Case Note & Summary
The petitioner, Vinod J. Agarwal, filed a writ petition seeking a declaration that the order of forfeiture of earnest money passed by the Mira-Bhayander Municipal Council on 9-6-1994 was null and void, and for a writ of mandamus directing the respondents to refund the earnest money of Rs.1,00,000 with interest at 18% per annum. The respondent-council had invited tenders for appointment of an agent for collection of octroi duty for the period 1-6-1994 to 31-5-1995. The last date for submission of tenders was 9-5-1994, and the opening date was 11-5-1994, with validity up to 16-5-1994. The tenders were not opened on the scheduled dates and were postponed to 21-5-1994. The petitioner, by letter dated 18-5-1994, withdrew his offer and demanded refund of earnest money. The respondent-council forfeited the earnest money. The court considered the issue of whether the forfeiture was valid. The petitioner argued that the withdrawal was valid as the tender opening was delayed beyond the validity period. The respondents contended that the forfeiture was justified. The court held that the forfeiture was illegal as there was no concluded contract and the petitioner had validly withdrawn the offer before acceptance. The court allowed the petition, quashed the forfeiture order, and directed refund of Rs.1,00,000 with interest at 12% per annum from the date of forfeiture till payment.
Headnote
A) Contract Law - Tender - Forfeiture of Earnest Money - Withdrawal of Offer - The petitioner withdrew his offer before the opening of tenders due to postponement of the opening date. The respondent-council forfeited the earnest money. The court held that the forfeiture was illegal as there was no concluded contract and the withdrawal was valid. (Paras 1-5) B) Contract Law - Earnest Money - Refund - The court directed refund of Rs.1,00,000 with interest at 12% per annum from the date of forfeiture till payment, as the forfeiture was without authority of law. (Para 5)
Issue of Consideration
Whether the forfeiture of earnest money by the respondent-council was valid when the petitioner withdrew his offer before the opening of tenders due to postponement of the opening date.
Final Decision
The petition is allowed. The order of forfeiture of earnest money dated 9-6-1994 is quashed and set aside. The respondents are directed to refund the amount of Rs.1,00,000 to the petitioner with interest at 12% per annum from the date of forfeiture till payment.
Law Points
- Earnest money forfeiture
- Tender withdrawal
- Contractual obligation
- Unilateral forfeiture
- Refund of earnest money
