IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 29TH DAY OF AUGUST 2019 BEFORE THE HON’BLE Dr. JUSTICE H.B.PRABHAKARA SASTRY R.F.A.No.976 OF 2011 BETWEEN:
The Commissioner Tiruchirappalli City Corporation, Tiruchirappali, Tamil Nadu State. …Appellant (By Sri. T.A.Karumbaiah & Smt. P.C.Vinutha, Advocates) AND:
B.Surendra Shiyal S/o. Late Bawarilal, 41 years, Proprietor of Manas Electric Company No.21, Venkateshwara Complex, B.V.K. Iyengar Road Cross, A.M.Lane, Bangalore-53. …Respondent (By Sri. P.Vittal Shetty, Advocate) This Regular First Appeal is filed under Section 96 read with Order XLI, Rule 1 of CPC, against the judgment and decree dated:11.02.2011 passed in O.S.No.1870/2009 on the file of the 42nd Addl. City Civil and Sessions Judge, Bangalore, partly decreeing the suit for recovery of money.
This Regular First Appeal coming on for Hearing, this day, the Court delivered the following:
JUDGMENT This is the defendant’s appeal. The present respondent, as a plaintiff, had instituted a suit in O.S.No.1870/2009, against the present appellant arraigning them as defendant in the Court of learned 42nd Addl.City Civil & Sessions Judge, (CCH-No.43), Bengaluru City, (hereinafter for brevity referred to as `trial Court’), for recovery of a sum of `1,34,550/- with interest thereupon at the rate of 18% p.a. from the date of the suit till the date of realisation. The said suit came to be decreed in part for a sum of `90,000/- along with interest at the rate of 6% p.a. from the date of suit till realisation. It is against the said judgment and decree, the defendant in the trial Court has preferred this appeal.
2. The summary of the case of the plaintiff in the trial Court was that, it is a proprietorship concern and authorised dealer in all electrical domestic and industrial products and carrying on its business at A.M.Lane, Bengaluru. In response to the Tender Notification issued by the defendant, which is a Municipal Corporation at Tiruchirapalli of Tamilnadu State, for supply of Sodium Vapour Lamps and accessories for street lights and for their maintenance for the year 2008-09, the plaintiff tendered his offer. The same was rejected by the defendant on technical grounds, which also forfeited the Earnest Money Deposit (EMD) amount of a sum of `90,000/- paid by the plaintiff along with his tender application. Challenging the said act of forfeiture of his EMD by the defendant and claiming the said amount together with interest at a sum of `44,550/-, the plaintiff instituted a suit against the defendant for recovery of a sum of `1,34,550/- and interest thereupon.
3. In response to the summons served upon it, the defendant tendered its appearance before the trial Court through its counsel and filed its written statement, wherein, it disputed the jurisdiction of the trial Court and justified its act of forfeiture of EMD amount of a sum of `90,000/- on the ground that the plaintiff had made a false representation before the defendant-Corporation in tendering the documents, representing that he has been a dealer of Crompton Greaves, a reputed Company in Electrical Appliances, but, the same was to be a false representation, as such, apart from rejecting its tender, the EMD amount was forfeited.
4. Based on the pleadings of the parties, the trial Court framed the following issues :
1. Whether the plaintiff proves that the defendant has withhold EMD amount of Rs.90,000/-?
2. Whether the plaintiff is entitled for interest at the rate of 18% per annum?
3. Whether this Court has no territorial jurisdiction to try the present suit?
4. Whether the defendant proves that the plaintiff has made false representation, therefore the EMD amount has been forfeited?
5. Whether the plaintiff proves that the defendant is liable to pay the suit amount?
6. What decree or order?
In support of his plaint, the plaintiff got himself examined as PW-1 and got marked documents at Exs.P-1 to P-9. On behalf of the defendant, one Sri M.Annamalai, Electrical Line Inspector, was examined as DW-1 and documents from Exs.D-1 to D-6 were marked.
After hearing both side, the trial Court by its judgment and decree dated 11.02.2011, answered issue No.1 in the affirmative, issue Nos.2, 3 and 4 in the negative, issue No.5 partly in the affirmative and proceeded to partly decree the suit of the plaintiff as aforementioned. It is against the said judgment and decree, the defendant has preferred this appeal.
5. Lower Court records were called for and the same are placed before this Court.
6. Heard the arguments of the learned counsel from both side and perused the materials placed before this Court, including the memorandum of appeal and the impugned judgment.
7. For the sake of convenience, the parties would be referred to as per their ranks before the trial Court.
8. In the light of the above, the points that arise for my consideration are :
(1) Whether the plaintiff is entitled for refund of the EMD amount of `90,000/-?
(2) Whether the judgment and decree under appeal deserves any interference at the hands of this Court?
