Abdul Rehim, Ag. C.J.1. The Kerala State Electricity Board Ltd. (hereinafter referred to as 'the Board' for short), who is the respondent in the writ petition is in appeal challenging judgment of the Single Judge, dated 27-03-2019. The writ petitioner is the respondent herein.2. The writ petition was filed by the respondent herein challenging Ext.P3 order issued by the appellant, through which sanction was accorded for forfeiture of the Earnest Money Deposit (EMD) amounting to Rs.1 Crore, which was deposited by the respondent along with the 'price bid' submitted, responding to an invitation for 'Expression of Interest (EoI)' for setting up a power plant based on 'renewable energy' other than 'Hydro energy'. Inter alia, a direction was sought for against the appellant for refund of the EMD along with interest @ 12% per annum. The Single Judge had allowed the writ petition and directed the appellant to refund the amount of Rs.1 Crore to the respondent, along with interest @ 9% per annum from the date of Ext.P3 onwards, within a period of 2 months from the date of receipt of the judgment. It is aggrieved by the said direction the appellant has filed the above writ appeal.3. Narration of brief facts, especially the sequence of events, will be beneficial for deciding the issue. By virtue of Ext.P1, the appellant invited EoI from potential developers in the field of renewable energy. The eligibility criteria insisted were as follows;“Eligibility Criteria1. Developers of renewable projects under this EoI shall be body corporates, private individuals or LSG Institutions.2. Net worth in the case corporates and individuals shall be at least 0.5 crore/MW of offered capacity. In the case of LSG Institutions, the financial credibility shall be decided by the Government.3. The developer or his technology partner should have at least 3 years experience in the field of implementation of renewable power projects.4. The promoters shall make their own arrangements to procure land required for implementation of the project.”It is stated that, short listing of the potential developers will be on the basis of their credentials, capability to set up and run the project and readiness for the same (availability of land, arrangements for forward and backward linkages REC / Carbon Credit trading capability, technology etc.). The method for allocation of points, out of the maximum score of 100, is also enumerated in Ext.P1. It is specifically stated that the shortlisted potential developers would be required to quote their 'annualised levellized tariff' for the next 10-20 years. It is also specified that, selection will be from among the potential providers on the basis of the EOI submitted, who is quoting less than the average 'pooled power purchase cost' for REC mechanism approved by KSERC. The appellant had received EOI from 15 persons and 7 persons were shortlisted for the second stage of consideration, who were provided with 'price bid' document to be submitted. The respondent is one among those companies shortlisted, who was required to submit the 'price bid' in the proforma enclosed as per Ext.R1 (a). As per Ext.R1 (a) 'price bid' document the respondent was required to furnish EMD @ Rs.2,00,000/- per M.W. of capacity offered. Accordingly the respondent submitted the 'price bid' and furnished EMD to the tune of Rs.1 Crore. As per Ext.R1 (a), the respondent had to submit further documents as required, while processing the 'price bid', at 3 distinct stages such as; (i) along with price bid (2) at the time of execution of the 'Power Purchase Agreement (PPA)' and (3) after the financial closure. The documents to be submitted at the time of submission of 'price bid' are enumerated in Clause C.9 of Ext.R1 (a), which includes; (1) EMD as per para C.5 (2) price bid in the form as per Annexure-II and (3) the agreement as per Annexure- IV. Admittedly, along with the 'price bid', the respondent had furnished EMD as required. He had also submitted the 'price bid' in Annexure-II and agreement executed as per Annexure-IV. Going by Clause D.1 of Ext.R1 (a), on acceptance of the price bid, the respondent has to execute the PPA, upon invitation issued by the appellant. In clause D.2 of Ext.R1 (a), the conditions to be satisfied before signing the PPA are stipulated, which include; (1) the land required for the project should be acquired in total and the developer should have clear title of the land or lease right extending for a period of 30 years from the date of PPA (2) Technology partner if any must be finalized. (3) The 'Performance Bank Guarantee' (PBG) must have been executed.4. Under Ext.R1 (a), in clause B.11 it is mentioned that, the EMD furnished by the bidder who did not turn up to execute PPA within 180 days from the intimation by the appellant shall be eliminated from further processing and his EMD shall be forfeited. The same condition is repeated in Clause C.6, in which it is enumerated that the EMD shall be forfeited on the following circumstances;1. Failure to execute the PPA within 180 days from LoI from KSEB.2. Withdraw his bid or back out after its acceptance.3. Violated the conditions of bid.4. If bid qualification requirement evidences are found to be fraudulent / non genuine.5. As evident from Ext.P3, the appellant Board accepted the offer of the respondent and the 'Letter of Intent' (LoI) was issued to the respondent on 15-03-2013. In Ext.P2 it is stated that the price