Orissa High Court
Debendranath Balabant Ray vs State Of Orissa And Ors. on 7 May, 2004
Equivalent citations: AIR2004ORI138, IV(2004)BC113, 98(2004)CLT12, 2004(I)OLR651, AIR 2004 ORISSA 138, 2004 (2) CTLJ 337, (2004) 1 ORISSA LR 651, (2004) 4 BANKCAS 113, (2004) 4 CIVLJ 601, (2004) 98 CUT LT 12
Author: B.P. Das
Bench: B.P. Das
JUDGMENT B.P. Das, J.
1. In these two writ petitions, the petitioner and the opposite parties being the same and the facts involved being almost similar, both the writ petitions were heard together and are being disposed of by this common judgment.
2. In W.P.(C) No. 11104/2003 the petitioner seeks quashing of Annexure - 6, the office order issued by O. P. No. 5 - the Executive Engineer, Rengali Right Canal Division No. II, Dhenkanal, forfeiting the earnest money deposited by him along with the tender submitted in respect of the work "Excavation of Gondia Branch Canal from RD 5.070 to 5.580 Km. of RBC of Rengali Irr. Project", as also Annexure-10, the communication of O. P. No. 1 - the Commissioner-cum-Secretary to the Govt. of Orissa in the Department of Water Resources, rejecting the petitioner's representation dated 15.10.2003 to allow him to furnish performance security at the reduced rate as has been allowed to another contractor, namely, Shri S. C. Panda, as per Annexure - 8. The petitioner has also prayed for issue of a command by this Court to the opposite parties to allow the petitioner to furnish performance security at the reduced rate and also to execute the agreement to start with the work.
In the other writ petition, i.e., W.P.(C) No. 737/2004, in respect of another item of work, namely, "Excavation of Gondia Branch Canal from RD 5.790 to 6.30 Km. of RBC of Rengali Irr. Project", the petitioner has made identical prayer to quash the respective annexures with regard to forfeiture of the earnest money deposit and the communication of O. P. No. 1 refusing to allow the petitioner to furnish reduced performance security besides seeking issue of command to the 0. Ps. as prayed for in the other writ petition.
3. The brief facts as delineated in the writ petitions tend to reveal that O. P. No. 5 - the Executive Engineer invited sealed tenders from intending eligible contractors for execution of eight items of work of excavation of Gondia Branch Canal as per Tender Call Notice No. 1/2002-03 published in the Oriya daily The Samaj' on 4.11.2002 (Annexure 2). Thereafter O. P. No. 5 issued a corrigendum to the aforesaid Tender Call Notice, which was published in the Oriya daily 'Dharitri' on 14.12.2002 (Annexure 3), wherein the estimated costs of the works indicated in Annexure 2 were reduced. The petitioner purchased two sets of tender papers and submitted the same in respect of the works indicated at serial Nos. 6 and 7 of Annexure 3, namely, "Excavation of Gondia Branch Canal from RD 5.070 to 5.580 Km. of RBC of Rengali Irr. Project" and "Excavation of Gondia Branch Canal from RD 5.790 to 6.30 Km. of RBC of Rengali Irr. Project" quoting the rates at Rs. 1,81,16,939/- and Rs. 1,83,31,182/- as against the tender schedule amounts of Rs. 2,56,89,690/- and Rs. 2,59,96,505/-, respectively. Thereafter O. P. No. 5 by letter dated 16.1.2003 (Annexure - 4) asked the petitioner to submit detailed analysis of the rates for each item of work. The petitioner in response to Annexure - 4 by letter dated 30.1.2003 submitted detailed analysis of the rates and indicated therein that as the work-sites of both the works were quite adjacent, the petitioner would be able to manage execution of both the works with one establishment for which there would be 50% reduction in the establishment cost and proportionate reduction in over-head expenditure. O. P. No. 5 by letter dated 15.3.2003 (Annexure-5) intimated the petitioner about acceptance of the tenders submitted by him for both the works and requested the petitioner to attend his office on or before 26.3.2003 along with the documents mentioned therein to sign the necessary agreements for execution of the works. On 26.3.2003 the petitioner attended the office of O.P. No. 5 and submitted all the required documents except the performance security. Petitioner's request to allow him to sign the agreements without furnishing the performance security was, however, turned down. Consequently O. P. No. 5 by office order dated 2.4.2003 (Annexure-6) forfeited the earnest money deposited by the petitioner in respect of both the works.
Challenging the aforesaid action of O. P. No. 5, the petitioner moved this Court in W.P.(C) Nos. 4780 and 4781 of 2003 but this Court declined to interfere with the decision taken by O. P. No. 5 on the ground that as the petitioner while submitting tenders was aware of the condition stipulated in the Detailed Tender Call Notice ('DTCN' in short) regarding furnishing of performance security and having agreed to such condition and accepted the same, he could not be permitted to challenge the said condition. The writ petitions were accordingly dismissed by the judgment passed on 24.9.2003.