It is not in dispute that the defendant had invited competitive bids from the manufacturers/authorised dealers in the supply Sodium Vapour Lamps and accessories for street lights maintenance within the Corporation limit. The said tender notice is documented and exhibited by defendant at Ex.D-1. It is also not in dispute that the said inviting of competitive bids through Tender Notification was subject to certain conditions, called as Tender Conditions, the copies of which the defendant produced at Exs.D-2 and D-3, which are also not in dispute. Further, the plaint averment that the plaintiff had submitted his tender quotation in response to Exs.D-1 and D-2 to the defendant-Corporation well within the time and he had also deposited a sum of `90,000/- towards EMD, is also an admitted fact. Further the depositing of EMD is corroborated by Exs.P-1 and P-2, which is not disputed by the other side. The fact that the said tender application of the plaintiff was rejected by the defendant and the defendant forfeited the EMD amount of `90,000/-, is also not in dispute. Further, it is evident that, apart from evidence of PW-1 and DW-1, even through the document at Ex.P-3, wherein the plaintiff has issued a legal notice to the defendant calling upon for the refund of the EMD amount and by the document at Ex.P-6, wherein the defendant-Corporation has replied to the said notice, the defendant had admitted that it had forfeited the EMD amount deposited by the plaintiff. After receipt of the said reply, the plaintiff has sent a rejoinder as per Ex.P-7, which is also not in dispute. The evidence of PW-1, which is the summary of the plaint averments, has not been denied or disputed on these lines, so also, the evidence of DW-1, which is the summary of the written statement. However, what is the dispute between the parties is regarding the jurisdiction of the trial Court to entertain the suit and the correctness of the act of the defendant-Corporation in forfeiting the EMD amount of `90,000/-.
9. With respect to the jurisdictional aspect, learned counsel for the appellant in his argument submitted that the trial Court had no jurisdiction to try the suit at Bengaluru in view of the fact that the Tender Conditions at Exs.D-2 and D-3 at Clause-15, mentions that any dispute arising in the contract has to be finalised in the Court of Tiruchirapalli jurisdiction.
Per contra, learned counsel for the respondent/ plaintiff in his argument submitted that in the absence of any concluded contract between the parties, the said Clause won’t come into operation.
Clause-15 of Ex.D-2 which is the Tender Condition reads as below :
“ Clause-15 : If any dispute arises in the contract, the same will have to be finalised in the court of Tiruchirapalli jurisdiction.”
A reading of the said Clause would clearly go to show that Tiruchirapalli Court would have jurisdiction, provided any dispute arise in the contract. As such, to attract the jurisdiction, two essentials are required : one is the existence of the dispute and the second one is the existence of the contract. Admittedly, there existed a dispute between the parties to the suit with regard to forfeiture of EMD amount. As such, the first requirement is fulfilled. With regard to existence of the contract, it is the very contention of the plaintiff/ respondent that since his tender was rejected at the threshold itself and he was not a successful bidder, there existed no concluded contract between them, as such, the said Clause won’t come into operation.
10. Ex.P-6 is the reply of the defendant to the legal notice of the plaintiff. In the said reply to the notice, the defendant has stated that the tender submitted by the plaintiff had not been sealed. In spite of this, the tender document has been opened and it was noticed that the Dealership Certificate produced by the plaintiff/tenderer appears to have been overwritten, as such, the defendant obtained a clarification from the Crompton Greaves Company, which wrote to the defendant stating that the dealership of the plaintiff had expired on 28th July 2006. As such, due to the violation of the tender conditions and also alleging that the plaintiff had played a fraud in the submission of the tender, the defendant has rejected the plaintiff’s tender and appropriated the deposited amount towards the liquidated damages. Thus, the said reply to the notice at Ex.P-6 would go to show that the rejection of the tender of the plaintiff was before its existence i.e., at the initial stage of acceptance of the offer made by the plaintiff.
Further, DW-1 in his cross-examination has admitted couple of suggestions as true, wherein, he has admitted as true that if the tender is not in accordance with the terms and conditions, that will be rejected by opening the tender. He has also admitted a suggestion as true that in the first instance, the tender of the plaintiff was rejected as it was not in the sealed cover. By stating so, he has made it clear that the tender of the plaintiff was rejected at the threshold itself before the defendant-Corporation further considering the price quoted by the plaintiff and coming to its opinion either to accept or reject the same. As such, the rejection of the tender was before the same could be matured into a contract between the parties. Thus, Clause-15 of the Tender Conditions at Exs.D-2 and D-3 would not come into operation. Had the tender of the plaintiff was accepted resulting the same into a contract, then any dispute arising in the contract would have confined to Tiruchirapallu jurisdiction.
In the instant case, though there is a dispute, but it is before any contract would arise between the parties. The said Clause-15 of Exs.D-2 and D-3 won’t take away the jurisdiction of the trial Court which is the place of submitting tender by the plaintiff. As such, the first contention of the appellant that the trial Court had no jurisdiction, is not acceptable.
