IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA CWP No.9628 of 2025 Decided on : 22.07.2026 Shubham Vij ...petitioner. Versus Municipal Corporation Shimla and Others. …Respondents. Coram Hon’ble Mr. Gurmeet Singh Sandhawalia, Chief Justice. Hon’ble Mr. Justice Bipin Chander Negi, Judge. Whether approved for reporting?1 For the petitioner : Mr. Ganesh Barowalia, Advocate. For the respondents : Mr. Mukul Sood, Advocate. Bipin Chander Negi, Judge The present petition has primarily been preferred laying challenge to Annexure P-7 (colly), i.e., letter dated 17.05.2025, whereby award made qua 13 works post-tender, vide letter dated 17.04.2025, Annexure P-4 (colly), were cancelled and the earnest money deposited qua the said 13 works so awarded were forfeited by the respondent- Corporation. 2. The respondent Corporation had floated tenders for execution of 17 works with respect to resurfacing of specific roads within the Shimla municipal area in the summer season, 1Whether the reporters of the local papers may be allowed to see the Judgment? Yes -2- i.e., May and June, 2025. Online publication whereof was made on 26.03.2025. Bid submission was to start on 26.03.2025 and the same was to end on 05.04.2025 up to 1:00 PM. Thereafter, the technical bid was to be opened on 05.04.2025 at 2:00 PM. In terms of the tender floated, date and place for opening of financial proposals was to be notified during uploading of technical evaluation sheet of bidders. 3. Out of the aforesaid 17 works for which tenders had been floated, post-conclusion of the tendering process, work with respect to 13 tenders was awarded to the petitioner. In the writ petition filed, it has been categorically averred that the work was awarded with respect to the aforesaid 13 bids made by the petitioner on 02.05.2025. It is further averred in the petition that it is only thereafter that the petitioner had approached the respondent-Corporation for signing of the contract agreement. However, it is only then that the petitioner came to know that the approval had been conveyed in his favour on 17.04.2025 Annexure P-4(Colly). 4. Besides the aforesaid, as per the petitioner, it is only after 2nd of May, 2025 that the petitioner became aware of the issuance of letter dated 30.04.2025, Annexure P-5 -3- (colly), whereby the petitioner had been directed to start work within 7 days from the receipt of the said letter. It had been further made clear in the said letter that if work is not started within the aforesaid period, not only would the work be rescinded, even the earnest money deposited along with the tender by the petitioner would be forfeited. 5. Other than the aforesaid, in the writ petition, reliance has been placed on terms of the agreement which the petitioner and the respondent-Corporation were required to enter into post-award of work in the case at hand. Reference has been made to the said provisions to portray that for delayed work the respondent-Corporation could recover monetary compensation at a determined rate from the peti- tioner. 6. In the response filed, it has been categorically averred that post-award of work in the case at hand, vide letter dated 17.04.2025, Annexure P-4 (colly), no agreement had been entered into between the petitioner and the respondent-Corporation. Hence, according to the respondents, reliance placed upon conditions contained in an -4- agreement, which had never been entered into between the parties was of no consequence. 7. Other than the aforesaid in the reply, it has been stated that the financial bids in the case at hand were opened on 07.04.2025.On analyzing the bids, petitioner was found to be the lowest tenderer. Accordingly, the petitioner was asked to deposit 10% performance guarantee against each work vide letters dated 11.04.2025 (Annexure R-1/6 colly). In the reply, it has been categorically averred that the said letters had been delivered to the writ petitioner at the home address furnished by the petitioner and through email. The writ petitioner had failed to deposit the performance guarantee in response to the aforesaid communication. 8. Besides the aforesaid in the reply, it has been averred that keeping in view the short period within which the work had to be executed, work was awarded to the petitioner vide letters dated 17.04.2025, Annexure P-4 (colly). The said letters were stated to have been delivered at the home address of the writ petitioner and through email. In terms of the said letters, the writ petitioner was to commence work within 7 days from the date of issue of the said letters. Besides -5- the aforesaid, in terms of the said letters, the petitioner was to execute an agreement within 7 days from the issuance of the said letters. It was made clear in the award letters that if the agreement is not signed by the contractor within the period of 7 days, the work would be treated to be cancelled and earnest money deposited by the writ petitioner was to be forfeited. 9. Within the stipulated 7 days from the issuance of the award letters dated 17.04.2025 (Annexure P-4 colly), neither was the work commenced nor agreement as was required to be signed by the petitioner entered into with the Corporation. As a result, vide Annexure P-5, i.e., letter dated 30.04.2025, the respondent-Corporation once again directed the writ petitioner to start work within 7 days from the receipt of the letter and complete the work within the stipulated time. Yet again, it was made clear that if the work is not started, then the work would be rescinded and earnest money would be forfeited. 10. Further, since despite issuance of the aforesaid letter, neither was the agreement executed by the petitioner nor was the work started within the stipulated time despite -6- repeated requests, therefore, the respondent-Corporation vide impugned Annexure P-7 (colly), i.e., letter dated 17.05.2025, cancelled the work allotted to the petitioner and forfeited the earnest money. 11. In the aforesaid facts and attending circumstances, two contentions have been raised by the writ petitioner, first, that the award letters dated 17.04.2025 (Annexure P-4 colly) and letters dated 30.04.2025 (Annexure P-5 colly) were never served upon the writ petitioner. The second contention raised by the writ petitioner is with respect to conditions contained in the agreement, which would have been entered into between the parties in pursuance to the award letters dated 17.04.2025 (Annexure P-4 colly) to show that delay in completion of work was permissible and for delayed work the respondent-Corporation could recover monetary compensa- tion at a determined rate from the petitioner. No other con- tention has been raised. 