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Judgment
If dictatorial England could not being titself t0orecognise the sactity of promices to the extent of making a gratuitous pro mise a binding contract what a paradozx it would be if we were to carry change through today after the wealening of the belief to the sancity of promise which this past century witnessed.
So observed Atiyah in "the Rise and Fall of Freedon of Contract" - Page 680 the famous dictum written by Maine wayback in 1961 in his "Ancient Law'' that the movement of progressive societies had been a movement from statues to contract is being eroded in modern times by the emergence of theState and State controlled institutions dominating the filed of contract. The preindustrial revolution era ledt little freedom to the employee tothehis services to anyone he pleases becauses themunber of employers was limited and thestatues or class of the employer and emplyee was well defined and demarcated. The industrial revolution gave the impetus to the development of a free economic society and the resultant mobility of labour afforded freedom of contract boty to the employer and the sercant or contracto. This gave rise to the traditional concept of contract each term of which was individually nogotiated between and agrred upon up the contracting parties. Negotiation as a promient feature of contract formation is now relegated to the background with the State or State controlled emplouyers laying down unifromset of terms andconditions and asking thecontractors to sign on thdotted lineornt at all. But as observed by Atriyah, can be revognise the sanctityof promises to the extent of making gratuitous promise a bindng contract. This appeal throus up just the qustion.
The National thermal Corporation Limited ("NTPC) ot the "the Owner"), a governnment of India Enterprise carries on the business of setting up, maintenance and running of thermal Power Stations the NTPC issued a notice inviting tender (NIT) by publishing the same in newspaper inviting bids for the design engineering manufacture, erection testig and commissioning of Air conditioning and Ventilation of System to be installed at Singrauli Korba and Ramagundam Statellite Earth Station Sites the NiT gave the descriptionof the work as:
"Two numbers water chilling type ar conditioning of capacity 82 TR for each Satellite Earth Station.
The scope of work was indicative only and detailed scope had been described on the bid documants. The cost of the documeants was put as Rs.s 500/- The last date andtime for submission of bid was 10.30 A. M. on 26 th February, 1985 and the bids were tobe openedt hesameday after half andhour I,e, at 11.00 A. M. the NIT made it clear of the bidders that the"Biddr will be required tofurnish a bid guarantee for an amount of 2% of the bid price allong withn the bid and a contract performance guraantee fof 10% of thecontract. "The contrct doucments dilted onthesumissionnms of bid gurarnatee and performance gurarantee thus:
2. The bid gurantee shall be made payable without any condition to the owner. The Bid Guranantee shallbe valid for a period of serven (7) calendar months form the date set of theopenning of bids.
3. The Bid Guarantee of the successfual Bider of whom a Contract of awared wil be returned after thesaid Bidder provies the contract Perfojance guarnatee ad required the Contract Documents.
4. If the succeeful Bidder fails tosubmit a contract Perfomance Guarantee as specified inthecontract documents within thrity (30) calender days after thedate of Notice of Award of the Contract then the Bid Gurantee amount will be forfeited by the Owner.
5. The Bid Gurantee of all unsuceeful bidders except the of the successful bidder wil be returned after the award of he contract.
6. Any bid not accompanied by a Bid Guaranctee shall be disqualified.
7.7 No interest will be payable bythe Owner on the above Bid guarantee.
policy for Bids under Consideration:
Bids shalbe deemed to the under consideration immediaterly after they are opened and untilsuch time official intimation of award/rejectionis made by the owner ot the bidders. When thebids are under consideration. Bidders and/or their respresentatives orrather interested parties are advised torefrain form contracting by and means theowner and/or by employees/ representativres on matters related ot the bids under ocnsideration. The owners if necessary may obtain clarification on the bids by requesting for such information form any orall the biders either in weriting or thrugjh personal contact as may be necessary Biddr will not be permktted tochange thesubstance of the bid after thebid has been opened.
1. Effect andvalidity of Bid
The submission of any did connected with these doucments and specificationns shall constitute an agreeement that theBidder shall have no cause of action or calim against the Owner for rejection of his bid.
