Madhya Pradesh High Court
M/S Tulsi Narayan Garg Thr. vs The M.P. Rural Road Development ... on 22 April, 2019
1
THE HIGH COURT OF MADHYA PRADESH
W.P.No.26373/2018
(M/s. Tulsi Narayan Garg Vs. The M.P. Rural Road Development Authority,
Bhopal & another)
Gwalior, Dated:-22.04.2019
Mr. M.P.S. Raghuvanshi, learned counsel for the petitioner.
Mr. Vivek Khedkar, learned counsel for the respondent.
1. Grievance raised by the petitioner is against retention of amount of performance guarantee.
2. Petitioner is a Contractor. He was awarded the work under Package No.MP 3755, District Sheopur for Construction of Road Palikunjpura-Nagarganwda vide agreement No.5/18.02.2011. Besides said work petitioner was also awarded the work under Package No.MP 3712, MP 3714, MP 3717 and MP 37MTN005.
3. In respect of work under Package No.3755, the work order was issued on 23.02.2011; whereby, the time allowed for completion of work was 12 months (including rainy season). Thus the due date of completion was 22.02.2012. The work was actually completed on 26.06.2013. Be it noted that the agreement was not only for construction but was for maintenance of Rural Road under Pradhan Mantri Gram Sadak Yojna.
4. That as per clause 32 contained in Section 2 of Instructions to Bidders (herein after referred as 'ITB') within 10 days after receipt of the letter of Acceptance, the successful Bidder was to mandatorily deliver to employer a performance security of five percent of contract prices for the period of five years and the time for completion of 2 THE HIGH COURT OF MADHYA PRADESH W.P.No.26373/2018 (M/s. Tulsi Narayan Garg Vs. The M.P. Rural Road Development Authority, Bhopal & another) works plus additional security for unbalanced Bids in accordance with clauses 27.3 and 27.4 of ITB and clause 46 Part I General Condition of Contract (herein after referred as 'GCC').
5. Clauses 27.3, 27.4 and 32 of ITB and Clause 46 of GCC Part I stipulates :
Under ITB "27.3 If the Bid of the successful Bidder is seriously unbalanced in relation to the Engineer's estimate of the cost of work to be performed under the contract, the Employer may require the Bidder to produce detailed price analyses for any or all items of the Bill of Quantities, to demonstrate the internal consistency of those prices with the construction methods and schedule proposed. After evaluation of the price analyses, the Employer may require that the amount of the performance security set forth in Clause 32 of ITB be increased at the expense of the successful Bidder to a level sufficient to protect the Employer against financial loss in the event of default of the successful Bidder under the Contract. The amount of the increased performance security shall be decided at the sole discretion of the Employer, which shall be final, binding and conclusive on the bidder.
27.4 If the Bid of the successful Bidder is seriously unbalanced in relation to the Engineer's estimate of the cost of routine maintenance of works to be performed for five years under the contract, the Employer may require the Bidder to produce detailed price analyses for routine maintenance. After its evaluation, the Employer may require that the amount of the performance security set forth in Clause 32 be increased at the expense of the successful Bidder to a level sufficient to protect the Employer against 3 THE HIGH COURT OF MADHYA PRADESH W.P.No.26373/2018 (M/s. Tulsi Narayan Garg Vs. The M.P. Rural Road Development Authority, Bhopal & another) financial loss in the event of default of the successful Bidder under the Contract. The amount of the increased performance security shall be decided at the sole discretion of the Employer, which shall be final, binding and conclusive on the bidder.
32. Performance Security 32.1 Within 10 (ten) days after receipt of the Letter of Acceptance, the successful Bidder shall deliver to the Employer a Performance Security of five percent of the Contract Price, for the period of five years and the time for completion of works plus additional security for unbalanced Bids in accordance with Clauses 27.3, 27.4 of ITB and Clause 46 Part I General Conditions of Contract and sign the contract.
32.2 The performance security shall be either in the form of a Bank Guarantee or fixed deposit Receipts, in the name of the Employer, from a Scheduled commercial bank.
If the Performance Security is in the form of Bank Guarantee, it should be valid until a date 45 days from the date of expiry of defect liability period. Bank Guarantee valid for a lesser period (not less that 1 year) may be initially accepted, but the bidder/contractor would get this Bank Guarantee extended in such a way that an amount equal to 5% of the contract price is always available with employer until 45 days after the lapse of Defect Liability Period. If the bidder/contractor fails to maintain above Performance security, the Employer would recover the same from any due payable to the contractor. Bank Guarantee should be from a scheduled Commercial bank (other than Co-Operative Bank).
