Kerala High Court
Mariya Constructions vs State Of Kerala on 3 November, 2020
Author: N.Nagaresh
Bench: N.Nagaresh
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
TUESDAY, THE 3RD DAY OF NOVEMBER 2020/12TH KARTHIKA, 1942
WP(C).No.6098 OF 2019(J)
PETITIONER:
MARIYA CONSTRUCTIONS,
DOOR NO.14/1375, KAKKANATT HOUSE,
THOTTILPEEDIKA, CHEVARAMBALAM P.O,
KOZHIKODE REPRESENTED BY ITS MANAGING PARTNER
LOUIS JOSE, AGED 64 YEARS, S/O.LOUIS,
KAKKANATT HOUSE, THOTTILPEEDIKA,
CHEVARAMBALAM P.O,
KOZHIKODE - 673 017.
BY ADVS.
SRI.GEORGE MATHEW
SRI.M.D.SASIKUMARAN
SHRI.SUNIL KUMAR A.G
SRI.DIPU JAMES
SMT.BHANU THILAK
SHRI.MATHEW K.T.
RESPONDENTS:
1 STATE OF KERALA,
REPRESENTED BY ITS SECRETARY,
WATER RESOURCES DEPARTMENT,
GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM 695 001.
2 KERALA RURAL WATEER SUPPLY AND SANITATION
AGENCY (KRWSA)
(JALANIDHI), PTC TOWERS, SS KOVIL ROAD,
THAMPANOOR, THIRUVANANTHAPURAM 695 001,
REP. BY ITS EXECUTIVE DIRECTOR.
WP(C) No.6098/2019
:2:
3 KERALA RURAL WATER SUPPLY AND SANITATION
AGENCY (KRWSA)
REGIONAL PROJECT MANAGEMENT UNIT, 2ND FLOOR,
BLDG. NO. III/253, NEAR AKG HOSPITAL, THALAP,
KANNUR 670 002, REP BY ITS REGIONAL PROJECT
DIRECTOR.
4 KERALA RURAL WATER SUPPLY AND SANITATION
AGENCY (KRWSA)
JALANIDHI OFFICE, PANAMARAM P.O, WAYANAD
DISTRICT 670 721
FOR PANAMARAM GRAMA PANCHAYATH, AGENCY-
MIRROR, CENTER FOR SOCIAL CHANGE, SULTHAN
BATHERY,
REP. BY ITS TEAM LEADER.
5 VILAMBUKANDAM SCHEME LEVEL EXECUTIVE
COMMITTEE (SLEC)
PANAMARAM GRAMA PANCHAYATH, PANAMARAM P.O,
WAYANAD DISTRICT 670 721, REP. BY ITS
SECRETARY.
6 SECRETARY,
VILAMBULANDAM SLEC, PANAMARAM GRAMA
PANCHAYATH, PANAMARAM P.O, WAYANAD DISTRICT
670 721.
R2 BY ADV. SRI.D.KISHORE
R2 BY ADV. SRI.N.ARJUNAN PILLAI
GOVT. PLEADER SMT. RASHMI K.M
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY
HEARD ON 20-10-2020, THE COURT ON 03-11-2020 DELIVERED
THE FOLLOWING:
WP(C) No.6098/2019
:3:
N. NAGARESH, J.
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W.P.(C) No.6098 of 2019
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Dated this the 3rd day of November, 2020
JUDGMENT
~~~~~~~~~ Petitioner, a partnership firm engaged in execution of civil works, is before this Court seeking to quash Ext.P9 and to declare that the respondents are not entitled to retain the amount of ₹5,16,657/- and original bank guarantee.
2. The first respondent in the writ petition is the State of Kerala and respondents 2 to 4 are Kerala Rural Water Supply and Sanitation Agency represented by its different officers. The 5th respondent is Vilambukandam Scheme Level Executive Committee (SLEC) and the 6 th respondent is the Secretary of the said SLEC.
3. The 3rd respondent, the Regional Project Director of the Kerala Rural Water Supply and Sanitation Agency WP(C) No.6098/2019 :4: (KRWSA) issued Ext.P1 Invitation For Bids (IFB) dated 19.06.2015 inviting bids for supplying and laying distribution system for Vilambukandam BWSS at Panamaram Grama Panchayat in Wayanad District. The petitioner submitted his bid for ₹2,06,66,279/-. The petitioner's bid was accepted and the Scheme Level Executive Committee (SLEC) issued Ext.P2 Letter of Acceptance dated 01.09.2015. The Letter of Acceptance required the petitioner to execute an agreement. Consequently, the petitioner executed Ext.P3 Contract Form on 03.09.2015.
