Allowed

M/S R.D. Enterprises v. State of Hp and Others

Himachal Pradesh HC5 Dec 2024CWP/7674/2024

Case brief

AI extract

What is this about?

Petitioner, a successful bidder for toll units who withdrew before depositing security, sought cancellation of an FDR prepared in the department's name but never submitted. The Court held the department could not direct the bank to hold the FDR as it was never deposited; losses must be recovered as arrears of land revenue under the HP Land Revenue Act, and the bank must process cancellation per ba

What did the court decide?

Direction issued to Respondent Bank to consider cancellation of FDR strictly in terms of banking rules, without influence from the State Department's instructions.

M/S R.D. Enterprises Vs State of Hp… — Public Procurement and Tenders | Himachal Pradesh HC (2024)

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2024:HHC:13429

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IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

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CWP No. 7674 of 2024 Date of Decision: 5.12.2024

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_____________________________________________________________________ M/s R.D. Enterprises

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……...Petitioner Versus

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State of Himachal Pradesh and Ors.

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…....Respondents

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Coram

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Hon’ble Mr. Justice Sandeep Sharma, Judge.

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Whether approved for reporting? For the Petitioner: Mr. Nitin Yadav, Mr. Shailesh K. Yadav and Mr. Rajat Thakur, Advocates. For the Respondents: Mr. Anup Rattan, Advocate General with Mr. Rajan Kahol, Mr. Vishal Panwar and Mr. B.C. Verma, Additional Advocates General with Mr. Ravi Chauhan, Deputy Advocate General, for respondents No. 1 and 2/State. Mr. Arvind Sharma, Advocate, for respondent No.3.

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Sandeep Sharma, J. (Oral)

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By way of instant writ petition filed under Article 226 of the Constitution of India, petitioner has prayed for following main reliefs:

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“I. That the Respondent No. 1, 2 and 3, (whoever concerns) may kindly be directed to cancel the FDR no. 38349082567 for an amount of Rs. 40,00,000/- issued by the Respondent No. 3 in the favour of Petitioner with immediate effect.

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II. Respondent No. 3 may kindly be directed to also release the maturity amount along with the interest rate as per the prescribed rules and regulations under the Reserve Bank of India.

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III. Respondent No. 3 may kindly be directed to pay the interest @ 24% P.A. till the date release of the FDR amount vide FDR No. 38349082567 issued by the Respondent No.3 along with consequential benefits from due date.”

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2. Precisely, the grouse of the petitioner, as has been highlighted in the petition and further canvassed by Mr. Nitin Yadav, learned counsel for the petitioner is that prayer made by the petitioner to the respondentBank for cancellation of FDR amounting to Rs. 40,00,000/- made in the name of Deputy Commissioner (State Taxes and Excise), Nahan, Himachal Pradesh by the petitioner- M/s R.D. Enterprises, has been rejected unlawfully without there being any authority.

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3. For having bird’s eye view, facts relevant for adjudication of the case at hand, are that State Government notified public notice inviting bids for lease to collect Toll by auction-cum-tender under the HP Tolls Act, 1975 for the year 2019-20 and date for auction cum tender was fixed for 14.3.2019. Since on the afore date, auction could not be held, vide notification dated 25.3.2019, auction again came to be re-notified for 27.3.2019 in respect of Toll Units of District Sirmaur, Himachal Pradesh. Petitioner being eligible as per condition No. 2.3.2 of the Toll