2. The bid should be kept valid for a periold of six (6) callendare months form the date set for opening of bids.
Award of Contract.:
2. The contract will be awarded to the best qualified and responsive Bidder offering the lowest evaluted bid in confermity with the requirements of these specifications and documents and the Owner shall be thesole judge in this regard and subject to the orovisions of these instructions of Bidders andother terms and conditions detailed out inthee documants and specificationns. A responsive bid is one which accepts all terms and conditons of these specifications and documents without any major modifications. Amajor modifications is one which affects inany way the prices quality quantitly or delivery period of the equipment or which limits of the Bidderor any rights of the Owner as requaired in these specificationns anddocuments.''
Kriloskar Pneumatic Company Limited of Pune, ("Kriloskar") carries of thebusiness, inter alia of manufacture of airconditioning and refrigeration unites compressors and accessories there of Kirloskar filed in its tender for the above works furnushed bid guarantee as required andquoted a total price of Rs. 1, 61, 27, 677/- their tenders along withthose of others were opened on 26th february, 1985 as stipulated in the Nit.
According toeKrloskar they had mistakently quoted theprice for one unit when the NiT specified supply oftwo units as each satelile earty station and soom as the error was discovered wrote tot heowner on 15th July 1985 explained the same and revised their bid. The NTPC the Owner replied on5th September1985 thet the price cannot beincreased aftert heBids were opened (which was done on 26th February, 1985) A miniute of correspondence followed across thetable which having failed, NTPC Cinvoked the Bank Guatantee fo rs. 4. 00. 000/- bieng thebid grarantee furnised by Kroloskar while submitteingtheir tender on 17th October1985, That drove Kirloskar into filling of Special Civil Suit NO. 177 of 1985 in the court of thecivil Judge Senior Division Pune, for the declarating that NTPC are not entitled to invoke the said Bank Gurarantee of rs. 4,00,00/- Kirloskar also filed anapplication for temporary injunction praying that heNTPC may be restraned by a temporary injunctiuon form invoking or enfrcing or demanding the payment undre theBank Gurantee bearing No. 9/85 dated 15th March, 1985 which application having been dismissed Kirlokar have come up with the present appeal.
the doctrine of contract has been succinctly put inNew Zealand Shipping Co, Ltd. v. A. M. Satterthwait & Co. Ltd. 1975 AC 154 thus.
"English law having committed itself to a rather technicaland schematic dotrine of contract in application takes a praticalapproach often at thecost of forcing of facts of fit uneasily intothe marked slots of offer acceptance and considertion.''
It noe remains tobe analuysed whether in the facts of the present case,there was anoffer whether theoffer was accepted andwhether there was a considertion which would point out toconcluded contract thebreachof which is being urged by NTPC as giving rise to their right toinvoke the Bank Guarantee of Rs. 4,00,00/-
Tender Notice: not on offer-
The advertisement issued by the NTPC under the caption initation tobid" to a notice iviting tender of NIT as it is generally known in construction or engineering works is not anoffer it is anivitation to treat or an offer to receive offers or an offers to chaffer
Tender of Contrator;
In response ot the NIT when contractors offer their bids or tenders thepromisor is only offering a bid This bid as ripan into a contract if it is accepted. But till such an acceptance is formally communicated to the promisor it is opentohim towithdraw his bid. (Sec S. 6 - Contract Act). "Williston on Contract" 60b, says:
"The offerer may see the approach of the offeree and know the an acceptance is contemplated. If one officer can sat "I revoke'' before the offeree acepts however bridf the interval of time bet went the twoacts there is no escape formt heconclusion that he offe is terminated.
Effect on Commercial Activities: "Gazumping".