4. The petitioner contends that the petitioner executed the entire work satisfactorily and the 3 rd respondent-Regional Project Director issued Ext.P5, certifying that the work has been completed by the petitioner satisfactorily. The tender conditions contained a defect liability period for the petitioner. When the defect liability period was over, the petitioner submitted Exts.P6 and P7 letters to the Secretary of SLEC requiring to return the Bank Guarantee and to release the Retention Money. WP(C) No.6098/2019 :5:
5. The petitioner states that the petitioner was issued with Ext.P9 letter dated 16.02.2019 which stated that the petitioner should take steps to connect all houses under the SLEC with water connections. Ext.P9 also required the petitioner to return the surplus PVC pipes, water meter, etc. The petitioner handed over all the remaining materials to the 5th respondent, which has been acknowledged as per Ext.P10. However, the respondents have not so far repaid or released the Retention Money.
6. The 2nd respondent filed a counter affidavit. In the counter affidavit, the 2nd respondent stated that the petitioner is bound to remedy any defects in the work and carry out routine maintenance for five years for the contract price and therefore the petitioner can seek return of retention money only after the said five-year period. The 2 nd respondent alleged that the petitioner has failed to undertake routine maintenance work and to cure defects. According to the 2 nd respondent, there were defects in the work of the petitioner. Therefore, the petitioner cannot insist that the retention WP(C) No.6098/2019 :6: money should be released immediately.
7. Heard learned counsel for the petitioner and learned Government Pleader appearing for the respondents.
8. The short question that arises for consideration is whether the petitioner can insist for return of bank guarantee and retention money after the defect liability period and whether the respondents can withhold the same for a period of five years during which period, the petitioner has undertaken to do routine maintenance work.
9. Ext.P1 is the Invitation For Bids (IFB). Clause 11 of Ext.P1 reads as follows:-
"11. Performance Security Please revise the paragraph below in line with discussions in the Procurement Workshop, to stipulate performance Guarantee for 2.5% of the contract value in the form of BG valid up to at least 45 days beyond the DLP + retention money @ 2.5% from each bill as in the present BD. The retention money will be released after satisfactory completion of the obligation under the Defects Liability.
Within 15 days of receiving letter of acceptance, the successful bidder shall deliver to the Regional Project Director, RPMU Kannur the performance security (either a bank guarantee or a bank draft in favour of the Employer) for an amount equivalent of 5% of the contract price. The Performance Security shall be valid till the expiry of the period of WP(C) No.6098/2019 :7: maintenance of the work, specified in clause 12. Failure of the successful Bidder to furnish performance security and signing the agreement within the period stipulated shall constitute sufficient grounds for annulment of award and forfeiture of the Bid Security, in which case the Employer may make the award to the next lowest evaluated bidder or call for new bids."
Clause 12 of Ext.P1 relating to defect liability, provides as follows:-
"12. Defects Liability The "Defects Liability Period" for the work is 12 months from the date of taking over possession or one full monsoon season whichever occurs later. During this period, the contractor will be responsible for rectifying any defects in construction free of cost to the Employer."
It is therefore evident that the defect liability period for the work is 12 months from the date of taking over possession or one full monsoon season whichever occurs later.
10. Ext.P2 Letter of Acceptance issued by the 6 th respondent-Secretary of SLEC provides that the bank guarantee shall be valid till the expiry of the period of maintenance that is up to 08.10.2017. It is seen that as required in Ext.P2 letter, the petitioner has entered into WP(C) No.6098/2019 :8: Ext.P3 contract with the 6th respondent. The material paragraphs contained in Ext.P3, read as follows:-
"1. In this Agreement, words and expressions shall have the same meanings as are respectively assigned to them in the Conditions of Contract hereinafter referred to, and they shall be deemed to form and be read and construed as part of this Agreement.
2. In consideration of the payments to be made by the Employer to the Contractor as hereinafter mentioned, the Contractor hereby covenants with the Employer to execute and complete the Works and remedy and defects therein in conformity in all aspects with the provisions of the Contract and undertaking routine maintenance for five years.
3. The Employer hereby covenants to pay the Contractor in consideration of the execution and completion of the Works and the remedying the defects wherein and undertaking routine maintenance for fie years, the Contract Price or such other sum as may become payable under the provisions of the Contract at the times and in the manner prescribed by the Contract.
