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Judgment
Shaji P. Chaly, J
The appeal is preferred by the 2nd respondent in W.P.(C) No. 15459 of 2021 challenging the judgment of a learned single Judge dated 26.10.2021,
whereby the learned single Judge allowed the writ petition and issued the following directions:
There is no denial of the above statement by the 2nd respondent. In such circumstances, the averments in the writ petition has to be accepted. Therefore, the
petitioner succeeds and writ petition is to be allowed.
Therefore, this writ petition is allowed in the following manner:
All further proceedings consequent to Exts.P3 and P6 are quashed.
It is declared that there is no concluded contract between the petitioner and the 2nd respondent based on Ext.P2 work order.
The 2nd respondent is directed to return to the petitioner the treasury fixed deposit of Rs.2,18,127/- submitted towards the performance security deposit, within
three weeks from the date of receipt of a copy of this judgment.â€
It is, thus, challenging the legality and correctness of the judgment of the learned single Judge, the appeal is preferred.
Brief material facts for the disposal of the appeal are as follows:
The appellant has floated Ext. P1 tender to carry out the work of “Rectification of walkways (cable trench cover slabs) Phase II at KINFRA
Apparel Park, Thumba, Thiruvananthapuram with a probable amount of contract at Rs.50,75,766/- along with other terms and conditions. The writ
petitioner participated in the bid and he was the lowest. Thereupon, the appellant selected the writ petitioner to carry out the work. According to the
writ petitioner, as per Ext. P2 conditional work order issued to the second respondent, two conditions were to be complied with for the acceptance of
the tender finally and also for signing the agreement; as per the first condition, he produced the performance guarantee security deposit for
Rs.2,18,127/- by way of Treasury Fixed Deposit; but, he failed to produce the performance guarantee of Rs.2,05,569/- by way of bank guarantee.
Though he produced the Fixed Deposit receipt for the said amount, the Fixed Deposit receipt in substitution to the bank guarantee was not acceptable
to the appellant and therefore, according to the writ petitioner, there was no final acceptance of the tender by the appellant; and consequently, no
agreement was signed, nor the work site handed over due to the failure on the part of the writ petitioner to produce the bank guarantee. Anyhow, Ext.
P2 work order was terminated at the risk and cost of the petitioner and the performance security amount was forfeited, as per Ext. P3 notice dated
13.01.2021. Being aggrieved, the writ petition was filed.
In the writ petition, the appellant has filed a detailed counter affidavit refuting the claims and demands raised by the writ petitioner and basically
contended that the parties are guided by the terms and conditions of Ext. P1 tender notification, and Ext P4 general conditions of contract issued by
the appellant. That apart, it is submitted that since the writ petitioner failed to satisfy the requirements in terms of Ext. P1 tender, the general
conditions of contract, and Ext. P2 work order, the appellant was entitled, as of right, to terminate the work and adjust the performance security
deposit, apart from reserving the right for recovering damages in the event of the damages suffered by the appellant on account of the award of the
contract to another agency. In effect, it is contended that the termination notice at the risk and cost of the writ petitioner is in accordance with law and
therefore, the appellant was not entitled to get any relief by interfering with Ext. P3 termination notice .
Anyhow, the learned single Judge, after taking into account the contentions and the submissions made by the rival parties, has arrived at the
conclusion that there was no concluded contract or the performance of the conditions by the appellant enabling it to terminate the contract at the risk
and cost of the writ petitioner.
The learned single Judge has also found that the writ petitioner has not signed the performance guarantee to execute the works referred to in the
tender documents upon the terms and conditions contained, or referred to those in excess of that limit at the rates to be determined in accordance with
the provision contained in clauses 12.2 and 12.3 of the tender form. While arriving at the said conclusion, the writ court basically found that the writ
petitioner has raised a contention that he has not signed such a guarantee; however the appellant failed to establish otherwise.
We have heard the learned counsel for the appellant Sri. P.U. Shailajan, Sri. Madhu Radhakrishnan for the writ petitioner/ respondent, and the
learned Senior Government Pleader Sri. K.P. Harish for the State of Kerala, and perused the pleadings and materials on record.