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Announcements for the concerned year, participated in the auction cum tender process for Kala Amb and Behral toll units of the District Sirmaur. On 27.3.2019, petitioner was declared successful bidder by the selection committee against the bid of Rs. 7,39,50,000/- and Rs.4, 78,50, 100/- for Kala Amb and Behral toll units, respectively (total amount of Rs. 12,18,00,100/-). After approval/confirmation by the Commissioner of State Taxes & Excise, Himachal Pradesh, afore units were allotted in favour of the petitioner for the period w.e.f. 1.4.2019 to 31.3.2020 and thereafter, petitioner herein deposited earnest money equal to 1% of the reserve price i.e. Rs. 7,39,570/- and Rs. 4,78,740/-, respectively by way of separate FDRs. As per condition No. 2.3.13 of the Toll Announcements for the year 2019-20, 20% of the bid amount was to be deposited by the petitioner within ten days or by 31.3.2019. However, on 30.3.2019, petitioner informed the office of respondent No.2 that it is not in position to run the barriers qua which it was found to be the highest bidder, as a result thereof, respondent department was compelled to put afore barriers to reauction, which could only fetch sum of Rs. 10,94,50,000/-. Since prior to 31.3.2019, petitioner herein on account of its being declared successful bidder had got prepared one FDR No. 38349082567 dated 26.3.2019, amounting to Rs. 40,00,000/- in the name of respondents No.2 and it had intimated the respondent-department that it is not in a position to run the

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barriers, it approached respondent-Bank for cancellation of FDR made in the name of respondent No.2. Before afore prayer made by the petitioner to the respondent-bank could be considered, respondent No.2 sent a communication to respondent-Bank to put on hold the FDRs prepared by the petitioner in the name of respondent No.2, as a result thereof, sum of Rs. 40,00,000/-, deposited by the petitioner for preparation of FDR detailed herein above, is lying unused and petitioner herein is suffering continuous loss . In the aforesaid background, petitioner has approached this Court in the instant proceedings, praying therein to issue direction to the respondent-Bank to cancel the FDR and release the amount in favour of the petitioner.

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4. Pursuant to notices issued in the instant proceedings, respondents No. 1 and 2 have filed reply under the signature of Deputy Commissioner (State Taxes and Excise) District Sirmour, wherein facts, as have been taken note herein above, have not been disputed, rather an attempt has been made to defeat the claim of the petitioner on the ground that on account of withdrawal of the petitioner after its being declared successful bidder, respondent State has been put to loss to the tune of Rs. 1,23,50,100/-. It is further averred in the afore reply that since on account of withdrawal by the petitioner, respondent-State had put the toll barriers to re-auction, it besides incurring miscellaneous expenditure also suffered

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loss because in the earlier bid, petitioner herein had offered price of Rs. 12,18,00,100/-, which subsequently came to be sold for an amount of Rs. 10,94,50,000/-.

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5. Though respondent bank has not filed reply, but Mr. Arvind Sharma, learned counsel appearing for respondent No.3 on instructions, states that since communication was received from the office of respondent No.2 to put on hold the FDRs sought to be encashed by the petitioner, prayer made by the petitioner could not be considered. However, Mr. Sharma, fairly admitted that though FDR amounting to Rs. 40,00,000/-was made in the name of respondent No.2, but original FDR was never furnished with the department, rather same is in possession of the petitioner. He further submitted that before encashment, person, who had got the FDR prepared, may be of any amount, can get it canceled, but once such FDR is pledged or encashed, prayer made by the person responsible for making FDR for cancellation cannot be accepted.

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6. I have heard the learned counsel for the parties and gone through record of the case.

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7. Precisely, the questions which need to be determined in the case at hand are (1) Whether respondent bank had any authority to reject the prayer made by the petitioner for cancellation of FDR on the basis of instructions issued by respondent No.2; (2) Once before submission of FDR

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prepared by the petitioner in the name of respondent No.2, petitioner herein had informed the department with regard to its decision not to run the toll barriers coupled with the fact that earnest money deposited by the petitioner @ 1% i.e. 7,39,570/- stood forfeited, respondent department could issue any direction to respondent-Bank not to release the FDR in favour of the petitioner and; (3) Whether loss, if any, suffered by the respondent on account of reauction could be recovered from the petitioner by making request to the respondent-Bank not to release the FDR which was never received or deposited with the Excise Department or such loss could only be made good by resorting to the provisions contained in condition No. 2.3.15 of the Toll Announcements for the year 2019-20 as detailed in reply filed by respondents No. 1 and 2?”

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8. Since in the case at hand, respondent-Bank proceeded to reject the prayer made by the petitioner on the basis of request made by respondent No.2, this Court shall proceed to explore answer to question No.3 formulated herein above at the first instance.

