Gauhati High CourtAdministrative and Public LawContract Law

Gauhati HC Orders Return Of Supplier’s ₹1 Lakh EMD NSCs, Says Tender Required Supply, Not Commissioning

Kit And Consultancy Servicesv.The State Of Assam And 3 Ors.

Gauhati HC Orders Return Of Supplier’s ₹1 Lakh EMD NSCs, Says Tender Required Supply, Not Commissioning. Kit And Consultancy Services vs The State Of Assam And 3 Ors.. Gauhati High Court. LawLens
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In brief

The question

Whether the petitioner’s failure to commission the supplied goods justified withholding or forfeiting the earnest money, where the quotation conditions required only supply and provided for forfeiture upon failure to supply

The court held

The Court held that the petitioner was entitled to return of the NSCs

It also directed

The Court disposed of the writ petition with directions to the respondents, particularly Respondent No. 2, to return them within 30 days after submission of a certified copy of the judgment

No interest was initially awarded, but if the NSCs were not returned within that period, Respondent No. 2 was directed to pay interest at 9% per annum on the earnest money from the date of judgment. No costs were awarded

01Facts

The petitioner participated in a quotation process for supplying tools and equipment and furnished earnest money of ₹1,00,000 in National Savings Certificates (NSCs). The quotation conditions provided for forfeiture only if the supplier failed wholly or partly to supply the ordered items

pp. 3–4, paras 4–5

The petitioner’s bid was accepted, a supply order was issued, and the respondents paid for the goods supplied

pp. 5, paras 6–9

The respondents withheld the NSCs, contending that the supply order also required commissioning and that the petitioner had not completed it. The petitioner maintained that commissioning was outside the tender’s scope and was the respondents’ responsibility

pp. 6, paras 10–11

The petitioner sought return of the NSCs by writ petition

p. 3, para 2

02Issues

i.Whether the petitioner’s failure to commission the supplied goods justified withholding or forfeiting the earnest money, where the quotation conditions required only supply and provided for forfeiture upon failure to supply

pp. 3–4, paras 4–5 · pp. 6–7, paras 10–12

ii.Whether the respondents’ continued retention of the NSCs, after the goods had been supplied and paid for, was arbitrary and unreasonable

pp. 7, paras 12–13

03Law Applied

Under Clause B, Sub-Clause 9 of the quotation, earnest money could be forfeited wholly or proportionately at the respondent’s discretion only if the supplier failed wholly or partly to supply the ordered items

pp. 3–4, para 4

The Court also applied the public-law principle that State action must not be arbitrary or unreasonable

p. 7, para 12

04Reasoning

The Court found that the quotation sought supply of goods and did not require the bidder to commission them

pp. 6–7, paras 11–12

It construed the supply order’s commissioning-related instruction as making the supplier responsible for the goods’ condition when they reached the destination and for defects identified during commissioning by the respondents; it did not make commissioning itself part of the petitioner’s supply obligation

p. 7, para 12

Since the petitioner supplied the goods and the respondents paid for them, the contractual condition permitting forfeiture for failure to supply was not triggered. Retaining the NSCs because the respondents had not commissioned the goods would therefore be arbitrary and unreasonable

p. 5, para 9 · p. 7, para 12

05Holding

The Court held that the petitioner was entitled to return of the NSCs

pp. 7–8, paras 13–14

The Court disposed of the writ petition with directions to the respondents, particularly Respondent No. 2, to return them within 30 days after submission of a certified copy of the judgment

pp. 7–8, paras 13–14

No interest was initially awarded, but if the NSCs were not returned within that period, Respondent No. 2 was directed to pay interest at 9% per annum on the earnest money from the date of judgment. No costs were awarded

p. 8, para 14
Gauhati High Court

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Kit And Consultancy ServicesvsThe State Of Assam And 3 Ors.

Gauhati High Court · November 04, 2026

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