Cj Darcl Logistics Ltd. vs Oil And Natural Gas Corporation Ltd.
- Court
- Delhi High Court
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on : 15.04.2026
Judgment delivered on : 01.07.2026
Judgment uploaded on : 02.07.2026
+ LPA 38/2021
CJ DARCL LOGISTICS LTD. .....Appellant
versus
OIL AND NATURAL GAS CORPORATION LTD.
.....Respondent
+ LPA 39/2021
TRANSRAIL LOGISTICS LTD. .....Appellant
versus
OIL AND NATURAL GAS CORPORATION LTD.
.....Respondent
Advocates who appeared in this case
For the Appellant : Mr. Anil Goel and Mr. Aditya Goel, Advs.
For the Respondents : Mr. Chetan Sharma, ASG and Mr Varun
Mishra, Adv.
CORAM:
HON'BLE MR. JUSTICE V. KAMESWAR RAO
HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA
JUDGMENT
Signature Not Verified
LPA 38/2021 & LPA 39/2021 Page 1 of 19
Signed By:MOHIT
Signing
Date:02.07.2026 19:06
MANMEET PRITAM SINGH ARORA, J.
1. The present appeals have been filed under Clause 10 of the Letters
Patent, read with the Delhi High Court Act, 1966 [‘Act of 1966’], against
the final order dated 07.01.2021 [‘impugned order’].
2. The Appellant in LPA No. 38/2021, i.e., CJ Darcl Logistics Limited,
is engaged in the business of logistics and transportation of goods across
India by road and rail. The Appellant in LPA No. 39/2021, i.e., Transrail
Logistics Limited, is a subsidiary company of CJ Darcl [hereinafter
collectively referred to as ‘the Appellants’].
3. The Respondent is a Public Sector Enterprise of the Government of
India, under the control of the Ministry of Petroleum and Natural Gas and
deals with oil, gas and energy.
4. The Respondent published a Notice Inviting Tender dated 15.09.2017
[‘NIT’], inviting techno-commercial E-Bids with respect to Tender No.
ZN6MC17001, namely ‘Rate Contract for Hiring of Services of All India
Material Transportation through Trucks and Trailers’ [‘said tender’]. The
said tender was divided into 8 groups: 4 for the Trailer segment and 4 for the
Truck Segment. The Appellant in LPA No. 38/2021 participated in all 8
groups, whereas the Appellant in LPA No. 39/2021 participated in the
1
MSME category only in the group of 4 groups for Trailer.
5. The price bids were opened by the Respondent on 05.03.2018;
however, the price bids of the Appellants were not opened and considered
by the Respondent. Vide letter dated 16.03.2018, received from the Silchar
office of the Respondent in relation to another tender, the Appellants were
informed that their price bids were not opened in view of the banning
1
Micro, Small, and Medium Enterprises
Signature Not Verified
LPA 38/2021 & LPA 39/2021 Page 2 of 19
Signed By:MOHIT
Signing
Date:02.07.2026 19:06
proceedings initiated against the Appellants in respect of the said tender.
6. Vide another communication dated 26.03.2018, the Appellants were
informed that their bids in the said tender had been rejected for violation of
the Integrity Pact. The bank guarantees submitted by the Appellant in LPA
No. 38/2021 as security deposit/Earnest Money Deposit [‘EMD’] were also
invoked and forfeited by the Respondent, and the same was informed to the
said Appellant on 27.03.2018. The Respondent thereafter issued a Show
Cause Notice dated 09.04.2018 [‘SCN’] to the Appellants alleging violation
of Section 2 of the Integrity Pact.
7. Against the SCN, the Appellants submitted their respective replies on
23.04.2018. Thereafter, the Respondent passed two separate yet identical
banning orders, both dated 06.06.2018 [‘impugned banning orders’],
addressed individually to each of the Appellants, thereby banning them from
engaging in business dealings with the Respondent for a period of six
months, and thereafter their representation against the same was also
rejected vide order dated 19.06.2018 [‘impugned representation rejection
order’].
8. The Appellants, aggrieved by the said orders, filed the underlying
writ petitions seeking the setting aside of the impugned banning orders and
the impugned representation rejection order. Vide the impugned order dated
07.01.2021, the learned Single Judge upheld the order rejecting the
Appellants’ representation as well as the impugned banning orders dated
06.06.2018. At the same time, the learned Single Judge directed the refund
of the EMD amount of Rs. 2,95,26,590/- forfeited by the Respondent. The
impugned order, however, did not grant any interest on the said refunded
amount.