bid submitted by the respondent at the tariff of 1.538% below the average 'pooled cost purchase power' was accepted and therefore the LoI was issued to the respondent for purchase of 50 MWs of energy. Through the said letter, the respondent was required to enter into PPA within 180 days from the date of issuance of the LoI. It was also clarified therein that the failure to execute PPA shall result in forfeiture of the EMD. The list of documents required to be submitted before execution of PPA was also enumerated in Ext.P2.6. Subsequently, on submission of requisite documents, after issuance of the LoI, the appellant Board had extended the time stipulated for signing of PPA, initially upto 11-10-2013. On 11-10-2013, on the request made by the respondent seeking more time for submitting the entire documents required for the purpose of signing PPA, the Board had further extended the time for singing the PPA upto 31-12-2013. On 31-12-2013, the respondent again submitted a letter seeking time for submission of the records related to the identified lands. The matter was then deliberated between the appellant and the respondent. Ultimately, the appellant accorded sanction extending the time for signing the PPA, upto 31-03-2014, with a stipulation that no further extension will be allowed. As evident from Ext.P3, on 31-03-2014, the respondent again submitted certain documents. But those documents were not fully acceptable to the Board. Therefore, through Ext.P3 letter dated 14-05-2014 the respondent was intimated that the Board had recommended to forfeit the EMD provided by the appellant, by invoking clause B.11 and C.6 of the price bid document. The said action was under challenge in the writ petition.7. In Ext.P3 letter the reason mentioned for forfeiture of the EMD was that, on 31-03-2014 the respondent had submitted proof regarding their net worth, signed by a Chartered Accountant and also requested more time to submit documents relating to the land. It is pointed out that, as per the 'net worth statement' attached, the total net worth of the respondent is Rs.25,52,43,278/-. It is pointed out that, out of the said amount Rs.25 Crores is shown as contribution from 'intangible assets' (know how). But no supporting documents were produced to substantiate the claim. It is pointed out that the Financial Advisor of Board had offered his remarks that the company had only 2 years investment history and the net worth calculated as Rs.25 Crores based on 'intangible assets', is neither sufficient nor credible. Therefore the Chief Engineer of the Board has brought the matter to the attention of the Board and recommended for forfeiture of EMD. Accordingly the Board sanctioned for forfeiture of the EMD and to treat the tender as closed.8. In the writ petition the respondent herein had contended that, the appellant had shortlisted the respondent after scrutinising their eligibility and only after finding that the respondent is having the required net worth. It is on that basis, Ext.P2 EoI was issued. But for such an intimation the respondent would not have deposited the EMD. Hence the subsequent forfeiture on alleging failure to prove net worth, is illegal. Inter alia it is contended that, the Board has no authority to discard the certificate of the Chartered Accountant, in a unilateral manner. It is pointed out that PPA could not be executed only because its terms were not finalized between the parties. Under such circumstances, there is no justification for the Board to forfeit the EMD, is the contention raised. The delay in execution of PPA was only because the Board had no consistency and was changing its stand with regard to the terms of the agreement, including upon the terms with respect to ownership of the land. Therefore the respondent cannot be found fault with the nonexecution of PPA. It is pointed out that, there existed no concluded contract between the parties and therefore there was no failure to perform any contract, which can be attributed against the respondent. Under such circumstances the forfeiture of EMD on a unilateral basis is not sustainable, was the contention. It was also pointed out that, the appellant has not suffered any loss or damages due to non-execution of PPA and therefore the forfeiture of EMD will result in an unlawful enrichment to the appellant. Hence the demand cannot be sustained.9. The writ petition was resisted by the appellant, through a detailed counter affidavit filed. At the first instance, it was contended that, the writ petitioner is not entitled to invoke jurisdiction vested on this court under Article 226, because the subject matter involved is purely a commercial activity governed by the terms of the contract and there is no public law character for such an issue. In such case, the aggrieved party need to approach the civil court to resolve the dispute, is the contention raised. According to the appellant, the respondent herein was shortlisted on the basis of the EoI submitted and they were given liberty to submit the price bid, in the second stage of the process. The 'price bid document' supplied had set forth the terms and conditions. The EMD was insisted at the time of submission of the price bid. Thereafter the Board had issued Ext.P2 LoI and invited the writ petitioner to sign the PPA. According to the appellant, the LoI was issued not only on the basis of EoI submitted at the first stage, but also on the basis of