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 agre