Case Note & Summary
The appellant, Sunil Mantri Realty Limited, filed an appeal against the order dated 29.09.2009 passed by the learned Joint Civil Judge Senior Division, Nagpur, rejecting its application for temporary injunction under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908. The appellant had filed Special Civil Suit No. 856/2009 seeking declaration that the order dated 17.08.2009 cancelling the acceptance of its tender and forfeiting the earnest money deposit of Rs.1,00,00,000 was illegal and arbitrary. The appellant also sought permanent injunction restraining the respondent, Maharashtra State Textile Corporation Limited, from acting upon the cancellation order, forfeiting the earnest money, removing security guards appointed by the appellant, and inviting fresh bids. The trial court rejected the injunction application, leading to the present appeal. The High Court considered the facts and submissions. The appellant argued that the cancellation was without notice and the forfeiture was arbitrary. The respondent contended that the cancellation was justified due to the appellant's failure to comply with tender conditions. The court held that the appellant had made out a prima facie case, the balance of convenience was in its favor, and irreparable loss would be caused if injunction was not granted. The court allowed the appeal, set aside the trial court's order, and granted temporary injunction restraining the respondent from acting upon the cancellation order, forfeiting the earnest money, and inviting fresh bids until the disposal of the suit.
Headnote
A) Civil Procedure - Temporary Injunction - Order XXXIX Rules 1 and 2 CPC - Prima Facie Case - The plaintiff, a realty company, challenged the cancellation of its tender acceptance and forfeiture of earnest money by the defendant, a state textile corporation. The court held that the plaintiff had made out a prima facie case for grant of injunction as the cancellation order was passed without giving an opportunity of hearing and the forfeiture was arbitrary. (Paras 1-10) B) Contract Law - Tender - Cancellation - Forfeiture of Earnest Money - The defendant cancelled the plaintiff's tender acceptance and forfeited Rs.1 crore earnest money without any valid reason. The court found that the balance of convenience was in favor of the plaintiff and irreparable loss would be caused if injunction was not granted. (Paras 11-20) C) Public Sector Undertaking - Arbitrary Action - The defendant, being a public sector undertaking, is expected to act fairly and reasonably. The cancellation of the tender without notice and forfeiture of earnest money was held to be arbitrary and illegal. (Paras 21-25)
Issue of Consideration
Whether the trial court was justified in rejecting the application for temporary injunction under Order XXXIX Rules 1 and 2 CPC, restraining the defendant from acting upon the cancellation of the plaintiff's tender acceptance and from forfeiting the earnest money deposit.
Final Decision
The appeal is allowed. The order dated 29.09.2009 passed by the learned Joint Civil Judge Senior Division, Nagpur, below Exh.5 in Special Civil Suit No. 856/2009 is set aside. The application for temporary injunction is allowed, restraining the respondent from acting upon the cancellation order dated 17.08.2009, from forfeiting the earnest money deposit of Rs.1,00,00,000, and from inviting fresh bids in respect of the development work until the disposal of the suit.
Law Points
- Prima facie case
- balance of convenience
- irreparable loss
- temporary injunction
- Order XXXIX Rules 1 and 2 CPC
- tender cancellation
- forfeiture of earnest money
- public sector undertaking
- contractual rights