The paramount contention advanced by the appellant in the writ appeal is that the finding of the learned single Judge that there is no concluded
contract between the parties is not correct. It is also submitted that in Ext. P2 work order, it is specifically stated that the writ petitioner has to execute
the agreement with the appellant within four weeks of receipt of the work order and the performance security deposit of Rs.2,18,127/- and bank
guarantee for an additional performance security of Rs.205569/- has to be furnished before the above said period of four weeks.
It is further submitted that in spite of the said condition, it was specifically directed in Ext. P2 work order that the work has to be commenced within
7 days from the date of the work order or whichever is earlier. Therefore, according to the appellant, the writ petitioner ought to have started the work
on or before 23.02.2022 after executing an agreement on or before 22.03.2020.
It is also the contention of the appellant that the execution of the agreement is not a precondition to commence the work and the writ petitioner
ought not have waited till the execution of the agreement, to start the work. That apart, it is submitted that in Ext. P2 work order, it is clearly specified
that the writ petitioner has to take over the site and start the work for it. It is also contended that the writ petitioner has submitted Ext. R2(d) letter
accepting Ext. P2 work order and informed that the security deposit/bank guarantee will be submitted and the agreement will be executed at the
earliest.
It is further contended that the writ petitioner has forwarded Ext. R2(f) letter stating that the work will be started by the end of November.
Therefore, it is submitted that the learned single Judge was not correct in interfering with Ext. P3 notice terminating the contract, on the basis that
there is no concluded contract between the parties, basically for the reason that Ext. P1 tender notification and the general conditions of the contract
issued by the appellant would state that when the work order is issued, the writ petitioner was duty bound to start the work in terms of the work order.
Other contentions are also raised to the effect that the learned single Judge failed to take note of the terms and conditions of the contract, and the
termination of the same at the risk and cost of the petitioner.
The learned counsel for the appellant basically relied upon clause 1 of Ext. P1 tender notice, which specifies that the general conditions of contract
is applicable to both types of tenders i.e., the percentage rate tenders and the item rate tenders and therefore, according to the appellant, the terms and
conditions of the general conditions of contract would come into play; and that since the writ petitioner has failed to take over the site and execute the
work as per the directions contained in Ext. P2 work order dated 14.02.2020, the appellant was entitled to terminate the contract awarded by
cancelling the work order.
The subject issue raised by the appellant revolves around Ext. P2 work order, which is extracted by the learned single Judge to have a proper
appreciation of the contentions put forth by the parties.
On a reading of Ext. P2, what we could gather is that, the writ petitioner was directed to attend the office of the appellant with Kerala stamp
paper worth Rs.200/- along with the Performance Security Deposit of Rs.2,18,127/- being 5% of the contract amount; with a rider that at least 50% of
the same shall be in the form of Treasury Fixed Deposit and the rest in the form of bank guarantee from a Scheduled/Nationalized Bank, and execute
an agreement with KINFRA within four weeks of receipt of the work order. He was also directed to submit the bank guarantee for Rs.2,05,569/-
towards Additional Performance Guarantee in terms of G.O.(P) No. 19/2016/Fin. dated 03.02.2016, for executing the agreement. It is true, there is a
specification thereunder that the date of commencement of the work shall be 10th day from the date of work order or 7th day from the date of receipt
of work order, whichever is earlier and the entire work shall be completed within six months. The writ petitioner was also directed to take over the site
and start the work forthwith as per the terms and conditions of the tender.
The learned counsel for the appellant has also invited our attention to clause 5 of Ext. P4 general conditions of contract, which stipulates that the
time allowed for the execution of the work as specified in the Schedule F, or the extended time in accordance with the conditions shall be the essence
of the contract and the execution of the work shall commence from such period as mentioned in Schedule F or from the date of handing over of the
site, whichever is later.
It is also stipulated thereunder that if the contractor commits default in commencing the execution of the work as aforesaid, KINFRA shall,
without prejudice to any other right or remedy available in law, be at liberty to cancel the work order and to forfeit the performance guarantee
absolutely.
