Citation reqired
Battula Manikumari Apparao
(Querist) 04 September 2011
This query is : Resolved
Respected all Members,
I am in search of a citation which will be suitable for my case brief facts of the case is as under:-
My client entered in to a bid with bsnl for supply of recharge cards and won the bid. As per tender they have issued the purchase order but after we have won the bid one of the license is required for the supply was withdrawn by the head office of BSNL ( such withdrawal is not permanent if we apply for that we can get license). In good faith my client informed this thing to bsnl and asked time for supply but insted of granting the time they have forfeited the Bank guarantee which is unjust. In tender there is a clause for liquidated damages in case of delay in supply and it is ageneral practice of Bsnl that they grant extra time for supply. When an alternate remedy is available how bsnl can forfeit the bank guarantee. I have sent a notice for arbitration ( as arbitration clause is there).
It is humble request to you Please give me a citation of SC which will be suitable for my case.
Thanks for giving your valuable time.
ajay sethi
(Expert) 04 September 2011
under the contract you had agreed to supply recharge cards to BSNIl within stipulated period . you failed to complete supply within stipulated period . BSNl was justifed in encashing your bank guarantee
such a term is always included in order to ensure that only a genuine party makes a bid. If such a term was not there even a person who does not have the capacity or a person who has no intention of entering into the contract will make a bid. The whole purpose of such a clause i.e. to see that only genuine bids are received would be lost if forfeiture was not permitted.
ajay sethi
(Expert) 04 September 2011
A Division Bench of this Court in M/s.SAMY PRODUCTS REP. BY ITS AUTHORISED SIGNATORY P.BALASUBRAMANIAN Vs. THE INSPECTOR OF FACTORIES, OFFICE OF THE INSPECTOR OF FACTORIES, TIRUPPUR & OTHERS in W.A.Nos.3 to 22 of 1999 (order dated 19.6.2000), held that the forfeiture of bank guarantee for non fulfilment of the export obligation cannot be considered as a punishment at all. The forfeiture of amount, by invoking bank guarantee of the respective petitioners, is a simple transaction, which is of commercial nature and the petitioners had, with their open eyes, entered into such commercial transactions and they were well aware of what would happen for their bank guarantee, if they fail to honour their commitments by non fulfilling their export obligations
Raj Kumar Makkad
(Expert) 04 September 2011
Nothing remains to be added in well advice of sethi.
J K Agrawal
(Expert) 05 September 2011
Even in case where liquidated damages is fixed the suffering party (BSNL) can recover only so much of loss which is actually suffered by him. The liquidated amount mentioned in the contract is maximum limit.
But the said case may come in exception as stated in section 74 of the Indian contract act as the service provided by you may be 'an act in which the public are interested' so you are liable for maximum amount stipulated.
The action of forfeiture of guarantee is not according to law.
You may get so many citation in a commentary on Law of Contracts under section 74.
or pl do ask me if required. advocatejk@yahoo.co.in 9414054426