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9. Before exploring the answer to question No.3, it would be apt to take note of condition No. 2.3.15 of the Toll announcement as reproduced in reply filed by respondents No. 1 and 2, which reads as under:

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"2.3.15. If any person, who is the highest bidder at the auction, either indulges in pooling by deliberately withdraw or fails to make the deposit of the amount of security or on approval of

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his bid by the Excise and Taxation Commissioner refuses to accept the lease, the lease in such a case may be granted by any arrangement specified in Condition No. 1.2 of Chapter-1 and any deficiency in the amount of bid and all expenses incurred on such grant or attempted grant shall be recoverable from the said person as arrears of land revenue. In addition, all deposits made by such a person shall be forfeited."

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10. Careful perusal of aforesaid condition clearly reveals that in case person, who is highest bidder at the auction indulges in pooling by deliberately, withdraws or fails to make the deposit of the amount of security or on approval of his bid by the Excise and Taxation Commissioner refuses to accept the lease, the lease in such a case, shall be granted by any arrangement specified in condition No. 1.2 of Chapter-1, which provides for re-auction and any deficiency in the bid amount including the expenses incurred for conducting re-auction, shall be recovered from the said person as arrears of the land revenue.

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11. Condition No. 2.3.12 of Toll Announcements clearly provides that any loss on account of re-auction in the process shall be recovered from the previous toll lessee as an arrear under HP Land Revenue Act 1954. It is quite apparent from the aforesaid provisions of law contained in the toll announcements that in case a person, after his being declared as successful bidder, withdraws or fails to make deposit of amount of security

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and on account of such failure, department is compelled to conduct reauction, deficiency in amount of bid including the expenses incurred for conducting re-auction shall be recovered from the previous toll lessee but as an arrear under HP Land Revenue Act 1954.

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12. In the case at hand, admittedly, petitioner herein was declared as successful bidder for two toll barriers namely Kala Amb and Behral against bid of Rs. 7,39,50,000 and 4,78,50,100/- respectively. It is also not in dispute that after its being declared as successful bidder, petitioner herein deposited earnest money equal to 1% of the reserve price i.e. Rs. 7,39,570/- and Rs.4,78,740/- It clearly emerges from the reply filed by respondents No. 1 and 2 that though petitioner herein being successful bidder was required to deposit 20% of the bid amount within ten days or by 31.3.2019, but before that it informed the department on 30.3.2019 that it is not in a position to run the toll barriers qua which, it has been found highest bidder. It also emerges from the reply filed by respondents No. 1 and 2 that on account of non-deposit of security despite being declared successful bidder, sums of Rs. 7,39,570/- and 4,78,740/-, deposited by the petitioner as earnest money already stand forfeited. It is also not in dispute that on account of refusal by the petitioner to run the toll barriers leased out in its favour, respondent department was compelled to conduct reauction and in the re-auction, department could only fetch

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Rs.10,94,50,000/- against the sum of Rs. 12,18,00,100/- offered by the petitioner herein in the initial bid.

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13. Though it clearly emerges from the reply filed by the respondents that on account of refusal of the petitioner to deposit the security amount, respondents No. 1 and 2 suffered loss of Rs. 1,23,50,000/-, but question needs to be decided is “ whether afore loss would be recovered by the department by directing the respondent-Bank not to release the FDR prepared by the petitioner in the name of respondent No.2, but not pledged with the department .” As has been taken note herein above, conditions No. 2.3.12 and 2.3.15 of the Toll Announcements clearly reveal that deficiency, if any, on account of re-auction as well as expenditure incurred on re-auction can be only recovered from the previous toll lessee as arrears of Land Revenue under the Himachal Pradesh Land Revenue Act. If it is so, there appears to be no merit in the submission of learned counsel for the petitioner that no direction could have been issued by respondent No.2 to respondent bank not to cancel the FDR made by the petitioner in the name of respondent No.2.