Once it is realised that the offerer is enttiled towithdraw the offer before it is accepted it would be followe that no contract canocme into existence because there is no offer available for accepance. The question whether such in iinterpretantion would operate unfavourably to the promise in thecontract of large scale commercial activity baded on a promise came up for consideration befoire various Law reform zgaencies. The early 70''s witnessed a period of rapidly increasing prices and the effect of allowing the offerer towithdraw his offer was though tobe unfavourable becauses it allowed thseller or the contractor to " gazump" i. e. to refuse tosign theformal contract unless the buyer agrees to bear the increased price. The United Kingdom law Commission conclued that "gaumpint was the product of short time factor andthat no change in law is called for. (Cheshire and Fifoo''s Las of contract) tenth Edition Pate 35).
Firm Offers:
If it is intended tobind the promosor to keep his offer open till a stipulated date theofferer willhave tobe given some consideration byt heofferee for thepupose upon which separate subsidiary contract can be said tohave come into existence This consideration maybot always be in terms in money but something of value of the eye of law.
Does the chance ofwnning the contract and making profit in theventure itself constitute a consideration? The bid documants provided.
"The contract will be awarded to the bese qualified andreaponsive Biddder offering the lowest evaluated bid."
Examination of the above cluase show that NTPC has hedeged in their intention to accept thelowerst bied by vaious favtors regarding qualifications of the bidders and whether the bid is a responsibe one. The terms also stipultes that "the Owner shall be thesole judge in this regard and hence eventhis promise that the contract will be warded to thebidder offering lowest evaluted bid will also not spell a considertion for subsidiary contrct of keep thebid open.
In Wilson v. Spry. (1920) 145 Ark 21 : 223 SW 564, Memo of Understanding was signed by the parties whichread:
"Memo of Uniderstanding Between Mr. Spry and Mr. Wilson re approximately 10,000 acres in Arkanses owned by Mr. Wilson.............Mr. Spry to put estmators onat once and complete examination. Within forty-five days wants today MR. Spry shall decide whether he wants right to but and Mr. Wilson is not th sell inmeantime to another Within that forty five days Mr. Spry may for $ 24, 000 have the right to buy the land for $ 200,000 within two years from today........"
On the basis of the above Memo of Understanding Spry made an examination of the a land But Wilson informed him his refusaltofo onwith the Memo. Spry notified wilson that the exercised the option thebuy and they brought suit for specific performance which was decreed, the Court of observing.
"It is a mistake tosay that there was no consideration to Wilson for the contract because Wilson (who lived in Canada) at that time as anxious to sellhis lands to Spry and Spry would not enter into a contrqct tobut without theright to make a thorough cruise or examinations of the land. To make such a cruise raured time...... While thecruise was being made it involved anexepentiufre on the part of Spry form $ 25 to $ 30 per day. The obligition of making a contmuous cruise .........was imposed upon Spry by the terms of the contract and the obligation as we see it was not along for the benefit of Spry.
reliance detriment
Secondly the courts have appreciated that even though the transaction did not contain anelement of consideration as such the absence of consideration should not be fatal to the enforcement of such a promise. If the offeree had prejudicially changed his positiion after placing reasonable reliance of the offer. Such instances occur when a genrealcontracter in a construction contract relies onthesubsidiary bids given by sub-contractors toperform various items of the works and compiles his tender after taking intoconsideration all the bids given by the subcontractors and adding toit theprofit the expects to make out of the venture. Before proceedings tothecase law on this aspect - which expressers divergent views. It would be helpful tonot the recommendations of thelaw reforms agencies which exercise is undertaken only forthepurpose of making a comparative study of development of law on this subject in other common law countries.
U. K. Law Commission.
The U. K. Law Commission in Working Paper NO. 16 (1975) has recommended that a builder in such a case should be relieved of thehardship of a sub-contractor withdrawing his bid when he has relied on them tohis detriment and offe a bid for the main work.
American Law:
Section 90 of thke Restatament of contracts of theAmerican Law Institute states.
" A promise which the promisor should reasonbly expect to induce action or forbearnace of a definite and substantial character on thepart of thepromises and which does induce such action of robearance is binding if injusctive can be avoided only by enforcement of the promise.''
