Disposed

M/S. Irikkur Construction Company v. Superintending Engineer

Kerala HC12 Jan 2021WP(C)/12882/2018

Case brief

AI extract

What is this about?

The Court disposed of a writ petition seeking release of forfeited Earnest Money Deposit. The petitioner, a successful bidder, failed to submit audited accounts due to Income Tax raid. The Court held the writ petition did not lie and directed the petitioner to file a representation with the Chief Engineer for reconsideration.

What did the court decide?

Petitioner directed to file representation to Chief Engineer for refund of EMD.

M/S. Irikkur Construction Company Vs Superintending… — Company and Corporate | Kerala HC (2021)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE N.NAGARESH

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TUESDAY,THE 12TH DAY OF JANUARY 2021/22TH POUSHA, 1942

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WP(C).No.12882 OF 2018(I)

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PETITIONER:

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M/S. IRIKKUR CONSTRUCTION COMPANY REPRESENTED BY K.T.ZIYAD, MANAGING PARTNER, S/O.MAMMU HAJI, AGED 38 YEARS, AMEENA MAZIL, P.O.IRIKKUR, KANNUR DISTRICT, PIN-670 593.

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BY ADVS.

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SRI.K.R.AVINASH (KUNNATH) SRI.ABDUL RAOOF PALLIPATH

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RESPONDENTS:

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1 SUPERINTENDING ENGINEER,PWD, NATIONAL HIGHWAYS (NORTH) CIRCLE, KOZHIKODE-673 001.

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2 CHIEF ENGINEER, PWD, NATIONAL HIGHWAYS, THIRUVANANTHAPURAM-695 001.

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3 SUPERINTENDING ENGINEER, PWD ROADS AND BRIDGES (NORTH) CIRCLE, KOZHIKODE-673 001.

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4 STATE OF KERALA REPRESENTED BY THE SECRETARY, PUBLIC WORKS DEPARTMENT, THIRUVANANTHAPURAM-695 001.

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BY SENIOR GOVERNMENT PLEADER SRI K.V.MANOJ KUMAR

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 12.01.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C)No.12882/2018

JUDGMENT

Dated this the 12^th day of January, 2021

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The petitioner seeks to direct the 1^st respondent to recall Ext.P13 order forfeiting the Earnest Money Deposit of `38,70,000/- and direct to release the EMD to the petitioner.

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The petitioner submitted his bid pursuant to Ext.P1 notification inviting bids for the work namely, CRF 2015-16 Improvements to Oduvallithattu – Naduvil -Kudiyanmala Road in Kannur District in the State of Kerala from KM 0/000 to 18/000. The petitioner was the lowest bidder. The petitioner had to submit Audited Accounts duly certified by the Chartered Accountant along with the bid. Since the Income Tax Authorities raided the office of the petitioner and seized documents, the petitioner could not produce its statement of accounts before the respondents. The petitioner had quoted 22.47% below the bids. By

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WP(C)No.12882/2018

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Ext.P2 letter, his bid was accepted by the respondents subject to confirmation of statement of accounts by Chartered Accountant.

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The petitioner says that he could not produce the statement of accounts authenticated by the Auditor in view of the detention of documents by the Income Tax Authorities. The respondents issued Ext.P7 letter dated 11.01.2017 intimating the petitioner that if the confirmation from the Chartered Accountant of the Profit and Loss Statement for the year ending 31.03.2016 is not received from the petitioner, the same will be taken from the Income Tax Department.

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Subsequently, the 2^nd respondent Chief Engineer by letter dated 21.10.2016 stated that the bid of the petitioner could not be submitted to the Government due to the delay on the part of the petitioner in making available Audited Reports. The petitioner was directed to give

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WP(C)No.12882/2018

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reasons for not submitting the same. In the letter dated 21.10.2016, it was also stated that the petitioner is disqualified from the work in question and that the action will be taken against him.

