 the petitioner's request for adjustment of earnest money towards security money was responded to by the Chief Engineer pointing out that as a special case he is allowed to execute the agreement with Executive Engineer, public Health Division, Patna, by using the bank guarantee already submitted towards security deposit and further required that deposit of separate bank guarantee as security deposit in the supply order must be deposited within 15 days positively. An extension of the time for entering into agreement with Executive Engineer, public Health Division, Patna East was granted up to 27th of March, 2006. The petitioner's request for adding RITHS/dgs and D as third party Inspecting Agency in addition to CROWN AGENTS as mentioned in the supply order was also notified.

(9.) HOWEVER, it appears that the petitioner had not executed the agreement despite aforesaid communications made by the chief Engineer. On 1st of April, 2006 the chief Engineer informed the petitioner that it is a matter of great regret that it has failed in executing agreement till stipulated date and the petitioner's local representative was not in the contact of the awarder of the contract and the petitioner was not even responding to the telephonic queries of the department in this regard. Therefore, the petitioner was informed that the proposed action by the Department to forfeit the earnest money deposited against all three tenders and to blacklist the Company for doing further business in the Government Department. A show cause notice was issued against this proposed action.

(10.) THE petitioner vide his letter dated 3rd of April, 2006 reiterated that it will not be possible for it to proceed any further in this matter unless the above two conditions, mentioned by him in his earlier letter, are reinstated, namely, deviation in the delivery period and inspection by DGS and D/rites, as was mentioned in the B. O. Q. In response to the Engineer-in-Chief-cum-Special secretary vide his letter dated 4th of april, 2006 stated clearly that on the petitioner's request vide letter dated 21st of march, 2006 a third party Inspecting Agency by DGS and D/rites was allowed and it was also pointed out that so far as the delivery period mentioned in the B. O. Q. was concerned, the same was limited in respect to the supply relating to closing of the financial year but it was made clear that the petitioner can start the supply with quantity as mentioned in his offer for the first fortnight after entering into agreement. It was stated, "if you are still serious about executing the order, you are allowed a time extension for entering into agreement up to 6th of April, 2006 with the Officers as mentioned in all three supply orders. After entering into agreement you can furnish us with your supply schedule in light of your fortnightly offer in tender, which can be considered in view of the urgency of matters. If you failed in entering into agreement by 6th of April, 2006 your earnest money will be forfeited and your firm will be blacklisted without any further communication".

(11.) IN respect of this letter petitioner wrote back on 6th of April, 2006, Annexure-9, which reads as under :

"please refer to our various correspondences mentioned above and your letter No. 6/pipe 2-103/2006-2132 dated 4-4-2006 in which you have mentioned that our earnest money will be forfeited and our firm will be blacklisted without any further communications. In this regard we are astonished by the decision taken by your good self as to how our earnest money may be forfeited or our firm be blacklisted unless and until a purchase order is issued to us exactly as per the terms and conditions mentioned in the B. O. Q. "

(12.) THIS followed by two impugned orders, referred to above, Annexure-10 series and Annexure -12.

(13.) IN the aforesaid circumstances, when the matter came before the learned single judge who considered the placement of order for supply of the quantity of Galvanized steel pipe, noticed above, to be a counter offer in law and not as acceptance of the tender. It was inferred by the learned single judge that the petitioner had made an offer based on a delivery period of 60 days. If that period had to be altered by the State, then negotiation had to start afresh. By issue of the letter dated 13th of March, 2006 was not the acceptance of petitioner's tender but it was a fresh offer made by the Department. In the process the learned single Judge also found the Department responsible for delay for which the petitioner cannot be faulted with and allowed the writ petition with direction to refund the earnest money.

(14.) HAVING considered the contentions and after perusal of the material placed before us, we are unable to agree with the conclusion reached by the learned single Judge.

(15.) IT may be noticed, firstly, that the tender form itself contained a condition no. 10 which envisaged that "the period of supply for full materials as mentioned in b. O. Q. is up to 60 days from the date of written supply order. In case the order for reduced quantity than the quantities mentioned in the B. O. Q. then supply period may be reduced. Delivery schedule should be attached. Failing to comply with this time schedule a penalty @ 1% (one) of agreement value per day (up to a maximum of 10% (ten) may be charged, even supply order may be cancelled, security money may be forfeited and the firm may be blacklisted. Conditional tender shall be liable to outright rejection. "

(16.) THIS condition shows that under the tender 60 days period is not the delivery period in the case of every supply orders but 60 days period is the limit within which the full supply of materials, as mentioned in the bill of Quantity, is directed to be mentioned and the period of each scheduled supply is of shorter duration. It is only if the total supply is reduced then only the total period of 60 days is to be reduced. This is apparent from the fact that the supplies were to be made for every fortnightly. If each supply had to be made within 60 days, there would not be any fortnightly supply schedule.

(17.) THUS, in the first instance inference drawn by the learned single Judge that because the period of supply was reduced as was appearing in the Bill of Quantity, is not supported by the notes on tender itself.

(18.) THIS premise if cannot be sustained, the other premise of the delay on the part of the Department in clearing and accepting the tender automatically falls to the ground.

(19.) AS a matter of fact, as Paragraph-4 of the notes of tenders, makes it absolutely clear that the mode of acceptance of the tender was only by placing the supply order. It reads that "successful tenderer shall have to acknowledge within fifteen days after receiving firm order, they will have to deposit 5% of the value of the supply order as security money in accordance with investment, mentioned therein. " Apparently the offer of the petitioner was accepted as placing the order for supply of the material was the acceptance of tender, which was to be followed with execution of the agreement by the person to whom firm order has been placed along with the security deposit.

(20.) THE correspondence between the petitioner and the Department hereinabove clearly goes to show that the Department has followed the procedure for accepting the tender by placing the firm order requiring the petitioner to make supplies of quantity ordered by 31-3-2006 and to execute an agreement for entering into contract and deposit security amount with further stipulations that he will maintain future schedule of fortnightly supplies. It was the petitioner who had indulged in dilly dallying tactics in execution of the agreement by raising the contention which were non-contentious apparently for reasons that because of rise in steel prices he was not willing to stick to his offer.

(21.) THE Department has acted fairly by not cancelling his tender immediately for non-supply of goods and non-execution of agreement by 31/3/2006 but has given him a chance to execute contract even after 31/3/2006. All these goes to show that it was the petitioner and not the Department who was delaying to fulfill his obligation under the agreement Annexure-10 and Annexure 12, having been made after giving a show cause notice to the petitioner and after giving him a chance to execute the contract in terms of the terms and conditions of the tender notice, no error can be found in the action of the appellant. The order under appeal cannot be sustained.

(22.) ACCORDINGLY, the appeal is allowed. Judgment under appeal is set aside. The writ petition is dismissed with cost. Cost is quantified to be Rs. 10,000. 00 (Rupees ten thousand). Appeal allowed
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