Allowed

Alexander John v. State of Kerala

Kerala HC5 Sept 2014WP(C)/21168/2014

Case brief

AI extract

What is this about?

The court held that the petitioner was not liable to pay performance guarantee as he quoted 5% below estimate, falling outside the 20-50% threshold. The direction to pay Rs.41,14,400/ security was set aside; the petitioner must only pay 10% of estimate minus EMD. Final agreement ordered within one week. Disposition: Allowed, Ext.P4 set aside partly.

What did the court decide?

Ext.P4 set aside to the extent of security and performance guarantee; direction to execute final agreement within one week after depositing balance security.

Alexander John Vs State of Kerala — Contract and Commercial Disputes | Kerala HC (2014)

¶1

IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶2

PRESENT:

¶3

THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE

¶4

WEDNESDAY, THE 5TH DAY OF SEPTEMBER 2014/14TH BHADRA, 1936

¶5

WP(C).No. 21168 of 2014 (U)

¶6

PETITIONER :

¶7

ALEXANDER JOHN, AGED 49 YEARS, S/O.M.YOHANNAN, MUKALUVILA VEEDU, KIZHAKKETHERUVU P.O., KOTTARAKKARA, KOLLAM DISTRICT - 691 001.

¶8

BY ADV. SRI.VINOY VARGHESE KALLUMOOTTILL

¶9

RESPONDENTS :

¶10

1. STATE OF KERALA, REPRESENTED BY ITS SECRETARY TO GOVERNMENT, IRRIGATION DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM - 695 001.

¶11

2. CHIEF ENGINEER, IRRIGATION AND ADMINISTRATION, OFFICE OF THE CHIEF ENGINEER, THIRUVANANTHAPURAM - 695 001.

¶12

3. DIRECTOR, INLAND NAVIGATION DIRECTORATE, KOLLAM - 691 001.

¶13

ADDITIONAL R4 IMPLEADED

¶14

4. GOKULDAS.S, AGED 32 YEARS, S/O.LATE SUNDARAM, RESIDING AT SATHYASUNDAR, KOTTIYODU, ATTINGAL.

¶15

*** ADDITIONAL R4 IS IMPLEADED AS PRE ORDER DATED 28.08.2014 IN I.A.NO.11747 OF 2014.**

¶16

R1 TO R3 BY SENIOR GOVERNMENT PLEADER SRI.S.ABDUL SALAM ADDL.R4 BY SRI.DEVAN RAMACHANDRAN(SENIOR ADVOCATE) ADVS. SRI.K.M.ANEESH SRI.ADARSH KUMAR

¶17

THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 03-09-2014, THE COURT ON 05-09-2014 DELIVERED THE FOLLOWING:

¶18

Msd.

¶19

WP(C).No. 21168 of 2014 (U)

¶20

APPENDIX

¶21

PETITIONER(S)' EXHIBITS

¶22

EXHIBIT-P1:	TRUE COPY OF THE NOTICE INVITING TENDER DATED 23.06.2014.
EXHIBIT-P2:	TRUE COPY OF THE PRELIMINARY AGREEMENT EXECUTED IN BETWEEN THE PETITIONER AND 3RD RESPONDENT.
EXHIBIT-P3:	TRUE COPY OF THE TENDER DOCUMENTS CONTAINS THE TENDER CONDITIONS BINDING ON THE PETITIONER AND THE GOVERNMENT.
EXHIBIT-P4:	TRUE COPY OF THE LETTER ISSUED BY THE 3RD RESPONDENT DATED 18.07.2014.
EXHIBIT-P5:	TRUE COPY OF THE LETTER ISSUED BY THE 2ND RESPONDENT DATED 11.04.2014.
EXHIBIT-P6:	TRUE COPY OF THE G.O.(RT) NO.1266/2012/WRD THIRUVANANTHAPURAM DATED 22.10.2012.
EXHIBIT-P7:	TRUE COPY OF THE FD RECEIPT IN FAVOUR OF 3RD RESPONDENT.
RESPONDEN	T(S)' ANNEXURES

¶23

ANNEXURE R3(A):	GOVERNMENT LETTER NO.5833/P3/2014/WRD DATED 24.03.2014.
ANNEXURE R3(B):	G.O.(MS)NO.13/2014/WRD DATED 05.02.2014.
ANNEXURE R3(C):	A PHOTOCOPY OF THE G.O.(M.S)NO.60/2012/PWD DATED 20.09.2012.
ANNEXURE R4(A):	TRUE COPY OF THE COMMUNICATION DATED 19.08.2014 TO THE 3RD RESPONDENT.
ANNEXURE R4(B):	TRUE COPY OF THE COMMUNICATION DATED 20.08.2014 MADE BY THE 3RD RESPONDENT.
ANNEXURE A3 :	TRUE COPY OF THE FORMAT OF THE PRELIMINARY AGREEMENT OF THE 4TH RESPONDENT.
ANNEXURE A4 :	TRUE COPY OF THE RELEVANT PAGES OF THE PWD MANUAL REVISED EDITION 2012. //TRUE COPY//

¶24

P.S.TO JUDGE

¶25

Msd.