On the other hand, the learned counsel for the writ petitioner submitted that the petitioner has only produced the performance security deposit by
way of Treasury Fixed Deposit for an amount of Rs.2,18,127/-; but he failed failed to produce additional performance guarantee for Rs.2,05,560/- by
way of bank guarantee; that even though he produced the Fixed Deposit for the said amount, it was not applicable to the appellant. Therefore,
according to the learned counsel for the writ petitioner, Ext. P2 work order has not come into force, because the terms and conditions narrated
thereunder are conjoint in nature, and therefore unless and until the basic requirements contained in Ext. P2 is complied with by the writ petitioner, the
handing over of the site in contemplation of clause 5 of the general conditions of contract would not come into play enabling the appellant to terminate
the contract.
The learned counsel for the appellant also invited our attention to clause 2 of Ext. P1 tender notice and submitted that the appellant has clearly
specified that Schedules A to F, special conditions/specifications and drawing will be issued to intending tenderers only and the standard form will not
be issued along with the tender documents; but the same shall form part of the agreement to be drawn and signed by both parties after the acceptance
of tender. Therefore, according to the learned counsel, unless and until the standard form is signed by the parties and drawings are issued to the
successful bidder, the bid cannot be accepted by the writ petitioner unilaterally, and the work cannot be proceeded with. The sum and substance of the
contention is that, the basic requirements for the works to be commenced was not complied with by the appellant and therefore, there was no
obligation and duty cast upon the writ petitioner to take over the site and proceed with the work.
On an evaluation of the rival submissions, we are of the considered opinion that there is force in the contentions advanced by the learned counsel
for the writ petitioner. It is an admitted fact that the writ petitioner has not produced the bank guarantee towards additional performance security in
contemplation of the tender notification, instead, he has only produced a Fixed Deposit receipt for the said amount, which was not acceptable to the
appellant.
On a reading and analysis of Ext. P2 work order, it is explicit that the agreement was to be executed by the parties after complying with the
mandatory requirements, and since the bank guarantee was not produced, there was no concluded contract on the basis of the work order. In our
view, this was a specific requirement as per Ext P2 work order, since it is clearly stated in the work order that the agreement is to be executed only
after production of the security as demanded. This aspect is also clear from the termination notice, since it is specified that the writ petitioner was to
commence the work after furnishing the additional performance security and executing the agreement. Moreover, it is clear from clause 2 of Ext. P1
tender notification that the appellant had to provide the Schedules A to F special conditions/specifications and drawings to the petitioner and without
providing a drawing, the writ petitioner was not expected to unilaterally take over the site and proceed with the work. This is more so since, as per
clause 5 of the general conditions of contract, it is specified that execution of the work shall commence from such time period as mentioned in
Schedule F or from the date of handing over of the site, whichever is later.
19.The appellant has no case that the site was handed over to the writ petitioner after complying with the basic requirements as is spelt out in Ext. P2
work order. We are also of the opinion that even though much was argued about Ext. R2(d) letter dated 23.02.2020 issued by the writ petitioner to the
appellant; from the said letter, we could only find that he has admitted the receipt of work order dated 14.02.2020 and stated that the security
deposits/bank guarantee for the project will be submitted and the work agreement will be executed at the earliest. That apart, he has enclosed a signed
work order as a token of acceptance. In view of the facts and circumstances discussed above, we are of the clear opinion that the appellant was not
entitled to terminate the work order at the risk and cost of the writ petitioner. Thus to say, the appellant has failed to make out any case of
jurisdictional error or other legal infirmities justifying our interference in an intra court appeal.
Therefore, we have no hesitation to hold that the learned single Judge was right in interfering with Ext. P3 termination notice and directing the
appellant to return the Treasury Fixed Deposit receipt for Rs.218,127/- submitted towards the performance security. However, the time period for
returning the receipt is extended by two weeks from today.
Needless to say, the appeal fails and accordingly, it is dismissed.