Signature Not Verified
LPA 38/2021 & LPA 39/2021 Page 3 of 19
Signed By:MOHIT
Signing
Date:02.07.2026 19:06
9. In these facts, the Appellants have instituted the present appeals
assailing the impugned order to the extent it upholds the impugned banning
orders.
10. The Respondent has filed cross-objections under Order XLI Rule 22
of the Code of Civil Procedure, 1908 [‘CPC’], by filing CM No. 26138/2021
in LPA No. 38/2021. The Respondent assails the impugned order to the
limited extent that it directs the Respondent to refund the EMD amount of
Rs. 2,95,26,590/-.
11. At the outset, this Court notes that vide order dated 22.02.2024, CM
No. 26138/2021 was inadvertently disposed of. However, in order to
consider the Respondent’s cross-objections, we find it apposite to revive the
said application and decide the same.
12. During the pendency of these proceedings, the Respondent deposited
the EMD amount of Rs. 2,95,26,590/- in W.P. (C) 6827/2018 in the year
2021. The said amount has been released to the Appellant in the year 2022
in pursuance of the order dated 08.07.2022 as against furnishing of a bank
guarantee.
13. This Court has heard the learned counsel for the parties and perused
the record.
14. Mr. Anil Goel, learned counsel for the Appellants, submitted at the
hearing that due to the passage of time, the impugned banning orders, which
were operative for a period of six months, have worked out and the period of
banning has already been undergone by the Appellants. He submitted that
without going into the merits of the impugned banning orders, the present
appeals may be disposed of by permitting the Appellants to participate in the
future contracts of the Respondent or any other third party, including
Signature Not Verified
LPA 38/2021 & LPA 39/2021 Page 4 of 19
Signed By:MOHIT
Signing
Date:02.07.2026 19:06
2
Government establishments or PSUs , without any reference to the
impugned banning orders.
14.1. He further submitted on behalf of the Appellant in LPA No. 38/2021
that the said Appellant is pressing for relief of grant of interest at the rate of
9% per annum on the EMD amount of Rs. 2,95,26,590/- w.e.f. 27.03.2018,
i.e., the date of forfeiture of the said amount till the date of the actual
payment. He relies upon several judicial precedents referred to in the written
submissions dated 02.08.2023 for relief of interest.
I. Claim for interest and the EMD refund
15. In our considered opinion, the Appellant’s prayer for grant of interest
on the EMD amount is reasonable and was a consequential relief to which
the Appellant was entitled after the learned Single Judge held that the
forfeiture of the EMD was illegal. The judgment of the Supreme Court in
3
Alok Shanker Pandey v. Union of India & Others relied upon by the
Appellant is apposite, wherein paragraph 9 reads as under: -
“9. It may be mentioned that there is misconception about interest.
Interest is not a penalty or punishment at all, but it is the normal
accretion on capital. For example, if A had to pay B a certain amount,
say 10 years ago, but he offers that amount to him today, then he has
pocketed the interest on the principal amount. Had A paid that amount to
B 10 years ago, B would have invested that amount somewhere and
earned interest thereon, but instead of that A has kept that amount with
himself and earned interest on it for this period. Hence, equity demands
that A should not only pay back the principal amount but also the interest
thereon to B.”
[Emphasis supplied]
16. The impugned order does not note the prayer for interest claimed in
the W.P. (C) 6827/2018 and therefore does not expressly deal with the said
prayer in the writ petition. There is therefore, an implied rejection of the said
2
Public Sector Undertakings
3
(2007) 3 SCC 545
Signature Not Verified
LPA 38/2021 & LPA 39/2021 Page 5 of 19
Signed By:MOHIT
Signing
Date:02.07.2026 19:06
prayer, albeit without any reasons.
17. We are therefore of the considered opinion that the Appellant will be
entitled to 8% simple interest per annum on the EMD amount of Rs.
2,95,26,590/-. The interest will be payable w.e.f. 27.03.2018 until the said
amount stood deposited by the Respondent with the Registry of this Court in
2021. The Respondent will remit the amount to the Appellant directly within
a period of two [2] weeks, along with a calculation sheet specifying the date
of deposit of the EMD amount with the Registry in the year 2021.
