Second highest bider is obliged to pay
suguma
(Querist) 21 May 2013
This query is : Resolved
One Bank advertised bid for sale of property on the following conditions:
1.Reserve price of Rs.10 Lakhs.
2.EMD for Rs.1 lakh was to be deposited with the bid form.
3. Top three bidders will have the opportunity to increase their offer on the opening of the bids.
4.The Bank may retain EMD of top 3 bidders upto 3 months from the date of opening the tenders.
5. The successful bidder will be required to deposit the balance amount within 7 days from the confirmation of the sale.
6. In case of failure to pay the balance amount within prescribed period the EMD deposited will be forfeited.
Bids were opened on 16.4.13 only 3 bids were received for [a]15 Lakhs [b] 14 Lakhs and [c]13 Lakhs. Sale of the property in favour a] was declared successful.the highest bidder for Rs.15 Lakhs.
on 23.4.13 The Bank wrote to [b] the second highest bidder that bidder [a] defaulted and [b] being second highest bidder he is required to pay Rs.13lakhs[ less one lakh EMD].
[b] refused to pay on the ground that the terms and conditions of the bid /sale has been violated and [b] is not bound to pay on grounds of estoppel. The matter has gone to higher ups. If [b] also fails whether bank can forfeit his EMD and compell [c] to pay balance Rs.12 lakhs. ???
C sent a legal notice demanding refund of EMD . The Banks stated that they will reply only on or before 3months from date of sale. i.e 15.7.13 They are holding up EMD D/D Whether [b] is liable to pay and if he fails [c] is obligated to pay.
Is it not violation of terms of bid. Nowhere in bid advt it is stated second highest or next highest bidder also has to pay.Under which section of contract act the case can be fought in a court of Law?
Raj Kumar Makkad
(Expert) 21 May 2013
If there is no such condition in the advertisement that on failure of top bidder, the bid shall go in favour of second highers and so on to third bidder then the bank cannot compel either b or c and in that event the EMD shall have to be got returned by it after due date as already accepted by every bidder.
The civil suit for recovery shall have to be filed on the failure of the banker to re-pay the
emd.
Anirudh
(Expert) 21 May 2013
What are the terms and conditions in the bid document? Without knowing that how can one answer your query?
suguma
(Querist) 21 May 2013
Thanks a lot Sir. But sir in your reply the word 'If' is used. All the 6 terms and conditions of advt. is mentioned herein above verbatim. Pl guide us sir, whehter condition no.4 is your 'if' or it is implied /wrapped up in the said conditon no.4 and that means we were put on notice that the sale to the highest bidder was conditional on the highest bidder's completing the purchase. Is it so or it is all implied and [b] and [c] bound to pay or else both will lose their EMD. Thanks and regards
suguma
(Querist) 21 May 2013
Anirudh sir, all the 6 terms and conditions of advt is mentioned in my query and nothing is ommitted . hence pl guide me sir.
suguma
(Querist) 21 May 2013
There was no bid document and we were asked to submit on a plain paper as under:
Name andaddress of the bidder, pan no. contact no. email id
Property decription, Reserve price: 10 Lakhs
Bid amount: in lakhs and DD for Rs.1 lakh enclosed
Signature of the authorised person with specimen signature attested. authorised person's identity proof, voter id or phto pancard and attendance sheet of the bidder meeting signed. sealed covers opened in the presence of DGM of the Bank and Banks law Officer and all three bidders. Highest bidder was held successful. all three were asked to improve the offer price. nobody increased. Biider[a] was held successful and he was congratulated. all bidders went. Minutes of the bid meeting not prepared nor signed by any of the bidders.
Raj Kumar Makkad
(Expert) 22 May 2013
I have again gone through each and every term of bid including condition no. 4 upon which you have stressed and have found that banker has got no right to pressurize b on failure of a to accept the bid.
Anirudh
(Expert) 23 May 2013
The bid is valid for certain period. Within that period, the owner can offer the property to the bidder it may be a, b or c. In case the bidder does not accept the offer naturally the EMD will get forfeited. After all, the property is being offered only for the amount bid by the bidder. Why the bidder will not accept the property for the bid value when offered?