11. With regard to the correctness of forfeiture of `90,000/- is concerned, it is once again the Tender Conditions are required to be looked into. Admittedly, the defendant-Corporation has no other terms or conditions governing the tender applications, except Ex.D-2. Therefore, it is only Ex.D-2 (Ex.D-3 is the copy of Ex.D-2) which governs the forfeiture clause. Among the nineteen conditions, which the said document enumerates as the Tender Conditions, it is only Clause- 5, Clause-10 and Clause-13 of the said document speaks about forfeiture, those Clauses are reproduced here below :
“ Clause -5 : In case the tender is withdrawn by the tenderer after it is opened, the Earnest Money Deposit will be forfeited.
Clause -10 : The successful tenderer shall enter into an agreement in the prescribed form in a non-judicial stamp paper having value of not less than Rs.20.00 purchased in his/her/its favour at his cost within 15 days after notification of the acceptance of his/her/its tender. If the successful tenderer fails to execute an agreement within the stipulated time, the Letter of Acceptance will be cancelled and EMD will be forfeited.
Clause -13 : If the work is not completed within the period granted, the deposit amount will be forfeited and the tender will be cancelled and loss if any for inviting fresh tenders, will be made good from the defaulter.”
The above reading of three Clauses would go to show that at first, the defendant-Corporation has power to forfeit the EMD amount, provided the tender is withdrawn by the tenderer after it is opened. Admittedly, in the instant case, the plaintiff as a tenderer has not withdrawn his tender. On the contrary, the technical bid was opened and was rejected by the defendant-Corporation.
Secondly, as per Clause-10 of Ex.D-2, the failure on the part of the successful bidder to execute an agreement within a stipulated time would entitle the defendant-Corporation to forfeit the EMD amount. Admittedly, in the instant case, the plaintiff was not a successful bidder, as such, he executing any agreement would not arise. As such also, by invoking Clause-10, the defendant-Corporation cannot forfeit the EMD amount.
Lastly, the EMD amount can be forfeited as per Clause-13 of Ex.D-2, provided where the work is not completed within the period granted. Here also, admittedly the plaintiff was not allotted or entrusted with any work, because, his tender at the threshold was rejected. As such, the defendant-Corporation would not get any right to forfeit the EMD amount under any of the conditions of the tender.
12. DW-1 in his cross-examination has admitted a suggestion as true that, as per Clause-13 of the Tender Notification, if the successful bidder fails to comply the terms and conditions within the stipulated period, then only his EMD will be forfeited. Though he denied a further suggestion that the defendant-Corporation could not have forfeited the EMD amount in respect of rejected tenders, however, he could not able to show any of the conditions of the tender under which the EMD amount of the plaintiff was forfeited.
Though learned counsel for the appellant in his argument canvassed that under Clause-19 of Ex.D-2, the Corporation has authority to forfeit the EMD amount, but, a reading of the said Clause does not show that the Corporation has got such a power. Clause-19 of Ex.D-2 is reproduced here below :
“ Clause-19: The Corporation Council reserves the right to cancel any or all the tenders without showing any specific reasons.”
A reading of the above Clause would go to show that the Corporation has reserved only a right to cancel the tender without showing any specific reason, but, it does not amount to a right to forfeit the EMD amount without valid reasons. The Corporation has given the reason for cancellation of the tender stating that there was manipulation of the alleged Dealership Certificate at Ex.D-4, but, it has not shown any reason or the authority upon which it has forfeited the EMD amount deposited by the plaintiff. DW-1 in his cross- examination has admitted that, in the instant case, the tender of the plaintiff was rejected as it was not in the sealed cover. As such also, without considering the second part of the tender, which is the price bid submitted by the plaintiff, since the tender of the plaintiff was rejected, it would not amount to cancellation of any tender or it would not in any way give right to the defendant to forfeit the EMD amount.
On the other hand, Clause-4 of the Tender Conditions at Ex.D-2 specifically mentions that the Earnest Money Deposit will be returned to the unsuccessful tenders on demand after the disposal of the tenders. It further says that, in case of successful tenders, the Earnest Money Deposit will be retained and converted as Security Deposit. The said Clause makes it very clear that for an unsuccessful bidder, the defendant-Corporation has got a duty to refund the earnest money. It is also for the reason that, as already observed above, the alleged act of the plaintiff in manipulating Ex.D-4 regarding his dealership with Crompton Greaves though assumed to be true, still, none of the Tender Conditions at Ex.D-2 would permit the defendant-Corporation to forfeit the EMD amount since the tender was rejected at the threshold. Thus, the trial Court after analysing and appreciating the evidence placed before it, has rightly decreed the suit of the plaintiff, which does not warrant any interference at the hands of this Court.
13. Accordingly, I proceed to pass the following order:
ORDER The Appeal is dismissed. The judgment and decree dated 11.02.2011, passed by the learned 42nd Addl.City Civil & Sessions Judge, Bengaluru City, (CCH-No.43), in O.S.No.1870/2009, is confirmed.
The Registry is directed to transmit a copy of this judgment along with lower Court records to the lower Court without delay.
Sd/- JUDGE bk/