Kiran Raj

A recent judgment by the Calcutta High Court addressed a dispute concerning a tender process initiated by the Shyama Prasad Mookerjee Port for the long-term lease of vacant land. The case arose after a company that had previously been declared the highest bidder in an earlier tender challenged the decision of the port authority to issue a fresh tender after the expiration of the original process.

The dispute centered on a notice inviting tender (NIT) dated August 2, 2021, through which the port authority sought bids for the lease of land for thirty years on an "as is where is" basis, without an option for renewal. The petitioners participated in the tender process and were declared the highest bidder (H1). However, the port authority was unable to proceed with the allotment due to a restraint order issued by the court on November 23, 2015, in connection with a separate litigation. The restraint order prevented the port from issuing the final allotment letter to the successful bidder.

Subsequently, the legal restriction was lifted when the writ petition was dismissed by the court on February 28, 2023. However, by that time, the validity period of the 2021 tender had expired. Since the tender had lapsed, the port authority proceeded with a fresh tender process, which was publicly announced on November 1, 2023. The petitioners did not participate in the fresh process. Another entity submitted a bid, was declared the highest bidder, and was awarded the lease. The new lessee took possession of the land on April 17, 2024, and a lease agreement was executed in June 2024.

In September 2024, the petitioners filed a fresh writ petition, challenging the new tender process. They sought to have the tender issued on November 1, 2023, set aside and all subsequent actions declared null and void. They also requested that the port authority issue an allotment letter in their favor and hand over possession of the land.

The petitioners argued that since they had been declared the highest bidders in the earlier tender and had deposited the earnest money, the port authority was bound to finalize the allotment in their favor. They contended that the earlier tender was canceled without reason and that they should have been notified before the fresh tender was issued. The petitioners submitted that as the port had accepted their offer and earnest money deposit, a binding contract had been formed, requiring the port to proceed with the allotment.

The court considered the arguments of both parties and examined whether any enforceable right had vested in the petitioners. It noted that the 2021 tender had a validity period of 180 days from the closing date of bid submission. Since the deadline for submission was September 2, 2021, the tender remained valid until March 2022.

The judgment stated: "The validity period could have been extended by the Port in response to a request made by the bidder. In the instant case, there was no request made for extension of the validity period of the tender." The court observed that once the validity period expired, the offer by the petitioners also lapsed. It was noted that "immediately on expiry of the validity period, the offer given by the petitioners also stood lapsed."

The court addressed the petitioners’ contention that they should have been informed of the lapse of the earlier tender before the new one was floated. It stated: "The Port may not have given a formal intimation regarding lapse of the offer of the petitioners, but the said non-communication will not revive the lapsed offer."

The court considered whether the petitioners had taken steps to preserve their claim once the restraint order was lifted. The judgment noted: "The petitioners ought to have followed up their offer with the Port immediately after dismissal of the pending writ petition which stood in the way of issuing the letter of allotment in favor of the petitioners. The writ petition stood dismissed by the Court in February, 2023, but there was no communication from the end of the petitioners. The Port proceeded to float fresh tender in November, 2023."

The court further observed that the fresh tender process was conducted through public advertisement in two leading newspapers, Sanmarg and The Times of India. The notice was also uploaded on the port authority’s official website and the MSTC platform. The court stated: "Had the petitioners been so interested to obtain allotment of land in the Port area, they ought to have been alert and vigilant as regards the advertisements published by the authority."

After examining the circumstances, the court found that the petitioners had no legal entitlement to the land under the expired tender. The judgment stated: "Submission of the petitioners that there was a valid contract in between the parties as the Port finalised, approved and accepted the offer of the petitioners, cannot be accepted by the Court. Though it is true that the bid/offer by the petitioners was accepted by the Port but, admittedly, the contract between the parties did not materialize and formal contract could not be executed because of the restraint order of the Court."

The judgment further stated: "A contract becomes valid only after the same is accepted and admitted by both the parties. In the instant case, final acceptance from the Port could not be made and, as such, the contract between the petitioners and the Port never came into existence at all. The same cannot be treated as a validly concluded contract. No right whatsoever accrued in favor of the petitioners as formal contract was not executed by and between the parties."

Regarding the petitioners' argument that their earnest money deposit gave them a contractual right, the court observed: "Mere payment of the earnest money deposit does not create any right in favor of the petitioners in the absence of a validly executed contract."

The judgment also considered whether the fresh tender process was improper. The court noted that there was no formal cancellation of the previous tender, as it had expired by its own terms. It found no procedural irregularities in the issuance of the new tender, as public notices had been issued and an open competitive bidding process had taken place.

The judgment concluded: "The submission of the petitioners that there has been unilateral cancellation of the earlier tender, also cannot be accepted. It does not appear that the petitioners have any right to proceed with the earlier tender which expired long back. There is no scope of reviving an offer which could not be finalized due to legal complications."

The court dismissed the writ petition and held that the contract executed with the successful bidder under the fresh tender process remained valid. It stated: "Fresh contract has been executed and the parties have acted in furtherance of the same. The Port and the private respondent shall be bound by the terms and conditions of the subsisting contract."

Case Title: Octavius Plantations Ltd. & Anr. vs. Shyama Prasad Mookerjee Port & Ors.
Case Number: WPO 960 of 2024
Bench: Justice Amrita Sinha

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