Law:

Section:

(a) Contract Act (IX of 1872)-------S.5---Revocation of offer before acceptance---Scope---Tender---Right to forfeit bid security---Scope---Bid (offer) made for tender with deposit of bid security---Validity period of bid---Condition that bid security would be forfeited if bid withdrawn (revoked) during its validity period---Withdrawal of bid within its validity period when it had not been accepted---Bid security could be forfeited, in circumstances---Provincial authorities (appellant), in the present case, invited tenders from interested persons for appointment as agent for collection of toll at a bridge---'M' (respondent) was one of the bidders and under the terms and conditions of the bid, deposited Rs. 2 million as bid security---As per terms and conditions of the bid, 'M' agreed to keep the bid/ offer open for acceptance for up to 90 days; agreed that the bid security would be forfeited should 'M' withdraw or modify its bid during the validity period of 90 days, and also agreed that 'M' would be bound by the communication of acceptance of the bid dispatched within the period of 90 days---­Letter of acceptance was issued to 'M', which letter stated that security amount and first instalment had to be deposited within 21 days of the receipt of the acceptance letter, but 'M' failed to do the same---Provincial authorities cancelled and withdrew the letter of acceptance issued to 'M' and forfeited its bid security of Rs. 2 million---'M' filed constitutional petition before the High Court with the contention that before receipt of letter of acceptance, it had sent a letter to the Provincial authorities informing them that 'M' was not interested in the work, therefore, the amount of bid security should be refunded---Constitutional petition was allowed by the High Court, letter of acceptance issued by the Provincial authorities was quashed and it was directed to refund the bid security amount of Rs. 2 million to 'M'---Validity---Although 'M' had sent its letter withdrawing the bid (offer) before receipt of the acceptance letter, but 'M' had agreed to keep the bid open for acceptance for up to 90 days---'M' had also agreed that it would be bound by the communication…

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