4. The following documents shall be deemed to form and be read and construed as part of this Agreement, viz:
(i) Letter of Acceptance;
(ii) Notice to proceed with the works;
(iii) Contractor's Bid;
(iv) Contract Data;
(v) Special Conditions of Contract;
(vi) General Conditions of Contract;
(vii) Specifications;
(viii) Drawings;
WP(C) No.6098/2019
:9:
(ix) Bill of Quantities; and
(x) Any other document listed in the Contract
Data as forming part of the contract."
Ext.P3 agreement makes it clear that the contractor's bid, contract data, the letter of acceptance and certain other documents shall be deemed to form and be read and construed as, part of Ext.P3 agreement.
11. Clause 11 of Ext.P1 instructions to bidders accompanying the invitation for bids, states that the performance guarantee of the contract is valid up to at least 45 days beyond the defects liability period. The retention money will be released after satisfactory completion of the works and the performance guarantee will be released after satisfactory completion of the obligation under the defect liability. Clause 12 of Ext.P1 provides that the defects liability period is 12 months from the date of taking over possession or one full monsoon season whichever occurs later. It is the bid based on Ext.P1 made by the petitioner that has been accepted by the respondents as per Ext.P2.
WP(C) No.6098/2019: 10 :
12. The respondents have not stated as to when the defects liability period was over. Ext.P2 Letter of Acceptance issued by the respondents states that the Bank Guarantee shall be valid up to 08.10.2017. Ext.P5 certificate dated 01.01.2018 issued by the 3 rd respondent would establish that the petitioner has executed the work and completed the same satisfactorily. The defect liability period in any case should therefore expire on 01.12.2018. Therefore, going by Ext.P1, the petitioner will be entitled to release of retention money at least on 01.01.2018 when the 3 rd respondent has certified that the petitioner has completed the work satisfactorily.
13. As regards the return of performance guarantee, Ext.P1 would show that the performance guarantee will be valid up to at least 45 days beyond the defect liability period. The defect liability period is 12 months from the date of taking over possession or one full monsoon season, whichever occurs later. Going by Clause 12 of Ext.P1, the petitioner will be responsible to rectify any defects in WP(C) No.6098/2019 : 11 : construction free of cost to the employer during this defect liability period. As the defect liability period got over by 31.12.2018, the petitioner need to maintain Bank Guarantee only till 15.02 2019.
14. The respondents in their counter affidavit have not stated as to the date of taking over of possession. The respondents have neither a case that they have not taken over possession. Under the circumstances, one has to assume that the defect liability period commences from 01.01.2018, the date on which the 3 rd respondent has stated that the petitioner has completed the work satisfactorily. Therefore, the defect liability period should be over by 31.12.2018. The respondents have refused to release the retention amount and return the Bank Guarantee alleging that there were defects in the work of the petitioner and the five-year maintenance period is not over yet.
15. According to the petitioner, the respondents have not pointed out any defect whatsoever during the defect liability period. Going by the materials available on record, WP(C) No.6098/2019 : 12 : the respondents have pointed out defects only on 16.02.2019 by issuing Ext.P9 letter, which is after the 12 months defect liability period. Ext.P9 admits that the petitioner has completed the work. Ext.P9 would also state that trial run could not be conducted not due to any fault of the petitioner, but due to the failure of the Kerala Water Authority to make available sufficient quantity of water. Ext.P9 would further indicate that the Kerala Water Authority has come forward to provide water on bulk meter basis.
16. But, Ext.P9, at the same time, makes an allegation that the petitioner was required to cure the defects in the line till water is supplied to all houses. Ext.P9 would further state that about 1010 families are not getting drinking water and are suffering. Ext.P9 requires the petitioner to make available drinking water to all houses. Ext.P9 would also indicate that the SLEC is ready to pay any balance due to the petitioner only after being convinced that all households are receiving water.
17. It is evident that the petitioner has satisfactorily WP(C) No.6098/2019 : 13 : completed the work by 01.01.2018. There is nothing on record to show that the respondents have pointed out any defects in the work of the petitioner till the defect liability period was over. In Ext.P9, the contention of the respondents, is that since the Water Authority could not supply sufficient quantity of water and since all houses/beneficiaries have not received water connection, until the petitioner makes arrangement to supply water to all beneficiary houses, the respondents will not make any payment. The respondents have unabashedly stated that they will pay the amount only after supplying water to all beneficiary houses.
18. The respondents have no case that the petitioner has not completed the work awarded to him pursuant to Ext.P1-IFB. The Regional Project Director of KRWSA has certified in Ext.P5 that the petitioner has completed the work satisfactorily. The stand of respondents 5 and 6 in Ext.P9 Communication is that the petitioner could not establish that all houses receive the water supplied. But, Ext.P9 itself WP(C) No.6098/2019 : 14 : states that the reason for the same is due to the non-supply of water by the Kerala Water Authority. But, Ext.P9 Communication which was issued on 16.02.2019, after the defect liability period, states that the Kerala Water Authority is now ready to supply water on bulk meter basis and the petitioner shall ensure water supply to all households.
