Dismissed

The Rajasthan State Co-Operative Bank Limited v. D.O.E.A.C.C. Centre

Rajasthan HC1 May 2025CFA/1109/2019

Case brief

AI extract

What is this about?

A co-operative bank sued its computerization consultant for refund of Rs.17,15,000 paid as administrative charges after it rejected the price bid and placed no purchase order. The court found the consultant had complied with the MoU, that forfeiture of earnest money did not apply since no purchase order was issued, and dismissed the appeal upholding the trial court's dismissal.

What the court decided

AI extract

The Rajasthan State Co-Operative Bank… — Public Procurement and Tenders | Rajasthan HC (2025)

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[2025:RJ-JP:18291-DB]

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HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR

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D.B. Civil First Appeal No. 1109/2019

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The Rajasthan State Co-Operative Bank Limited, Jaipur Through Managing Director

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----Appellant

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Versus

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D.O.E.A.C.C. Centre, Chandigarh, 114-116, Sector-17-B, Chandigarh 160017, Through Director

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Secretary, Ministry Of Information And Technology, Government Of India, New Delhi

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----Respondent

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For Appellant(s) : Mr. Akash Gaur For Respondent(s) : Mr. Parag Rastogi

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HON'BLE MR. JUSTICE AVNEESH JHINGAN HON'BLE MR. JUSTICE BHUWAN GOYAL

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Judgment

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Reserved on: 25/04/2025 Pronounced on: 01/05/2025 AVNEESH JHINGAN, J:-

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This appeal is directed against the judgment dated 06.09.2019 of the Commercial Court No.2, Jaipur Metropolitan, dismissing the suit for recovery.

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The appellant-plaintiff is a Co-operative Bank (herein after referred to as ‘bank’). In pursuance to the decision taken by the Government for computerization of Co-operative Banks, the bank approached respondent No 1 (for brevity ‘respondent’) for rendering consultancy services for procurement of computer hardware. A proposal was made by the respondent vide communication dated 01.12.2004 and after negotiation vide letters dated 11.01.2005 & 11.02.2005, the administrative

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[CFA-1109/2019]

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(2 of 9)

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charges were capped to Rs.24,50,000/-. The appellant on 03.06.2005 accepted the offer and paid Rs.6,00,000/- to the respondent. Parties entered into Memorandum of Understanding. It was agreed that the respondent will provide following services:-

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“Activities of DOEACC Centre, Chandigarh:-

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1. Preparation of tender document for purchasing Hardware, allied peripherals and system software, etc.

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2. Publication of Tender following two-bid system - Technical and Commercial Bids.

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3. A pre bid conference will be scheduled a week's time before the last date of submission of bids.

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4. Processing and Evaluation of Technical bids of those vendors who meet the pre qualification criteria.

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5. Short-listing of technically qualified vendors and

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negotiating terms and conditions.

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6. Opening of commercial bids.

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7. Preparation of Commercial Comparative statements.

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8. Price Negotiations.

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9. Placement of purchase order on behalf of RSCB.”

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2.1. The schedule of payment of administrative charges is

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reproduced below:-

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S.No.	Total Cost Hardware, Equipment system etc. be purchase	of and to d Administrative charges (percentage of Total Cost of Hardware, Equipment and system software etc. to be purchased)	Subject to the Minimum Charges
1.	Up to 50.00	Lac 10%	Rs.5.00 Lac

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(3 of 9)

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[CFA-1109/2019]

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2.	50.00 1.00 cr	lac to ore	9%	Rs.8.00 Lac
3.	Betwee crore crore	n 1.00 to 1.50	8%	Rs.9.00 Lac
4.	Betwee Rs.1.5 and crore	n 0 crore Rs.2.00	7.5%	Rs.12.00 Lac
5.	Above crore	Rs.2.00	7%	Rs.15.00 Lac

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“Note: RSCB will pay the minimum of the administrative charges to DOEACC as per the payment terms given below. In case RSCB does not place final order for procurement of H/W and any of the equipment, this center will charge the minimum amount for the complete process. In case RSCB releases any repeat / subsequent order(s) for any of the item(s) either direct or through this center on the short listed vendors, RSCB will be liable to pay the agreed charges to this center.

