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4.0 MOBILISATION AND LIQUIDATED DAMAGES :- The Contractor shall be responsible to deploy vehicle(s) a and when required by the ONGC as per clause no.5.5.1 and liable for liquidated damages as per clause no.10 of Scope of work, Annexure-III of tender document.

5.0 PERFORMANCE BANK GUARANTEE/SECURITY DEPOSIT 5.1 You are requested to furnish a Performance Bank Guarantee / Security Deposit for Rs.14,83,359.00 (RUPEES FOURTEE LAKHS EIGHTY THREEE THOUSAND THREE HUNDRED FIFTY NINE ONLY i.e. @7.5% of one year Contract value for above Schedules) valid upto 60 days beyond date of completion of Contract period of one year (i.e. 12 months + 60 days = Total validity required to be submitted upto 27/11/2007) from the date of commencement of Contract towards satisfactory performance of the entire contract (as per prescribed format given in the subject tender document) from a Nationalized/ Scheduled Indian Bank within 15 days from the date of issue of NOA."

10.0 PERFORMANCE BOND :-

The CONTRACTOR has furnished security deposit in the form of Two Bank Guarantees as per details given below towards performance under this CONTRACT.

a) Performance Bank Guarantee No.28/41 dt.09/10/2006 amounting of Rs.1,07,203/- Valid upto 11/11/2007 from Central Bank of India, Devnar Br. Mumbai.

b) Performance Bank Guarantee No.28/42 dt.16/10/06 amounting of Rs.14,83,359/- Valid upto 17/11/2007 from Central Bank of India, Devnar Br. Mumbai.

67. The next question that arises for consideration of this Court is whether the respondent could appropriate the amount recovered by encashing two performance bank guarantees and also retention money deposit in view of the alleged non-performance of the contract by the petitioner in respect of the two work orders even if, the respondent had not suffered any loss or had failed to prove any alleged loss.

68. Under clause 5.1 of the letter dated 27 th September 2006, it was provided that the contractor was to furnish a performance bank guarantee/security deposit towards satisfactory performance of the entire contract. Under clauses 9 and 10 of the contract agreement entered into between the parties, it was provided that the contractor shall undertake to perform all services under the contract with all reasonable skill, diligence and care in accordance with sound industry practice to the satisfaction of the respondent. It was provided that in the event, the contractor failed to honour any of the commitments entered into under ppn 37 arbp-372.13(j).doc the said agreement and/or in respect of any amount due from the contractor to the Corporation, the Corporation shall have unconditional option under the guarantee to invoke the bank guarantee and claim the amount from the bank.

76. A perusal of the terms and conditions of the contract referred to aforesaid clearly indicates that the performance bank guarantee was furnished by the petitioner to secure the performance of the contract. The purpose of giving such performance bank guarantees and earnest money deposit was to enable the respondent to recover the outstanding amount recoverable, if any, from the contractor under the ppn 41 arbp-372.13(j).doc contract or towards liquidated damages in case the respondent had suffered any loss. In my view, there cannot be any windfall in favour of the respondent to encash and appropriate the amounts by encashing the performance bank guarantee and/or retention money merely on the basis of the alleged breaches committed by the petitioner without there being any amount recoverable by the respondent from the petitioner as outstanding under the provisions of the contract or against the loss, if any, suffered by the respondent due to the breaches committed by the petitioner. I am not inclined to accept the submission of Mr.Bharti, learned counsel for the respondent that it was an absolute right of the respondent to appropriate the said amount without the respondent having proved any loss due to the breaches, if any, committed by the petitioner.