According to the petitioner, after dismissal of the aforesaid writ petitions, he came to know that O. P. No. 1 had given concession in respect of furnishing performance security to some contractors, who were similarly placed like the petitioner, by reducing the amount of such security. In paragraph 14 of the writ petitions, the petitioner has specifically averred that such benefit/concession was given to one S. C. Panda, a super-class contractor, in respect of the work "Construction of Left Bank Canal of Rengali Irrigation Project from RD 33 KM to 35.50 KM with all structures-Package 7(B)" by allowing him to deposit performance security after deduction of 15% from the estimated cost of contract treating that to be the profit of the contractor, vide Annexure-8, on the basis of the recommendation made by the Chief Engineer and Basin Manager, Brahmani Left Basin, Samal, vide Annexure-7, which reads as follows :
"In inviting reference to the above, I am to State that Sri S. C. Panda, Super Class Contractor was asked to give his written consent for furnishing additional performance security in shape of unconditional Bank Guarantee towards unbalanced items amounting to Rs. 9,68,16,512.00 and to avail escalation from the date of opening of revised Bid. In response to the above he has furnished his written consent vide his Lr. No. Nil dt. 9.10.2001 (copy enclosed) for additional performance security towards unbalanced items in shape of unconditional Bank Guarantee for Rs. 5,70,62,571/- against Rs. 9,68,16,512/-. In his written consent he has intimated that the estimated amount put to tender is Rs. 31,58,33,957/- which includes profit of 15%. The cost of work therefore is Rs. 26,84,58,864/-. The total amount of offer after negotiation is Rs. 21,13,96,292/-. Hence the unbalanced amount is Rs. 5,70,62,571/-.
The appeal of Sri S. C. Panda, the lowest bidder was reviewed. The profit on the unbalanced items has been evaluated from the sanctioned estimate and appended in Annexure I.As per the statement the Contractor's profit comes to Rs. 3,70,05,086/-. The unbalanced amount after deducting the Contractor's profit comes to Rs. 5,98,11,346/-.
Hence Shri S. C. Panda, the bidder was asked to give his consent for furnishing the additional performance security of Rs. 5,98,11,346/-in shape of unbalanced Bank Guarantee instead of Rs. 5,70,62,571/-, Sri Panda has submitted his willingness (copy enclosed) as Annexure II.
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The above would show that though the performance security in case of Shri Panda was Rs. 9,68,16,512/-, he was allowed to make such deposit at a concessional rate. The grievance of the petitioner is that there was no reason as to why the principle adopted in the case of Shri Panda could not be applied to the case of the petitioner. According to the petitioner, refusal to extend such benefit to the petitioner was arbitrary and discriminatory in nature for which a prayer is made to direct the opposite parties to extend to the petitioner the benefit/concession in regard to the amount of performance security as has been done in the case of Shri Panda under Annexures 7 and 8, and other similarly situated contractors. A further prayer is also made to quash Annexure-10, which is the order passed by, O.P. No. 1 - the Commissioner -cum- Secretary rejecting the representation of the petitioner on the same score.
4. The opposite parties in their counter affidavit have resisted the prayer of the petitioner saying that the petitioner had earlier filed a writ petition, which was not entertained by this Court, but only a direction was issued to the Government to dispose of the petitioner's representation which has been rightly rejected by the Commissioner -cum- Secretary after due consideration. So far as the main grievance of the petitioner regarding reduction in the amount of performance security is concerned, the opposite parties in paragraph 18 of their counter affidavit have stated that the work awarded by the State Government in favour of Shri S. C. Panda, as cited by the petitioner, namely, Construction of Left Bank Canal of Rengali Irrigation Project from RD 33 KM to 35.50 KM with all structures- Package-7(B), was totally different from the works for which the petitioner submitted his tenders. The opposite parties further submitted that the petitioner failed to execute the agreements by furnishing the required amount of performance security as per Clause 1.2.2 of the DTCN which the petitioner signed in token of acceptance "during tendering for the above two works" within the stipulated time and, therefore, O. P. No. 5 was justified in forfeiting the EMD of the petitioner. In this regard attention of the Court is invited to Clause 1.2.2. of the DTCN which under the heading "Performance Security for Unbalanced Items" requires the contractor to furnish performance security in shape of N. S. C./K. V. P./Post Office Time Deposit at the time of agreement equal to the amount which is differential cost between the amount put to tender and the less quoted amount by the contractor in each item.
5. According to the learned counsel for the State, once the petitioner agreed and endorsed acceptance of the condition regarding furnishing performance security, he cannot go back from the same by saying that he was not liable to furnish the performance security. At this point, one thing is to be kept in mind. The petitioner has not denied such endorsement but has claimed that some other contractors, who also endorsed acceptance of such condition, at a later stage were given some relaxation in the matter of computation of the unbalanced amount of cost and such benefit has been denied to the petitioner.