¶26

A.MUHAMED MUSTAQUE, J.

¶27

¶28

W.P.(C).No.21168 of 2014

¶29

¶30

Dated this the 5^th day of September, 2014

¶31

J U D G M E N T

¶32

The petitioner based on Ext.P1 tender notification has been awarded with a work of development and revival of historic waterway from Angengo kayal to Nadayara kayal also other works mentioned in Ext.P1. Estimate amount mentioned in Ext.P1 is Rs.4,33,07,983/-. Earnest Money Deposit (EMD) is Rs.10,82,700/-. As per Ext.P4, petitioner was directed to produce a security deposit for an amount of Rs.41,14,400/- and also produce a performance security deposit for an amount of Rs.21,65,000/-. Petitioner in this writ petition challenges the direction in Ext.P4 to deposit the security and performance guarantee as indicated therein. In this matter, the fourth respondent himself got impleaded stating that he is the second best bidder and undertakes that he is prepared to comply with the directions in Ext.P4. The additional fourth respondent has filed a counter affidavit. A statement on behalf of the third respondent has also been filed. It is stated that if the petitioner fails to remit the amount within 30 days from the date of notice, the work will be awarded to the next lowest tenderer. The grievance of the

¶33

W.P.(C).No.21168/2014

¶34

-:2:-

¶35

petitioner is twofold; one is regarding security deposit and the other is regarding performance guarantee.

¶36

The petitioner points out Ext.P3 issued by the Irrigation Department. It is mentioned in Ext.P3 in clause 3(c)(ii) that “if the rate quoted by the contractor is between 20% below estimate amount and 50% below estimate amount (the quoted rate being x% below estimate amount), the contractor will remit performance guarantee for an amount equal to (x20)% of the estimate amount. This will be released after satisfactory completion of the work”. The petitioner's case is that he will not come within the above clause. Petitioner's further case is that relying on clause 13 of Ext.P3 he needs to deposit a sum together with EMD to make up 10% of the probable value of the contract to treat the sum as security. The petitioner therefore assails the direction to pay Rs.41,14,400/-. The petitioner's case is that he needs to pay only Rs.1,00,000/- as security deposit.

¶37

In the additional statement filed by the third respondent as directed by this Court, it is stated that the performance guarantee so fixed is an amount equivalent to difference between estimate PAC and quoted PAC. It is further stated that since petitioner has quoted 5% below estimate rate,

¶38

W.P.(C).No.21168/2014

¶39

-:3:-

¶40

the performance guarantee is fixed at Rs.21,65,000/-. In Ext.P3, in clause 3

¶41

(c), it is stipulated that the contractor, who quotes unjustified low rates will remit performance guarantee with a view to curb the tendency to quote low rates and execute the work unsatisfactorily. It is further stated in clause 3(c) (i) that if the quoted rate for a work is below 50%, it will be rejected. The manner in which performance guarantee has to be calculated is also mentioned in clause 3(c)(ii). It is stipulated therin that if the rate quoted by the contractor is between 20% below estimate amount and 50% below estimate amount, the Contractor will remit performance guarantee for an amount equal to difference of the estimate amount. This will be released only after satisfactory completion of the work.

¶42

On a mere reading of the clause as above, it can be seen that performance guarantee can be insisted only when rate is between 20% and 50% below estimate amount. The petitioner herein quoted 5% below the estimate amount. Therefore, I am of the view that he is not liable to pay the performance guarantee. The calculation in Ext.P4 regarding security deposit appears to be incorrect. The petitioner needs to pay only an amount of 10% of the estimate amount towards security minus EMD as clearly

¶43

W.P.(C).No.21168/2014

¶44

-:4:-

¶45

mentioned in clause 13 of Ext.P3. The petitioner's claim that he is liable to pay only Rs.1,00,000/-, is without any merit. Therefore, the insistence to pay the amount of Rs.41,14,400/- is unsustainable. The petitioner is liable to pay 10% of the estimate amount including the EMD.

¶46

Though in this writ petition reliefs are sought to the effect that the respondents shall execute the final agreement without insisting for performance security deposit, I am of the view that Ext.P4 is not sustainable in toto as the petitioner is not liable to pay performance guarantee but liable to pay security deposit minus EMD to make up 10% of estimate value. Accordingly, Ext.P4 is set aside to the extent as above. There shall be a direction to the respondents to execute final agreement with the petitioner within a period of one week from today on paying the balance of security deposit to make up probable value of contract.

¶47

The writ petition is disposed of as above. No costs.

¶48

Sd/A.MUHAMED MUSTAQUE, JUDGE

¶49

Alexander John v. State of Kerala

Case brief

What is this about?

What did the court decide?

Alexander John v. State of Kerala

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Parties & counsel

Coram

Case details

Similar cases

M.a.Varghese Vs State of Kerala

T.K.Manoj Vs Indian Oil Corporation Ltd.

Riju M. Vs the Passport Officer

Basid (Minor) Vs Mr.K.C.Sanu

Pramod K. Vs the District Level Authorisation

K.M. John Vs State of Kerala