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IN THE HIGH COURT OF KERALA AT ERNAKULAM
MR.JUSTICE N.NAGARESH, J
EKK Infrastructure Limited – Appellant
Versus
Kerala Road Fund Board – Respondent
JUDGMENT :
1. The petitioner is an A Class Contractor in the Public Works Department. The respondents had invited bids for the work, namely KIIFB Work 2016-2017 improvements to Udumbanchola Chithirapuram Road (Km 0/000 to 45/880) as per the Notice Inviting Tender dated 17.08.2019.
2. As the petitioner was the lowest tenderer in the above tender proceedings, the 2nd respondent issued Ext.P2 letter accepting tender in respect of the above work for an amount of Rs. 139,90,01,074/-. Thereafter, Ext.P4 contract was entered between the petitioner and the respondents. As per Part I of the Instructions to the bidders which form part of the Notice Inviting Tender, the successful bidder will have to submit Performance Guarantee before executing the agreement. In compliance to the same, the petitioner submitted Ext.P4 Bank Guarantee and Exts.P5 and P6 Treasury Fixed Deposits. Thereafter, the petitioner successfully completed the construction of the work and the 1st respondent issued Ext.P8 Completion Certificate to the petitioner.
3. As per Clause 7.10 of the instructions to the bidders, NIT, half of the Performance Guarantee in the form of Treasury Deposit can be released upon submission of an
Contractual obligations must be honored, and a contractor is entitled to the release of Performance Guarantee upon fulfilling specified conditions.
The court established that performance guarantees must be released upon contract expiration unless justified by established liabilities.
Unpaid certified bill from same authority substitutable for treasury deposit in performance guarantee.
The court recognized the legality of reducing the performance guarantee from 5% to 3% in accordance with government orders due to pandemic relief initiatives.
The court affirmed the legality of substituting a performance guarantee with an unpaid sanctioned bill under specific government provisions.
A contractor can substitute a performance guarantee with an unpaid sanctioned bill if permissible under relevant Government Order.
Court permits substitution of performance guarantees with treasury deposits based on previous judgments, ensuring compliance within stipulated time.
The court emphasized strict interpretation of exemption conditions, confirming that exemptions apply only to tenders prior to stipulated deadlines.
The main legal point established in the judgment is that the benefits conferred by Government Orders extending relaxation in performance security and related guarantees were intended for contractors ....
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