Toobviate such injustice in certain countries, legislationhas made an offer irrevocable on thelines of the ole English Law which regarded an offer under seal irrevocable for examble.
New York general Obligations Law S. 5 1109 (Mc Kinery 100) Provides.
"When anoffer toenter into a contract is made in a writing signed by theoffered or by his agent which states that the offer is irrevocable during a period \\set forth or until a time fixed the offer shall not be revocable during such peiod of until such time becsuse of the aosence of consderation for assurance of irrevocability.
An offe by merchant of but or sellgoods in a singned writing which by its terms gives assurance that it will be held openit not revocablefor lack of consideration during the time stated orif no time is stated orno time ir stated for a period of irrevocablility exceed (sic) three months but any such terms of assruance of a form supplied by theofferee must be separted signed by the offeror.''
Mexican Law
In contract to the common law countries the Mexican Ariticle 1806 provides -
"When the offer is made without the stipulation of a period for acceptance to a person who is not present the offerer reamins bound during three days in addition to the time required for the regular despacthc and return of amils of the public post office or in addition to thetime judged by thecourt tobe sufficient in thesbasence of postal service in accordance with the distances involved and the facility or difficulty of communication."
17.When one receives a naked promise andsuch promise is not kept he is no worse off than he was efore the promise was made He gave nothing for it lost nothing by it and upon its breachhe suffers no recoverable damages. Way back in 1884 Holmes J, observed.
" It I wouldcut up the doctrine of consideration by the roots if a promises could make a gratuitous promise binding y subsequently actinge in reliance on it." Commonwealth v. Scitusate Sav. Bank. (1884) 137 Mass 301 .
It is usual toportary the doctrine of promissory estoppel as some kind of stand in for consideration or extension of thedoctine of consideration.
Policy considerations prompt the application of the doctrine of promissory estoppel to protest charitable subscriptions and anlogies drawn form the Law of Torts focuusing upon consequential losses hav einfluenced the treatment of the gratuitous bailee. Charitable institutions have a favaurable statues and the traditional concepts about considertion give way to public interest.
In James Baird Co. v. Gimel Bros Inc. 1933 cir 64 learned Hand a distinguised Judge held that onoffer which bargains for a promise is not binding until the specific return asked for is made and that the theory of promissory estoppeal is restircted to "donative" promises. In Baird the defendant sub-contractor, claiming a mistake in compution in his rates in the bid revoked his offer tosupply materials after the gerneal contractor had relied bbyincroporating the offer in th e bid of the prime contract and the claim of the principal contractor for damages was turned down,
However in Drennan v. Star Paving Co. (1958) 51 Cal 409 the facts were similar to those inBaird theposition was just the oppositve. Plaintiff a gernealcontractor had solicited bids form various sub contractors for the paving work to the done on a construction project on which plaintiff was preparing to bid for the prme contract. Defendant submitted the lowest bid for the paving and plaintiff according the custome in the trade used defendants bid in computing his won bid. The Plaintiff bid, which listed defendatn revoked his bid on theground that a mostake incomputation had been made. Plaintiff sued to revocer the incresed cost of having thepaving work done by another sub. The Califonia Superme court affirmed a judgment for the different between defendant bid and actua cost of the paving work.
Reasonbale reliance resulting in foreseeable prejudical change inpostion affords a compelliing basis for omplying a subsidiary promise not to revoke an offer for a bilateral contract. The effect of Drennan is simply to keep a power of acceptance alive for reaconble timebut if the general contractor delay acceptance or reopens negotiations the sub-contractor is not obligated tokeep the offer open.
