M/S Kalimata Vyapaar PVT. LTD. vs. The Union Of INDIA And 3 Ors.

Held

The Court held that no concluded contract was formed between the petitioner and the respondent authorities. The Court reasoned that the respondent's letter of acceptance dated April 1, 2022, did not unequivocally accept the petitioner's quoted deviations and, importantly, altered the price variation formula specified in Clause 25.5 of the Special Conditions of Contract (SCC). According to Section 7 of the Indian Contract Act, 1872, an acceptance must be absolute and unqualified to convert a proposal into a promise. The changes made by the respondents in the letter of acceptance constituted a counter-offer. The petitioner's refusal of this counter-offer on April 4, 2022, within a reasonable time, meant that no agreement was reached. Consequently, the purchase order dated April 27, 2022, issued without a concluded contract, could not bind the petitioner. The Court further held that the termination of the contract and the imposition of a penalty via the communication dated July 18, 2022, were therefore impermissible. The Court quashed the impugned communication dated July 18, 2022.

Facts

The petitioner, M/s Kalimata Vyapaar Pvt. Ltd., filed a writ petition challenging a communication dated July 18, 2022, by which the respondent authorities, specifically Deputy Chief Engineer/Track Procurement, Northeast Frontier Railway, terminated a contract and imposed a 10% penalty. The dispute arose from a Notice Inviting Tender (NIT) issued on December 6, 2021, for the manufacture and supply of Elastic Rail Clips (ERC). The petitioner submitted its bid on December 27, 2021, with certain deviations. The respondent authorities issued a letter of acceptance on April 1, 2022, which the petitioner refused on April 4, 2022, citing unaccepted deviations and a changed price variation formula. Subsequently, a purchase order was issued on April 27, 2022, which the petitioner contended was invalid due to the lack of a concluded contract.

Key Issues

1. Whether a concluded contract was formed between the petitioner and the respondent authorities for the supply of Elastic Rail Clips (ERC) based on the Notice Inviting Tender (NIT) dated December 6, 2021, and subsequent communications, particularly concerning the acceptance of deviations and the price variation formula? (Question of mixed law and fact, turning on principles of contract formation under the Indian Contract Act, 1872, and the terms of the NIT). Petitioner's arguments: The petitioner contended that no concluded contract was formed because the respondent's letter of acceptance dated April 1, 2022, did not address the deviations quoted by the petitioner and altered the price variation formula stipulated in Clause 25.5 of the Special Conditions of Contract (SCC). Therefore, the letter of acceptance constituted a counter-offer, which the petitioner rightly refused. Consequently, the subsequent purchase order dated April 27, 2022, was invalid, and the termination and penalty imposed by the communication dated July 18, 2022, were unlawful. Revenue's arguments: The respondent authorities argued that a concluded contract existed, implying that the petitioner was bound by the terms and conditions, including the purchase order and the subsequent termination. (Specific arguments for the revenue were not explicitly detailed in the provided text, but their actions imply a belief in a concluded contract).