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A bidder furnishes earnest money under an accepted tender condition permitting forfeiture if the bid is…

Withdrawal before acceptance and enforcement of an agreed bid-security condition are distinct questions under NHAI v Ganga Enterprises. Where the bidder accepted a condition…

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A bidder furnishes earnest money under an accepted tender condition permitting forfeiture if the bid is withdrawn during its validity period. The bidder withdraws during that period before acceptance of the works tender. No separate illegality or penalty objection is raised. Does the mere fact of pre-acceptance withdrawal bar forfeiture under the principle in NHAI v. Ganga Enterprises?

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Answer and explanation

Correct answer B

Withdrawal before acceptance and enforcement of an agreed bid-security condition are distinct questions under NHAI v Ganga Enterprises. Where the bidder accepted a condition securing non-withdrawal during the bid-validity period, pre-acceptance withdrawal alone does not prevent agreed forfeiture; this does not decide every possible penalty, illegality or loss objection.

See section 5 of the Indian Contract Act, 1872.

Option feedback

Option A

The timing of withdrawal before acceptance alone does not preclude the agreed bid-security forfeiture.

Option B

Forfeiture may be enforced on the stated independent security condition; the timing objection alone fails.

Option C

This conflates security for non-withdrawal with damages for breach of the eventual works contract.

Option D

Absence of a concluded works contract does not defeat the accepted bid-security condition.

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