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Showing contexts for: rescission of contract in M/S. S. Mund Constructions vs State Of Odisha And Others ..... Opp. ... on 18 August, 2023Matching Fragments
4. Per contra, Mr. Tarun Patnaik, learned Addl. Standing Counsel appearing for the State-opposite parties vehemently contended that the argument advanced by the learned Senior Advocate, that the condition stipulated under Clause-11 of the DTCN is illegal, irrational and arbitrary, is not correct and the same is speculative one. The said Clause-11, which was Clause-13 earlier, has been incorporated since 2008 by the Public Works Department, Government of Odisha. The embodiment of the conditions in the DTCN are all informative and intended to aware the potential bidders/ contractors to participate in the tender process. The reason for incorporation of said Clause-11 is only to filter the qualified contractor to participate in the tender process and to debar those bidders who either failed to complete the contract or abandoned the contract causing a loss to the public and government exchequer for last 5 years prior to the date of bid. There is a provision in the DTCN for imposition of penalty of 20% amount of the balance work left at the time of rescission of the contract and debarring the contractor to participate in tender process. As such, both the provisions, such as Clause-11 and Clause-121 are distinct to each other in context of the purpose. The same cannot be equated. Even though there is a provision for rescission of contract and imposition of penalty for non-performance of the contract within the time specified, that is completely separate from the provision contained in Clause-11 of the agreement, which is meant for consideration of eligibility criteria to participate in the bid itself. The debarment of a bidder under Clause-11 of DTCN is an outcome of the self-declaration of the bidder, vide Schedule-E, and Affidavit, vide Schedule-F of the bidding document, that is adherence to the legal process. As such, the contention raised, that the provision of Clause-11 of DTCN is not in consonance with Article- 19(1)(g) of the Constitution, is not correct and discriminatory, in view of the provisions contained in Article-19(6)(i), which empowers the State for laying down reasonable restrictions on freedom of profession, occupation, trade or business. Here restriction of bidders, on rescission of any contract, is not in violation to the Article-19 (1)(g) of the Constitution.
8. Clause-11 postulates two stages, namely, (1) an applicant or any of its constituent partners of whose contract for any work has been rescinded; and (2) who has abandoned any work in the last five years, prior to the date of the bid. Then only, one can incur disqualification to participate in the bid.
9 To 'rescind' a contract means to abrogate, annul, avoid or cancel or to do away with a contract. In other words, a contract may be rescinded by agreement between the parties at any time before it is discharged by performance or in some other way. Rescission operates as if the agreement never had any effect. If we will simplify the meaning, the rescission is unmaking of a contract requiring the same concurrence of wills and that which made it and nothing short of this will suffice. Rescission, in other words, is tendering a contract null and void and the contract is no longer recognized as legally binding. A rescission can be unilateral when a party rightfully revokes a contract on account of breach by another party to contract. It can also be mutual when the parties to contract agree to discharge all remaining obligations. Therefore, there is a wide difference between rescission of contract and its mere termination or cancellation. Thereby, there is distinction between rescission of contract and termination of contract. Rescission is utilised as a term of art to refer to a mutual agreement to discharge contractual duties. Thus, rescission of contract means the undoing of a thing.
13. Therefore, Clause-11 is a requirement for consideration of the bid before any agreement has been executed between the parties, whereas Clause-120 states about addendum to the condition of P1 contract. Sub- clause 2.3 thereof states about compensation for delay. Sub-clause 2.3.1 makes it clear that if the contractor fails to maintain the required progress in terms of Clause 2 of P- 1 contract or to complete the work and clear the site on or before the contract or extended date of completion, then necessary steps shall be taken against him. Sub-clause 2.5 deals with the management meetings. Under Clause 2 (b) of Sub-clause 2.5.2 there is rescission of contract and in that case to rescind the contract (of which rescission notice in writing to the contractor under the hand of the Executive Engineer shall be conclusive evidence), 20% of the value of left over work will be realised from the contractor as penalty. Therefore, a penalty will be imposed on the contract while rescinding the contract due to non- performance within the time specified. That itself is a penal action against him after execution of the agreement and due to non-performance as per the terms and conditions stipulated in the agreement itself. Clause 121 of the DTCN makes it clear that a contractor may be blacklisted as per amendment made to Appendix XXXIV to OPWD Code Vol-II on the rules for blacklisting of contractors vide letter no.3365 dated 01.03.2007 of Works Department, Odisha. For non-performance of the work as per the terms and conditions of the agreement and as per the amendment made to Appendix XXXIV of OPDW Code Vol-II, a contractor may be blacklisted if he has not adhered to the sub-clauses
25. In view of such position and the plethora decisions cited above, the petitioner is now precluded from raising the contention that Clause-11 of the DTCN as arbitrary, unreasonable and the same should be struck down.
26. Mr. Asok Mohanty, learned Senior Advocate appearing for the petitioner relies upon Sections 23, 27 and 65 of the Indian Contract Act, as mentioned above. But on perusal of the aforementioned provisions, it is made clear that the said provisions can be evoked only after the bipartite agreement between the parties is signed. Therefore, applicability of such sections of the Indian Contract Act during tender process is unwarranted. Rather, Clause-11 of the DTCN is placed into service for selection of a bidder for a particular contract. In other words, by filing an affidavit in Schedule-F of the bid document, the bidder has to certify himself that he has never been indulged in any act of rescission of contract or abandonment of the contract for the last five years. Thereby, he has to make a certificate about his good conduct by way of an affidavit in prescribed Schedule-F so as to consider his bid in terms of the clauses of the DTCN. That has got nothing to do with the provisions contained in Sections 23, 27 and 65 of the Indian Contract Act. Needless to say that the bidder is aware of the stipulation contained in the DTCN while bidding. Therefore, if at all it has been included in the rescission of contract or abandonment of the contract and incurred a disqualification to participate in the bid, that cannot be treated as unreasonable, arbitrary and contrary to the provisions of law. Therefore, an administrative process and commercial decision, which is taken fairly on the commercial viability of the party, cannot be construed to be mala fide in the decision making process so as to cause interference of this Court at this stage. Once the bidder has submitted his bid, he cannot challenge the terms and conditions mentioned in the clauses of the DTCN, reason being after perusing the clauses containing the conditions of the tender, he had submitted his bid and his bid was rejected pursuant to the clauses of the DTCN. It is well settled principle of law decided by the apex Court time and again that one unsuccessful bidder cannot challenge the terms and conditions of the tender having participated in the tender process.