18. We are, however, not inclined to direct the Respondent to pay any
interest for the period after the principal amount of Rs. 2,95,26,590/- stood
deposited with the Registry of this Court in the year 2021.
19. The Appellant was paid over the principal amount of Rs.
2,95,26,590/- by the Registry of this Court in the year 2022; however, the
interest accrued thereon after the deposit, by the Respondent, in the year
2021 was not released to the Appellant and is lying deposited with the
Registry in an FDR. The Registry is directed to release the entire amount
lying in the said FDR to the Appellant within a period of two [2] weeks. The
Registry is also directed to return the bank guarantee dated 12.05.2026 to the
Appellant.
20. With the aforesaid directions, the prayer (a) in the LPA No. 38/2021
seeking interest on the EMD amount of Rs. 2,95,26,590/- stands allowed in
the aforesaid terms.
II. Clarification sought qua impugned banning orders
4
21. We shall next consider the challenge in both the LPAs to the
respective impugned banning orders dated 06.06.2018.
4
Letters Patent Appeals
Signature Not Verified
LPA 38/2021 & LPA 39/2021 Page 6 of 19
Signed By:MOHIT
Signing
Date:02.07.2026 19:06
22. As noted above, Mr. Anil Goel, Advocate has submitted that the
Appellants are no longer challenging the impugned order of the learned
Single Judge to the extent it upholds the impugned banning orders, as the
Appellants have already undergone the banning period of six months and
instead only seek a clarification that it is permissible for the Appellants to
henceforth participate in future contracts, without any reference to the
impugned banning orders. The submission is also specifically pleaded at
paragraph ‘13’ of the written submissions dated 02.08.2023 filed in LPA
No. 38/2021.
23. In view of the submissions of Appellants with respect to the
impugned banning orders dated 06.06.2018, we illustratively refer to the
operative portion of the impugned banning order pertaining to the Appellant
in LPA No. 38/2021, which reads as under: -
“11. Accordingly, ONGC has decided to ban all business dealings with
you i.e. M/s CJ Darcl Logistics Limited, Tilak Bazar-19, Hisar- 125001,
Haryana (Vendor Code: 828996) along with its allied concern(s),
partner(s) or associate(s) or directors or proprietors involved in any
capacity for a period of 6 months from the date of issue of banning order.
During the aforementioned period of banning of 6 months, neither any
tender enquiry shall be issued by ONGC against any type of tender nor
offers of M/s CJ Darcl Logistics Limited, Tilak Bazar-19, Hisar- 125001,
Haryana (Vendor Code: 828996) or its allied concern(s), partners) or
associates or directors or proprietors involved in any capacity etc. shall
be considered by ONGC in any of the on-going tender(s).”
The operative part of the banning order in LPA No. 39/2021 is
identical.
24. The operative part of the impugned banning orders makes it expressly
clear that the ban on participation was limited to a period of 6 months and
only vis-à-vis the Respondent [i.e., ONGC]. In the facts of these appeals,
Signature Not Verified
LPA 38/2021 & LPA 39/2021 Page 7 of 19
Signed By:MOHIT
Signing
Date:02.07.2026 19:06
since an interim order operated in favour of the Appellants during the
pendency of the writ petitions, the banning period of 6 months commenced
only on 07.01.2021, i.e., after the pronouncement of the impugned judgment
by the learned Single Judge and this period expired on 06.07.2021.
25. It is a matter of record that after 06.07.2021, the Appellants have not
faced any impediment in participation in any tender process issued by the
Respondent or any third party due to the said impugned banning orders.
26. In these facts, the directions prayed for by the Appellants to the effect
that this Court must clarify that the Appellants can participate in future
tenders floated by any third party, including Government establishments or
PSUs, without any reference to the impugned banning orders, are not only
beyond the scope of the said banning orders but, in effect, seeks a relief in
their favour against third parties [i.e., Government establishments, PSUs,
etc.] who are not before this Court. Each tendering authority is entitled to
stipulate its own eligibility and disclosure conditions, and it is for such
authority to assess the relevance, if any, of any prior banning order in
accordance with its governing tender conditions. Consequently, if the tender
conditions of any such third party require disclosure of past banning orders,
the Appellants would be contractually required to make such disclosure. In
these circumstances, no omnibus declaration, as prayed for by the
Appellants, can be granted.