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The Superintending Engineer by Ext.P13 letter dated 04.12.2017, stated that the reply submitted by the petitioner and explanations furnished by them for not submitting Audited Accounts are insufficient to condone gross violation of tender conditions. Accordingly, the the Superintending Engineer decided that the EMD amount for `38,70,000/- be forfeited to the Government. The petitioner thereupon preferred Ext.P14 representation to the Secretary, Government of Kerala, Public Works Department. Ext.P14 did not yield any result. It is in the said circumstances that the petitioner is before this Court seeking release of EMD.

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WP(C)No.12882/2018

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The petitioner would contend that even at the time of submission of the tender, the petitioner had disclosed that Audited Accounts are not available with the Company due to the seizure by the Income Tax Department and the petitioner will be able to produce the documents only as and when the Income Tax Department release the documents. The respondents were aware of the situation and inspite of that, the bid of the petitioner was accepted as the petitioner's bid was of considerable monetary advantage to the respondents. Unfortunately, the petitioner could not produce the required Audited Statement due to the fact that documents were not released by the Income Tax Department.

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The petitioner pointed out in Ext.P7, the respondents themselves had agreed to obtain the Account Statements from the Income Tax Department. This would show the respondents were aware of the situation in which

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WP(C)No.12882/2018

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the petitioner is placed. Therefore, Ext.P13 order of the Superintending Engineer, forfeiting EMD of the petitioner is highly arbitrary and unjustified. The petitioner is therefore entitled to receive EMD deposited by him.

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Respondents 1 and 2 filed counter affidavit resisting the contentions of the petitioner. Respondents 1 and 2 stated that the petitioner was only provisionally qualified and his selection was subject to production of Audited Annual Financial Statements. The petitioner produced only self attested Annual Financial Statements. Even after the repeated demand from the Office of the Chief Engineer and inspite of the instructions, the petitioner did not produce the Audited Annual Statements.

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The petitioner was issued Annexure R1(b) series letter dated 18.07.2016, 31.08.2016, 19.09.2016, 21.10.2016 and 11.01.2017, requiring the confirmation from the Chartered Accountant. The petitioner failed to do so.

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WP(C)No.12882/2018

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Subsequently, pursuant to the orders of this Court in another writ petition the respondents awarded the work to another bidder. The action of the petitioner in bidding for the work without producing required documents resulted in rejection of the bid. Action of the petitioner has caused financial loss to the respondents. Therefore forfeiture of EMD is amply justified, contended the learned Government Pleader.

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I have heard the learned counsel for the petitioner and the learned Government Pleader appearing for the respondents.

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Going through the pleadings in the writ petition, it is evident that the respondents accepted the bid of the petitioner even though the requisite audited financial statements were not produced. The respondents could have rejected the bid of the petitioner at the initial stage itself which was not done, perhaps on the belief that the

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WP(C)No.12882/2018

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petitioner would be able to produce the requisite documents.

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The PWD Manual Revised Edition 2012 (Clause 2009.5.) states that the firm period of a tender is the period from the date of opening of the tender to the date upto which the offer given in the tender is binding on the bidder. The firm period is fixed as the maximum time required within which a decision can be taken on the tender and order of acceptance issued in writing to the bidder which shall not exceed two months. The Manual further provides that if delay is anticipated, the officer who invited the tenders shall get the consent of the lowest two bidders for extending the firm period by one month or more as required. Clause 2009.6 further provides that after it is decided to accept a tender, selection notice in the form of letter of acceptance as per bidding documents shall be issued to the bidder by the tendering authority within seven

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days or before the expiry of firm period whichever is earlier.

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The facts of the case would reveal that the bid submitted by the petitioner was not accompanied by the requisite documents. However, from Ext.P7, this Court finds that the respondents were aware of the non submission of documents and showed leniency to the petitioner granting time to produce documents.

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Taking into consideration the entire facts and circumstances of the case, this Court is of the considered opinion that the petitioner can be relegated to approach the Chief Engineer for reliefs. If the petitioner files a representation seeking return of refund of EMD, the Chief Engineer shall consider such representation taking into account the entire facts and circumstances of the case and Ext.P9 communication of the Additional Chief Secretary to Government to the Chief Engineer. If the petitioner files a representation within a period of 30 days, the Chief

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Engineer shall take final decision thereon within a further period of 90 days.

