Case Note & Summary
The Petitioner, M/s Hasmukhlal & Co., submitted a tender in June 2000 to the Municipal Corporation for Greater Mumbai for supply of road metal. The tender was for two categories: Wards A to E and Wards F and G. On 15 September 2000, the Petitioner informed the Corporation that the quarry owner had declined to supply two items (Item Nos. 4 and 5) for F and G Wards, and thus withdrew its offer for those items. The Corporation had already obtained sanction from the Additional Municipal Commissioner on 7 September 2000 for Wards A to E, and issued communications on 19 September 2000. The Petitioner reiterated its withdrawal on 21 September 2000, stating that the offer was withdrawn before the Standing Committee's approval, which was required under Section 69(c) of the Mumbai Municipal Corporation Act, 1888 for supplies exceeding Rs.15 lakhs. The Petitioner later requested that its name not be deleted from the approved list of suppliers, but the Corporation forfeited the earnest money deposit. The Petitioner challenged this forfeiture by way of a writ petition. The Court examined the tender conditions and the Contract Act, 1872. It held that under Section 5 of the Contract Act, a proposal may be revoked at any time before its acceptance is complete as against the proposer. Since the Standing Committee's approval was a condition for acceptance, and the Petitioner withdrew before such approval, there was no concluded contract. However, the tender conditions specifically provided that if a bidder withdrew the offer before acceptance, the earnest money deposit would be forfeited. The Court found that the Corporation's action in forfeiting the deposit was in accordance with the tender conditions and was not arbitrary or unreasonable. The petition was dismissed, and the forfeiture was upheld.
Headnote
A) Tender Law - Withdrawal of Offer - Forfeiture of Earnest Money Deposit - Mumbai Municipal Corporation Act, 1888, Section 69(c) - The Petitioner withdrew its tender offer for two items before the Standing Committee's approval, which was required for contracts exceeding Rs.15 lakhs. The Court held that the withdrawal was permissible under Section 5 of the Contract Act, 1872, but the Corporation could forfeit the earnest money deposit as per tender conditions, which provided for forfeiture if the bidder withdrew the offer before acceptance. The Court found that the Corporation's action in forfeiting the deposit was justified and not arbitrary. (Paras 1-10) B) Tender Law - Standing Committee Approval - Conditional Acceptance - Mumbai Municipal Corporation Act, 1888, Section 69(c) - The approval of the Standing Committee was a condition precedent for a valid contract. Since the Petitioner withdrew before such approval, there was no concluded contract. However, the tender conditions allowed forfeiture of earnest money for withdrawal before acceptance, and the Corporation's decision to forfeit was upheld. (Paras 5-10)
Issue of Consideration
Whether the Municipal Corporation was entitled to forfeit the earnest money deposit when the Petitioner withdrew its offer before the Standing Committee's approval, and whether the Petitioner's withdrawal was valid under the Contract Act.
Final Decision
The Court dismissed the writ petition, upholding the forfeiture of the earnest money deposit by the Municipal Corporation.
Law Points
- Tender law
- Withdrawal of offer before acceptance
- Forfeiture of earnest money deposit
- Mumbai Municipal Corporation Act
- 1888 Section 69(c)
- Contract Act 1872 Section 5