The Appellants have not placed before this Court any event post
06.07.2021, where a third party has denied them an opportunity to
participate in the tender process due to the impugned banning orders and
therefore, we find that the omnibus declaration sought is without any cause
of action.
Signature Not Verified
LPA 38/2021 & LPA 39/2021 Page 8 of 19
Signed By:MOHIT
Signing
Date:02.07.2026 19:06
27. It is trite law that since the impugned banning orders have already
taken effect and the Appellants have undergone the ban, these banning
orders would ordinarily not form the basis of denial of opportunity to
participate in tenders issued by Government authority. If the Appellants are
excluded from participation in tenders by any third party solely by placing
reliance on the impugned banning orders, the Appellants would have to avail
their legal remedies against such exclusion and the reasonableness of such
action would be determined in those proceedings.
28. Even on the merits of the challenge to the impugned banning orders
dated 06.06.2018, we find that the findings recorded by the learned Single
Judge are well reasoned and do not merit any interference. The conclusion in
paragraph ‘18’ of the impugned order is sufficient to uphold the impugned
banning orders. The relevant paragraph 18 reads as under: -
“18. In the present case, the respondent has come to a conclusion that
because the bids that were submitted by the petitioners were submitted by
Mr. Pradeep Bansal; one under his own signatures for Transrail and the
second through his Power of Attorney holder- Mr. Narendra Sharma, for
CJ Darcl, the bids were designed and coordinated by the same person
thereby violating the provisions of Integrity Pact. The respondent has not
invoked the provision as is contained in the amended Integrity Pact for
proceeding against the petitioners only because of their relationship as
holding and subsidiary company. No fault can be found with the above
finding of the respondent.”
[Emphasis supplied]
Therefore, we hold that the impugned banning orders passed by the
Respondents have been rightly upheld by the learned Single Judge.
29. The prayer of the Appellants seeking a declaration qua the impugned
banning orders is disposed of with the aforesaid directions.
III. Maintainability of the Cross-objections of the Respondent challenging the
direction for refund of the EMD and merits of the said objection
Signature Not Verified
LPA 38/2021 & LPA 39/2021 Page 9 of 19
Signed By:MOHIT
Signing
Date:02.07.2026 19:06
30. Lastly, we have to consider the cross-objections filed by the
Respondent as CM No. 26138/2021 in LPA No. 38/2021 under Order XLI
Rule 22 CPC impugning the order dated 07.01.2021 to the extent that it
directs the Respondent to refund the EMD amount of Rs. 2,95,26,590/-.
31. The Appellants have raised an objection to the maintainability of the
cross-objections. It is contended that the provision of Order XLI Rule 22
CPC has no application in the present appeal filed under Clause 10 of the
Letters Patent. Learned counsel for the Appellants have relied upon the
judgment of the full bench of the High Court of Madhya Pradesh in
5
J abalpur Development Authority v. Y.S. Sachan and others to contend
that a cross-objection filed under Order XLI Rule 22 CPC cannot be
construed to apply to a proceeding under LPA. He relies upon paragraph
nos. 9, 10, and 11, which read as under: -
“9. On a perusal of the aforesaid decision it is noticeable that their
Lordships referred to the decision rendered in the case of Ramanbhai
Ashabhai Patel v. Dabhi Ajitkumar Fulsinji, AIR 1965 SC 669, the
Constitution Bench judgment wherein it has been held that a party can
always support the judgment in his favour even on grounds that was
negatived in the impugned judgment.
10. If the aforesaid judgment is considered in juxtaposition of the law
laid down in the case of Puran Singh (supra) there can be no doubt that a
respondent can defend the judgment pasted in a Letters Patent Appeal
where the order of the single Judge is under assail. The moot question
that arises for consideration is whether in such an appeal a cross
objection can be filed. A party who is aggrieved by an order of the
learned single Judge can prefer an independent appeal. The cross
objection has a different connotation. The concept of cross appeal has a
different contour and colour. A cross objection or a cross appeal is filed
after receipt of the notice within the time provided under Order 41, Rule
22 of the Code of Civil Procedure. But, there is no concept of filing of
cross objection in a Letters Patent Appeal in the Rules. Rules have been
framed for filing of letters patent appeals. An LPA has to be filed within
5
2004 SCC OnLine MP 54
Signature Not Verified
LPA 38/2021 & LPA 39/2021 Page 10 of 19
Signed By:MOHIT
Signing
Date:02.07.2026 19:06
thirty days. In this context we may profitably refer to the relevant Rule. It
reads as under:
“XIII (1) Any appeal under clause 10 of the Letters Patent shall be
filed within 30 days from the date of judgment and order of the single
Judge.