4THE HIGH COURT OF MADHYA PRADESH W.P.No.26373/2018 (M/s. Tulsi Narayan Garg Vs. The M.P. Rural Road Development Authority, Bhopal & another) 32.3 Failure of the successful bidder to comply with the requirements of Clause 32.1 shall constitute sufficient grounds for cancellation of the award and forfeiture of the Earnest Money. He will also be debarred from participating in bids under PMGSY for one year."
under GCC Part I "46 Securities 46.1 The Performance Security equal to five percent of the contract price and additional security for unbalanced bids shall be provided to the Employer no later than the date specified in the Letter of Acceptance and shall be issued in the form given in the Contract Date and by a scheduled commercial bank. The Performance Security and additional performance security for routine maintenance shall be valid until a date 45 days from the date of expiry of Defect Liability Period and the additional security for unbalanced bids shall be valid until a date 45 days from the date of issue of the certificate of completion. If the Performance Security is in the form of Bank Guarantee, it should be valid until a date 45 days from the date of expiry of defect liability period. Bank Guarantee valid for a lesser period (not less that 1 year) may be initially accepted, but the contractor would get this Bank Guarantee extended in such a way that an amount equal to 5% of the contract price is always available with employer until 45 days after the lapse of Defect Liability Period. If the bidder/contractor fails to maintain above Performance security, the Employer would recover the same from any due payable to the contractor."
5
THE HIGH COURT OF MADHYA PRADESH W.P.No.26373/2018 (M/s. Tulsi Narayan Garg Vs. The M.P. Rural Road Development Authority, Bhopal & another)
6. It is the case of the petitioner that having completed the work on 26.06.2013 and having been given the completion certificate on 26.06.2013 (though it is dated 01.04.2013, but is signed by the Authorities of respondent on 26.06.2013), the petitioner is entitled for the release of said Performance Security under Clause 43 of the GCC Part I, which accounts for :
"43. Security Deposit/Retention and Release of Performance Security and Security Deposit/Retention.
43.1 The Engineer shall retain security deposit of 5% of the amount from each payment due to the Contractor until completion of the whole of the construction work. No security deposit/retention shall be retained from the payments for Routine Maintenance of works.
43.2 "On the satisfactory completion of the whole of the construction work half the total amount retained as security deposit is repaid to the contractor at the end of 2nd year after completion of the construction work and balance of the amount retained as security deposit is repaid to the contractor at the end of 3rd year after completion of the construction work subject to condition that the engineer has certified that all defects notified by the engineer to the contractor before the end of period prescribed for repayment have been corrected".
43.3 The additional performance security for unbalanced bids as detailed in Clause 51 of conditions of Contract is repaid to the contractor when the construction work is complete. 43.4 The performance security equal to the five percent of the contract price and additional 6 THE HIGH COURT OF MADHYA PRADESH W.P.No.26373/2018 (M/s. Tulsi Narayan Garg Vs. The M.P. Rural Road Development Authority, Bhopal & another) performance security for Routine Maintenance as detailed in Clause 51 of Conditions of Contract is repaid to the contractor when the period of five years fixed for Routine Maintenance is over and the Engineer has certified that the contractor has satisfactorily carried out the Routine Maintenance of the works.
If the Routine Maintenance part of the contract is not carried out by the Contractor as per this contract, the employer will be free to carry out Routine Maintenance work and the amount required for this work will be recovered from the amount of Performance Security available with the employer and/or from any amounts of the Contractor whatever is due.
43.5 If the contractor so desires then the Security Deposit can be converted into any interest bearing security of scheduled commercial bank in the name of the Employer or National Saving Certificates duly pledged in favour of the Employer for Defect Liability Period."
7. It is contended that after completion of five years, i.e. from 26.06.2013 from the date of completion (wrongly mentioned by the petitioner as 05.09.2012), utilization certificate was issued under the joint signature of term which carried out the inspection of the road in question on 29.04.2018. The team comprised of Team leader M/s Escon India, Assistant Manager, MPRAD, Project Implementation Unit Sheopur, General Manager, MPRRDA, PIU Sheopur and General Manager, MPRRDA, PIU Bhind. It is urged that despite the utilization certification and completion of maintenance period, the 7 THE HIGH COURT OF MADHYA PRADESH W.P.No.26373/2018 (M/s. Tulsi Narayan Garg Vs. The M.P. Rural Road Development Authority, Bhopal & another) respondents have not released the amount of performance security. Accordingly, release of said amount is being sought vide present writ petition.
8. The respondents have filed short reply wherein while not disputing basic facts, it is urged that the defect liability period as per clause 46 expired on 26.06.2018. It is urged that before the expiry of said period, the contract awarded to the petitioner vide Package No.MP 3712, MP 3714, MP 3717 and MP 37MTN005 were terminated on account of non-completion and on account of near about Rs.342.93 lakh is required to be recovered from the petitioner; therefore, the amount of Rs.12.7 lakh under Package No.3175 is not disbursed.