Nagotiations,
The doctrine of promissory estopped has been extended to the area of negotiations where one pary of was induced tomake a changed tohis determent as a result of negotiated. A case which may sound a retareat formthe commonlaw view that breach of an agreement toagree is not actionable came form the supreme Court of wisconsin. Hoffman v. R3ed Owl Stores Inc. 26 Wis 2683 evolved forma proposalby defendant toestablish plaintiff in one of its stores as a franchise operator provided plaintiff would ivest a specified amount of capital and perfors certain other condietions, Ther parties dicussed thematter in various stages for more than two years with defenatnt at each stage assuring plaintiff that he would get his franchise uponperfonance ofthestated conditions some of which were added as matters progresses. The termination of negotiations apparently resulted from defendants''s insistence that plaintiff supply an amount capital nearly twice the sum originally requested. By that time as a result of defendants urging plaintiff had sold that bakery business andbuilding sold a small grocery operation which has been purchased inorder to gain experience made a payment on thsite for the proposed franchise incurred moving expencses and arranged for a house rental. The wisconsin Court reasoning that promissory estoppel contemplates award of such damages" as are a necessary to prevent injustice.,award plaintiff the amount of the actual expencses and losses he had incurred.
Hoffman''s case does raise certain problems. Generally preliminary negotiations donot support a promissory estopel and pre-agreeement discussions and nogotiations can at most consitute an agreement toagree which is not enforceable. A tenderer like Kirloskat would surely have toincur consideration expenditure invisting thesites. Taking measurements and preparing the estimates. So will NIT in scrutinising the vaious tenders received, But these experses cannot be said to constitute actionable clamis because men of business know that thse are necessary exepencse if theywish tostay in business and hope tooffset thesameby profit which they would make when they emerge as thesuccessful, tenderers insome venture A contract cannot be created by estoppel rather estoppelmay operate only todeny the existence of otherwise binding contract that is tosay it may serve defensively as a shield but not as a sword Deliberate risk taking prior to agreement will clearly be treated differently form a change of position in response to a promise.
However, the American Law Insitutute intis S.s 89- B (2) (tent, Draft No. 2, 1965) of the Restatement of Contracts provides: "an offer which the offerer should reasonably exepct to induct action or forbearance ofa substantial charater onth part of the offeree before acceptance and which does induce sub action or for bearance is binding as an option contract to extant necrssary toaviod injustice " (See Promissory Estoppel and traditional Contract Doctrine (1969) 78 Yale lj 3430.
Baid Advertising.
The tradtional contract theory that an offeror can withdrow his offer any moment before acceptance can lead tocommerical malpratice enuphemistically called ''Sales promotion'', Bait Advertising a widely used consumer enticemetn techniquie is one of themost difficult or misleading promitionaldevices tocontrol by the common law.A Bair seller seeks toattract customer by advertising at spectacularly low price a product which he does not intend to sell. Once contract has been made with the potentialpurchaser, the seller endavours to switch thecustomer to another item onwhich profit marigin is greter and will prevent or discurage purchases of the unporfitable "bait" by disparagement or sabotage. He may make a drorgatory remark about the advertised merchandise or show that advertised item is of an inferior qulaity or that it is out of stock or allege that thespare parts are nto available. The "baid advertiser theen offers a "quality "model at ahighter price. Once the customer is tuned to a purchase mood he is most likely togo in for the highter price item, which normally the would not have done. Under the strict theory of contract the Biat Adveriser canwithdraw customer is likely to place anorder. With a view of control this prictive of Biat Advertising which erodoes intoa fair competitive market theory certain States have enacted laws making its misdemeanour (See State Control Of Baid Advertising (1961) 59 YLJ 830.
In the light of the above discussion it is clear that as the bid gien by Irloskar was withdrawn before it was accepted no contract as such has come onto existence between Kirloskar and the NTPC It is not the case of the NTPC that they had offered any consideration to Kirloskar tokeep the offer open for a perod of six months and even though the contract document provided tothat effect it was always open to Kirloskar to revoke their offer before it was acceoted. (Diskinson v. Dedds (1876) 2 Ch D 463, According toKeloskar there was a mistake in their calcutations but that at best is indicative totheir bona fides; nothing turns onwhether of withdrawal in calculation of not. It could as well have been a quirk of fancy that made Kirloskar withdraw their offer.
that brings us to the question whether NTPC had acted totheir deterimernt after receriving the bid of Krloskar, If an element of ''reliance detriment'' couldbe establised then on theanalogy of thecase discussed above about a contracter filling in his consolidated tender onthebasis of bids recerived from sub- contracter, NTPC would be entitled toinvoke thebank gurantee though thequantification of damages will again have tobe legt to the court. Here again thecorrespondence between the parties does not revealthat NTPC were driven to take any stps whichshould amount toa detriment and hence any discussion form this angle wouldalso not help NTPC.