Provided, however, that, any delay in filing the appeal may be
condoned for good and sufficient reason.
(2) In computing the period of limitation for an appeal under clause 10
of the Letters Patent, the time taken for obtaining leave to appeal,
when such leave is necessary and the time taken for obtaining certified
copy of the judgment and order or decree, shall be excluded.
(3) A memorandum of appeal under clause 10 of the Letters Patent
shall be accompanied by two certified copies or one certified copy and
one photocopy, or two photo copies of the judgment and order or
decree appealed from.”
11. On a perusal of the aforesaid Rule it is clear that there is provision for
condonation of delay in preferring an appeal. But that does not
necessarily mean that a cross objection or cross appeal can be filed
awaiting notice in appeal. It is relevant to state that no cross objection is
entertained under Article 226 of the Constitution of India like a counter
claim in a suit. True it is, in a letters patent appeal the facts and law can
be gone into by the Court deciding the intra-Court appeal but that does
not necessarily convey that while hearing an appeal, a cross objection
would be entertained when a counter claim or counter relief is not
entertained in a writ petition, at the instance of the opposite party or
respondent therein. Another facet is worth noting. A cross objection has
its own independent existence under the Code of Civil Procedure but the
same cannot be construed to apply to a proceeding under writ jurisdiction
or an appeal arising therefrom. The High Court of Andhra Pradesh in the
decision rendered in the case of Chittoor Co-operative Town Bank Ltd.
(supra) has applied concept of the Order 41, Rule 22 in entirety. In our
considered opinion the same is not permissible as per the law laid down
in the case of Puran Singh (supra) in the case of Puran Singh (supra) the
Supreme Court has held that the High Court should be left to adopt its
own procedure for granting relief to the persons. An appeal from an
order made under Article 226/227 is in a different realm altogether
and can never be understood to mean that a cross objection which a
matter of statutory right under the Code of Civil Procedure would lie
to the Court when the LPA is admitted. ”
[Emphasis supplied]
Signature Not Verified
LPA 38/2021 & LPA 39/2021 Page 11 of 19
Signed By:MOHIT
Signing
Date:02.07.2026 19:06
32. In response, Mr. Chetan Sharma, learned Additional Solicitor
General, has submitted that a cross-objection is maintainable in an LPA and
in this regard relies upon the judgment of the Supreme Court in Dheeraj
6
Singh v. Greater Noida Industrial Development Authority and Others .
33. We are unable to agree with the contentions of the Respondent with
respect to maintainability of the cross-objections under Order XLI Rule 22
CPC in an LPA.
34. In addition to the judgment of the full bench of the High Court of
Madhya Pradesh relied upon by the Appellants, we find it apposite to refer
7
to the judgment of the Supreme Court in Puran Singh v. State of Punjab ,
wherein the Supreme Court, after referring to the Explanation to Section 141
CPC, unequivocally held that provisions of CPC have no application to
proceedings under Article 226 of the Constitution of India. The relevant
paragraphs read as under: -
“7. When the High Court exercises extraordinary jurisdiction under
Article 226 of the Constitution, it aims at securing a very speedy and
efficacious remedy to a person, whose legal or constitutional right has
been infringed. If all the elaborate and technical rules laid down in the
Code are to be applied to writ proceedings the very object and purpose is
likely to be defeated. According to us, in view of the conflicting opinions
expressed by the different courts, Parliament by the aforesaid amending
Act introduced the explanation saying that in Section 141 of the Code the
expression ‘proceedings’ does not include “any proceedings under
Article 226 of the Constitution” and statutorily recognised the views
expressed by some of the courts that writ proceedings under Article 226
of the Constitution shall not be deemed to be proceedings within the
meaning of Section 141 of the Code. After the introduction of the
explanation to Section 141 of the Code, it can be said that when Section
141 provides that the procedure prescribed in the Code in regard to suits
shall be followed, as far as it can be made applicable “in all proceedings
in any court of civil jurisdiction” it shall not include a proceeding under
6
2023 SCC OnLine SC 768
7
(1996) 2 SCC 205
Signature Not Verified
LPA 38/2021 & LPA 39/2021 Page 12 of 19
Signed By:MOHIT
Signing
Date:02.07.2026 19:06
Article 226 of the Constitution. In this background, according to us, it
cannot be held that the provisions contained in Order 22 of the Code are
applicable per se to writ proceedings. If even before the introduction of
the explanation to Section 141, this Court in the case of Babubhai v.
