STATE OF MAHARASHTRA AND ORS. versus A.P. PAPER MILLS LTD.

Citation: [2006] 3 S.C.R. 719 · Decided: 03-04-2006 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Appeal(s) allowed
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Judgment (excerpt)

.. 
ST A TE OF MAHARASHTRA AND ORS. 
A 
V. 
A.P. PAPER MILLS LTD. 
APRIL 3, 2006 
[ARIJIT PASAYAT AND TARUN CHATTERJEE, JJ.] 
B 
Contract-Offer/bid to tender notice-Withdrawal of, before conclusion 
of contract and demand of refund of earnest money deposited-Entitlement 
of-Held: Offer under the tender was valid for a period of 45 days from date 
of tender of sale and withdrawal was made before expiry of the period-Thus, C 
earnest money deposited cannot be refunded and is liable to beforfeited-
Tenderer cannot take a plea that there is no bar on the withdrawal of tender 
since the final sale result has not been declared. 
Appellant no. 2 and 3 issued a Tender Notice for sale of certain forest 
units. The tender was to be submitted on or before 15.7.1987. Respondent D 
submitted tenders on 15.7.1987 and also deposited the earnest money. As per 
clause 7 of the Tender, the final sale result was to be declared within 30 days, 
but the same was not declared. As such the respondent withdrew its offer and 
made repeated request for return of the earnest money deposit. On 3.9.1997, 
appellant sought approval of the State Government for declaring the final E 
sale result. Final sale result was declared .. Government accepted respondent's 
tender on 7.9.1987 and thereafter, rejected the request of respondent to refund 
the earnest money and forfeited the earnest money on account of withdrawal 
of the tender. Respondent filed a writ petition. High Court allowed the same 
holding that the respondent had withdrawn the bid to the tender notice before 
conclusion of the· contract, thus, was entitled to refund of earnest money F 
deposited. Hence the present appeal. 
Allowing the appeal, the Court 
HELD: Clause S(v) of the Tender Notice clearly spells that once a tender 
is tendered the offer shall be considered valid for a period of 45 days from G 
the date of tender sale and in the instant case from 29.8.1'987. Clause S(v) 
read with clause 5(iv) makes the position clear that once a tender is tendered 
no changes can be made and no tender can be withdrawn. Under clause 7, 
the provisional sale result has to be declared as early as possible. But the same 
719 
H 
720 
SUPREME COURT REPORTS [2006] 3 S.C.R. 
A is not to be declared which is not to be considered as final sale result and the 
final sale result can be declared within 30 days on getting approval of the 
competent authority. It cannot be said that the sale results should have been 
declared for getting approval of the competent authority by 14.8.87. If the 
highest tender is not considered acceptable the final sale result was required 
B to be declared within 45 days i.e. by 29.8.87. The withdrawal was made before 
the expiry of the period i.e. on 15.8.87. Another request for withdrawal made 
after the expiry of the 45 days period does not change the situation. Since the 
tender is valid for a period of 45 days and withdrawal is before expiry of the 
period the earnest money is to be forfeited. Once the tenderer withdraws the 
tender, he cannot take the stand that since the final sale result has not been 
C declared there is no bar on the withdrawal of the tender. 
[724-F-G-H; 725-B-C-Fl 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4487/2003. 
From the Order dated 20.12.2002 of the High Court of Bombay in W.P. 
D No. 807/1998. 
E 
V. N. Raghupathy for the Appellants. 
M.N. Rao, P.N. Gupta and H. Devarajan for the Respondent. 
The Judgment of the Court was delivered by 
ARIJIT PASAY AT, J. Chall1;_nge in this appeal is to the judgment of 
a Division Bench of the Bombay High Court, Nagpur Bench, directing the 
appellant to refund the earnest money which was forfeited along with interest 
@ 6% from the date on which the respondent had withdrawn its offer till 
actual date of payment. Further direction was given to refund the amount 
p 
within a period of 8 weeks from the date of judgment. 
Factual background in a nutshell is as follows: 
Appellant no.2 had issued a Tender Notice dated 8.6.1987 for sale of 
Bamboo Units in Vadasa (Unit No.7) and Gadchiroli (Unit Nos. 10, 11, 12 
and 14). The appellant no.3 had also issued a Tender Sale notice in respect 
G of Bhamragarh (Unit No.5) Chandrapur Circle for the same purpose. The 
terms and conditions of both the tender notices were identical. The tender 
was to be submined in the prescribed form on or before 15.7.1987 and sealed 
tenders received from the bidders were to be opened on the same day and 
tenderers were to pay
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