Nagar Parishad Bamhani Banjar District Mandla M.P. vs. Collector

Held

The Court held that the Collector's order was just and correct. It found that the second wave of Covid-19, which began in April 2021 and continued until at least September 2021, constituted a force majeure event. This pandemic prevented the Contractor from making recoveries from the market due to the non-organization of weekly markets. Therefore, the Contractor was helpless due to this situation. The Court distinguished the precedents cited by the Petitioner, finding Sardar Sucha Singh and Shiv Singh inapplicable to the present facts. However, it found the principle laid down in Bharat Petroleum Corporation Limited versus Maddula Ratnavalli relevant. The Court concluded that the contract could not be given effect to due to force majeure. Consequently, the Collector's action of forfeiting the earnest money but refunding the first installment was deemed reasonable. The impugned order of the Collector was upheld as fulfilling the cannons of reasonableness, and the writ petition was dismissed.

Facts

The Petitioner, Nagar Parishad Bamhani Banjar, invited offers for weekly market recovery charges. The Respondent, Ashish Kachhwaha, was the highest bidder and furnished earnest money of Rs. 50,000/-. His bid was accepted, and he was asked to deposit 25% of the bid amount, Rs. 4,63,445/-, within 24 hours. He deposited this amount on 22.3.2021 and requested that GST be made payable by participants. Subsequently, he sought condonation of installments due to the second phase of Covid-19, citing non-convening of the weekly market. He later requested a refund of his earnest money and the first installment, stating no authorization letter or agreement was executed and he was facing undue loss. The Chief Municipal Officer rejected this plea. The matter went to the Collector, Mandla, who ordered the forfeiture of only the earnest money and a refund of the remaining amount to the Respondent. The Petitioner is aggrieved by this order.

Key Issues

1. Whether, in light of the Contractor's deposit of the first installment, a formal agreement came into existence by conduct, preventing the Respondent/Contractor from claiming a refund, as argued by the Petitioner, relying on Sardar Sucha Singh versus Union of India & Others and Shiv Singh versus Union of India & Another? 2. Whether the Collector's order, directing forfeiture of only earnest money and refund of the first installment, is just and correct, considering the impact of the Covid-19 pandemic as a force majeure event, as argued by the Respondent, relying on P.M. Harshan Hassan versus Government of Tamil Nadu & Others and Bharat Petroleum Corporation Limited versus Maddula Ratnavalli?