Nandlal [(1974) 2 SCC 706 : AIR 1974 SC 2105 : (1975) 2 SCR 71] had
said that (SCC Headnote p. 707) the words “as far as it can be made
applicable” occurring in Section 141 of the Code made it clear that, in
applying the various provisions of the Code to the proceedings other than
those of a suit, the court has to take into consideration the nature of those
proceedings and the reliefs sought for after introduction of the
explanation the writ proceedings have to be excluded from the expression
‘proceedings’ occurring in Section 141 of the Code. If because of the
explanation, proceeding under Article 226 of the Constitution has been
excluded, there is no question of making applicable the procedure of
Code “as far as it can be made applicable” to such proceeding. The
procedures prescribed in respect of suit in the Code if are made
applicable to the writ proceedings then in many cases it may frustrate the
exercise of extraordinary powers by the High Court under Articles 226
and 227 of the Constitution.
……
11. We have not been able to appreciate the anxiety on the part of the
different courts in judgments referred to above to apply the provisions of
the Code to writ proceedings on the basis of Section 141 of the Code.
When the Constitution has vested extraordinary power in the High Court
under Articles 226 and 227 to issue any order, writ or direction and the
power of superintendence over all courts and tribunals throughout the
territories in relation to which such High Court is exercising jurisdiction,
the procedure for exercising such power and jurisdiction have to be
traced and found in Articles 226 and 227 itself. No useful purpose will be
served by limiting the power of the High Court by procedural provisions
prescribed in the Code. Of course, on many questions, the provisions and
procedures prescribed under the Code can be taken up as guide while
exercising the power, for granting relief to persons, who have invoked
the jurisdiction of the High Court. It need not be impressed that different
provisions and procedures under the Code are based on well-recognised
principles for exercise of discretionary power, and they are reasonable
and rational. But at the same time, it cannot be disputed that many
procedures prescribed in the said Code are responsible for delaying the
delivery of justice and causing delay in securing the remedy available to
a person who pursues such remedies. The High Court should be left to
adopt its own procedure for granting relief to the persons concerned. The
High Court is expected to adopt a procedure which can be held to be not
only reasonable but also expeditious.”
[Emphasis supplied]
Signature Not Verified
LPA 38/2021 & LPA 39/2021 Page 13 of 19
Signed By:MOHIT
Signing
Date:02.07.2026 19:06
35. In these proceedings, the writ petitions filed under Article 226 of the
Constitution were entertained by the learned Single Judge in exercise of the
original jurisdiction vested in the High Court under Section 5(1) of the Act
of 1966. As held by the Supreme Court in Puran Singh (supra), the
provisions of the CPC do not apply proprio vigore to proceedings under
Article 226 of the Constitution of India, unless expressly made applicable by
statute.
36. The appeal against the impugned order has been filed under Clause 10
of the Letters Patent of Lahore as applicable to Delhi. CPC has neither been
made applicable to the proceedings entertained by the High Court under
Article 226 of the Constitution of India nor to an appeal filed under Clause
10 of the Letters Patent. The Respondent therefore could not have filed
cross-objections under Order XLI Rule 22 CPC, considering that CPC does
not apply to the appeal filed under Letters Patent. The Respondent was not
remediless and ought to have exercised its right to file an independent
appeal against the impugned judgment, in accordance with law.