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The writ petition is disposed of as above.

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Sd/- N. NAGARESH JUDGE

ncd

APPENDIX

PETITIONER'S EXHIBITS:

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EXHIBIT P1 TRUE COPY OF THE INVITATION FOR BIDS (IFB) DATED 20-5-2016. EXHIBIT P2 TRUE COPY OF MINUTES OF THE FINANCIAL BID OPENING COMMITTEE MEETING HELD ON 14-7-2016. EXHIBIT P3 TRUE COPY OF LETTER DATED 21-10-2016 OF THE 2ND RESPONDENT ADDRESSED TO THE PETITIONER. EXHIBIT P4 TRUE COPY OF RELEVANT PAGES OF THE STANDARD BID DOCUMENT (SBD). EXHIBIT P5 TRUE COPY OF THE REPLY TO EXHIBIT-P3. EXHIBIT P6 TRUE COPY OF LETTER DATED 25-1-2017 FORWARDING A COPY OF LETTER DATED 12-12017 OF INCOME TAX, ASSISTANT COMMISSIONER EVIDENCING SEIZURE OF BOOK OF ACCOUNTS. EXHIBIT P7 TRUE COPY OF LETTER DATED 11-1-2017 OF THE 2ND RESPONDENT. EXHIBIT P8 TRUE COPY OF LETTER DATED 21-10-2016 OF THE 2ND RESPONDENT TO GOVERNMENT FORWARDING THE EVALUATION DETAILS OF FINANCIAL BIDS. EXHIBIT P9 TRUE COPY OF GOVERNMENT LETTER DATED 2312-2016, REJECTING THE PROPOSAL OF 2ND RESPONDENT MADE IN EXHIBIT-P8. EXHIBIT P10 TRUE COPY OF LETTER DATED 21-8-2017 OF THE PETITIONER TO THE 2ND RESPONDENT REQUESTING TO RELEASE THE EMD.

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EXHIBIT P11 TRUE	COPY	OF LETT	ER DATED 3-8-2017 OF
THE PETI	1ST TIONER	RESPONDE .	NT ADDRESSED TO THE
EXHIBIT P12 TRUE TO E	COPY XHIBIT	OF THE P11.	REPLY DATED 18-9-2017
EXHIBIT P13 TRUE THE	COPY 1ST RE	OF ORDE SPONDENT	R DATED 4-12-2017 OF FORFEITING THE EMD.
EXHIBIT P14 TRUE THE WITH RESP	COPY PETITI COPIE ONDENT	OF LETT ONER TO S TO 1S .	ER DATED 9-3-2018 OF THE 4TH RESPONDENT TO T RESPONDENT AND 2ND
EXHIBIT P15 TRUE RESP REQU TO D THE	COPY ONDENT ESTING IRECT DECISI	OF LETT BY HIS HIM TO THE 2ND ON TO FO	ER, DELIVERED TO 2ND OFFICE ON 14-3-2018 PAY PERSONAL ATTENTION RESPONDENT TO RECALL RFEIT THE EMD.

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RESPONDENTS' EXHIBITS:

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EXHIBIT	R1(a) TRUE COPY OF THE PART OF SBD	LIST OF DOCUMENT AS
EXHIBIT	R1(b) TRUE COPY OF THE 18.7.2016, 31.8.2 21.10.2016 AND FI	LETTER DATED 016, 19.9.2016, ALLY ON 11.1.2017
EXHIBIT	R1(c) TRUE COPY OF THE 01.08.2017	LETTER DATED
EXHIBIT	R1(d) TRUE COPY OF THE TECHNICAL BID EVA	CONDITIONS OF LUATION COMMITTEE
EXHIBIT	R1(e) TRUE COPY OF THE EVALUATION COMMIT	TECHNICAL BID TEE MINUTES.
EXHIBIT	R1(f) GOVERNMENT ORDER 17.07.2013	NO.59/2013/PWD DATED

M/S. Irikkur Construction Company v. Superintending Engineer

Case brief

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M/S. Irikkur Construction Company v. Superintending Engineer

Case brief

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