price bid document submitted. Therefore the writ petitioner was at an obligation to sign the PPA within a period of 180 days, after furnishing the documents mentioned in the terms and conditions of the price bid. The Board denied the allegation that modifications / suggestions were made by it in the proposed PPA. In the LoI itself it was mentioned that, the terms and conditions shall be in accordance with the PPA to be executed. The draft of the PPA was sent along with the LoI and therefore the contention of the writ petitioner that the terms were not finalized between the parties, is not at all true and correct. In the case at hand, the respondent herein had delayed the execution of the PPA, beyond the stipulated time. Even within the extended period, they could not fulfill the terms of the price bid documents, which is reiterated in the LoI. The respondent had failed to furnish the title deeds / lease agreements of the land, along with supporting documents such as non-encumberance certificates, which were the conditions already informed to the shortlisted investors, before submitting their price bid. Therefore the allegation that the Board had imposed more and stringent conditions for entering into PPA is false and untrue. It is pointed out that the net worth statement furnished by the writ petitioner could not be accepted because the worthiness of the 'intangible assets' was shown to the extent of Rs.25 Crores. It is realized that the financial assets of the company is only to the extent of Rs.53.43 Lakhs. Therefore the company could not be considered as a bidder satisfying the condition with respect to its net worth. It is contended that, the writ petitioner had also failed in fulfilling the conditions relating to offer of the land required, with production of clear documents. For all these reasons, the forfeiture of EMD was attempted to be justified.10. While evaluating the rival contentions, the learned Single Judge observed that, normally a writ will not lie in contractual matters, especially when one of the party is a private party. But the state or its instrumentality is bound by the obligations of fairness. It is reiterated that, if there are factual dispute, where assessment of evidence is required, the appropriate remedy is not by way of a writ petition. But writ can be issued wherever the executive action is unsupported by law or where there is denial of equality before law or equal protection of law, even in respect of a Corporation. It was found that each case has to be examined on its facts as to whether the contractual relations between the parties bear insignia of public element, and once there is such a finding, the matter can be examined by the High Court under Article 226 of the Constitution, inorder to see whether the action of the instrumentality is fair, just and equitable or that the relevant factors are not taken into consideration and irrelevant factors have not gone into the decision making process or when the decision is arbitrary. It is specifically observed that, the writ petitioner has not entered into any statutory contract. It was also found that the matter was remaining in dispute in the writ petition filed in the year 2015, which was pending disposal till the year 2019. More over, it was found that the contention regarding non-maintainability of the writ petition could have been accepted if there were any factual disputes in the matter. The learned Single Judge found that, at this distance of time, it would not be proper to relegate the writ petitioner to his remedies before the civil court, especially when the respondent in the writ petition is a company fully owned by the Government. It was observed that, when there is violation of any fundamental rights, Acts or Rules or principles of natural justice, matter can be examined under Article 226. It was noticed that the only question to be decided is as to whether the forfeiture of EMD is justifiable or not, in the absence of any injury or loss caused to the KSEB. It was noticed that the contention of the Board is only that the forfeiture is based on a contract condition agreed upon, and that the EMD is collected at the time of submission of the price bid of the investors only for ensuring that the claim made by the bidder is performed. It is not on the basis of any loss or damage to the party inviting bid is sustained or not. According to the Board this is a very common practice fully acceptable by the law of the land. It was found by the learned Judge that, going by provisions of the Contract Act, especially Sections 73 and 75, if the breach of a contract has not resulted in any harm, loss or damages to the other party, the question of recompensing him would not arise. Therefore, however grievous or serious the act of breach may be, it does not give rise to a right of compensation, if it did not result in any loss or damage. It was observed that, compensation payable under Sections 73 & 75 of the Contract Act is only the damages caused by the breach and not by the mere act of breach. Further it was pointed out that the by principle under Section 74 will have to be applied. In a particular case where the contract itself stipulates for payment of a sum of money on the breach of the contract, the party suffering from the breach would be entitled only to a reasonable compensation. In a case where the party complaining of the breach has not suffered any legal injury, there