Bid Gurantee and Contract Perfomance Gurantee - Co-relation.
The Supreme Court in Radha Sundar Dutta Vs. Mohd. Jahadur Rahim and Others, observed.
"Now it is settled rule of interpretation that if there be admissible two construction of a document one of whichwill give effect to all the clauses therein while the other will render one or more of them nugatorys it is the former that should be adopted on theprinciple expresses in the maxim, "ut res magis valeat quam pereat.
".............the sense and meaning of the parties in any particular part of an instrument may be collected ex antecedentibus et consequentibus (I, e, form what goes before andformthat follow) every part of it may be brought into action in order to collect form the whole one uniform and constant sence it that may be done."
Applying these principles of interpretations it appears that according to NPTC thequestion of forfeiture of the bid gurantee was toarise only when first the contract is awarded to the bidder secondly thebiddr is asked tofurnish contract performance grarnatee after the contract is awarded. It is only when these three contigencies take place then the bid guarantee amount can be forfeited by theowner. The cluses enjoinging upon the bidder tokeep the bid gurarntee valid for a perid of six calender months from the date set for opening of bids and warning the bidder that he willnot be permitted tochange thesubstance of thebid did not contain any stipulation regarding forferiture of the abid grarantee amount. The word "forferiture" occurses for the first time inclause. 7.4. and the owner NTPC is enabled by this clause to forfeit the amount if Kirloskar were tofail to submitt within 30 days the performance guaranctt aftger date ofnotice of award of thecontract.
The Contra Proferendum Rule of Interpreation provides that if two interpretations are possible the one favourable to the pary who had drafted the contract and the other against himthe interpretation against the part has to be preferred. No doubt., this rule has has to be applied with caution as abserved by the Supreme Court in Sahebzada Mohammad Kamgar Shah Vs. Jagdish Chandra Deo Dhabal Deo and Others,
"It is only if the meaning is not otherwise clear that all deeds are to be construed strictly against the grantor and in favour of the grantee.
Applying these twin rules of interpretations it is obvious that as a contract has not been awarded ot Kirloskar the question of forfeting thebid guarantee does not arise.
Bank guarantee;
The Supreme Court in United Commercial Bank Vs. Bank of India and Others, has expressed the opinion that "the courts usualy refrain from granting injunction to restrain theperfomance of the contractualobligations arising out of letter of credit or a bank grarantee between one bank and anotehr ," and releying onthose observations, the Lower Court has refused togrant injunction. The device known astheirrevicable leter of credit is to finsance contracts for the saoe of goods between buyers andsellers in different countries and particulary where the delay between despatch form the place of maunfacture and arrival at thedestination is a considertion one It enables short terem credit facitlities ot be made availoable grarantees apyment of the sellers, and sageguards the parties against fluctuations inthevalue of currecy. A contract is concluded between the buyer and tehseller whereby the buyer undertakes tofunish a irrevocab,e leter of credit in favour of the seller. He is instructs his bankar topay to the seller provided the seller tenders the required shipping documetns in complicance with the terms of letter of credit. No doubt the banker is under anbosolute obligation to pay irrespective of any dispute there may be between thebuyer and the seller. The bankar can only pay it the shipping documents are tendered to him. The bankar cannot investige whether the goods to which the documents relate are the goods which the buyer had ordered. A shipping document is sine qua non for the seller to obtain the price of the goods (See forestal Mimosa Ltd. V. Oriental Credit Ltd. (1986) 1 WLR 631.