19. As per Clause 11 of Ext.P1-IFB, the Retention Money has to be released after satisfactory completion of work. Ext.P5 Certificate would show that the work was satisfactorily completed, by 01.01.2018. Therefore, the respondents cannot withhold the Retention Money after 01.01.2018. The Performance Security is valid up to at least 45 days beyond the defect liability period. The parties have not agreed to extend the period of Performance Security beyond the said period. Therefore, the petitioner is entitled to return of Performance Security, on 15.02.2019.
20. There is nothing on record to show that the respondents have pointed out any defect in respect of the work carried out, before 31.12.2018, before the expiry of WP(C) No.6098/2019 : 15 : defect liability period. There is nothing on record to show that the petitioner has not performed his part of the work and it was brought to the notice of the petitioner before 15.02.2019. In the circumstances, the petitioner is entitled to return of Performance Security/Bank Guarantee provided by the petitioner.
21. The State experienced floods during 2018 and 2019. If any damage occurred to the lines drawn by the petitioner due to floods, the petitioner cannot be found fault with.
22. The refusal of the respondents to honour the payments, is based on Ext.P3 contract. Ext.P3 contract binds the petitioner to undertake routine maintenance for five years. It is evident that the bid of the petitioner was in response to Ext.P1 which did not require the petitioner to undertake maintenance work for five years. Therefore, the bid amount should be treated as on consideration of the work offered and conditions stipulated in Ext.P1. If the petitioner was made to sign Ext.P3 contract which includes an WP(C) No.6098/2019 : 16 : undertaking to do routine maintenance for five years, such maintenance work should necessarily entail additional payment. For the alleged failure of the petitioner to do routine maintenance, the respondents will not be justified in withholding either the Retention Money payable to or Performance Security/Bank Guarantee submitted by the petitioner.
In the circumstances, the writ petition is allowed. Ext.P9 is set aside. The respondents are directed to release Retention Money due to the petitioner and return the Performance Security documents submitted by the petitioner, within a period of 60 days.
Sd/-
N. NAGARESH, JUDGE aks/02/11/2020 WP(C) No.6098/2019 : 17 : APPENDIX PETITIONER'S EXHIBITS:
EXHIBIT P1 TRUE COPY OF RELEVANT PAGES OF NIT DTD 19-06-2015 ISSUED BY 3RD RESPONDENT.
EXHIBIT P2 TRUE COPY OF LETTER OF ACCEPTANCE-
CUM-NOTICE DTD 01-09-2015 ISSUED BY 6TH RESPONDENT.
EXHIBIT P3 TRUE COPY OF CONTRACT FORM (PRINCIPAL AGREEMENT) DTD 03-09-2015.
EXHIBIT P4 TRUE COPY OF LETTER DTD 23-10-2017 ISSUED BY UNION BANK OF INDIA MAVOOR ROAD.
EXHIBIT P5 TRUE COPY OF EXPERIENCE CERTIFICATE DTD. 01-01-2018 ISSUED BY 3RD RESPONDENT TO THE PETITIONER.
EXHIBIT P6 TRUE COPY OF REQUEST DTD 20-01-2019 SENT TO 6TH RESPONDENT FOR RETURNING THE ORIGINAL BANK GUARANTEE.
EXHIBIT P7 TRUE COPY OF REQUEST DTD 22-01-2019 SENT TO 6TH RESPONDENT SEEKING RELEASE OF RETENTION AMOUNT.
EXHIBIT P8 TRUE COPY OF LETTER DTD. 15-02-2019 ISSUED BY 4TH RESPONDENT.
EXHIBIT P9 TRUE COPY OF LETTER DTD. 16-02-2019 ISSUED BY 4TH RESPONDENT.
EXHIBIT P10 TRUE COPY OF RECEIPT DTD 10-04-2018 ISSUED BY THE 6TH RESPONDENT.WP(C) No.6098/2019 : 18 :
RESPONDENT'S EXTS:
R2(A) TRUE COPY OF THE AGREEMENT DT 30.6.2015 SIGNED BETWEEN THE GRAMA PANCHAYAT AND SLEC.
R2(B) TRUE COPY OF THE AGREEMENT DT 7.8.2019.
R2(C) TRUE COPY OF THE BILL RECEIVED FROM KWA.