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14. True, it is, rather stands proved on record that prior to earlier auction conducted on 27.3.2019 petitioner herein had got prepared one FDR amounting to Rs. 40,00,000/- in the name of respondent No.2 i.e. 26.3.2019, but it is also not in dispute that afore FDR never came to be

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deposited with respondent No.2. Though petitioner herein was called upon to deposit 20% of the bid amount on or before 31.3.2019, but before that, on 31.3.2019, it apprised the department with regard to its decision not to take barriers on lease, as a result thereof, amount deposited as earnest money to the tune of Rs. 7,39,570/- and 4,78,740/-, was forfeited and as such, amount is not being claimed by the petitioner.

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15. Though Mr. Vishal Panwar, learned Additional Advocate General, vehemently argued that since on account of re-auction, department suffered loss to the tune of Rs. 1,23,50,100/-, respondent No.2 rightly requested the respondent/bank not to release FDR amounting to Rs. 40,00,000/-made in the name of department, but such submission of Mr. Panwar, deserves outright rejection being totally contrary to the Excise Announcement for the year 2010-20. Though taking note of clauses 3.1.12 and 3.1.15 of toll announcements, this Court is of the view that loss, if any, suffered by the department on account of deficiency or expenditure incurred on re-auction could only be recovered as an arrear under the HP Land Revenue Act, but even if it presumed that loss suffered by the department on account of re-auction can be recovered by any other mode, action of respondent No.2 in writing to respondent bank not to cancel the FDR made in its name by the petitioner is wholly unjustified. Had the petitioner herein deposited FDR made by him in the name of department

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with the respondent department, it would have been right in contending that FDR made in its name cannot be cancelled, rather such amount deserves to be released in favour of the respondent on account of loss suffered by it due to re-auction.

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16. Since, in the case at hand, FDR sought to be cancelled by the petitioner never came to be deposited with the Department and before issuance of letter thereby calling upon the petitioner to enter into an agreement being lowest bidder, petitioner herein communicated to the department its inability to run the toll barriers allotted in its favour, there was no authority, if any, with respondent No.2 to write to respondent-Bank to put the FDRs, as detailed herein above, on hold.

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17. In light of discussion made herein above, this Court has no hesitation to conclude that once FDR got prepared by the petitioner in the sum of Rs. 40,00,000/- was not deposited with respondent No.2 and the original FDR was with the petitioner, there was no authority, if any, with the respondent bank to refuse the prayer made by the petitioner that too on the simple instructions issued by the respondent No.2 that FDR, as detailed herein above, be put on hold. Had petitioner herein submitted original copy of the FDR to the bank and there was material to show that same stands deposited with the respondent department, bank was well within its jurisdiction to refuse the prayer made by the petitioner. However,

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in the case at hand, situation is totally converse as has been discussed herein above.

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18. Leaving everything aside, once there is specific procedure provided under the Toll Announcements for recovery of the loss, if any, suffered by the department on account of re-auction, department cannot be permitted to use its might to defeat the rightful claim of the petitioner, who though was declared successful bidder, but before entering into agreement, apprised the department with regard to its decision not to run the barriers, as a result thereof, earnest money deposited by it was forfeited, there was otherwise no occasion for respondent No.2, to call upon respondent-Bank to put the FDR in question on hold.

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19. Consequently, in view of the detailed discussion made herein above, this Court finds merit in the present petition and accordingly, same is allowed and respondent No.3-Bank is directed to consider and decide the prayer made by the petitioner for cancellation of FDR in question strictly in terms of the banking rules, but without being influenced by the communication/instructions, if any, issued by respondent No.2 alongwith applicable interest, subject to deposit of original FDR(s). Respondent No. 1 and 2 are always at liberty to take recourse to the appropriate proceedings, if any, for recovery of loss suffered by them on account of re-auction. In the

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aforesaid terms, present petition is disposed of alongwith pending

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applications, if any.

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December 5, 2024 (Sandeep Sharma), (manjit) Judge

M/S R.D. Enterprises v. State of Hp and Others

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M/S R.D. Enterprises v. State of Hp and Others

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