Division Bench allowed the writ appeal challenging directions to furnish Additional Performance Guarantee. Court relied on prior Division Bench judgment holding appellants not liable when overall rate quoted is 5.98% above TPAC.
Appellant not liable to execute Additional Performance Guarantee as overall rate quoted is 5.98% above TPAC.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE THE CHIEF JUSTICE MR. A.J.DESAI
&
THE HONOURABLE MR.JUSTICE V.G.ARUN
MONDAY, THE 9TH DAY OF OCTOBER 2023 / 17TH ASWINA, 1945
WA NO. 1702 OF 2023
AGAINST THE ORDER/JUDGMENT WP(C) 22253/2023 OF HIGH COURT
OF KERALA
APPELLANT/S:
M/S. STREFA PROJECTS PRIVATE LTD PLOT NO. 34, EASWARAIAH ENCLAVE, DAMMAIGUDA, HYDERABAD, TELANGANA STATE, REPRESENTED BY ITS, DIRECTOR, P. CHANDRABABU, S/O. P, DASTAGIRI, PIN - 500062 BY ADVS. GEORGE MATHEW M.D.SASIKUMARAN SUNIL KUMAR A.G MATHEW K.T. GEORGE K.V. STEPHY K REGI
RESPONDENT/S:
1 KERALA WATER AUTHORITY REPRESENTED BY ITS MANAGING DIRECTOR, HEAD OFFICE, JALA BHAVAN, VELLAYAMBALAM, THIRUVANANTHAPURAM, PIN - 695033 2 THE SUPERINTENDING ENGINEER OFFICE OF THE SUPERINTENDING ENGINEER, P.H. CIRCLE, KERALA WATER AUTHORITY, KALMANDAPAM, PALAKKAD DISTRICT -678 001. * R2 IS SUBSTITUTED AS "THE SUPERINTENDING ENGINEER, OFFICE OF THE SUPERINTENDING ENGINEER, P.H.CIRCLE, KERALA WATER AUTHORITY, THIRUVALLA, PATHANAMTHITTA689101" AS PER ORDER DATED 11.07.2023 IN I.A.NO.1/23, PIN – 689101
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3 GOVERNMENT OF INDIA, REPRESENTED BY ITS SECRETARY, MINISTRY OF ROAD TRANSPORT & HIGHWAYS, (MORTH)TRANSPORT BHAWAN - 1, PARLIAMENT STREET, NEW DELHI, PIN - 110001 BY ADVS.
P.M.JOHNY, SC, KERALA WATER AUTHORITY() DEPUTY SOLICITOR GENERAL OF INDIA
OTHER PRESENT:
SC FOR KWA GEORGIE JOHNNY
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON
09.10.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
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JUDGMENT
Dated this the 09th day of October, 2023
V.G.Arun, J.
This writ appeal is filed, aggrieved by the directions in the common judgment dated 19.07.2023 in W.P.(C) No.35311 of 2022 and connected cases. The essential facts are as under;
The appellant is a Private Limited Company registered under the provisions of the Companies Act, represented by its Director. The appellant was issued with a work order by the Kerala Water Authority, pursuant to its participation in the tender. The letter of acceptance issued to the appellant, prior to the execution of the work contract agreement, mandate the furnishing of Additional Performance Guarantee, if the offer made is less than the Tendered Probable Amount of
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Contract. The writ petition was filed challenging the said condition. By the impugned judgment, the
learned Single Judge disposed of the writ petition with the following directions;
“1) It is declared that the OM No. F.9/4/2020-PPD dated 12.11.2020 regarding
the performance guarantee, OM No. F.9/4/2020-PPD dated 12.11.2020 regarding the additional performance guarantee and the other Office Memorandums issued by the Government of India are not binding to the State Government and consequently to the Kerala State Water Authority.
2) If the contract of any of the petitioners fall within the purview of GO(P) No. 7/2021/FIN dated 07.01.2021 and GO(P) No. 32/2022/FIN dated 15.03.2022, then they are entitled to the benefit of those Government Orders.
3) If any work in accordance with the agreement executed based on the interim order passed by this Court in any of these cases is completed by any of the contractors, no Additional Performance Guarantee shall be insisted from those contractors. If the work has progressed
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to a level exceeding 80%, the tendering authority is left with the liberty to take a decision as to whether any Additional Performance Guarantee is to be insisted upon, taking into account the efficiency, reputation, men and machinery engaged, and other positive factors of the respective contractors. If the work has exceeded 30% of the total work, then the tendering authority is directed to secure Additional Performance Guarantee proportionate to the balance work.
4) In all other cases, the contractors/petitioners are directed to furnish an Additional Performance Guarantee to the tendering authority as specified in the tender documents within three weeks from the date of receipt of a copy of this judgment.
5) In cases where a Performance guarantee is furnished by the contractors in spite of its relaxation up to 31.03.2023, the said amounts can be adjusted against the Additional Performance guarantee required in the circumstances specified above.
6) If the tenders are invited on the basis of the Percentage Rate Contracts,
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then the contractors are liable to furnish the Additional Performance Guarantee on the basis of (X-10)% of the estimated PAC.
7) If the tenders are invited on the basis of Items Rates Contract, then the contractors are liable to furnish Additional Performance Guarantee for each item of work on the basis of (X-10)% of the estimated amount for each item of work.
I make it clear that the directions are issued as above taking into account the peculiar facts, features and circumstances involved in these cases consequent to the interim orders granted; and it shall not be treated as a precedent, except in regard to the writ petitions pending in the above context.”
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and those writ appeals were allowed by the Division Bench with the following directions;
“15. Considering the above aspects, we allow these appeals and set aside the judgment passed by the learned Single Judge. It is made clear that the appellants would not be liable to execute the Additional Performance Guarantee, if the over all rate is below 10% of TPAC. However, the appellants would be liable to furnish Additional Performance Guarantee as per the letter dated 10.01.2019, ie, x-10%. Additional Performance Guarantee should be executed for the balance amount of work where the amount of work is above 10-25% of the TPAC.”
demand for Additional Performance Guarantee, the
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appellant is challenging the condition requiring it to furnish 5% of the contract value as Performance Guarantee. Learned Counsel submitted that, by G.O.(P)No.7/2021/FIN dated 07.01.2021,
the Government of Kerala had reduced the requirement of Performance Guarantee from 5% to
3% till 31.03.2023 and now, by G.O.(P) No.95/2023/FIN dated 07.09.2023, the reduction
stands extended up to 31.03.2024, with
retrospective effect from 01.04.2023. A copy of
the latest Government Order is also made available for perusal. In our opinion, insofar as orders issued by the Government are applicable to the Water Authority, G.O.(P)No.95/2023/FIN dated 07.09.2023 reducing the Performance Guarantee from 5% to 3%, will also be applicable.
In the result, the writ appeal is allowed and
the impugned judgment is set aside.
It is made clear that the appellant is not
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liable to execute the Additional Performance Guarantee, the overall rate quoted by it being
5.98% above TPAC .
sd/-
A.J.Desai Chief Justice
sd/-
V.G.Arun
Judge
scl
2 issues framed by the court
Whether the appellant is liable to execute the Additional Performance Guarantee given its quoted rate being below 10% of TPAC.
Whether the Government Orders reducing the Performance Guarantee requirement are applicable to the Kerala Water Authority.
Colour shows how this judgement treated each authority
Writ Appeal No.725 of 2023 and connected casesRelied on¶48
2 provisions across 2 enactments
M/S. STREFA PROJECTS PRIVATE LTD
KERALA WATER AUTHORITY
GOVERNMENT OF INDIA
A.J. Desai
V.G. Arun
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