6. In order to fortify his contention, the petitioner has filed a rejoinder affidavit wherein he has brought to the notice of the Court that the benefit of reduction in the amount of performance security has not only been extended to Shri S. C. Panda but also to another contractor, namely, Shri Arun Kumar Nayak, who was entrusted with "Excavation of Gondia Branch Canal from RD 00 Km. To RD 1.330 Km.", the nature of which work is similar to the works of the petitioner, who submitted his tenders for excavation of Gondia Branch Canal. Annexure-11 to the rejoinder affidavit filed by the petitioner is the letter dated 30.1.2004 of the Financial Advisor-cum-Addl. Secretary to the Government in Water Resources Department to the Chief Engineer & Basin Manager, Brahmani Right Basin, Dhenkanal, from which it transpires that the performance security in respect of the work entrusted to Shri A. K. Nayak had been reduced. Controverting the claim made on the basis of Annexure-11, O. P. No. 5 has stoutly denied that no relaxation had been given in respect of the work awarded to Shri A. K. Nayak in furnishing performance security. But so far as the work awarded to Shri S. C. Panda is concerned, there is no cogent reason adduced by the 0. Ps. for such relaxation except saying that the nature of work was different.
7. Learned Counsel for the State has drawn our attention to a decision of this Court in Dasarathi Naik and Engineers v. Chief Engineer, Minor Irrigation, Orissa, 96 (2003) CLT 216, where the question that fell for consideration was whether Clause 64 of the Detailed Tender Call Notice with regard to furnishing bank guarantee towards performance security was there in the tender schedule originally or was inserted later on. The Court held that the question being a disputed question of fact could not be decided in a writ petition. However, the Court prima facie found that while submitting tender DTCN was required to be filled up by the tenderer, who has to sign each page of the DTCN and the said DTNC in Clause 64 prescribes for furnishing performance security and the same had been accepted by the petitioner by signing below the aforesaid clause and that the petitioner in the communication made to the Executive Engineer had also expressed its willingness to deposit the performance security as required at the time of agreement but later on the petitioner by another letter intimated that he could not arrange the bank guarantee as desired by the Executive Engineer since the Bank Managers of some banks could not issue bank guarantee due to end of financial year and prayed for two weeks' time to sign the agreement. Ultimately the Court dismissed the writ petition finding that there was no illegality in the impugned letter since the petitioner had quoted 23.33% less than the estimated cost and, therefore, it was necessary to keep performance security in shape of bank guarantee so that the petitioner would not leave the work half way through.
8. The facts of the present case are totally different from the facts in Dasarathi Naik's case (supra). Here is a case where the petitioner neither disputes existence of the clause requiring the tenderer to furnish performance security nor disputes the fact that the DTCN was filled up and signed by him. That too the petitioner is estopped from taking such a plea after disposal of his own writ petitions, W.P.(C) Nos. 4780 and 4,781/2003. The petitioner herein makes a grievance that when a similarly situated contractor in a similar tender agreement having a clause for furnishing bank guarantee had been allowed to furnish performance security basing upon the computation which was beneficial to him, the petitioner without any reason has not been allowed to avail such benefit. This act of the O.Ps., according to the petitioner, is discriminatory, Hence the ratio of the decision of Dasarathi Naik is not applicable to the facts and circumstances of the present case.
9. Law is well settled that in normal course the Court should be reluctant to interfere with the action of the Government in awarding contract work but if the same is found to be unreasonable, arbitrary, mala fide or is in disregard of the mandatory procedures, it will not hesitate to nullify or rectify such action. Here is a case where even if the contention of the learned counsel for the State is accepted in toto that the tender work awarded to Shri S. C. Panda was not similar to that of the petitioner, the principle for computation of performance security ought to have been uniform. Apparently the State has computed the performance security of Shri S. C. Panda in such a manner which was beneficial to him because he was asked to give the performance guarantee after deduction of 15% profit added to the estimated cost of tender. The manner in which computation of performance security was made in case of Shri S. C. Panda as per Annexures 7 and 8 has definitely reduced the amount of performance security. The petitioner's request to compute performance security in his case in similar manner has been turned down by the authorities. Prima facie it appears that the authorities have applied one standard in the case of Shri S. C. Panda and a different standard in the case of the petitioner, even though the standard agreement form was same and both of them agreed to abide by the conditions stipulated in the tender notice. The computation of performance security in the case of the petitioner was totally different from that of Shri S. C. Panda.
It is well settled that when an instrumentality of the State acts contrary to public good and public interest unfairly, unjustly and unreasonably in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution. In other words, once the State or instrumentality of the State is a party to the contract, it has an obligation in law to act fairly, justly and reasonably which is the requirement of Article 14 of the Constitution of India. (See ABL International Ltd. v. Export Credit Guarantee Corporation of India Ltd., (2004) 3 SCC 553.
In view of the aforesaid legal position, it is clear that the opposite parties in not allowing the petitioner to furnish performance security in the manner it was done in the case of Shri S. C. Panda as per Annexures 7 and 8 have not acted fairly, justly and reasonably and their action is discriminatory. The rejection of the petitioner's representation was also illegal.
10. We accordingly direct the opposite parties to compute the performance security of the petitioner in terms of Annexures 7 and 8. In view of the aforesaid direction, the orders forfeiting the earnest money deposited by the petitioner in respect of the works in question as per Annexure-6 to the writ petitions are quashed.
11. The writ petitions are accordingly allowed in part. There shall be no order as to cost.
SUJIT BARMAN ROY, C.J.
12. I agree.