IN THE HIGH COURT OF GAUHATI, NAGALAND, MIZORAM AND ARUNACHAL PRADESH
Michael Zothankhuma, J.
M/s Rana Construction and Engineers Pvt. Ltd. – Petitioner
Versus
The State of Assam, Represented by the Commissioner and Secretary to the Government of Assam, Public Works Roads Department and ors. – Respondents
WP(C) 4982 & WP(C) 2146 of 2023
Decided On : 17-02-2024
Performance Security - Contract Work Dispute - ITB Clause No. 26, special condition of contract Clause No. 1.2 of Section 4, Part- II - NIT dated 21.05.2022 - Letter of Acceptance dated 06.08.2022 - Speaking Order dated 10.04.2023
Fact of the Case:
The petitioner, a contractor, challenged the Speaking Order dated 10.04.2023 issued by the Chief Engineer, PWD, and sought payment for the work done without a signed contract agreement or work order.
Finding of the Court:
The court found that the petitioner had not fulfilled the conditions for submitting Performance Security and additional Performance Security as per the ITB Clause and special condition of contract. The court held that the petitioner's conduct precluded the formation of a valid contract and dismissed the writ petitions.
Issues: Non-payment of contractual bills, dispute over Performance Security, cancellation of Letter of Acceptance, and absence of work order or contract agreement.
Ratio Decidendi: A person who does not intend to enter into a valid binding contract by fulfilling tender conditions cannot claim undue benefit in the absence of a work order or contract agreement.
Final Decision: The writ petitions were dismissed.
JUDGMENT :
1. Heard the petitioner-in-person in WP(C) No.4982/2023, who is the Director of the petitioner company. Also heard Mr. S. Hoque, learned counsel for the petitioner in WP(C) No.2146/2023. Mr. B. Gogoi, learned Standing Counsel appears for the PWD and Mrs. R. Devi, learned CGC appears for the respondent nos.4 & 5.
2. As the subject matter in both the cases relate to the same contract work in question and the petitioner being the same in both the cases, the cases are being decided by this common judgment and order.
3. In WP(C) No.2146/2023, the petitioner has put to challenge the Speaking Order dated 10.04.2023 issued by the Chief Engineer, PWD (Border Roads) and made a prayer to allow him to deposit Performance Security and additional Performance Security in respect of Package No. AS-17-260, PMGSY-III, Batch No.1, 2022-23 for execution of the work constructing road length of 22.65 kms. in Morigaon District. The road name being T05Dimaruguri Kamarpur Road. The contract work includes cross-drainage works and routine maintenance works for 5 years. He has also prayed for setting aside the fresh NIT dated 28.02.2023 issued in respect of the same Package No. AS-17-260, PMGSY-III, Batch No.1, 2022-23.
In WP(C) No. 4982/2023, the petitioner has prayed for payment of his contractual bills in respect of the work done by him pertaining to the same Package No. AS-17-260, PMGSY-III, Batch No.1, 2022-23, hereinafter referred to as the “work.”
4. The petitioner’s grievance is that despite having completed 10% of the work, in terms of the NIT dated 21.05.2022 issued by the Chief Engineer, PWD (Border Roads), Assam and the Letter of Acceptance dated 06.08.2022, the petitioner has not been paid his pending bills amounting to Rs.1,98,11,912/-.
5. The facts of the case, as can be culled out from the pleadings herein, is that the petitioner had taken part in the Short NIT dated 21.05.2022 pertaining to Package No. AS-17-260, PMGSY-III, Batch No.1, 2022-23, for execution of the work construction of road length of 22.65 kms in Morigaon District, the road name being T05-Dimaruguri Kamarpur Road, including cross-drainage works and routine maintenance works for 5 years.
6. The petitioner being the lowest bidder for the said contract work, he was given a Letter of Acceptance dated 06.08.2022 by the Chief Engineer, PWD (Border Roads). However, he was requested to furnish Performance Security for an amount of Rs.45,98,000/- and additional Performance Security of Rs.2,12,29,000/-, for quoting 17.86% below the estimated construction cost.
7. The petitioner being aggrieved by having been requested to furnish additional Performance Security of Rs.2,12,29,000/-filed WP(C) 5301/2022, challenging the condition for submission of the additional Performance Security. This Court dismissed WP(C) 5301/2022, vide order date 07.02.2023. Being aggrieved, the petitioner filed an Appeal which was registered as WA 86/2023. The same was also dismissed by the Division Bench of this Court, vide order dated 20.03.2023.
8. Situated thus, the petitioner thereafter submitted a representation dated 22.02.2023 to the respondent authorities, seeking that the additional Performance Security sought by the State respondents should be adjusted with the pending Security Deposit as well as the royalty. A further offer was made in the petitioner’s representation, for increasing the rate of reduction of the Security Deposit from 7.5% to 16.5%, which would, in the calculation of the petitioner, take care of the State respondents’ demand for additional Performance Security. As the petitioner’s representation was not been considered, the petitioner filed WP(C) No.1057/2023 before this Court.
9. The petitioner in the meantime, in the absence of any work order or contract agreement being signed between the parties, had started construction of the road. He thereafter filed WP(C) 1725/2023, praying that his pending bills from other contract works should be adjusted against the additional Performance
Ayaaubkhan Noorkhan Pathan Vs. State of Maharashtra and Others.
It is settled that interpretation and implementation of clauses in a contract cannot ordinarily be subject-matter of a writ petition.
Court upheld the demand for additional performance security per contractual terms to prevent front loading, emphasizing the need for safeguarding project completion.
The court emphasized the importance of strict compliance with tender conditions and the exercise of judicial review in contractual matters, particularly when public interest is involved.
The court upheld the validity of contract termination due to non-completion of work, affirming that claims for liquidated damages should be pursued in civil court.
The Court determined that contractual disputes involving factual questions requiring evidence must be resolved outside the writ jurisdiction under Article 226 of the Constitution.
Writ petitions are maintainable for contractual claims against state entities, and withholding payments due to contractors on arbitrary grounds violates constitutional obligations to act fairly.
(1) Constitutional courts must defer appreciation of tender documents by employer unless there is mala fide or perversity in understanding or appreciation.(2) Tendering authority cannot be expected t....
A party failing to comply with contractual terms may be subject to termination even if claiming force majeure circumstances.
Compliance with work order conditions and directions is essential for upholding a procurement process. Failure to adhere to the conditions may lead to the forfeiture of earnest money and cancellation....
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