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Payment Terms

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➤ RSCE will release 40% payment of the minimum administrative charges depending upon the above stated slabs to DOEACC, in advance, along with the acceptance of this proposal.

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➤ RSCB will release the next installment of 30% of the administrative charges within one week of the publication of tender notice.

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[CFA-1109/2019]

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(4 of 9)

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➤ RSCB will release the balance actual amount due to

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DOEACC towards the administrative charges within two weeks after the release of purchase order.

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➤ RSCB will release the payment the hardware supplier as per the agreed upon terms and conditions directly.

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➤ Service tax and other taxes, if applicable, would be

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charged extra.”

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2.2. The respondent twice issued Notice Inviting Tender(for brevity ‘NIT’); pre bid conference was held; after evaluating the technical bids M/s CMC Limited (hereinafter referred to as ‘L1’) was found to be eligible and lowest bidder; after negotiation and preparation of the comparative statements the bid was forwarded to the bank; the clarification given by L1 vide communication dated 27.02.2006 was forwarded by respondent to the bank; and the bank on 26.05.2006 showed willingness to accept the bid price dated 22.02.2006 for Schedule I(a)&(b) and for Schedule II but it stipulated four conditions.

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2.3 After discussions and negotiation with the L1, the bank in the meeting held on 30.05.2006 rejected the price bid. As per the schedule of payment, the bank had made payment of Rs.17,15,000/- to the respondent. Vide notice dated 04.07.2006 the bank stating that it did not succeed in getting the supplies for computer hardware, sought remittance of the amount paid to the respondent.

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2.4. Vide letter dated 04.07.2006, Managing Director of the bank directed the director of the respondent that the earnest money of L1 be forfeited. The respondent replied that earnest money cannot

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[CFA-1109/2019]

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(5 of 9)

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be forfeited without pointing out default on the part of L1 and providing an opportunity to explain. Further that the respondent had fulfilled all the obligations as a consultant but the bank rejected the price bid and there was no question of refunding the amount received. On dismissal of the recovery suit filed by the bank, this appeal is filed.

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Learned counsel for the appellant contended that there was failure on the part of the respondent to forfeit the earnest money of L1 and yet the consultation charges paid were not refunded. The reliance is placed on Clause 6(x) of the terms of the tender to submit that the earnest money of L1 was to be forfeited.

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As per contra, the respondent had fulfilled all the obligations as per the MoU. Further that even in case of non placing of the purchase order the bank had to pay administrative charges to the respondent. The amount paid was towards the administrative charges and these were not refundable.

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Heard learned counsel for the parties and perused the record with their able assistance.

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The appellant examined one witness PW1 Vinod Mishra and produced 24 exhibits. The respondent examined DW1 Deepak Wasan and exhibited 62 documents. The Commercial Court relied upon testimony of PW1 Vinod Mishra wherein in crossexamination, it was admitted that payment made to the respondent was as per the schedule and the respondent complied with the required obligations. The gist of the cross-examination of the deposition of PW1 is:-

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[CFA-1109/2019]

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(6 of 9)

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(i) Rs.24,50,000/- as administrative charges were agreed between the parties;

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(ii) 30% of the administrative charges were to be paid on publication of the NIT and 40% on opening of the financial bid; (iii) the respondent advertised NIT;

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(iv) the pre-bid was opened at Delhi and the tender was cancelled;

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(v) after cancellation the re-tendering was done by the respondent;

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(vi) the companies gave their presentation in the bank premises; (vii) CMC Limited and Infrasoft Companies were L1 and L2; (viii) vide letter dated 28.02.2006 bid of the L1 was forwarded to the bank;

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(ix) the meeting between the bank officials and representatives of the respondent was held on 23.03.2006; and lastly

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(x) the communication sent by the respondent and the bills of expenses furnished by the respondent were not produced by the bank.