9. Considered rival submissions.
10. The issues which crop up for consideration are as to whether the petitioner is entitled for the refund of amount of performance guarantee. Secondly, whether the respondents are justified in withholding the amount as there exists liability of the petitioner under other contract.
11. True it is that Clause 43 of GCC Part I provides the manner of Security deposit/Retention and release of performance security and security Deposit/Retention Clause 43.4 besides stipulating that the performance security equal to the five percent of the contract price 8 THE HIGH COURT OF MADHYA PRADESH W.P.No.26373/2018 (M/s. Tulsi Narayan Garg Vs. The M.P. Rural Road Development Authority, Bhopal & another) and additional performance security for Routine maintenance as detailed in Clause 51 of Condition of Contractor is repaid to the contractor when the period of five years fixed for Routine maintenance is over and the Engineer has certified that the contractor has satisfactorily carried out the Routine Maintenance of the works. This Clause however, further stipulates that: "if the Routine maintenance Part of the contract is not carried out by the Contractor as per this contract, the employer will be free to carry out Routine maintenance work and the amount required for this work will be recovered from the amount of performance security available with the employer and/or from any amounts of the Contractor whatever is due. As evident from the contract documents of Package No.MP 3712, MP 3714, MP 3717 and MP 37MTN005 similar Clause appear in these agreement. The connotation "and/or from any amounts of the Contractor whatever is due," in our considered opinion is in contradistinction with the earlier part of Clause 43.4, and will include any amount arising not only under the subject contract, but any other contract, which entitles the employer to effect recovery thereof.
12. Furthermore, Clause 50 of GCC Part I stipulates:
"50. Final Account 50.1 The Contractor shall supply the Engineer with a detailed account of the total amount that the Contractor considers payable for works under 9 THE HIGH COURT OF MADHYA PRADESH W.P.No.26373/2018 (M/s. Tulsi Narayan Garg Vs. The M.P. Rural Road Development Authority, Bhopal & another) the Contract within 21 days of issue of certificate of completion of construction of works. The Engineer shall issue a Defects Liability Certificate and certify and payment that is due to the Contractor within 42 days of receiving the Contractor's account if it is correct and complete. If the account is not correct and complete, the Engineer shall issue within 42 days a schedule that states the scope of the corrections or additions that are necessary. If the Account is still unsatisfactory after it has been resubmitted, the Engineer shall decide on the amount payable to the Contractor and issue a payment certificate within 28 days of receiving the Contractor's revised account. The payment of final bill for construction of works will be made within 14 days thereafter.
50.2 In case the account is not received within 21 days of issue of Certificate of Completion as provided in clause 50.1 above, the Engineer shall proceed to finalise the account and issue a payment certificate within 28 days. The payment of final bill for construction of works will be made within 14 days thereafter.
50.3 The Contractor shall supply the Engineer with a detailed account of the total amount that the Contractor considers payable under the contract 21 days before the end of the Routine Maintenance Period. The Engineer shall issue a Routine Maintenance Completion Certificate and certify and final payment that is due to the Contractor within 42 days of receiving the Contractor's account if it is correct and complete. If it is not, the Engineer shall issue within 42 days a schedule that states the scope of the corrections or additions that are necessary. If the Final Account is still unsatisfactory after it has been resubmitted, the Engineer shall decide on the amount payable to the Contractor and issue a payment certificate within 28 days of receiving the Contractors revised account. The payment of 10 THE HIGH COURT OF MADHYA PRADESH W.P.No.26373/2018 (M/s. Tulsi Narayan Garg Vs. The M.P. Rural Road Development Authority, Bhopal & another) final bills for routine maintenance will be made within 14 days thereafter.
50.4 In case the account is not received within 21 days of issue of Certificate of Completion as provided in clause 50.3 above the Engineer shall proceed to finalise the account and issue a payment certificate within 28 days. The payment of final bill for routine maintenance will be made within 14 days thereafter."
13. No cogent material is commended at to establish that the petitioner has exhausted the said stage which unless accomplished will not entitle petitioner for the refund under Clause 43 of GCC Part I as claimed.
14. Besides above, Clause 24 and 25 of GCC part I provides for Dispute Redressal System and the Arbitration.
15. For the reasons above, we are not inclined to cause any indulgence.
16. As no relief can be granted, petition fails and is dismissed. No costs.
(Sanjay Yadav) (Vivek Agarwal)
Judge Judge
bj/-
BARKHA
JHA
2019.05.
03
10:29:10
-07'00'