The NTPC could have invoked the bank guarantee if and only if Kirloskar having been awarded contract had failed to submit a contract perfomance guaranteeas stipulated in the contract document. The dealings between thepaties were only at the stage of offer . No contrct was awared to Kroloskar the question of their furnishing a perfromance gruantee did nt arise NTPC by its leter dated 15-10-1985 wrot tothe Bank to say that "in terms of the aforsaid Banck Gurantee we do hereby invoke the Bank Gurantt n 9/85 dated 15-3-1985 and make damand on you toimmediately pay to amount of Rs. 4.00 lacs. ''The United CommercialBank coul not question whether the invocation is "in terms of the Bank Gurantee" It was for NTPC toverify whetherunder theterms of thecontract they could invole back guarant. As observed earlier thecontract having not bene awarded the questio of submitting contract performance guarancted did not arise not did the question of forfeiting of bid grarnatee.Inthis view of the matter theaction of NTPC invoking the bank guarantee by their letter dated 15- 10 1984 was itslf inlawfulthoug it is correct tosay that the bank could not refuse the payment under the guarantee.
Temporary Injunction.
The upshot of the above discussion shown dirstly that there was nt contract between NTPC abd Irloskare to keep the bid alive that thebid could be revokied before the acceptance as Kirloskar have done that theNTPC did not totheir detriment relying onthebid of Krloskar that thebid gurantee could only be invoked if the contract were to be awared to the Kirolskar and they had failed to pay the amount or to perform their part which stage never arose theat NTPC could not invoke thebid guarantee in terms of the contract and hence a clear prima faci case exists of issuing aninjunction restraining thebank formmaking the payment the balance of convenience also is clearly ingavour of Krloskar because even if the wrong onhte above dindings allthat would wrong on the above findings allthat would happen id that at the end of litigation NTPC would be able to recover the amount of bid guarantee or such other sum as may be determined by the Court in thelight of the priciples laid down by the Supreme Court inMaula Bux v union of India AIR 1970 Sc 195, and that recovery woul at most be delayed.It is nobody''s case that Kirlokar are not solvant to the extent of Rs. 4,00,000/- and hence.If find that all theconditionns issuance oftemporary injnucitonare satisfied in this case.
It is always open to the owner or the employer like NTPC to maake surethat their officers are the cluttered with frivolous bids because even examining each bid requires time and expenses in the shape of salaries to be paid to their staff. With the end inview the NTPC were right insisting uponhelf security.this bid security would have some handy to them if the contract were to be awared toKirloskar and Kirloskar ewere to resile form their obligaiton of not furnishing contract performasnce guranctee. At best NTPC would have beneright in rejecting a bid if the biders were to withdraw there from or to make changes therein as Kirloskare ahas done. But tosay that anofferr cannot withdraw his offer before acceptance in the absence of the contrac tokeep theoffer him andthat too when the promise has nt suffered reliance determent would flt in the face of the principles of contract Some exceptions have been carved out oint he interst in international sale of goods law as well as by statute as in the case of Company Law where are an application for allotment of share cannot be withdrawn before a stipulated peiod or by common law in the case of Inn-keepers Absent any such statutory provisionns the general principles of contract law must prevail government and government undertakings contract are drated expertly and government departments generally obtain legal opnion fromtheir advisers if a dispute arises and the department may even abandona claim against a contractor if accordings totheir advisers the claim is ill fouonded in law. the\\se coercions of law have to co exist witht eh coercions of acountability infiscal matters theoverseeing role of estimates committees public account committees committee on public under taking etc., which may suggest ot the executive functionary to play safer by preferring a claim and leave the matter to the courts.
the appeal succeds and it is ordered that the defendant No. 2 United CommercialBank is restrianine form making the payment or rs. 4.00 laces or any order sum todefendant No. 1 NTPC in pursuance of the Bank Guarantee bearing No. 9/85 15th March 1985 in spita of the invocation of the same made by NTPC by their lette dated 15-10-1985.
Costs costs in the cause.
Appeal allowed.