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On consideration of the evidence it was concluded that the purchase order was not issued by the bank due to failure of negotiation with L1 with regard to passing of benefit in case of reduction of rate of tax and not for failure of the respondent to comply with the obligations. On failure of the bank to prove the claim the suit was dismissed.

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Even before this Court, it is not case of the appellant that nine conditions stipulated in MoU were not complied with by the respondents. Rather the contention is that in compliance with

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(7 of 9) [CFA-1109/2019]

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Clause 6(x) of the terms and conditions of the tender the respondent failed to forfeit the earnest money of L1.

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Before proceeding further, it would be relevant to quote condition of the eligibility dealing with the earnest money:-

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“All bids should be accompanied by Earnest

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Money deposit the amount of which is being stated as follows:

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Rs. 10 Lac for Schedule I

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Rs. 2 Lac for Schedule II

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Rs. 2 Lac for Schedule III

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Rs. 1 Lac for Schedule IV

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This EMD should be in the form of a demand draft issued by a scheduled commercial bank favouring Rajasthan State Cooperative Bank, payable at Jaipur, which will be returned by the Bank to all except the tenderer(s) selected for placing the supply order. The earnest money deposit must be enclosed with the technical bid. In the event of non-submission of earnest money deposit, the proposals will be out rightly rejected. No interest will be payable on the earnest money deposit. This amount will be forfeited if the vendor refuses to accept purchase order or having accepted the purchase order, fails to carry out his obligations mentioned therein. The earnest money deposit will be refunded only after completion of the bid process. NO TENDER WITHOUT EARNEST MONEY DEPOSIT WILL BE ENTERTAINED. No exemptions in

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[CFA-1109/2019]

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(8 of 9)

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the earnest money deposit will be applicable to any

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agency participating in the tender.”

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From reading of the clause, it is evident that the bidder had to deposit the earnest money along-with the bid to be eligible for consideration. The earnest money of all unsuccessful bidders was to be returned. The earnest money of bidder selected for placing the supply order was liable to be forfeited in case of refusal by the vendor to accept the purchase order or failure to carry out the obligation after accepting the purchase order.

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It is an admitted fact that the purchase order was not issued to L1. The amount was to be forfeited on refusal of the vendor to accept the purchase order or after accepting on failure to comply with it. Whereas in the present case, the stage of issuance of purchase order never arose as the bank rejected the price bid of L1 and the conditions of Clause 6(x) of the tender shall not come into operation.

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The language of the note to schedule of payment reproduced above is unambiguous that the minimum of the administrative charges are to be paid even in case of failure of the bank to place a final order for procurement. The administrative charges were capped to Rs.24,50,000/- by the respondent vide communication dated 11.02.2005 and this proposal was accepted by the bank. PW1 admitted that the payment of Rs.17,15,000/- was of the administrative charges and made as per the schedule. The claim of the bank for remittance of the amount paid to the respondent consequent to no final order being placed for procurement is contrary to the terms and conditions agreed between the parties.

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(9 of 9) [CFA-1109/2019]

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The appellant failed to prove failure on the part of the respondent to provide services as quoted in the MoU. The forfeiture clause was not applicable in the facts of the case.

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No case is made out for interference in the impugned judgment. The appeal is dismissed.

(BHUWAN GOYAL),J

(AVNEESH JHINGAN),J

Brijesh/Monika

Reportable: Yes

The Rajasthan State Co-Operative Bank Limited v. D.O.E.A.C.C. Centre

Case brief

What is this about?

What the court decided

The Rajasthan State Co-Operative Bank Limited v. D.O.E.A.C.C. Centre

Case brief

What is this about?

What the court decided

A compact analysis

Issues for consideration

Parties & counsel

Coram

Case details

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