M/s. Krishne Gowda Engineering Contractors vs The State of Karnataka and Others

A.S. Bopanna, J.—The petitioner is before this Court assailing the order dated 23.07.2012 impugned at Annexure-M. The petitioner is also seeking for a direction to respondents No. 2 to 5 to refund the securities forfeited under the impugned order dated 23.07.2012. The petitioner is a Class-I contractor and in that regard had responded to the short term tender invited by the second respondent through E-procurement for construction of the Flower Auction Complex at Sirsi, Uttara Kannada District, vide notification dated 07.07.2011. The petitioner was selected for award of the said work after negotiations. The final rate quoted by the petitioner was Rs. 2,08,23,875/- as against the estimated cost of Rs. 2,00,00,000/-. In the method of calculation of the amount which was estimated for the work to be performed and the rates quoted, the unbalanced proposition if any with regard to the rates was required to be calculated. In that regard, there were certain issues between the petitioner and the second respondent. Ultimately by the order dated 23.07.2012 (Annexure-M), the work in favour of the petitioner was cancelled at their risk and costs so as to forfeit their securities. It is in that context, the petitioner is before this Court.

Respondent No. 2 at the first instance filed a detailed objection statement seeking to justify their action by contending that the amount quoted by the petitioner is to be classified as unbalanced and therefore, to the extent as quoted, the securities are to be furnished. During the pendency of the instant petition, since the learned counsel for the petitioner has made a detailed reference to the manner in which the unbalanced amount is to be calculated and the security that is to be provided which is in vogue and further since it was seriously disputed that in the instant facts, the calculation made is based on certain estimates which is contrary to the terms, Respondent No. 7 who is in-charge of similar contracts in the State was directed to file an affidavit before this Court explaining the correct method of calculation. Accordingly, the affidavit dated 13.08.2013 along with enclosures is filed before this Court.

Respondent No. 6 has taken note of the Clauses contained in the contract, more particularly Clause-25.5 of the tender documents and also the volume of work involved in the instant case and has referred to the normal procedure that is followed while awarding contracts through the Department. Further it is stated that the rates which are quoted below 75% of the estimated rate was considered to be freak and in that regard, the securities were to be given to the entire extent of 75% of the amount and not just the difference of the amount.

Learned counsel for the petitioner would however contend that the security would not be for the entire 75% but only for the difference of the rate which is lesser than 75% which is fixed. In any event, that aspect of the matter need not be gone into in detail, but what is necessary to be noticed is that from the affidavit filed by respondent No. 6, it would be clear that respondent No. 2 had not properly assessed the situation while calling additional securities in the manner as had been done in the instant facts of the case. If these aspects of the matter are kept in view, in my opinion, the clarification as made by respondent No. 6 by way of affidavit before this Court would have to be taken note to the extent that the petitioner instead of succumbing to the demand made by respondent No. 2 to furnish securities in the manner as had been sought, was seeking to point out that an error has been committed by respondent No. 2 and the security as sought for cannot be furnished. If in this background, the impugned order dated 23.07.2012 is taken into consideration, it would indicate that there were negotiations between the petitioner and the respondents and ultimately since the petitioner had not furnished the securities in the manner as desired by respondent No. 2, the decision was taken to cancel the work in favour of the petitioner and to forfeit their securities.

Insofar as the cancellation of the work of the petitioner, in any event, the same does not arise for consideration inasmuch as the further progress of the work through any other contractor had not been prevented by this Court nor is the petitioner at this juncture interested in pressing for the work to be assigned to the petitioner. In that circumstance since the rates quoted by the petitioner was more than a year back, at present, the work cannot be continued in the same manner. To the said extent, I am of the opinion that the petitioner would be justified in putting forth the contention that the work cannot be taken up at this juncture.

Further having arrived at the said decision and also taking note of the clarification issued by respondent No. 6 by way of affidavit, which would justify the stand taken by the petitioner, I am of the opinion that to the extent of the impugned order dated 23.07.2012 seeking to forfeit the securities or such other amount that has been deposited by the petitioner would not be justified when the calculation of security as made by the second respondent itself was erroneous. To the said extent, the impugned order dated 23.07.2012 insofar as forfeiting the securities stands quashed. Though for other reasons, this Court has not expressed any opinion with regard to the manner of calculation, since this Court has taken note of the error committed by respondent No. 2 and in view of the clarification of respondent No. 6, a direction is issued to respondents No. 2 to 5 to refund the securities forfeited under the impugned order dated 23.07.2012 to the petitioner. The said refund shall be made as expeditiously as possible, but not later than four weeks from the date on which a certified copy of this order is made available to respondents No. 2 to 5.

With the said direction, the petition stands disposed of.