Paulmech Infrastructure v. State of Odisha

Letter of Intent (LOI) –  On taking note of the contention, a close perusal of the phrase employed in the LOI would indicate the onetime payment made upfront is shown as “nonrefundable” and such payment is towards execution of the Operating Lease Agreement. If that be the position, the terms of LOI is clear that the said payment is towards the lease rentals and is the upfront payment which becomes a part of the lease transaction and therefore not refundable only if the lease agreement comes into operation and not otherwise. The word employed is not “forfeiture”, therefore, the amount payable towards the advance lease rentals and the other advance payments provided in clause 2 of the LOI, cannot be forfeited if there is default in complying with the term and entering into the lease agreement, going by the stipulations contained in the LOI governing the parties herein. [Para 20]