Srikrishna, C.J.

These two are connected matters and can be conveniently disposed of by a common judgment.

2. The appellant in W.A.No.966 of 1996 is a Government contractor. The respondents are (1) State of Kerala, (2) The chief Engineer, Harbour Engineering Department, Thiruvananthapuram, (3) The Superintending Engineer, Harbour Engineer Department, North Circle, Kozhikode and (4) The Executive Engineer, Harbour Engineer Division, Kozhikode-32.

3. On 7-7-1981, the respondents issued a public advertisement inviting tenders registered contractors having "A" class license for executing certain work for the development of the Beypore Port construction of breakwaters. The appellant submitted his tender on 21.8.1981. The probable amount of contract was Rs. 24,23,79,991/- and the earnest money to be deposited was Rs.50,000/-. The tender submitted by the appellant on 21-8-1981, was the lowest as the appellant quoted 12.90% below the estimate rate. The second lowest tenderer had quoted 25% above the estimate rate.

4. On 16-9-1981, the appellant's tender was accepted and an acceptance letter was sent, vide Ext.P1. By this letter the appellant was called upon to execute a formal agreement on stamp paper and he was also informed that failure to do so would make the earnest money deposit liable to forfeiture and lead to cancellation of the proposed contract and make him liable to pay the Government the entire loss that may be caused to the Government by retender or rearrangement of the work or otherwise consequent on the failure of the appellant to execute the agreement or execute the work as provided for in Clause 13 of the notice inviting tenders.

5. On 29-9-1981, by letter, Ext.P2, the appellant informed the third respondent that he had committed a mistake, as due to inadvertence he had quoted 12.90% below the estimate rate while it was his intention to quote 12.90% above the estimate rate. He also conended that he had come to the conclusion that even a rate 12.90% above the estimate rate is not at all worth considering in the present labour rates, cost of material, higher charges of machinery, fuel prices, etc. He also said that the bank facilities which he was hoping to get within a reasonable period would also be delayed considerably because of reasons beyond his control. In these circumstances, the appellant maintained that he was not in a position to enter into an agreement with the department for the execution of the above under the terms and conditions stipulated in the tender schedule. He, therefore, requested that he may be relieved of the responsibility of carrying out the work as per tender and the earnest money deposit be refunded.

6. On 30-9-1981, the third respondent by his letter (Ext.P3), informed the appellant that his plea that he mistake he had quoted 12.90% below the estimate rate could not be accepted. The appellant was called upon to execute the agreement within the time limit specified in the letter of the department, failing which, he was informed that the work would be arranged otherwise at the full risk and cost of the appellant without any further notice.

7. On 12-10-1981, the third respondent by his letter (Ext.P4) informed the appellant that the earnest money deposit of Rs. 50,000/- was forfeited to the Government under clause 13 of the notice inviting tenders, that the work would be rearranged at the risk of the appellant in terms of the tender conditions vide Clause 13 of the notice inviting tenders and "as per the rules in force". He also stated that all losses to Government on account of the rearrangement of work would be recovered from the appellant as arrears of revenue by proceedings under the Revenue Recovery Act or otherwise.

8. As a matter of fact, the respondents did not retender the work, but gave it to the second lowest tenderer, who had quoted 25% above the estimate rate.

9. On 25-11-1983, the State Government made an order black listing the appellant for a period of ten years and also dire