37. The reliance placed by the Respondent on the judgment of Dheeraj
Singh v. Greater Noida (supra) is misconceived. The said judgment arose
in proceedings arising under the Land Acquisition Act, 1894 [‘Act of
1894’]. The issue arising for consideration was with respect to non-
consideration by the High Court of the cross-objections filed by the
Government authority in the appeal filed by the landowners against the rate
of award of compensation. The Supreme Court, on a perusal of the
impugned judgment of the High Court, found that the cross-objections were
neither considered nor adjudicated by the High Court, and in this
background, it was held that the High Court had erred. We are unable to
Signature Not Verified
LPA 38/2021 & LPA 39/2021 Page 14 of 19
Signed By:MOHIT
Signing
Date:02.07.2026 19:06
appreciate how this judgment would enable the Respondent herein to
maintain the cross-objections in this LPA, as under the Act of 1894,
provisions of CPC have been specifically made applicable to appeals, and in
this regard, Sections 53 and 54 of the Act of 1894 are expressly clear. Thus,
indeed, cross-objections under Order XLI Rule 22 CPC are available to a
respondent in appeals filed under the Act of 1894.
38. Since the right to file cross-objections as per Order XLI Rule 22 CPC
is a substantive right granted by the statute, unless the provisions of CPC
have been made expressly applicable to the legal proceedings in question, a
Respondent cannot file the cross-objections in an LPA, and its remedy to
challenge the impugned order has to be exercised in accordance with the
statute which governs the original proceedings.
39. Nevertheless, to put a quietus to the issue, we have examined the
impugned order and the legality of the reasons recorded by the learned
Single Judge for issuing a direction for refund of the EMD amount of Rs.
2,95,26,590/- on the grounds pleaded in CM No. 26138/2021.
40. The reasons recorded by the learned Single Judge are as under: -
“28. A reading of the above Section of the Integrity Pact would clearly
show that where the bidder is disqualified from the bid due to
transgression of the Integrity Pact, the respondent is entitled to “demand
and recover” from the bidder “liquidated damages” equivalent to earnest
money deposit/bid security. The bidder has to pay the same without
protest subject only to the condition that if the bidder/Contractor can
prove and establish that the exclusion of the bidder from the tender
process has caused no damage or less damage than the amount of the
liquidated damages, then the bidder/Contractor shall compensate the
Principal only to the extent of the damage in the amount proved.
Therefore, on a transgression of the Integrity Pact being found by
the respondent to have been committed by a bidder, the respondent
has to first raise a demand for the liquidated damages equivalent to
the earnest money deposit/bid security. On such demand being
raised, the bidder would be entitled to prove and establish that no
Signature Not Verified
LPA 38/2021 & LPA 39/2021 Page 15 of 19
Signed By:MOHIT
Signing
Date:02.07.2026 19:06
loss or loss of a lesser amount has been caused to the respondent, in
which event either no amount or lesser amount shall be claimed
payable by the bidder .
29. In the present case, the bank guarantee of the petitioners towards the
earnest money deposit was encashed by the respondent without any
notice to the petitioners. The question therefore is whether the amount so
received can be retained by the respondent in the facts of the present
case. Admittedly, the respondent has not issued any notice to the
petitioner demanding the above amount as liquidated damages. Infact, it
is the case of the respondent that the same automatically stood forfeited.
The petitioners have claimed that due to the disqualification of the
petitioner, no loss was caused to the respondent. On the other hand the
respondent claimed that no such loss is required to be shown. They have
placed reliance on the judgment of the Supreme Court in Kailash Nath
and Associates, (Supra), wherein the Supreme Court has inter alia held as
under:-
“41. It must, however, be pointed out that in cases where a public
auction is held, forfeiture of earnest money may take place even
before an agreement is reached, as DDA is to accept the bid only
after the earnest money is paid. In the present case, under the terms
and conditions of auction, the highest bid (along with which
earnest money has to be paid) may well have been rejected. In such
cases, Section 74 may not be attracted on its plain language
because it applies only "when a contract has been broken".
xxxxxx
40.7 Section 74 will apply to cases of forfeiture of earnest money
under a contract. Where, however, forfeiture takes place
under the terms and conditions of a public auction before
agreement is reached, Section 74 would have no
application.”
30. In the present case, though Section 74 of the Indian Contract Act,
1872 may not have any application, Section 4 of the Integrity Pact itself
requires a demand to be raised on the earnest money deposit and a right
is created in favour of the bidder to show on such demand that no
damage is suffered by the respondent or that the damage suffered is
lesser than the earnest money deposit, in which case, either no such
amount can be recovered from the bidder or a lesser amount is to be
recovered.
