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IN THE HIGH COURT OF KERALA AT ERNAKULAM
S. MANIKUMAR, SHAJI P.CHALY, JJ.
M/s. Skilled Constructions Company Ltd., Represented By Its Authorised Signatory. – Petitioner
Versus
Union Of India, Represented By Its Secretary and Ors. – Respondents
WA No. 615 Of 2022, WA No. 713 Of 2022, WA No. 726 Of 2022, WA No. 941 Of 2022
Decided On : 22-11-2022
Performance Security - Contractual Works - G.O.(P) No.7/2021/Fin. - OM dated 12.11.2020 - OM dated 15.03.2022 - The court considered the applicability of Government Orders dated 07.01.2021 and 15.03.2022 in the context of Covid-19 pandemic and their impact on contracts. The judgment discussed the reduction of Performance Security, Bid Security, and Additional Performance Guarantee, and their applicability to new tenders and awarded works. The court concluded that the contractors who had executed agreements before the issuance of the Government Order were not entitled to the benefits conferred by the Government Orders.
Fact of the Case:
The appellants, engaged in contractual works, sought reduction of performance security and release of retention amount due to financial crunch caused by the COVID-19 pandemic. The Government had issued Office Memorandums reducing performance security to 3% and releasing retention amount, but the benefits were denied to the appellants as they had signed agreements before the memorandums.
Finding of the Court:
The court found that the benefits of the Government Orders were extended to contractors who had not executed agreements, and there was no discrimination or unreasonable classification. The court held that the contractors who had executed agreements were not entitled to the benefits conferred by the Government Orders.
Issues: The issues involved the applicability of Government Orders, the denial of benefits to contractors who had executed agreements before the issuance of the Orders, and the impact of the COVID-19 pandemic on contractual works.
Ratio Decidendi: The court held that the benefits of the Government Orders were intended for contractors who had not executed agreements, and there was no discrimination in denying the benefits to contractors who had already executed agreements. The court concluded that the contractors who had executed agreements were not entitled to the benefits conferred by the Government Orders.
Final Decision: The writ appeals were dismissed, and the court upheld the judgment of the learned single Judge, finding no jurisdictional error or legal infirmities in the judgment.
JUDGMENT :
[S. Manikumar, J. ]
1. Being aggrieved by the judgment passed in W.P.(C) Nos. 23679, 26212 and 26762 of 2021 dated 22.04.2022, W.A. Nos.615, 713, and 726 of 2022 are filed by the petitioners, whereas, W.A. No.941 of 2022 is filed by the State and its instrumentalities, challenging the judgment in W.P.(C) No. 4140 of 2022 dated 8.4.2022.
2. After considering the submissions, by judgment dated 22.04.2022 in W.P.(C) Nos. 23679, 26212 and 26762 of 2021, writ court ordered thus:
13. The Government of Kerala has issued GO(P) No.7/2021/Fin dated 07.01.2021 relaxing the requirements of Performance Security/Security Deposit, Bid Security/Earnest Money Deposit and Additional Performance Guarantee for the execution of Public Works in the State. Paragraphs 4 to 6 of the GO dated 07.01.2021 reads as follows:
“4. Government have examined the matter in detail and are pleased to order as follows.
(1) Performance Security/Security Deposit to be submitted at the time of executing the agreement is reduced from the existing rate of 5% to 3% of the contract amount.
(2) Correspondingly Bid Security/Earnest Money Deposit is reduced from 2.5% to 1.5% of the estimated amount.
(3) Additional Performance Guarantee is waived for the low quoted items on the condition that the bidder shall furnish an undertaking to execute all low quoted items in full as per contract terms.
5. The above relaxations on account of Covid-19 pandemic are made applicable for works initially for one year and would be reviewed post that date.
6. This Government Order is made applicable to all new tenders as well as works which have been tendered and awarded, but agreements have not been signed by the winning bidder.”
It is therefore evident that the said GO is made applicable only to new tenders and in respect of works which have been tendered and awarded, but agreements have not been signed by the winning bidder.
14. In the case of the works undertaken by the petitioners in these writ petitions, admittedly, those are not works undertaken after 07.01.2021. The agreements in respect of the works in question have been signed by the petitioners before 07.01.2021. Therefore, GO dated 07.01.2021 will not apply to the contracts undertaken by the petitioners.
15. The contention of the petitioners is that exclusion of contractors like the petitioners from the purview of GO dated 07.01.2021 for the reason that the petitioners have already executed agreements for the work, is arbitrary and discriminatory. The exclusion would offend Article 14 of the Constitution of India.
16. This Court is not inclined to accept the said argument for the reason that the petitioners are not claiming any fundamental or statutory rights. The issue involved is purely within the realm of contract laws. The petitioners have executed agreements with open eyes. What is granted under GO dated 07.01.2021 is only a concession. The petitioners cannot claim any concession in contractual matters invoking writ proceedings under Article 226 of the Constitution of India.
The writ petitions are therefore devoid of any merits and are dismissed.
3. Whereas, by judgment dated 8.4.2022 in W.P.(C) No.4140 of 2022, writ court ordered as under:
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