12. Insofar as the first contention is concerned, a perusal of the Tender Summary Report annexed along with the writ petition as Annexure P-3 (colly) would point out that insofar as the Financial Bid Opening Summary is concerned, -7- the same had been updated on 8th April, 2025. Other than the aforesaid, if a reference in this respect is made to Para-9 of the reply on merits filed by the respondents, then it becomes evident that the financial bids in the case at hand were opened on 07.04.2025. 13. In this respect, from the response filed by the respondents, specifically Para-9 on merits, it transpires that after analyzing the financial bids made by the competing contractors, the writ petitioner was found to be the lowest. Accordingly, vide letter dated 11.04.2025 appended along with the reply as (Annexure R-1/6 colly), the writ petitioner was asked to deposit 10% performance guarantee. The same was delivered at the home of the writ petitioner and had been sent by email. 14. Since the work was of a time-bound nature and it had to be done within the months of May and June prior to the onset of the monsoons, therefore, on 17.04.2025 (Annexure P-4 colly), award letters had been issued in favour of the writ petitioner. The award letter had been communicated to the writ petitioner at his home address and through the email ID provided. In terms of the award letters, -8- the writ petitioner was required to execute an agreement and commence work within 7 days of the issuance of the said letters. 15. As neither the work was commenced nor the agreement was signed by the writ petitioner, therefore, vide letters dated 30.04.2025 (Annexure P-5 colly) once again, the petitioner was directed to start work within seven days from the receipt of the letter and complete the work within the stipulated time, i.e., before 30th June, 2025. In the letter, it was made clear that if the work is not commenced, then the work would be rescinded and earnest money would be forfeited. The said letter, as per the reply, had been delivered at the home address of the writ petitioner through a process server and had also been sent by email. 16. In the aforesaid backdrop, it has been stated in the reply that the Executive Engineer, R&B, MC Shimla, had also telephonically contacted the writ petitioner to sign the tender agreement and to commence work, but the telephonic and written requests were of no avail. It is in the aforesaid backdrop that the work had to be rescinded vide the impugned letter dated 17.05.2025, Annexure P-7 (colly). -9- 17. In the aforesaid facts and attending circumstances, the contention put forth by the writ petitioner qua non- furnishing/non-supply of the award letters dated 17.04.2025, letters granting extension of time, i.e., letter dated 30.04.2025, cannot be believed especially keeping in view the short span within which the work of re-surfacing the roads was required to be done (end of June before the on-set of the monsoon), and the urgency shown by the respondent- Corporation in ensuring delievery of letters dated 11.04.2025(Annexure R-1/6 colly),17.04.2025(Annexure P-4 colly), and 30.04.2025 (Annexure P-5 colly) cannot be dis-believed. Moreover it cannot be believed that the petitioner was not aware of the date of opening of the financial bids in the case at hand when as per his own documents Annexure P-3 (colly) it is apparent that insofar as the Financial Bid is concerned, status qua the same had been updated on the official web-site on 8th April, 2025 hence, the contention in this respect needs to be rejected. 18. Reliance placed upon condition of an agreement which had never been entered into between the parties is of no avail to the writ petitioner. Hence, the contention based on terms and conditions of an unexecuted agreement cannot be -10- permitted to be raised by the writ petitioner. The work in the case at hand was of an urgent nature. The same was required to be done within a short span. Hence, time for entering into the agreement post award and execution of the work were required to be done as expeditiously as possible. 19. Earnest money is furnished by a tenderer. It forms a part of the price when the transaction goes forward. The same can be forfeited when the transaction falls on account of the fault by the tenderer. In this respect, reference can be made to (2010) 10 SCC 532, titled Villayati Ram Mittal Private Limited VS. Union of India and Anr.. The relevant extract of the same reads as under:- 10. The legal principles relating to “earnest money” are well settled. In Chiranjit Singh v. Har Swarup the Judicial Committee of the Privy Council held: ( AIR 1926 PC 1) “Earnest money is part of the purchase price when the transaction goes forward: it is forfeited when the transaction falls through, by reason of the fault or failure of the vendee.” These observations of the Judicial Committee have been quoted (at SCC p. 531, para 20) in the judgment of this Court in Shri Hanuman Cotton Mills v. Tata Air Craft Ltd.1969(3)SCC522 in which the principles relating to earnest money have been laid down. 11. Similarly, in HUDA v. Kewal Krishan Goel 1996(4)SCC249 this Court quoted the following observations of Hamilton, J. in Sumner and Leivesley v. John Brown & Co. 1909(25)TLR745 with regard to the meaning of -11- “earnest”: (HUDA case1996(4)SCC249, SCC p. 254, para 10) “10. … ‘ “Earnest” … meant something given for the purpose of binding a contract, something to be used to put pressure on the defaulter if he failed to carry out his part. If the contract went through, the thing given in earnest was returned to the giver, or, if money, was deducted from the price. If the contract went off through the giver’s fault the thing given in earnest was forfeited.’ ” 12. It is thus clear that when earnest money is furnished by a tenderer it forms part of the price if the offer of the tenderer is accepted or it is refunded to the tenderer if someone else’s offer is accepted, but if for some fault or failure on the part of the tenderer the transaction or the contract does not come through, the party inviting the tender is entitled to forfeit the earnest money furnished by that tenderer.” 20. In the aforesaid facts and attending circumstances, the present petition is dismissed being devoid of merit, so also the pending miscellaneous application(s), if any. (G.S. Sandhawalia) Chief Justice (Bipin Chander Negi) Judge 22nd July, 2026 (Gaurav Rawat)