is nothing to recompense and therefore he would not be entitled for compensation. After elaborate consideration of the case law remaining settled on various points as mentioned above, the Single Judge found that there occurred no injury, loss or damage sustained to the Board and hence the forfeiture of EMD was not legally sustainable. Hence the writ petition was allowed by directing the appellant herein to refund the amount of EMD, along with interest due @ 9% from the date of Ext.P3. The refund was directed to be made within a period of 2 months.11. One of the main grounds agitated in the writ appeal is regarding the non-maintainability of the writ petition, the matter being one coming within the realm of contractual liability. The relief was granted mainly on observing that, the writ petition was pending more than a period of 4 years, which was also assailed as not a valid reason. Further contention is against the finding that the forfeiture of the EMD is bad for the reason that the Board has not suffered any loss or damages.12. Learned Senior Counsel, Sri. Raju Joseph, appearing for the appellant contended that when there is a violation with respect to the compliance of an obligation cast upon the tenderer, forfeiture of the EMD is perfectly justifiable. He placed reliance on a decision of the hon'ble Supreme Court in Shri Hanuman Cotton Mills and others V. Tata Aircraft Limited ((1969) 3 SCC 522). After evaluating various legal precedents, the apex court observed that, the following principles emerged regarding the EMD. “(1) It must be given at the moment at which the contract is concluded.(2) It represents a guarantee that the contract will be fulfilled or, in other words, “earnest” is given to bind the contract.(3) It is part of the purchase price when the transaction is carried out.(4) It is forfeited when the transaction falls through by reason of the default or failure of the purchaser.(5) Unless there is anything to the contrary in the terms of the contract, or default committed by the buyer, the seller is entitled to forfeit the earnest.”He placed further reliance on a later decision of the hon'ble Supreme Court in Kailash Nath Associates V. Delhi Development Authority and another ((2015) 4 SCC 136). After referring to Shri. Hanuman Cotton Mill's case (supra) the apex court observed that,“as against the amount tendered by way of security, amount tendered as earnest money could be forfeited as per terms of the contract.”Per contra, learned counsel appearing for the respondent emphasized that, there occurred no breach of contract as there was no concluded contract entered. He also reiterated the ground that the appellant herein has not suffered any injury, loss or damages, enabling them to forfeit the EMD.13. Specific issues emerging from the rival contentions seems to be mainly on two aspects; one is regarding entertainment of the writ petition under Article 226. We are not persuaded to accept the contention of the appellant that the writ petitioner could have been relegated to remedy before the civil court. It remains well settled that, there is no absolute bar with respect to exercise of the discretionary jurisdiction vested under Article 226 of the Constitution of India, in all the matters of contract. Despite the general rule that the rights and obligations arising out of a concluded contract is a matter to be agitated under the common law, there are exemptions. When the factual aspects are not in dispute and when the point of controversy is specific and distinct, so also when the dispute is not arising out of a right or obligation based on a concluded contract, it cannot be said that there is any total ouster of the jurisdiction. Further, when one among the parties to the contract is an instrumentality of the state and which is a public authority, the question of fairness and justifiability of the actions based on the constitutional guarantees, is a matter which can be considered in exercise of the writ jurisdiction. Therefore we do not find any illegality or infirmity with respect to the decision of the Single Judge in entertaining the writ petition, by opting to exercise the discretionary jurisdiction vested on him. Next question is regarding the entitlement of the appellant to forfeit the EMD, alleging non- fulfillment of the obligation under the Rule of tender. In deciding the said issue, various stages involved in the tender process assumes importance. When the EoI was invited the appellant had stipulated the eligibility criteria for participation. The evaluation of the tenders involved the method for allocation of points (scores) based on eligibility of each of the tenderers on various aspects as. It is on the basis of the points /scores obtained that the writ petitioner, that they were shortlisted and required to submit the price bid document. The competition in the price bid was stipulated based on quoting of the rate, less than the average 'pooled power purchase cost'. Evidently 7 tenderers were shortlisted for consideration of the second stage of submission of price bid. Exhibit R1 (a) is the price bid document to be furnished by the tenderers. Along with the price bid document the tenderers were required to furnish the EMD. The price bid document illustrated 3 distinct stages, when the tenderers have to furnish specific documents. The 3 stages enumerated are;(1) Along with the Price Bid.