31. As noted, the respondent has not denied that no loss was suffered by
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the respondent due to the disqualification of the petitioners from the bid
on account of their transgression of the Integrity Pact. There would
therefore, be no disputed question of fact to be adjudicated. The
forfeiture of the earnest money deposit of the petitioner, therefore, cannot
be sustained and is ordered to be refunded to the petitioners.
32. Accordingly, while the impugned orders in so far as they ban the
petitioners from all business dealings with the respondent for a period of
six months are upheld. The respondent is however, directed to refund the
Security Deposit/Earnest Money Deposits of the petitioners forfeited by
it, within a period of four weeks of this order.”
[Emphasis supplied]
41. The learned Single Judge directed the refund on two grounds:
(a) Non-following of the procedure set out in Section 4 of
the Integrity Pact by issuing a notice of demand; and
(b) No loss having been suffered by the Respondent due to
the exclusion of the bidder from the tender process.
42. The Respondent has impugned the said findings of the learned Single
Judge on the ground that it has indeed suffered losses, as the disqualification
of the Appellants from the bidding process made the tender process less
competitive. It also contended that the communications dated 16.03.2018
and 26.03.2018 sufficiently complied with the requirement of issuing a
notice as required under Section 4 of the Integrity Pact.
43. In our considered opinion, the submission of the Respondent in the
pleadings that it has suffered losses due to the exclusion of the Appellant
from the bidding process cannot be accepted as proof of loss.
In the facts of this case, the tender process continued [smoothly] and
was awarded to the successful bidder, Western Carrier Pvt. Ltd., on
10.03.2018, even prior to rejection of the Appellant’s bid on 26.03.2018 and
initiation of the banning proceedings against the Appellant herein, which
only began on 09.04.2018. The award of the tender on 10.03.2018 to the
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successful bidder belies the contention of the Respondent that it suffered any
loss due to the exclusion of the Appellant from the bidding process.
We have also perused the SCN and the impugned banning orders;
neither the SCN nor the order records that any loss was suffered by the
Respondent due to the Appellants’ transgression of the Integrity Pact.
Similarly, the e-mail dated 26.03.2018 issued by the Respondent
communicating to the Appellants the rejection of their bid due to the
violation of the Integrity Pact does not make any assertion of loss. Also, the
initial letter dated 16.03.2018 issued by the Respondent to the Appellant in
response to the letter dated 14.03.2018 only makes reference to the initiation
of banning proceedings and does not assert any loss suffered.
44. In these facts, the finding recorded by the learned Single Judge that
the Respondent had not suffered any loss is correct and does not require any
interference. Also, the finding of the learned Single Judge that the issue of
alleged loss is not a disputed question of fact is correct in the facts of this
case, as no documents or information have been placed on record by the
Respondent to even remotely prove the alleged loss suffered by it.
45. The Respondent has also challenged the finding of the learned Single
Judge with respect to the non-following of the procedure of forfeiture of
EMD contemplated under Section 4 of the Integrity Pact with respect to
issuance of notice of demand. The Respondent has contended that the
communications dated 16.03.2018 and 26.03.2018 would amount to implied
notice of forfeiture of the EMD. We have perused the contents of the said
communication and are unable to find any merit in this submission of the
Respondent. These communications make no reference to any demand for
liquidated damages and also make no reference to any intention of the
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Respondent to forfeit the EMD. The said communications cannot even be
read to imply any intention of the Respondent to forfeit the EMD. Clause
16.7 of the said tender and Section 4 of the Integrity Pact no doubt entitles
the Respondent to forfeit the EMD; however, the said right of the
Respondent is subject to compliance with the twin conditions of notice and
suffering actual loss. In the facts of this case, the Respondent has not been
able to satisfy these twin conditions, and therefore, the findings of the
learned Single Judge do not merit any interference.
46. The grounds raised by the Respondent in CM No. 26138/2021
challenging the findings and direction in the impugned order directing them
to refund the EMD amount of Rs. 2,95,26,590/- are bereft of merits and are
accordingly dismissed.
47. The Respondent and the Registry are directed to comply with the
directions set out at paragraph nos. ‘17’ and ‘19’ respectively of this
judgment, within two [2] weeks.
48. With the aforesaid findings and directions, the present appeals along
with the cross-objections filed by the Respondent are disposed of.
MANMEET PRITAM SINGH ARORA, J
V. KAMESWAR RAO, J
JULY 01, 2026/ mt/aa/aj
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