(2) At the time of execution of the PPA(3) After the Financial closure.At the first stage, the document insisted were; (i) EMD (ii) Price Bid and (iii) An agreement in Annexure-IV. The writ petitioner had fulfilled all the 3 requirements. Going by the procedure stipulated in the price bid document, it is only on acceptance of the price bid, the LoI will be issued. The second stage of execution of the PPA arises, only after issuance of LoI. The conditions to be satisfied before signing the PPA are stipulated in the price bid document. It includes; (1) the land required for the project should be acquired in total and the developer should have clear title of the land or the lease right extending for a period of 30 years from the date of PPA (2) Technology partner if any, must be finalized. (3) The 'Performance Bank Guarantee (PBG)' must have been executed.14. On the facts, it is evident that, the next stage of execution of PPA, after acceptance of the price bid and after issuance of LoI, has not been completed in the case at hand. Admittedly, the period of 180 days after issuance of LoI had lapsed in this case. But the Board had extended the period stipulated for execution of PPA on 3 occasions; namely upto 11-10-2013, then upto 31-12-2013 and finally upto 31-03-2014. Thereafter on 14-05-2014 Ext.P3 was issued intimating the decision to forfeit the EMD. The reason mentioned is mainly that the writ petitioner had failed to prove its net worth. Question arises as to whether the EMD can be forfeited for the said reason.15. In Ext.R1 (a) document it is stated that, the EMD furnished by the bidder, who did not turn to execute the PPA within 180 days from the date of issuance of the LoI, shall be forfeited. In clause 6 of Ext.R1 (a), 4 particular circumstances under which the EMD can be forfeited, were enumerated as follows;”1. Failure to execute the PPA within 180 days from LoI from KSEB.2. Withdraw his bid or back out after its acceptance.3. Violated the conditions of bid.4. If bid qualification requirement evidences are found to be fraudulent / non genuine.”Therefore question arises as to whether the EMD can be forfeited at that stage of the tender, on the allegation that writ petitioner was not qualified based on the conditions stipulated for pre-qualification. The condition regarding the net worth, is an eligibility criteria insisted upon while inviting the EoI. It is only on satisfying the eligibility criteria that the tenderers are shortlisted for inviting the price bid. In the case at hand the writ petitioner was selected or shortlisted on satisfying about all their eligibility, including its net worthiness. Therefore the EMD cannot be forfeited after submission of the pr
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ice bid on the basis that the Financial Advisor of the Board had found that the net worth document submitted are not acceptable. It cannot be said that the writ petitioner had submitted any fraudulent document or any document which is not genuine. It is evident from Ext.P3 that the PPA was not executed, or not permitted to be executed, only because of the reason regarding insufficiency of documents relating to the net worthiness. This is a factor which was already been evaluated at the time of scrutiny of pre-qualification and at the time of awarding of points (scores). It is on satisfaction of the eligibility that the writ petitioner was shortlisted and invited to submit the price bid. Therefore, even in a case where the Board found that the writ petitioner cannot be permitted to proceed further for execution of the PPA the forfeiture of EMD was not at all warranted or sustainable. If the appellant / Board had arrived at any conclusion that the pre-qualification of the respondent was not proper, it can only withhold the writ petitioner from proceeding further with execution of the PPA. At any rate, such a reason will not entitle the Board to forfeit the EMD. The reason mentioned will not fall within any of the four circumstances enumerated under clause C.6 in Ext.R1 (a), entitling for forfeiture of EMD.16. Under the above mentioned circumstances, apart from the fact that the Board has not suffered any injury, loss or damages, we find that the forfeiture of EMD was illegal and unsustainable, because it was not entitled, going by the terms of the tender and the conditions stipulated in various documents of tender, including the price bid document furnished to the respondent herein.17. Question remains as to whether the appellant can be mulcted with the liability for payment of interest. We take noteinto consideration of the fact that there occurred delay on the part of the respondent herein in executing the PPA within the stipulated time of 180 days. The appellant had shown indulgence in extending the time limit on 3 occasions. Still it is evident that the documents furnished with respect to title and encumbrance of the land, was not full. Therefore the respondent had also contributed considerably in occurring the delay. Hence while setting aside the forfeiture of EMD, we are not inclined to sustain the direction issued by the Single Judge in ordering repayment along with interest.Hence while declining interference with the impugned judgment to the extent it directed repayment of the EMD forfeited, we hereby set aside the direction contained in the impugned judgment to the extent it insisted upon payment of interest by the appellant.The writ appeal is disposed of accordingly.